We sit down with Steve Ballmer, the legendary former Microsoft CEO and owner of the LA Clippers, for an epic conversation covering his 34 years at Microsoft. Steve listened to our Microsoft episodes and had some thoughts to share — and boy, did he deliver. Steve takes us point-by-point through the original IBM DOS deal that started everything, how he built Microsoft's enterprise business from scratch, and offers his candid reflections on missing mobile and search. We also cover the story behind “developers, developers, developers”, the complexities of his relationship with Bill Gates (including a year where they didn't speak), and why he ultimately decided to step down as CEO. Plus, we learn why Steve has held onto his Microsoft stock through it all — giving him arguably the best investment track record in the world over the last 10 years with his net worth growing from $20B to $130B since leaving. And of course, we couldn't resist also talking about his other passion: the Clippers and Intuit Dome. Hit play and get ready to experience the patented Steve Ballmer energy and fun on full display!Sponsors:Many thanks to our fantastic Summer ‘25 Season partners:J.P. Morgan PaymentsStatsigVercelAnthropicLinks:Join us July 15 at Radio City!More Acquired:Get email updates with hints on next episode and follow-ups from recent episodesJoin the SlackSubscribe to ACQ2Check out the latest swag in the ACQ Merch Store!Note: Acquired hosts and guests may hold assets discussed in this episode. This podcast is not investment advice, and is intended for informational and entertainment purposes only. You should do your own research and make your own independent decisions when considering any financial transactions.
Chapter 1: What is the significance of the Clippers jersey?
All right, so David, Steve gave us the signed Clippers jersey with the name acquired on it. There's only one jersey. What are we going to do about this?
Should we rock, paper, scissors for it? Well, you know what? No, no. You keep it. There's no Seattle basketball team. Keep it there.
All right. All right. It'll go in Acquired Museum North. Great. Perfect. All right. Let's do it. Let's do it.
Who got the truth? Is it you? Is it you? Is it you? Who got the truth now?
Welcome to episode one of the summer 2025 season of Acquired, the podcast about great companies and the stories and playbooks behind them. I'm Ben Gilbert.
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Chapter 2: How did Steve Ballmer become a top investor?
I'm David Rosenthal.
And we are your hosts. Steve Ballmer is, among other things, arguably the very best investor of the last 20 years. It sounds a little funny to frame it that way, but here are the numbers. In 2014, when Steve left Microsoft, his net worth was $20 billion, almost entirely comprised of Microsoft stock. Today, 11 years later, it is a staggering $130 billion, according to Forbes.
It is incredibly rare to reach this stratospheric level when you are A, not the founder of the company, and B, no longer CEO or even employed by the company. And all of this comes from just one investment decision. Just keep holding substantially all of his Microsoft stock.
Incredible. We chat about it with him in the conversation to come.
Now, as most of you know, we did a big two-part Microsoft series last year on the history of the company up through when Steve transitioned the CEO role to Satya Nadella. Steve listened to those episodes, and he had some thoughts that he wanted to share with his recollection of how things went down. You know, things like what made Microsoft so fabulously successful, what his missteps were as CEO.
We wanted to share that as a recorded conversation with all of you. So we set up our cameras and our mics at his office, his philanthropy office, Ballmer Group in Bellevue, Washington, and we pressed record. So we'll go into everything from the misses on mobile, search, social, the huge wins in enterprise and cloud. Steve also reflects on his business lessons learned.
He goes into why he stepped down as CEO, when he did, and he talks about his relationship with Bill Gates over the years. And of course, we had to talk with him a little bit about the Clippers and the new arena that Steve built and personally owns, too.
Yeah, Intuit Dome. Incredible place. A cathedral of basketball, as Steve would put it.
Listeners, if you want to know every time an episode drops, check out our email list. It's the only place where we will share a hint of what our next episode will be. We'll share episode corrections, updates, and little tidbits that we learn from all of you about previous episodes. Come join the Slack to talk about this with us and the whole Acquired community.
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Chapter 3: What lessons did Ballmer learn from his time at Microsoft?
And that's just one use case. Developers across industries traditionally had to choose between the innovation and flexibility of a fintech and the security and scale of a global bank. JP Morgan Payments is on a mission to eliminate that choice and offer you both.
