The question that made Bill Gates rethink what he wants Microsoft to become

 

A small tech company launched in Albuquerque, New Mexico, might never have become Microsoft, the global giant, if not for a question Warren Buffett posed to Bill Gates in the early 1990s.

Celebrating 25 years of friendship, Gates recently revealed the question Buffett asked him. "He asked `Hey, Microsoft is a small company, IBM is this huge com pany. What can you do better? W hy can't they beat you at the software game that you're playing?'" Gates said. 

That was several years before Microsoft would hit its peak as the largest company on the planet. (Adjusted for inflation, the company's 1999 valuation of $837 billion eclipses Apple's current market value by about $300 billion.) Throughout those early years, Gates and co -founder Paul Allen had spent much of their time thinking only about how to make the software as good as it can be. No one, Gates or Allen included, had really thought about focusing on gaining a competitive edge in the market.  Quickly, Gates started incorporating the idea into his thought process. "Every day I was thinking about, okay, what advantage do we have. What do we do?" he said. 

Microsoft gained an edge over competitors through easy-to-use interfaces in home computers, notably with its Windows operating system. It began tapping into a nontechnical customer base that other companies largely ignored. He and Buffett also began t a l ki ng more about t he ways finance related to the technology industry Gates was building with Microsoft.

"I didn't understand banking, why some get ahead and some don't," he said. "And so I found somebody whose model was rich enough that it helped me under stand things that I r e a l ly wa nt e d to know and we could laugh about things that were a surprise to us."

Even today, Gates said, the relationship he shares with Buffett is one built on curios ity -though oftentimes it's Gates doing the probing.