>> rose: welcome to the program. we begin this evening with an appreciation of oscar de la renta the greatest fashion designer who died and later this week we'll have a full appreciation of his life and talk to his friends, but tonight we remember what an inspired life he lived, appropriate for a man who began life wanting to be a painter, as he told me in a conversation. >> it just happened they went to art school in the dominican republic, and then at the age of 17, i went to spain to continue my art studies, in madrid, and it's while i was in spain, that-- you know, my father was-- i come from a big family. we had seven children. im the youngest, and six girls.

and my father was making a lot of pressure on me to come back to the dominican republic and work in his business-- he was in the insurance about business. i didn't see myself selling insurance. and i started doing fashion illustration for newspapers and magazines in spain because i could draw very well. and that led me into the fashion houses and started learning what fashion was all about. and, you know, probably the greatest decider of our time-- he offered me a job to come work as an illustrator in his house, and that really is sort of the very beginning. i never, ever went to fashion school. but then i went to the very best fashion school because i had the opportunity to work in house, what i could see how clothes were made, how they were cut, how they were constructed. and so then i said, well, perhaps i can be a fashion designer and paint sometimes.

and i kept doing both for quite-- you know, for a long period of time, all the years they lived in paris, i really went on painting, but each time i did it less and less. and finally when i came to work in the united states, i really, you know, quit painting altogether. i realized to do something well, you have to do only one thing. the big sort of talent, most of the people who are talent martin mcdonagh a lot of different things, but to do something very well, you have to do only one thing. >> rose: why do you think-- and this is a hard question to answer but you've been successful at it. it is said you generate some $500 million or $6 hell money in revenue from the various parts of the businesses you're in. it st because you somehow had an instinct for a certain client, and you knew how to design clothes? what was it about your signature

that has survived the test of time. >> i think it is a combination of a lot of different things. i think that, you know, the staying power of having been in business now for over 25 years and still doing well to still have the passion to do it. i mean, i love what i do. >> rose: what do you love about it? >> i love designing clothes. i always say, you spend exples less time -- >> not that you shouldn't. >> i spend less and less time designing cloacts because -- >> you're a businessman. >> i own a business, and i have tried to learn to be a businessman. that's not something that comes naturally to me. but the best time is when i am in my studio with my assistant working in a collection. that is what i really enjoy. and as long as there's this passion for doing it, though sometimes it's sort of very agonizing. >> rose: agonizing because?

>> because, you know, any creative work, there's a tremendous amount of self-doubt, and then, you know, good reviews and bad reviews. people ask me, "by now you really should not-- what does it matter to you?" but still it does matter, you know. and you suffer as much from it today as you did when you-- when i started. >> rose: oscar de la renta, dead at 82. we remember this evening his family, and especially his wife annette de la renta who was with him at the end. we continue this evening with steve ballmer, the former c.e.o. of microsoft, now the new owner of the l.a. clippers. >> butted i'd asked the commissioner, i said, look, best for me was to get somebody in saeblgths, second, also as good, would be to buy a team in l.a. and he said seattle you have all the problems of of movement, and expansion, not likely.

and l.a., they're just not going to sell. that's what he told me, they're just not going to sell. because i love l.a. i really love l.a. so about a month and a half after, that maybe two months, saturday morning, my son who is in college gives a call and says, "dad, have you seen these tapes and the clippers?" and i said, i don't know anything you're talking about. he said, "go look at them. the clippers are going to sell. you have to be ready to move." >> rose: steve ballmer, a conversation, when we continue. >> and by bloomberg, a provider of multimedia news and information services worldwide.

captioning sponsored by rose communications from our studios in new york city, this is charlie rose. >> rose: biewm is here. he is the owner of the los angeles clippers, n.b.a. franchise. he purchased team in august for a record $2 billion. he was c.e.o. of microsoft for 14 years. he is that company's largest sthoalder. i am pleased to have him here to talk about basketball, technology, microsoft, and many other things. i begin with this-- this is the cover of "bloomberg business week." there he is. when i look at that picture, i see a guy who likes basketball, could have played basketball. looks likes a powered for to me. and look at his eyes. his eyes are set on the basket. am i right so far? >> well, you're giving me a little too much athletic credit there, charlie! >> rose: you love the game. >> i do love the game of basketball. >> rose: okay, so here are

