Five Startup Tips From Bill Gates

Note: This is an installment in the Iconic Advice series. Other installments include: Jeff Bezos, Steve Jobs, Mark Cuban, Richard Branson, Walt Disney, Mark Zuckerberg, Michael Dell and Larry Ellison.

Bill gatesFor more than 30-years, Bill Gates has been at the pinnacle of the software industry. Like Steve Jobs, Michael Dell and Larry Ellison, he is one of the few startup Founders who remained at the helm of their respective companies throughout their entire maturation process.

In addition, like Steve, Michael and Larry, Mr. Gates also failed to graduate from college. I explore this peculiar entrepreneurial career path in further detail in THIS entry.

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1. Great Startup Ideas Come From Everywhere

"At Microsoft there are lots of brilliant ideas but the image is that they all come from the top - I'm afraid that's not quite right." [Tweet this quote]

Much like political leaders, corporate executives are often given too much credit, as well as too much blame. Effective startup leaders allow ideas to percolate from within their company, rather than attempting to monopolize the ideation process. They also internalize their professional failures while externalizing their team’s successes.

2. One Of The Most Important Startup Skills

"The best way to prepare [to be a programmer] is to write programs, and to study great programs that other people have written. In my case, I went to the garbage cans at the Computer Science Center and fished out listings of their operating system." [Tweet this quote]

In Mark Suster’s recent talk at UC Santa Barbara, he advised his audience of entrepreneurial students to master two skills: selling and coding. Mark noted that even if an entrepreneur does not become a master developer, by simply understanding the software development process, they will be a more effective startup leader.

No one ever accused Bill of being a master programmer. However, his first-hand knowledge of how software is created, tested and commercialized facilitated his execution of Microsoft’s initial strategy, in which it leveraged its operating system to create a suite of business productivity solutions.

3. Frugal Is As Frugal Does

"Instead of buying airplanes and playing around like some of our competitors, we've rolled almost everything back into the company." [Tweet this quote]

Pie in the Face of Bill GatesGates, Ballmer and the rest of Microsoft’s executive team were extremely frugal, long past the company’s startup stage. This frugality was evidenced by the fact that everyone at Microsoft, even Gates, flew coach until well into the late 1990s.

As Bill’s profile heightened, flying commercial airlines became a security issue, which eventually outweighed the associated increase in travel costs. In 1997, Bill finally purchased a private jet. Ironically, a year later, he was hit in the face with a cream pie, ironically while exiting a commercial flight.

Microsoft was one of the first successful high-tech companies to not distribute its profits to shareholders. Bill believed that the cash which Microsoft generated would deliver a higher return to its shareholders if it were reinvested into the company’s operations, rather than distributed in the form of dividends. It was not until 2003 that Microsoft issued its first dividend.

4. Student Wakeup Call

"If you think your teacher is tough, wait until you get a boss. He doesn't have tenure." [Tweet this quote]

Despite not graduating from college, Bill has spoken to thousands of students during the past several decades. His advice is essentially, "buck up, it’s called work for a reason." During one college talk, Bill told the student audience, "Life is not divided into semesters. You don't get summers off and very few employers are interested in helping you find yourself." [Tweet this quote]

Bill’s advice reflects Microsoft’s hardnosed culture, which encourages internal competition and a ruthless pursuit of the truth. As noted in Core Values, the culture of your startup is entirely in your hands. Treasure it. Along with your cash, customers and employees, a healthy startup culture will prove to be one of your most precious assets. 

5. Banana IP

"Intellectual property has the shelf life of a banana." [Tweet this quote]

As described in IP Is Worthless To A Startup, most startups over estimate the value of their intellectual property. Unless your venture is focused on researching potential scientific breakthroughs, it is likely that your technology can be easily copied and your patents circumvented. Thus, focus on out-executing your competitors, rather than hoping you can thwart them in a courtroom.

Microsoft’s success is proof that the best technology is not required in order to dominate a market. High switching costs, massive distribution and ubiquitous mindshare have combined to maintain Microsoft’s market leadership, despite their glaring technological and usability shortcomings.

I am not suggesting you spurn product excellence. However, as you develop your Minimal Viable Product, heed Voltaire, who once said, "The perfect is the enemy of the good." Bill Gates has proven numerous times that "good, is good enough." 

Note: This is an installment in the Iconic Advice series. Other installments include: Jeff Bezos, Steve Jobs, Mark Cuban, Richard Branson, Walt Disney, Mark Zuckerberg, Michael Dell and Larry Ellison.

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John Greathouse is a Partner at Rincon Venture Partners, a venture capital firm investing in early stage, web-based businesses. Previously, John co-founded RevUpNet, a performance-based online marketing agency sold to Coull. During the prior twenty years, he held senior executive positions with several successful startups, spearheading transactions that generated more than $350 million of shareholder value, including an IPO and a multi-hundred-million-dollar acquisition.

John is a CPA and holds an M.B.A. from the Wharton School. He is a member of the University of California at Santa Barbara's Faculty where he teaches several entrepreneurial courses.

Note: All of my advice in this blog is that of a layman. I am not a lawyer and I never played one on TV. You should always assess the veracity of any third-party advice that might have far-reaching implications (be it legal, accounting, personnel, tax or otherwise) with your trusted professional of choice.

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