Bill Gates' Biggest 7 Failures

Bill Gates' Biggest 7 Failures

As the richest man in the world, Bill Gates is obviously one of the most respected and revered individuals across the entire globe. Despite the massive amount of success that Gates has experienced, he’s also had his fair share of mistakes, such as the following 7 failures.

1. Traf-O-Data

Before their successful business partnership Microsoft was founded, Bill Gates and Paul Allen started a company called Traf-O-Data in the early 1970s. The company read and analyzed data from roadway counters and created reports for traffic engineers.

As Allen recalls;

“Despite efforts to sell our wares as far afield as South America, we had virtually no customers. Traf-O-Data was a good idea with a flawed business model. It hadn’t occurred to us to do any market research, and we had no idea how hard it would be to get capital commitments from municipalities. Between 1974 and 1980, Traf-O-Data totaled net losses of $3,494. We closed shop shortly thereafter.”

Despite the failure of Traf-Data, the learning experience played a crucial role in the formation and success of Microsoft.

2. Not Engaging the Government

Even after taking Microsoft from “a two-man startup into a tech juggernaut worth hundreds of billions of dollars, becoming the world's richest man along the way,” Gates still made some mishaps as CEO.

"Top of the list for me is that Bill did not engage – either himself or the company – in the political process early enough. When Microsoft’s competitors were effectively lobbying the government, Bill’s attitude was the government should just go away and leave Microsoft alone,"said Brad Silverberg, who spent nine years as Microsoft's SVP.

“In his view the company was competing hard but fairly; it was creating value for customers and that should be enough,” says Silverberg. “Well, this approach of not constructively engaging the government and concerned politicians, of not alleviating concerns that were not going to go away, was a disaster. The US federal government, many states, and the EU all essentially declared war on Microsoft, and Microsoft paid a devastating price.”

3. Supporting Common Core Curriculum

Besides being best-known as the co-founder of Microsoft, Gates is also associated with his philanthropy - most notably the work done through the Bill and Melinda Gates Foundation.

Gates first began working on education in 1999 by working to reduce the size of classrooms. The foundation, however, strongly supported Common Core curriculum standards. The foundation’s CEO, Sue Desmond-Hellman, wrote that, “Unfortunately, our foundation underestimated the level of resources and support required for our public education systems to be well-equipped to implement the standards,”

“We missed an early opportunity to sufficiently engage educators — particularly teachers — but also parents and communities, so that the benefits of the standards could take flight from the beginning.

“This has been a challenging lesson for us to absorb, but we take it to heart. The mission of improving education in America is both vast and complicated, and the Gates Foundation doesn’t have all the answers.”

As the Los Angeles Times bluntly puts it, “Philanthropists are not generally education experts, and even if they hire scholars and experts, public officials shouldn’t be allowing them to set the policy agenda for the nation’s public schools. The Gates experience teaches once again that educational silver bullets are in short supply and that some educational trends live only a little longer than mayflies.”

4. Underestimating the Internet

Silverberg believes that Gates second mistake as CEO was “figuring out how to respond to the opportunity / threat of the Internet.” He explains that, “When you own Windows in the late 90’s, life is good and why would you want things to change? Bill’s view was to protect Windows, and didn’t come up with an approach that kept Windows and Microsoft’s systems strategy at the forefront.”

This lead to Microsoft’s strategic position declining in the 2000s. However, the company is “now coming to grips with the new reality and making necessary, if belated, changes.”

5. Funding the Competition

In August 1997, “a Bill Gates-led Microsoft made one of the biggest mistakes in tech,” writes Jamal Carnette in the Motley Fool. That mistake? Investing in long-time rival Apple.

As a result of the antitrust suit, Microsoft bailed out the fledgling Apple with a $150 million investment in stock buys, along with no voting options and a three-year holding period.

Apple received the funding that it needed and has gone on to become one of the largest and innovative companies in the world.

With essentially bailing out Apple, one has to wonder if Microsoft’s Zune would have been the revolutionary mp3 player instead of the iPod.

6. Ignoring Search Engines

“Google kicked our butts.” - Bill Gates, former CEO of Microsoft

In 1998 Larry Page and Sergey Brin launched a little company known as Google. Gates also introduced a search in 1998 called MSN Search.

But, how did a startup best a tech giant like Microsoft?

Google was fast, innovative, and most importantly, actually delivered relevant results. As Nick Scheidies writes for IncomeDiary, “MSN Search was none-of-the-above.” To make matters worse, “Microsoft hadn’t even bothered to develop a search engine of their own. They used results from Inktomi, an existing search engine.”

Search wasn’t a priority for Gates or Microsoft. And, the company has been trying to catch-up to Google ever since. But, just imagine what it would be like if Microsoft was the most powerful search engine. Microsoft had the resources to become the world’s most known and powerful search engines in the world. Instead, they let that opportunity slip through their hands.

7. Steve Ballmer

When Gates stepped down as CEO in 2000 he put Microsoft in the hands of his long-time friend Steve Ballmer.

Under Ballmer, Microsoft missed out on market opportunities like social networking, oversaw failed product releases like Zune, made terrible investments, and took shareholder value from $60 to $30 per share.

 


 

About the Author

John Rampton is an entrepreneur, investor, online marketing guru and startup enthusiast. He is founder of the online payments company Due.

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