you, a guy who's got a ton of money, and it's all reported publicly, $20 billion-plus. and you have left microsoft. and you're looking around for what to do. hupreviously, previously tried to buy an n.b.a. franchise, unsuccessfully. you looked at milwaukee, it didn't happen. you looked at-- i don't know who else. and then you find out about the l.a. clippers. how did you find out and what did you do? >> it's kind of funny. i had actually looked two or three times-- which is important, important part of the story-- because i knew what to look for. i'd looked at numbers before. i'd thought about it. i'd gotten my mind about it emotionally. i probably had been talking about it for 10. plus years. and we took a hard run at buying sacramento and moving it to seattle. we got turned down on moving it. i was running microsoft so i was the backseat part partner. i was providing the financing

but i wasn't really driving. the day basically i retired from microsoft, earlier this year. pretty much the day, i went to see commissioner silver and talked to him about teams and he said they don't really sell very often. >> rose: almost the same day you left microsoft. >> within two weeks. within two weeks i was here to see adam silver. he told me unlikely to see any expansion in the league-- they're not working on it anyway, he said, without moving teams. difficult, dill, they're trying to help cities keep their teams. so i said i better look at milwaukee because it was for sale. i scheduled the commissioner, i said best for me would be to get somebody in seattle, and second, also as good, would be to buy a team in l.a. he said seattle you have all the problems of movement, and expansion, not likely. and l.a., they're just not going to sale is what he told me, they're just not going to sell. because i love l.a. rail love l.a. about a month and a half after that, maybe two months, saturday

morning, my son, who? college, gives a call and says, "dad! have you seen these tapes and the clippers?" and i said, "i don't know anything you're talking about." he said,"go look at them. the clippers are going to sell. you have to be ready to move." >> rose: that's a son you would like to have. >> he was on it. >> rose: he was like a pointer for you. what do yo>> what do you do abo? i talked to the commissioner, like i'm sure every potential buyer was. they had to decide their responses, probably a week or two later, i was calling around to everybody i knew in l.a., do you know the sterilings? best would be to buy the the team from them. i attended a few games because i had never been to a clipper game. i was supposed to go with one of my other sons earlier in the year and we kind of got our scheduleds all goofd up. i watched them play oklahoma state, and i got the opportunity

to meet with mrs. sterling. >> rose: how did that conversation go? >> well, i called her on a saturday morning. i was at another one of my son's basketball tournaments, and, you know, i said i'm very interested. she had just received a call from a mutual friend, michael eisner, who had run disney. >> rose: and who gz gz to the games. doesn't he go to the clippers games? >>ly sits courtside to heli. he said take this guy's call. i called her and said mrs. sterling, i'm very interested in buying your team. i'd love to come talk to you about it. i don't even know how i'm supposed to make a bid. she said, "you can give it to me over the phone here or why don't you come see me tomorrow." i said fine, and we set it up, and i flew down there to have dinner with her and i had a bunch of officers with me. >> rose: what do the the mean "a lot of offers with me?" different ways to structure the deal. >> different ways to structure

the deal. i didn't know what she was interested in. the lawyers said have a meeting here first, and i left all the offers in the briefcase. i pulled out a piece of paper. normally, i use my tablet for taking notes. i pulled out a piece of paper, because, she's an older lady. and her nephew starts teasing me, "where is the tablets? you're mr. electronics." and we talked about basketball, and how much she loves the clippers. and they kind of told me what was process was going to look like. >> rose: did anybody start talking about numbers yet? >> not in that first meeting. not in that first meeting. we started talking to some of her people, lawyers and bankers, and they structured the process, and gave us a bit of a sense that this wasn't going to be a cheap deal. and i just decided to cancel everything i had and stay in l.a. for the week. and i didn't leave until the deal was signed. >> rose: all right. you paid $2 billion. some people think that's too high. you think that was what? >> i think it will be-- i own

microsoft stock and i own an index fund. i do think -- >> an s&p index fund? >> an s&p index fund. it's a global index fund and i buy indexes from around the world, so think of it as a global index fund. i do think my investment in the clirpz will be as good a return? i believe it will be and i believe it has less downside than anything you buy. if you compare it to tech stocks-- it's got real earnings. it's got a guaranteed position. compare it to an index fund. we'll make money, make profit on that. will it appreciate? well, the next guy that buys this team-- and probably when i die is going to buy it with stock. and as long as the s&p index goes up, people love l.a. not just american buyers. if anybody 30 years from now, you know, you could be talking about buyers from anywhere in the world. >> rose: it's warm weather, it's hollywood, it's california. >> it's a good asset.

it's beachfront in the n.b.a. >> rose: you have beachfront property independent n.b.a. why did you want beachfront property in the n.b.a.? why did you want to 53 a team? the conventional wisdom is one more rich man who wants a toy. >> yes. look, that's an element of it. everybody who gets involved better love the game. it's sill tow own an n.b.a. team or any other sports franchise if you don't love it. why? why? you have to have some passion about it. you will get some level of abuse, your team wins, your team loses, you trade guys . >> rose: why you? >> i love basketball. i like the speed of the game. i like the action. i like the fact that every player has to make a decision about something, unlike other sports where things are a little more scripted. i just think it's great. >> rose: so one of the first things you do after owning the team is go to doc rivers and say, "i've got your contract here, doc. let's start all over."

