♪ emily: he got his start at microsoft as employee number 30 -- personally recruited and hired by bill gates. in over three decades, he went gates' top lieutenant to microsoft's ceo and is perhaps best known for bringing light to software conferences that will never be seen again. in 2014, steve ballmer left microsoft after a 14 year reign, bringing his trademark energy and enthusiasm from the boardroom to the basketball court with a $2 billion deal to buy the l.a. clippers. joining me today on bloomberg

"studio 1.0," steve ballmer. former ceo of microsoft, ballmer group cofounder, and owner of the l.a. clippers. steve, thank you so much for joining us. steve: thanks for having me. i heard a rumor about you that i couldn't possibly believe to be true, which was that you were shy growing up. eve: that's a true rumor. emily: tell me about this. steve: when i was a little kid, if somebody's dad was at home, i would literally sit out in the car, because i would be so nervous and shy. when i got to college, a friend of mine describes it this way -- hi, i'm steve ballmer, my hand is sweaty, because i'm so nervous to meet you. [laughter] steve: over time, that has changed. emily: it has changed. you brought life to software conferences that will never be seen again.

where did that guy come from? steve: that's a very good question. i would say there was a breakthrough for me, literally, when i was football manager at harvard. that is an intimidating thing to get up in front of football players. the manager is not the loftiest position. "hey, listen up a minute!" and you have to speak before a pretty unruly group of 100 guys. that is where i broke through. emily: you were born in detroit, your dad worked at ford. you excelled in math and science even early on. at harvard, some other kid named bill gates lived down the hall, and you were better at math than him? steve: i think that's an extreme way to say it. on the putnam prize competition, which was kind of the big college math competition, i did beat him our sophomore year. emily: how did you get to know bill? what was your relationship like in school?

steve: we got to know each other, ate lunch and dinner, took math class together, brainstormed a little bit about what he was doing when he started microsoft. about year after the company moved to seattle, bill called up. i was at stanford business school, and he said, "we could really use a guy like you." emily: you joined microsoft in 1980. you were the 30th employee. wasn't there a time during this first few weeks where you are thinking, "i don't know if this place is for me, and maybe i should quit?" steve: bill and i were arguing. i wanted to add a bunch of people. bill did not want to add them.

he kept saying, "steve, you are going to bankrupt this place." i thought, "why did i drop out of school?" bill and his dad took me out, and that's where i make up in my head that bill invented this computer on every desk and in every home. he said something like, steve, you don't get it. we're going to put a computer on every desk and every home. i bought into it and stayed a total of almost 34 years. emily: you were his top lieutenant and became ceo in 2000. you tripled microsoft's revenue. what was it like taking over from a founder ceo? steve: people like to focus in on when bill was ceo and when i on when bill was ceo and when i was ceo. this was our baby. we were growing it and nurturing it. he was the senior partner, i was the junior partner. if it was in the raising of children, i would say mom gets to decide more than dad. i take great satisfaction in the things we accomplished throughout the time, not just when i became ceo. when i became ceo, we had a very miserable year. bill did not know how to work for anybody, and i did not know how to manage bill. i'm not sure i ever learned the latter. things lightened up some, and i would say my life changed a lot

in 2008 when bill actually left the company. emily: how so? steve: bill said, "look, i'm happy to help you in anyway, but i don't want you to need me. if you want me, great, but i have another life." in sense, fe are not partners anymore. haveo take accntability. and i think i did some of my very best wo after bill left. emily: like what? steve: pushed us into bing. sustained us in that investment. that's where we got into the cloud. we started with office 365. after bill left, we pushed into the hardware business with surface. and now satya nadella, my successor, is taking things to infinity and beyond if you will. emily: how do you feel being asked about your successes and your failures? what you are most proud of, what you are least proud of? steve: at this stage, i'm almost

three years out. it's ancient history. did i have a lot of success? yeah. are there things i wish i had done differently? of course. i started a company that had about $2.5 million in revenue and 30 people, and i left a company that had $22 billion in profit, and i feel like net/net, pretty good success. emily: what is your relationship with bill like today? steve: we have kind of drifted apart. he has his life, and i have mine. microsoft was the thing that really bound us. we started off as friends but kind of got messed around with microsoft. since i have gone, we have drifted a little bit. emily: when you left, he left suddenly. what really happened? steve: it was definitely not a simple thing for either one of us. i think at the end of the day, probably two things -- a little bit of difference in opinion on the strategic direction of the

