Bill Gates

And it is still true that it's totally insane to evaluate how did someone do with an asset that they were sort of forced into buying at 75x earnings. Yep. So at the end of his term, it was 14x. The P.E. multiple went from 75x to 14x. The market cap when he was announced went from $600 billion to when he left at $330 billion.

And it is still true that it's totally insane to evaluate how did someone do with an asset that they were sort of forced into buying at 75x earnings. Yep. So at the end of his term, it was 14x. The P.E. multiple went from 75x to 14x. The market cap when he was announced went from $600 billion to when he left at $330 billion.

A lot of that is basically the price-to-earnings multiple rationalizing in that first year. And then after it did that, the stock price was basically flat again. for his entire tenure, no matter how much the revenue or the profits grew. And so one crazy stat on this is you could have bought Microsoft in 2009 for 2.1 X annual revenue.

A lot of that is basically the price-to-earnings multiple rationalizing in that first year. And then after it did that, the stock price was basically flat again. for his entire tenure, no matter how much the revenue or the profits grew. And so one crazy stat on this is you could have bought Microsoft in 2009 for 2.1 X annual revenue.

Listeners are slight of hand here. We switched from earnings to revenue, but David, I thought that too. I was like 2009. Come on. In 2013, you could have bought Microsoft stock for three X revenue.

Listeners are slight of hand here. We switched from earnings to revenue, but David, I thought that too. I was like 2009. Come on. In 2013, you could have bought Microsoft stock for three X revenue.

Wow. And so the question is, why? Why did investors give Steve zero credit for any of this growth? Cut off that first year when the multiple was coming down. Why is it that effectively what happened from 2001 to 2014 is for any gains that they got in revenue or profits, it was offset by multiple compression coming down and saying the asset's still worth the same thing.

Wow. And so the question is, why? Why did investors give Steve zero credit for any of this growth? Cut off that first year when the multiple was coming down. Why is it that effectively what happened from 2001 to 2014 is for any gains that they got in revenue or profits, it was offset by multiple compression coming down and saying the asset's still worth the same thing.

One is, very legitimately, the investors had little belief in Microsoft's long-term relevance. Not the place for user excitement, not the place for developers. They doubted that there was real vision from leadership.

One is, very legitimately, the investors had little belief in Microsoft's long-term relevance. Not the place for user excitement, not the place for developers. They doubted that there was real vision from leadership.

I mean, you went from Gates, this guy who created it all, to someone that everyone was chalking up to be the sales and marketing guy, and there's the product strategies all over the place, and Windows isn't getting any more relevant. They're trying all these new things that are failing. Search passes you by, social passes you by, blah, blah, blah.

I mean, you went from Gates, this guy who created it all, to someone that everyone was chalking up to be the sales and marketing guy, and there's the product strategies all over the place, and Windows isn't getting any more relevant. They're trying all these new things that are failing. Search passes you by, social passes you by, blah, blah, blah.

But the interesting thing is investors basically didn't think Windows and Office businesses were sticky, and they were only valuing the newer bets, which was super wrong. Windows and Office have proven to be these ridiculously durable franchises generating more revenue today than ever.

But the interesting thing is investors basically didn't think Windows and Office businesses were sticky, and they were only valuing the newer bets, which was super wrong. Windows and Office have proven to be these ridiculously durable franchises generating more revenue today than ever.

So, I mean, it is ultimately on the CEO to help shareholders understand where the value is, but shareholders obviously did not price in the retention and growth within the existing Windows and Office customers through a new era of technology. I think people were just betting that Microsoft would lose it, and they didn't. They held on to these durable franchises.

So, I mean, it is ultimately on the CEO to help shareholders understand where the value is, but shareholders obviously did not price in the retention and growth within the existing Windows and Office customers through a new era of technology. I think people were just betting that Microsoft would lose it, and they didn't. They held on to these durable franchises.

Yeah. I mean, consumers had no idea what Microsoft's strategy was and neither did developers, so neither did investors.

Yeah. I mean, consumers had no idea what Microsoft's strategy was and neither did developers, so neither did investors.

Sort of, but they were probably like, what's going on in search and what's going on?

Sort of, but they were probably like, what's going on in search and what's going on?