>> not quite like that. doc had been in discussion with the folks who had been assigned to run the team -- >> to extend his contract. >> he had been in those discussions. but, of course, they were installed by the n.b.a.-- dick parsons who used to run time warner-- they don't really want to make long-term decisions but the discussions had gotten started. doc and i had gotten to know each other. we didn't talk about the team. until i took ownership we were not allowed to talk about the team. i knew he would like to make a longer term commitment and we worked it out actually pretty quickly. >> rose: let me talk about a friend of yourself, paul allen, co-owner the of the mieches. his team won the super bowl, and here's what he said-- and i interviewed him and we talked about this. he seemed to have a good philosophy. he's involved in the big decisions but he has his guy run it. he's not trying to act like he's

the general manager or the coach. is that a model that you see for yourself? >> i do in fact. i mean, if you look at who's trained me as an owner, i've been talking to paul about owning an n.b.a. team for 25 years, about when he bought the blaze glers he has one. >> he has one, but he's been telling me it's good and he tells me how he does it and what his formula is. when & who else trained me? my neighbor, who worked for paul, pete carroll. he said if you want to come down and hear from john schneider, how we do it here at the seahawks, we'd be theep tell you. they eexpowz a philosophy that is essentially the same philosophy you just puted for that paul has. i said that's a good role mod toll copy. they won a championship. that's pretty good. in football, that's pretty darn good. >> rose: what about sterling? have you talked to him? >> during the process i really worked with shelly steriling. >> rose: right, the wife. >> yeah, and one occasion, as was chronicled on some of the

tabloids . >> rose: everywhere. >> digo to visit him. and have a chance to see if we could maybe get things done without the lawsuit part. perfectly pleasant meeting but nothing happened. and, you know, so-- the sale concluded -- we absolutely -- >> she had the right to sell it. >> she prevailed in court and then we crowed the deal. >> rose: he has no interest in in at all. you own 100%. >> 100%. >> rose: looking at sports today, thinking obviously the questions of domestic abuse in the nfl. questions of ownership here with-- is there a problem here in terms of the way we approach the adulation of sports stars and how we pay them and not whether that shouldn't happen but whether we need something else here to make sure that these kinds of things-- because of who they are and the public attention they draw? >> i'm a huge believer in the positive power of sport.

whether you wind up playing it professionally or not, it's hugely valuable to people being part of a team. >> collaboration and team work. >> and the elite players, the people who turn inspirational are, inspirational in more ways than we can talk about. i don't think that's a bad thing. statistically, not everybody is going to be necessarily exactly the person that any warrant would want their kid to be. it's just going to be a statistical truism, and the question is how do you deal with the fact that the people whose job sort of involves inspiring people and yet may not be perfect role models. i know the nfl is trying to address that. it's going to happen. i don't think it takes away from the fundamental value of sports as an inspiration to kids to perform, to achieve, to collaborate. >> rose: but sports leaders have a responsibility because of all the things you just said. >>, of course, they do, of course, they do. >> rose: they ought to be on the cutting edge of being most

alert and attentive to those social issues. >> look what adam silver did on behalf of the n.b.a. in that case it wasn't a player, but a senior person in the sport, and-- and said this is not okay. >> and suspended from baseball for life. >> for life. >> rose: from basketball for life. >> it's not okay. i think that is excellent. but that kind of decisiveness is hard to show, and you just have to say adam silver did a great job. >> rose: if you hadn't done this, what might you have done? you teach at stanford. that's two days a week. >> yeah, no, it's two days a week. it's a small thing, and actually, my class is now done glu taught leadership, which i want to get to in a minute. >> di. and i enjoyed the heck out of it. obviously, i have more free time. i love to play golf. that's my competitive juice. >> rose: i heard you went off and got a bunch of lessons, too? >> i did. i got a few lessons. that's useful. >> rose: if i were you, i would have bought a pro for a

year. that's what i would have done if i was worth your money. >> i went down for two afternoons. that felt like a big deal for me. >> rose: you want to be a winner. >> there are three things-- there are three things i would see my primarily involved in. number one would be owning the clippers. n.t.s.b. full time. number two another would be to seek a contribution. but you have to ask the the questions and understand. i think there are enough things that aren't functional in our government that somebody who is not a politician might have a role to play. so i'm sort of working my way through that. and number three, i'm obviously a tech investor. i'm not an angel. i don't do small things, but i do own a big chunk of microsoft. >> rose: you own the biggest chunk there is. >> i do. not an index fund. i do. >> rose: the biggest chunkue own more than bill does, for example. >> exactly. >> rose: when you look at microsoft, and when you-- it