company which i think is a challenge. and number two, he and i always had what i would call a brotherly relationship in the good parts and bad parts. i think, toward the end, that was a bit more difficult than rticularly with a strategic direction change and stock prices not going anywhere, so the rest of the board felt pressure despite the fact that profits were going up. so i think you have kind of a combustible situation. emily: does it bother you that you don't get credit for that? steve: sure and no. at the end of the day, i have the great comfort of knowing what i did and feeling good about myself, and everything else doesn't really matter. emily: where did you want to take the company? where did he want to take the company? steve: i think is a fundamental disagreement about how important it was to be in the product business. i push for the service and the

board had been reluctant. then it came to what to do about the phone business. emily: satya nadella said recently on stage that missing the mobile phone was one of the big mistakes in microsoft's history. what would you have done differently? steve: i would have moved into the hardware business faster and recognized that what we had in the pc, where there is a separation of chips, systems, and software, was not going to largely reproduce itself in the mobile world. i wish i had thought about the model of subsidizing phones through the operators. people like to point to the quote where i said that iphones would never sell, because $700 was too high and there was business model innovation by applto get it built into the monthly cell phone bill. we should have been in the hardware business sooner in the phone case, and we were still suffering what i would call some of the effects of our vista release of windows which sucked up a huge amount of resource for

a much longer time than it should have because we stumbled over it. when you have a lot of your best engineers being nonproductive for a while, it takes its toll. emily: would you have bought nokia? steve: i certainly wanted to buy nokia. the board at first disagreed with that and then came back and said the company should go ahead with it. i had decided to leave. i believe, if executed in a certain way, it made a lot of sense. the company chose to go another direction, and that is the decision the company made. emily: do you think they were wrong? steve: i see the stock price flying sky high, and all you can say is the market certainly agrees with the direction of the company, and i am excited about that. emily: how do you think he's doing? steve: i think he's doing a fantastic job. he's really pushed on the cloud. she's really building on the

foundation of machine learning. revenues and profits have been pretty flat, but that is important to maintain as he re-gears the place. he has my unconditional support. emily: he has been more open to partnerships than you seem to be. is that the right strategy? steve: i have no quibbles with anything he has done. should azure run open source software? absolutely. is it easier for him to communicate that than it would have been for me, because i was identified as the competitor? sure. he's taking advantage of it and doing the right stuff. emily: how does life as the owner of a basketball team compto life at microsoft? ♪

emily: may 2014, you bought the clippers for $2 billion. how does life as the owner of a basketball team compared to life at microsoft? steve: it's completely different. comparing them may not be the most interesting or valuable thing to do. i love the game. i love seeing us go out there and win, but there's aspects to the job as well. how do i properly interact with our coach, our basketball staff, our players? what is my role? we have big decisions in front of us. arena -- where do we go in terms of changing the way sports is consumed using digital techniques? not just ott but virtual reality and live statistics in addition

to, "hey, let's go win some ballgames." emily: what are your hopes for a new season, and not to talk smack, but how do you beat warriors? steve: i watched the spurs beat the warriors by 25 points in their opening game. anyone can be anyone on any given night. emily: the cavaliers and warriors are favored to get the finals for the third year in a row. does the league have a competitiveness problem, and do they need to fix it? steve: i think our league is actually pretty competitive over time. but, in any given year, there are players who are difference makers. i think it is tougher to win it all if you don't have one or two of those difference makers. emily: how's the search for a new arena going? steve: we are searching. that's one of the things we will look at before we are all done. first question is, what is out there for available land? what would it look like to build the building?

we have some good confidence that we will find some land and be able to build the builng at a good price. i'm interested in building an arena, but before all is said and done, we will talk to the staples guy. the other thing i will tell you is i don't think it ever makes sense to enter renegotiation with a landlord unless you have an option. we will have an option, and it will be exciting. emily: let's talk up a class you are teaching. you are drilling down on government. steve: when i retired in early 2014, my wife and i -- she has been working for 10 plus years on the issues of child welfare and what does it take to help support children who grow up in tougher circumstances?

