How Microsoft created over 10,000 millionaires
Microsoft's great success helped thousands of staff become Millionaires.
Microsoft Corporation is an American technology company headquartered in Redmond, Washington, that supports the invention, manufacturing, and licensing of goods and services related to computing. It was registered in New Mexico in 1976 after being formed the year before by two childhood friends.
Two Computer Geeks
Before Paul Allen and Bill Gates co-founded Microsoft, they were avid computer geeks in an age when access to computers was hard to come by. Allen and Gates even skipped high school classes to live and breathe in their school's computer room. Eventually, they hacked the school's computer and were caught, but instead of being expelled, they were offered unlimited computer time in exchange for helping to improve the school computer's performance.
With the help of partner Paul Gilbert, Gates and Allen ran their own small company, Traf-O-Data, while in high school and sold a computer to the city of Seattle for counting city traffic, according to ThoughtCo.
Bill Gates, Harvard Dropout
In 1973, Gates left Seattle to attend Harvard University as a pre-law student. However, Gates' first love never left him as he spent most of his time in Harvard's computer center, where he kept improving his programming skills. Soon Allen moved to Boston as well, working as a programmer and pressuring Gates to leave Harvard so they could work together full time on their projects. Gates was uncertain of what to do, but fate stepped in.
|Bill Gates, father of Microsoft. Photo: BBC.com|
The Birth of Microsoft
In January 1975, Allen read an article in Popular Electronics magazine about the Altair 8800 microcomputer and showed it to Gates. Gates called MITS, makers of the Altair, and offered his and Allen's services to write a version of the new BASIC programming language for the Altair.
After eight weeks, Allen and Gates demonstrated their program to MITS, which agreed to distribute and market the product under the name Altair BASIC. The deal inspired Gates and Allen to form their own software company. Thus, Microsoft was started on April 4, 1975 in Albuquerque, New Mexico—the home of MITS—with Gates as the first CEO.
When they started their software company, the two founders Bill Gates and Paul Allen would certainly not have thought that they were soon to run one of the largest companies in the world. The two founders’ meteoric rise, however, would not set in until the 1980s. That was when they began their collaboration with IBM. The company needed an operating system for its first major foray into the home computer business, and that was exactly what Microsoft provided. Gates and Allen received $186,000 from IBM for this deal and at the same time an entry into a glorious future.
Although the deal helped the company generate more and more money in the years that followed, it still chose to “give” shares to employees instead of a monetary bonus. What at the time sounded like a bad deal would, over the next few years, turn out to be a big lottery win for the employees.
How 10,000 Microsoft Employees Became Millionaires
When nobody was able to stop Microsoft’s steep rise in the late 1980s and early 1990s, the company’s share price jumped from one record high to the next. The special side effect: The shares which had previously been issued to employees as a bonus now had a value of several million and turned an estimated 10,000 employees into millionaires in the 1990s. Understandably, these employees increasingly started to leave the company to spend their well-earned money. But for Microsoft, this development resulted in an acute staffing problem. The top employees were leaving the company so quickly that more and more know-how was lost and the development of new projects was slowing down.
But instead of wasting their millions senselessly, Microsoft’s former employees spent their money on various things. There were employees who shared their wealth with their families, others donated the money to their former universities and one employee even used his bonus to buy the rights to the US National Bowling League.
Nowadays, Microsoft no longer issues quite as many stock options, so that only a few employees manage to become millionaires because of their stock bonus. This is bad for the employees, but also good for the company. This way, Microsoft no longer has to fear losing the majority of its workforce within a very short time.
Where the Name 'Microsoft' Came From
On July 29, 1975, Gates used the name "Micro-Soft"—which had been suggested by Allen—in a letter to Allen referring to their partnership. The name, a portmanteau of "microcomputer" and "software," was registered with the New Mexico secretary of state on Nov. 26, 1976.
In August 1977, less than a year later, the company opened its first international office. The branch, located in Japan, was called ASCII Microsoft. In 1979, the company moved to Bellevue, Washington, and two years later it incorporated under the name Microsoft Inc. Gates was president of the company and chairman of the board, and Allen was executive vice president.
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