tell me how you got there. >> to microsoft? >> rose: yeah. >> i met bill gates when we were sophomores in college. we were friends at harvard. >> rose: roommates? >> no, down the hall, down the hall our sophomore year. bill started microsoft with paul allen. >> rose: in albuquerque. >> in albuquerque, new mexico. they moved back to seattle. i graduated from harvard. bill didn't, he dropped out, obviously, to do microsoft. >> rose: they gave him an honorary degree later. >> they did. i stayed in touch with bill, 21 visit him at albuquerque and i was back in business. >> they said we need a technology guy, too bad you don't have a twin. i called him back, and decided i would drop out and she if things didn't work out-- glfs this the first year of business school? >> the end of my first year.

i finished the first year. and moved to seattle -- >> how many employees when you signed on? >> 30 people. >> rose: 30 people. >> 30 people, revenue for the the full fiscal year before i joined was $2.5 million. >> rose: and they allowed you to own 10% of the stock at that time? >> i came in, the company wasn't even a corporation. it was a partnership. and what i really got was a profit share. 10% of the growth in profits over 1979. that was my deal! and we incorporated the business a year later and we translated that into a founding interest-- founding interest in the corporation of 8.75%. >> rose: if you're writing a novel, describe paul allen on the one hand and bill gates on the other hand and steve balmer on the third hand. who are these three guys? >> paul is a very smart, very

curious guy, very creative guy. he's sor of an idea firer. you know, sort of ignights ide ideas. bill is as good a brain as you'll ever find. he processes everything. he can store lots of information in his head. he has great kind of sense of, you know, competing and competitive strategy and the like and is just a force of nature. and i would say i'm more like a locomotive. the engine that just turns and keeps things moving. >> rose: at the time-- >> driving. >> rose: at the time you brought what to the couple? >> i was the business guy. >> rose: "we're going to make this a business." >> we're going to make it a business. >> rose: this is not simply that we have an operating system. >> we didn't have an operating system. when i started, charlie, we didn't have an operating system.

we had a product called the soft card. we didn't have an ms dos or windows or operating system. that came after i started. but the question was there was thrfs more to do than bill could do. hhe wanted to have time to focu. i came in to do the business stuff. we incorporated the business, hired new bookkeepers. i did all the recruiting for everybody for about three, four years. i convinced bill we could add people without going bankrupt. that was our first big fight. could i add people was i just there to bankrupt him. >> rose: is that the way he put it? >> steve, i didn't ask you to drop out to bankrupt this company. quote, unquote. >> rose: quote, unquote. >> pretty much, quote, unquote. and i could wear a tie, which that was uncommon. so i became the account representative on the ibm account when ibe then decided

they wanted to build eye computer shortly airfare started at microsoft. but my initial stuff was about finance. it was about human resources. it was about sales to ibm. and that's kind of what my bootstrap was. >> rose: i want from you an assessment of your time at microsoft, first before you became c.e.o. and then after c.e.o. give me if you were writing your last lecture about what i have done at mieches and what i intend-- microsoft, and what i intended to do, and what i learned from that experience. >> well, obviously, let's go to 30,000 feet and look down. >> rose: yeah. >> i was basically either top dog or the number two dog for most of 34 years where we went from nothing to $80 billion, from 30 people to 100,000, and from almost no profit to $28 billion of profit before tax. >> rose: pretty impressive.

>> i-- i am unique in this world, pretty much. and that's not even-- i'm not-- i'm not-- guys have done great work. bill gates, obviously, steve jobs, obviously. i mean, they were guys who you can just say well, they're amazing. but man, i wasn't just a passive participant on the road so i look at that body of work and say i feel really good. i don't distinguish in my mind very well-- quote-- before i became c.e.o. and after glu don't? >> no. for me that was an important point but there's before bill left and after bill left. there's before i got involved on the technical side in the early 80s. it's-- it's more of a body of work in my mind. and i feel good about it. now, with hindsight, are there things i'd do differently? , of course. >> rose: like what? >> come on, charlie, i probably would have started us doing hardware earlier so we could have been more effective in the phone business.