If you're a developer working within a fintech or looking to embed payments within your software, head on over to jpmorgan.com slash acquired to learn more about their ever-growing list of APIs. And if any listeners remember the meetup that we did after our Chase Center show, we're actually going to do it again. We're planning another meetup the day after Radio City on the 16th.
We will share more details soon in the Slack community, but wanted to give folks a heads up in case you were planning for travel Evening of July 16th, a great meetup with our friends at JPMorgan Payments.
I pick up the Wall Street Journal and I read that IBM's divorcing us.
And so what does that mean? Walking away from the OS2 collaboration? Uh-huh.
Huh. Basically, they kicked you out, kicked Microsoft out, said we're taking OS 2 in-house.
Exactly. Exactly.
And so you're sitting there. Windows isn't powerful Windows yet. Windows is this fledgling kind of idea.
We still had something called the 640K barrier. You couldn't speak to more than 640K of memory. We didn't break the 640K barrier. Until I think Windows 3.1, which I want to say was 91 or 92.
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Chapter 4: How did Microsoft become an enterprise business?
Is it fair to call services a third? And by my estimates, their profit dollars from services have now eclipsed iPhone hardware profit.
I consider it just part of the trick. If you go by your platform definition, it's part of the platform. I call it really a trick. They've just monetized it. It's kind of like us adding things to Office and redoing the EA and It's a monetization model. It's an additional monetization model, but it's not a new locomotive.
A locomotive is the business that can pull the cabooses, and the locomotive remains the phone. The services business would go away pretty quick if the phone volume fell apart. So I'm going to call. It's additional. Very important. but not uncorrelated the way that AWS and- No. I get the sense. And I think Mac versus everything iOS is also uncorrelated. Yeah.
So I get the sense you really wanted three tricks.
Abso-fricking-lutely.
Absolutely.
What's the one that eats you up inside? Which one do you think you were closest to getting that you didn't get? Not social. Okay. Forget social. It doesn't feel Microsoft-y.
You wanted to buy Facebook. I'm going to tell you why. It's either... Sure, because we were still on the Paul Allen strategy. We've got to do all the software that these things will ever need. I mean, it was still of the mindset that said, and there's an arrogance to that, and there's a hunger to that that says, there's just nothing we shouldn't do. And I don't think that was a good mindset by...
The time I took over, and yet it was still sort of baked in with Bill, baked in with me, and I think that was a mistake. Social doesn't get you. This is like asking me to pick between negative children, I don't know. But the phone, because it was a client-side device, or search, because it was a productivity tool. Microsoft, both of those were Microsoft big businesses. Yep.
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Chapter 5: What was the original IBM DOS deal?
Chi Lu is, do you guys know the story of Chi Lu at Microsoft? Chi Lu is one of the most pivotal, pivotal things at Microsoft. Okay, why? I knew he was important, but tell us the story. Pivotal, in a way you may not even know. First of all, brilliant guy, great guy. So Chi's talking about leaving Yahoo. He's at Yahoo at the time.
And Chi, I think, went to graduate school with Harry Shum, who had been in Microsoft Research, and Harry was now working on Search, and he was working for Satya, who was running Bing.
And Harry says. That's an amazing sentence all in itself. Oh, Satya, the guy who was running Bing. He was running Bing.
And Harry says, Chi's a genius. We've got to hire Chi. I don't know if Chi really wants to work.
We got to pick Chi's brain. We just have to learn from Chi Lu.
Okay, so Satya, me, Harry fly down to California and we meet with Chi Lu. And we talked to Chi and Chi's brilliant. We're learning all this stuff about Chi and Chi leaves the room. God, there's a lot. I don't know who throws the idea out at first. Maybe Satya. We should hire Chi and I should work for him. Whoa. So Harry and Harry was all in. Harry worked for Satya who worked for Chi. No.
We flipped it around. So you flipped the whole reporting structure to hire Chi in the room. After Chi walked, we talked for about 15 minutes. And then Harry calls Chi and said, do you mind coming back? Wow. Wow. I forget where Chi was thinking he'd take his next job. He had a next job in mind. Maybe it was with Baidu. I can't remember. Someplace.
Wow. So then what did he do at Microsoft that made him so impactful?
It's the story I just told you. It's what it told me about Satya. I mean, I love Satya. We were giving him more and more responsibilities anyway. But it told me this guy will do the right thing for the company. He'll prioritize that. He doesn't have an ego that gets in the way. And she did great work. I mean, she knew about search. She could bring in a different – The product got a lot better.
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