i retired, and she said, "ok, now, you are my partner." i said, "come on, the government takes care of that." all we have to do is pay our taxes. she said, "no, we can do better than that." i put 10 years in. so we locked onto things. number one, we locked in on a focus on kids born in communities where their probability of living the american dream, having that sense of upside, is very limited. but why the government project? because my wife challenged me. i said i have to figure out what government does. what money does it take in? how is it working? i eventually came to the idea that we needed to create something like a 10k or investor presentation. we are hoping to publish early 2017. emily: what are the most troubling things you found so far about the numbers? steve: government is making good progress and improvement in many ways. i was surprised how good i felt. not perfect, but much better about government and taxes, and i came away with two big things. number one, what i call the savings programs. not the transfers and entitlements, the savings

programs. social security and medicare. we have to put aside enough revenue and expense to match. those things have lost money every year since 1980. second, what we need to do consequently will help us get the debt under control. the third thing, which jives with what my wife said, is there are communities of people -- let's say you are born in the bottom 20% -- if life was perfect, there'd be a 20% chance you stay in the bottom 20%. the truth is there are communities of people where that number is over 50%. that is just not ok. every kid should at least have the opportunity. what does it take for government and for us as people with philanthropic and civic resources -- what kind of investment in not for profits and government programs? it has been interesting, but , when you look at government, a

lot of things are going well, but something's really not. really not.s are emily: the work you are doing in philanthropy compares to what mark zuckerberg is doing. talk to me about where you are going, where you are leaning, who you are looking to help. steve: there are some great not for profits doing good work. we are trying to find the best of those who operate nationally and support them. that's number one. number two, we are very bullish on what they call place-based strategies, where you bring a community together and challenge everybody. number three, we are going to focus on certain cities. the ones we have a connection to are seattle, because we live there, l.a., because we own a basketball team there, and detroit, because i grew up there. so, we will have geographic focus. emily: when you joined microsoft, you didn't get a single share. tt true? ♪

emily: you mentioned you could never make the math work on salesforce. never ever. what do you mean by that? steve: it's too expensive. it's a fine company. is it a great company? i don't know. it's a fine company, but, in my opinion, relative to earnings potential, it is radically overpriced. that's my opinion. emily: do you think they are headed for a disaster? steve: the company is headed for

a disaster. the market will ask companies to make profi commensurate with their market cap. amazon does not either. they have great potential, and it's a great company, but when will the market demand that? i can't say. when will it demand it from salesforce? i can't say. emily: is amazon getting a pass from wall street? steve: they are, because people believe powerfully enough in the future of earnings. but you can't tell me over the long run the earnings and market cap are divorced. that runs fundamental to my basic view in capitalism and the way it works. twitter, me talk about because you are still an investor in twitter? when you announced the stake, it was 4%. do you still own as many shares in twitter as you used to? steve: i think it's fair to say i remain a large investor in twitter. emily: what do you think about what they are going through now?

steve: i think twitter is an irreproducible asset. i don't think there's any vehicle that let you speak broadly to amass audience better than twitter. could the product be easier to use? of course, the product could be easier to use, and i think that is an important area. emily: do you see twitter having a future as an independent company? steve: i think twitter would be great as an independent company and our acquisitions that would make sense for the company, the product and shareholders. emily: what about going private? steve: going private is a distraction. the company would be better served putting its money into innovation than all the work you take to go private. emily: what about jack dorsey having his two jobs? steve: i think it's easy to question. people like me would likmore out of twitter. the ceo is clearly divid in the way jack spends his time, as a shareholder, it would be reassuring if he was entirely focused on twitter. emily: what would you like to see? steve: i would like to see them work on the things they need to do from a product and cost

terre: we asked some of the best minds in the world from business, government, the arts, academia, what are the most urgent problems facing humanity, and how do we solve them? the result is "big problems, big thinkers." what is the number one major problem facing mankind? >> i think is the lack of education.