this is kind of like an i.q. test. should microsoft have a position in the phone business? the two most profitable companies -- we were the number one, most profitable company for a long time. two guys passed it and they both did it by making phones, apexpel samsung. i don't think software was the right they there, but the most profitable are apple, samsung, and microsoft. do i wish we had done that sooner? , of course, i do. >> rose: then why didn't you? >> when the name of your company is microsoft and your formula works -- our formula was working. we were software guys. bill gates told paul allen when paul first wanted to do hardware back in the 70s, "we are software guys." for us it was kind of a religious transformation. you could say we always had a little hardware. we had a mouse, bee did the x-box, but the big step was doing the surface. we bought nokia after, that but

the big step was doing surface. i love our partners. i love hp, dell, lenovo and the like, but there are things you can do and you can be more complete in your vision. your feedback loop is tighter. customers are telling you what they like and don't like much more quickly. i don't regret our journey and i don't regret the fact we're tremendously profitable by making operating software for p.c.ss. but relative to new form factors-- like the phone was new to us-- i should have moved us faster. >> rose: can you make this awrpt because your culture was about software, your dedication was software, software was what brought you there. >> absolutely. >> rose: so, therefore, software-- >> the thing you have to understand is software is also the magic in the hardware. >> rose: i thand. >> i get that. it's not like you abandon software -- >> i didn't say abandon-- >> how do you make it and address dres is it and make it

beautiful. you don't have to. it is highly advantageous, particularly in these very small form factors. it's highly advantageous to do the hardware, too. it's not required. samsung doesn't make the android operating system. it comes through google, and google tries to monetize through searches. in most businesses today-- this is a business school lesson-- most businesses today are trying to become more direct with their customers. that's a theme on the internet. we were building software to sell the hardware guys who were selling to are taylors to sell to consumers. that is not very direct. the feedback loop from our innovation to that customer had two layers at least of people who wanted to change it and morph it. apple built the hardware, built the stores, they were direct. there was not two layers between them and their customers. samsung built the hardware. they basically took over android from google. they built buildeverything. that was their experience.

indirection, tough. in this century, people are learning to be very direct with their products. >> rose: someone told me that yahoo had a chance to buy google early on. because larry wanted to go back to business school. >> that right. >> rose: this is what i heard. >> i know the price. i think the price was a billion bucks. >> rose: that's right. they wanted $1 billion, larry and sergei-- whoever the venture capital people were. and i'm told that they offered him like $800 million. >> i've heard the same story. >> rose: and they said we want a billion. we want a billion. that's our price. and they said no. now, there are a thousand stories of like that in the history of capitalism. did you have a chance to buy goog? >> no. >> rose: did you never look at it? >> we never did. >> rose: here's what always amazed me about microsoft eye know a nijo smidgen about techny

and everything else. you guys have been sitting on a ton of money, a ton of money pup cooch bought things. you didn't buy that many big things. >> buying big things is hard, okay. buying big things that are expensive requires real thought. buying things cambridge can be a distraction. you have to know what you're doing. we made more runs at things. we took a run at sab-- >> business software company in europe. >> exactly, and because of our issues with the european competition commission, we backed away, but we spent a lot of time on that. we certainly made a big run at yahoo, we couldn't agree on price. >> rose: that was you after bill left. >> was it after he left? i was c.e.o. but still was still with the company. >> rose: he hadn't totally devoted himself-- you made a $35

billion offer as i remember. >> yeah, sounds about right. we made a $33 a share offer, yeah, about $35 billion, exactly right. they wanted-- i don't know what they really wanted. they said they wanted 40 and i don't even they would have taken 36, 37. >> rose: you reached your limit of what you thought you were willing to pay. >> i was willing to go three xx. and i said you can get me to do something beyond the decimal point but i'm not going past 3 point something, something. in my model, you have to be disciplined when you're looking to spend a lot of money. you have to be. >> rose: is this unfair to microsoft? you guys were ahead of the game on many things-- tablets, even search-- even speech technology-- a whole range of things. you were there pup weren't dumb. you had the best computer scientists because you were the big, successful-- >> still are. >> rose: still are. but you didn't-- >> charlie we didn't make the

hardware. it's hard for people to understand just how profound that is. you have to have a way to go to market. you have to have a way to make money. you have to have a way to get a feedback loop with the customers by being direct. speech technology, what is it? it's a fundamental part of a phone. of course. touch technology, pen technology. these are fundamental parts of hardware and we were going through many layers of indirection. and the software had to flourish through the lens-- where did we get vision technology right? with our connect hardware which is part of x-box. >> rose: i got you, i got you. i hear you-- the lesson here subetter have connection to your customers so you get the kind of feedback so that you can see where the reality of the world is and what's at the cutting edge. >> yes. i recently really got-- went through this. i was doing a deposition for a case that microsoft is still involved in, but it was about something-- i don't want to go through the details. but i had to go back then in the

