How Steve Ballmer negotiated his deal with Microsoft to reach an $80 billion estate

  • 10

When Steve Ballmer joined Microsoft did not receive any action. Nor does it appear in the mythical photo of the first eleven workers of the company. Although he later climbed up and ended up picking up the baton from Bill Gates as CEO of Microsoft, Ballmer arrived in 1980 and is considered the thirtieth employee. But thanks to a quirk with his contract, he ended up getting 8% of Microsoft shares.

A master move that today has allowed him to be among the richest in the worldwith a fortune valued at more than 80,000 million dollars, according to Forbes magazine.

How Ballmer got 8.75% of Microsoft despite Paul Allen’s reluctance

Ballmer Gates

Steve Ballmer and Microsoft co-founder Paul Allen had their differences, but as recognized Ballmer himself after Allen’s death in 2018, was a “friend, teacher and mentor”. The conflict between the two Microsoft personalities had one of its most intense episodes when Bill Gates offered 8.75% of Microsoft stock to Ballmer.

Paul Allen: the Microsoft co-founder who quarreled with Gates, beat cancer and plays "almost" as Hendrix

According to Paul Allen himself in his book ‘Idea Man: A Memoir by the Co-founder of Microsoft’, the initial idea was to offer him up to 5% of the company, because they were sure that Ballmer would not leave Stanford unless he had a percentage of shares.

However, Gates ended up offering him 8.75%, considerably more than Paul Allen had agreed. “Look, we have to have Steve. I’ll get the extra points back for me,” Gates said. A position that Allen accepted and exemplifies how Ballmer managed to get more stock than the Microsoft co-founders themselves had intended to give him.

That a person who joins a company so late gets such a high percentage is unusual. His initial position was “commercial manager”but he managed to negotiate his contract much better and ended up becoming one of the most relevant figures in the company.

Ballmer and Gates

Steve Ballmer it was Microsoft’s first non-technical signing. Gates and Allen needed immediate help and went for Ballmer, with a starting salary of $50,000, but also 10% of any profit growth he could generate.

However, in those years Microsoft began to grow like foam and that 10% of profits was not sustainable. And this is where the change of contract took place that has ended up making Ballmer one of the richest people in the world.

From Gates to Bezos passing through Ballmer: this is how the ranking of the richest in the technology industry has evolved

Gates had 64% and Allen 36%. But taking advantage of the growth, it was decided to change the structure of the company. Gates and Allen kept 84%, 8% went to investors and 8% was kept by Ballmer in exchange for giving up his agreement of 10% of the profits.

Ballmer Clippers

What in 1980 seemed acceptable conditions for Ballmer ended up becoming unsustainable due to the explosive growth of Microsoft. In 1986, with the IPO of Microsoft, Ballmer made a lump sum of $56 million.

Many years have passed since then, but Ballmer still holds about 4% of Microsoft shares.. With the current valuation of these actions, Ballmer has been climbing to the top of the richest in the world. All for knowing how to agree on ambitious but logical conditions at first and knowing how to adapt when there was a restructuring.

Image | Microsoft Sweden
In Xataka | Since the arrival of Satya Nadella, Microsoft has grown by 465%: when you get rid of atavisms to be something very different from what made you great

When Steve Ballmer joined Microsoft did not receive any action. Nor does it appear in the mythical photo of the…

When Steve Ballmer joined Microsoft did not receive any action. Nor does it appear in the mythical photo of the…

Leave a Reply

Your email address will not be published.