♪ emily: he got his start at microsoft as employee number 30, personally recruited and hired by bill gates. in over three decades, he went from 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. i 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? [laughter] --ve: that is a true more that is 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 sometimes because i would be so nervous and so shy. when i got to college, a friend of mine described it this way -- hi, i'm steve ballmer, my hand is sweaty because i'm so nervous to meet you. [laughter] steve: i guess you could say over time, that is changed. emily: it has changed quite

considerably. 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's a breakthrough, 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: so, you were born in detroit, your dad worked at ford. you excelled in math and science and, 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 some, took

math class together, and brainstorm the 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, hey, we get .eally 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 said to me, steve, you're 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 in every home. and i bought into it, and stated 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 was ceo. this is kind of like my baby. my baby and bill paschi baby. and we were -- my baby and bill's 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. you know, 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.

so i can come and go, if you want me, great, but i have another life. in a sense, i felt like, ok, we are not partners anymore. i have to take accountability. and i think i did some of my very best work after bill left. emily: really? 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, etc. 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 some 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 kind of the thing that really bound us. we started off as friends but really quite got mashed around at microsoft and 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 the number two he and i

, always had what i would call a brotherly relationship in the good parts and bad parts. i just think toward the end, that was a bit more difficult than not, particularly with the strategic, direction change, and stock price is 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 mortar been reluctant in supporting it. max tohings came to cli

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 it else in the mobile world. i wish i had thought about the model of subsidizing phones through the operators. you know, people like to point to the quote where i said that iphones would never sell because i thought $700 was too hi, and there was business model innovation by apple to 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 period of 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 disagree with that, and then came back and said the company should go ahead even though i decided to leave. way, iuted in a certain think it made a lot of sense. the company chose to go another direction. and that is the decision the company made. 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. he is really building on the foundation of machine learning and artificial intelligence. revenues and profits have been

pretty flat actually, but that is important to maintain as he read years -- 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 and it would have been for me, because i was identified as a competitor? sure. and he is taking advantage of it. he is doing the right stuff. emily: how does life as the owner of a basketball team compare to 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: well, 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 in the arena. where do we go in terms of changing the way sports is consumed using digital techniques? not just ott, but virtual reality home and the statistics come in addition to, hey, let's go win some ballgames. emily: so what are your hopes

, for a new season, and not to talk smack, but how do you beat warriors this year? steve: i watched the spurs beat the warriors by 25 points in their opening game. [laughter] it is like what we say 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. steve: true. emily: does the league have a competitiveness problem, and do they need to fix it? steve: i think our league is 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. you know, that is one of the things we will take a look at before we are all done. the 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 land that we will build the building at a

good price. but i'm very interested in the 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 said, ok, now, you are my partner. and i said, come on, the government takes care of that. all we have to do is pay our taxes correctly. and she said, no we can do , better than that. i put 10 years in. things.cked on two

number we locked in on a focus one, 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, ok, i have to figure out what government does. how much money does it taken? how was it working? i eventually came to the idea that we needed to create something like a 10k or investor presentation, if you will. we are hoping to publish early 2017. emily: what are the most troubling things you found so far about the numbers? steve: government is actually making good progress in good improvements in many ways. i was surprised how good i felt. not perfect, but much better about government and the 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 enough expense to match. those things have lost money every year since 1980. we have to do- consequently that will help us get the debt under control. but the third thing, which really tries with what my wife -- which really 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 investments in not-for-profit 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. , 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 are you 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. the schools, everybody. number we are going to focus on three, certain cities. the ones we have a connection to our 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. is that true? ♪

emily: you mentioned you could never make the math work on salesforce. never, ever, ever, 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 dramatically overpriced. that's my opinion. emily: do you think they are headed for a disaster? steve: the company is headed for a disaster. in my worldview, at some point in time, the market will ask companies to make profits commensurate with their market

cap. now, amazon does not either. they have great potential, and it is a great company. but when will the market demand that? i can't say. when will it demand it from salesforce? i cannot 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. emily: we can talk about twitter because you are still an investor in twitter, as i understand it. 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: first of all, i think twitter is an irreproducible asset. i don't think there's any vehicle that let you speak broadly to a mass 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 i am sure that there are acquisitions that would make sense for the company, the product, and the shareholders. emily what about going private? : steve: going private is a distraction. in my opinion, the company would be better served putting its money into innovation that all the work it would take to go private. emily: what about jack dorsey having his two jobs? do you think that is a good set up? steve: i think it's easy to question. people, like me would like more , out of twitter. the ceo is clearly divided in the way jack spends his time, as a shareholder, it would be reassuring to me 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 structure standpoint. and be open, always open, to

opportunities to be independent. sale, if thatke a seems appropriate. emily: when you joined microsoft, you didn't get a single share. is that true? steve: that's complicated. i had a profit share. i never had a stock option. it's written on wikipedia that i made money on stock options. i never had any. at the day we incorporated, i had eight and 3/4 percent of the company, and that's been the source of my ownership. emily: and you still own like, -- and you still own a lot of the company today, like 4%? steve: i still own what i own. that is not a thing i disclose. with the stock at 60, you have to consider the possibilities given the good job that satya has done. emily: you held onto your shares. why have you held on to them? steve: that is correct. emily: why do you hold on? steve i believe in myself. : i ran a company i believed in, and guess what, it is worth a bunch. the full recognition in the marketplace of the value was not

necessarily recognized during my tenure, but it is now being recognized in satya's tenure. i would say, number one, i made a great investment by holding, and number two, i have a lot of loyalty. when i'm working at the place, if i start selling, what does that mean? it means i don't believe in the future of the company. i sort of basically believe that people on boards or work for companies, at least in leadership positions they should , have to hold all their stock. emily: at what point do you think you might sell? steve: that will be a decision i get to make. the longer i get out of the company, the more it is not mine anymore. the more i look at the value of the stock, the more we are doing philanthropically, which is a big deal, these things will change. emily: we calculated that you are with how do you manage your $26 billion. money and investments when she get to that level of wealth? steve: i do a pretty simply. i own microsoft, i own some

twitter, i own the clippers, and i own a bunch of index funds. emily: comparisons have been made to you and tim cook, who also took over from an iconic founder and ceo. what do you make of those comparisons? you write it mean, if down on a piece of paper, founder, product-oriented ceo replaced by a non-founder, more business-oriented ceo, the comparison is perfect. if you say most of the revenue and profit was generated under my watch, yes. tim's watch, yes, those things are true. i think people are trying to extrapolate that to and during the tenure, the new product assets were not built. certainly, in my own case, i would say, hey we got going in , the cloud, got started and hardware, and built assets in machine learning and artificial intelligence. so, we were building those assets. apple is a lot more secretive. i can't tell you what assets tim is building or not building.

the jury is out on everything, but the worst thing anyone says to me is if i'm being compared to a guy who has done great job at apple, so be it. emily: what do you want to write in chapter two of steve ballmer? steve: i want to have fun. and make a civic contribution. the work i am trying to do to publish all this data, i call those civic contributions. i think some of the things we are doing with the clippers can be very important specifically -- important civic league inside civically inside the los angeles area. i don't want this to sound silly, but spectator sport itself was not really my deal. i love watching my kids play and the clippers are more similar. i know the guys, i cheer, i see myself as an energetic guy but also very thoughtful, a guy who has come from being shy and nerdy to a guy who is not. but the grounding part about

that is the ability to think through heart problems, and hope we make a difference. emily: steve ballmer, former ceo of microsoft, owner of the l.a. clippers. thank you for being on the show. great to have you. steve: my pleasure. ♪

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