deposition. the lawyers are showing me all these memos about microsoft and mobile technology back 25 years. and you read through them, and you say, boy, we really knew what was important, and we never found a way to really get into the loop. there was one thing we missed technologically-- all of our brilliant people-- bill gates-- we missed one thing. we loved pens. turns out the world right now will say the finger is even more important than the pen asab input device. the pen will be important but the finger was more important. and apple got that right. that's a very powerful notion. low-cost processors and the finger. a lot of money has been made on that with smartphones. >> rose: if i ask this question, why did steve jobs get it, you know, and gates and ballmer didn't get it? >> might be many reasons. might be many reasons. a better than b-- blah, blah,

blah. whons. i can't remark about all of them but i'll give you a fulm one. apple was born asab integrated hardware and software company. they were going to try this different than we did. they got it right at the first pass. thaour fundamental characteristc was get to the market, get the feedback and improve. that was something said about mieft, we don't get it right until the third version. we had no hardware and software muscle until we really said we're going into it with surface and the phones. now our company actually has a hardware and a software muscle, and if it takes integrated information across that boundary, alle was going to get there. they were born that way. we were born on the software side -- >> you're on your way now is what you seem to be saying.

>> i own the stock, charlie. cut me open and it says microsoft all the way through. >> rose: you don't want blind faith. you have more at stake than anybody. >> there are two fundamental capabilities which are new-- my stanford business school class, one of our seven major topics was just called "capabilities." how do companies build new muscle? i call it getting in the weight room. microsoft, we built-- we had to build muscle not just in software, which is where we started. we've now had to build muscle in the cloud, and we're one of only three or four, five companies in the world who have cloud muscle. we've had to build muscle in hardware. we're now only one of three, four five companies that really have any muscle furc will, in consumer hardware, i mean, after apple and samsung. who cels really trying to do these things? and maybe facebook google, maybe goog, we'll see. but you gotta have capable. if you don't have capable, you can't execute.

we have the right capabilities. we've got genius people. we have incredible cash flow that gives us permission to do things, to get into new areas. the company needs to moveed for, not just to buy things. the company needs to build things. and i think in the last six years, i would call the last six years the best-- probably six of my best years contributing to microsoft. >> rose: you did more value-added stuff to microsoft in the last six years than you did in the first eight years or even your previous-- >> if you go-- the best work probably i did was between '08y and '86. take out '08y and '86 and my next best years would be the last. we developed hardware capability. we developed cloud capability. we developed machine learning capability through our work bing. we grew our profits. we did all of that.

now, we didn't do phones, but '08-- when does iphone start? '07, i think. we were behind the 8 ball, but some of the work i think was my best work at microsoft were probably those first six years and those last six years. >> rose: what would be the thing in the last six years, finally getting into phone-- >> we got gocloud. we didn't have machine learning -- >> look at what jeff basisose did? he started out with e-commerce, and look what he has now. >> what does he have now? i don't know what to say about amazon. i like amazon, nice company. >> rose: they're in the cloud. >> they make no money, charlie. in my world, you're not a real business until you make some money. i have a hard time with businesses that don't make money at some point. i get it if you don't make money for two or three years but amazon is what, 21 years old and not making money. >> rose: obviously they have enough stockholders that think highly of what they're doing. >> and bravo to them.

>> rose: bravo to them. >> but i don't know when they'll make money, and if i was a shareholder-- it's an expensive company. $150 billion almost. eventually, if you're worth $150 billion, eventually somebody thinks you're going to make $15 billion pretax, and they make about zero. and there's a big big swrab between 0 and 13. >> rose: do they say plow back, plow back, plow back? look at the enterprise system they have built. >> they have built capability. i will give that you. i think one capable every business is expected to have is the capability to make money. that requires a certain kind of discipline. a certain kind of mindset. and ultimately, if you don't have the capability -- >> and you're not sure it's there. >> i don't know. look, they're our neighbors. i like the people. they're fine. but as a businessman, if you ask

me what i'm proud of, i'm proud of the fact they made $2anist billion under my watch as c.e.o. and i know in our industry, only product matters to people, and product is everything in the long run. but product that makes money is important. >> rose: but what about this, some argue. when you took over as c.e.o., the market cap was what? >> 500 something. 600, maybe. >> rose: and when you lft as c.e.o., what was it? >> 200 something. >> rose: $300 billion in market cap? >> gone. >> rose: come on! >> that's a silly twimeasure a c.e.o. >> rose: is it really? >> very sill gle why is that silly? >> the market was in a froth. i took over at a time-- you take -- >> it was riding high. it was riding high. >> take any company that he was considered cool at the time-- g.e., microsoft-- it doesn't dnt matter who. the market was silly. and if you use the market as your measure of success, you

will do silly things. the truth is, our profit tripled in that same period of time. our profit went from about $9 billion to $28 billion during this -- >> but why don't you think the market appreciated that? >> it was too high to start, and it got too low -- >> you mean the the p/e was too high. >> the pslrks e was way too high. the p/e got low because people didn't know if i was making good investments, or things that were folly when i left. about the time i left we had two things happen. we had an activist investor, who said if-- at the same time, saatchi takes over as c.e.o., and people want to give the company a fresh look which is a great thing.

it's a great thing. one of the advantages of new oons and i actually do think at some point in time, for any organization, being fresh and having people give a fresh look and think about things and a new c.e.o. was a great chance to do that. i actually think it's right. >> rose: people say -- in terms of the management class-- you come in and you have about 10 years. and you should, you know, bring somebody else? else. >> i had 34. i had 34, and it was great for me, charlie. >> rose: it sure as hell was. >> actually, for anybody who assesses businesses by the numbers it was great for people who own our stock. >would. >> rose: would you rather microsoft's hand, google's hand, or amion's.

>> definitely not amazon's? if you're-- again, it depends what your time frame is. if your time frame is one year, i'd probably take apple because they have the most earnings. if your time frame is 30 years, then i'd probably take microsoft and google. and i'd pick microsoft over google because i am completely non-objective. >> rose: what did the decision about nokia have to do with you leaving microsoft? >> well, it was-- i had looked at buying phone companies for a few years. let's just put it that way. >> rose: you understood you needed hardware. >> yes, and i started surface -- >> surface say tablet? >> it's a p.g.a. that's a tablet or tablet that's a p.c. i was doing the microsoft surface product. i initiated that with some discomfort, i would say, from our people. we kept it very quiet. even the leadership, who i

forced to start it, didn't love it. the board wasn't sure about it but went along. i was sure we needed to go in this direction probably 2009, 2010. that's when we kicked all this off. but we needed to go farther and faster, particularly in phones. so the first half of 2013, with the board's knowledge, i was having discussions with nokia about possible acquisition. they were already our partner. if you looked at it at the time, 88, 89% of windows phones were being produced by nokia. i thought the best thing to do for the partnership, strengthen our position was to put the companies all the way together as opposed to having this kind of partnership. i walked the board through my thinking. they said go ahead and talk to them. we had a board set of discussions. we came to a meeting that winded up being a little tumultuous.

the details are probably not that important but the bored winded up being tumultuous. there were some weird dynamics, let me just say, around it. it wasn't just about the mertheit of the argument. we didn't get to the mer. >> rose: what was the other dynamic? >> not worth going through. >> rose: but was it you and bill? >> really not worth going through. we had a tumultuous argument about basically the centerpoint of the future. we are going to be software guys for our lives but unless we innovate across that boundary, that was important for me. i had spent four, five years coming to the point of view was my number one mistake was i didn't get there sooner, charlie. and i basically said this is really important. while the board wound up ultimately agreeing with that -- >> they bought nokia. >> they bought nokia. by that time they had heard from my i will probably go whether you buy or not. >> rose: you already said that. >> yes. >> rose: why did you say that

gifelt if we buy it, we'd had enough negative attention between us it would be better off giving it to a new leader, if the board wanted to buy it. and if the board didn't want to buy it, i wanted support and if you don't have it, sometimes it's time to go. they bought it knowing i would probably say this is a good time to hand off the leadership, not just of nokia but the whole company to a new leader. >> rose: it sounds like everybody signed on to that idea. >> yeah. at that stage. if we hadn't had our tumultuous discussion, who knows? who knows? but we did. and then i said, look, there's an advantage in this next generation of microsoft, my replacement calls it cloud first, mobile first. i think you can also call it devices and services because those are our new capabilities--

in this new world, let the new leader build this from the the get-go. saatchi had helped-- he was one of the absolute leaders below me building out our cloud footprint in every sense. he had work oned bing-- we had a couple of guys i loved. sacha and at least one other guy who i loved spernlly. we had good external candidates. but boards go through weird dynamics but when we got to the final decision, saatchi was the only candidate left and my favorite candidate at that stage. >> rose: everybody wants to know this. how much of this had to do with when you became c.e.o.-- what the relationship was between you and bill? everybody wants to know that. >> it's a complicated thing. i think everybody-- look, 14

years ago-- almost 15 years ago-- i took over as c.e.o. bill had asked me to become c.e.o. and i said, "do you really want me to be c.e.o.?" he had me president at the time and i said i was perfectly happy being president. i said do you really want me to be c.e.o.? and he said i really want you to be c.e.o. and we spent a year arguing. i knew how to be his deputy, and he knew how to be my boss but he said, no, edes like to switch that. of course, i didn't know how to be his boss and he didn't know how to be my deputy. we got through what i could call a very tumultuous year in 2000 and 2001. and we sort of settled things down but the mo-jo was never quite the same. if you look at it, the would probably you probably the least productive years for me at microsoft were those first few

years as c.e.o. bill and i were out of rhythm so the product direction was a little out of rhythm. that was when he did our longhorn and vista releases of windows. our least successful time was that period. both of us did perhaps our least-good work. >> rose: it was a beginning probably of a lot of factors. we never got it right, and then 2006, six years later, bill announced he would be leaving. then it was up to you. we had a two-year period where he transitioned. >> rose: was this part of a different-- did you see things differently? we now know how you felt about the idea of connection to the consumers, about anniversaries, about having a phone.

could you live together and have two separate philosophies, two separate world views? >> i think that would be over-icism liifying it, also. it depends on the the year tdependss where you-- our partnership i think most people would say was among the most successful in history. look at the business, look at the profit straem, look for both. it wasn't the same high-level performance buwasy -- >> could you view it as a complementary relationship? in other words, his strengths were-- complementing your weakness, whatever they may be, relatively, and your strength complemented his. when it was workingality its best, that's the way it was. it didn't work as well after we flipped things around, i would say. that's that's when we did-- that

was the early 2000s. that was not our best work. i think i have done some of my best work after bill left exphrkt 20 years before that, we did a great job together. learn we had a tough year in 80-81, too. >> rose: what was that? was that-- >> hiring people, bankrupt the company. another-- we had a couple of tough adjustments, but we figured it out. >> rose: my next to last question. did the antitrust suit throw you guys off your game? >> it certainly wasn't helpful. i think it was far more impact, on bill than he of me. i moon, the whole company, of course, got some level of distraction by it. new rules. the european commission.

and it was a significant distraction, certainly to the company. no ye about that. i think emotionally, it impacted bill more than me. and i probably would write it down as one reason why he wanted to flip things around and have me take over as c.e.o. if you look at the timing, it was not surprising it was plus or minus the judge ordered us to be broken up. >> rose: that's why i brought it up. how old are you? >> 58. >> rose: you're 58 years old. this is great. you're 58 years old. you're the largest stock shoulder of a huge and profitable company, which gives you the opportunity to do a thousand different things. you just achieved a goal that you have thought about for a long time and made efforts. all of a sudden-- you didn't just get a basketball team. >> i got a great basketball team! >> rose: in a place that you

love. >> absolutely. i'm fired glu up. >> rose: what is there not to love about being steve ballmer? >> i'm happy. i'm happy with the fact that not everything-- i love being at microsoft, and not everything was known about how we were going to do "x," "y," and "z," but i knew what i was doing every day. i have total free will. i get to decide completely how to spend my time. i get to decide whatever it's going to be that really get me charged up, whether civic or not. that free well, that to me-- it's scary, but it excites me. >> rose: it is this someare able to do it and some are the not-- it's something we owe ourselves. regardless of people not at your income level. just the chance to be able to look back. we have one time at life, one time.

and many of us get on-- i have an image of you lying in bed with your surface. >> clearly, it wasn't an ipad. >> it was a surface! yeah! by microsoft! >> rose: i'll bet you, you have an ipad somewhere, iphone somewhere? >> i do not. >> rose: you have no iphone. >> i do not! my children do not. my wife does not. >> rose: and the clippers will not? >> the clippers individually are allowed to do whatever they want to do. >> rose: but the team? >> anything the team buys? come ocharlie! we're going to buy microsoft are my money! >> rose: there is this finally, there is an image of you in bed or lying on top of the bed-- this-- >> i whan you're going to say? >> rose: here he is, all 6'5" of him laying on the bed with his surface on his chest watch because he fell in love with a

cbs show. >> a., i'm 5'11". i used to be over six feet. i've shrunk. yeah, i love that show. and it was funny because i -- >> "the good wife." >> right. about christmastime, i was out of day-to-day management. it was time to start the transition -- >> you didn't have any meetings you needed to go to. >> i didn't want to start anything new for what might be a month. except i started the "good life." i watched them all. >> rose: there was a piece in the "new yorker" magazine saying it's one great show. >> it is. >> rose: thank you very much. much success. if i'm in l.a., aye come watch the clippers. >> e-mail me. >> rose: steve ballmer for the hour.

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