Ballmer, who once led Microsoft to a dead end, reaped a lot of wealth

Source丨Venture Bang (ID: ichuangyebang)

Author丨Wang Yi

Editor丨Sea waist

In the first year of AI, Microsoft's stock price soared like a flip.

Microsoft's stock price is up about 58% compared to last year.

In this pouring wealth, the biggest piece of the cake is not the founder Gates, nor the current CEO Nadella, but the second CEO Steve Ballmer, who once led Microsoft into a dead end and plunged Microsoft's market value.

Ballmer owns about 4 percent of Microsoft, making him the individual with the largest stake in Microsoft at the moment.

Based on Microsoft's current market capitalization of $2.78 trillion, Ballmer is currently worth about $130 billion, an increase of about $35.7 billion this year alone, ranking fifth in the Bloomberg Billionaires Index, behind Elon Musk, Bernard Arnott, Jeff Bezos and Bill Gates, and even surpassing Mark Zuckerberg and Warren Buffett.

I didn't do anything, I won all the way

Ballmer, Gates' roommate at Harvard, joined Microsoft in 1980 as Microsoft's No. 30 employee. When Microsoft IPO took place in 1986, Gates owned 49 percent of the company, and Ballmer held 8 percent. After the IPO, this percentage dropped slightly to 45%.

Less than a year later, Microsoft's stock price soared, and Gates, 31, became a billionaire. In the following years, he rose to the top of the rankings and became the richest man in the world in 1995. He held the title until 2017, except for 4 of which were surpassed by Warren Buffett and Carlos Slim.

When Gates stepped down as CEO in 2000, his stake in Microsoft had fallen to 14 percent. In 2008, Gates retired from Microsoft and devoted all his energy to philanthropy. He cashed out his shares in Microsoft and put the money into his Bill & Melinda Gates Charitable Foundation. The foundation is committed to eradicating infectious diseases in developing countries, and has participated in projects such as the Global Alliance for Vaccines and Immunization, the Indian Ocean earthquake relief campaign, and COVID-19 donations.

As a result of selling too many shares, Gates now owns only about 1.38% of Microsoft, for a total of 103 million shares. Gates' portfolio has also become more diversified, moving away from Microsoft's focus to include BERKSHIRE HATHAWAY INC., Waste Management, Inc., Four Seasons Hotels Inc., Canadian National Railway Company, A number of companies, including Caterpillar Inc., are managed by Cascade Investment, of which he is the actual controller. As of November, Gates had a net worth of about $116 billion.

Ballmer, for his part, owned $333 million in Microsoft stock when he stepped down as CEO in 2014, or about 4% of the company's shares. After resigning from Microsoft, he bought the Los Angeles Clippers, the star team of the NBA, for $2 billion, and since then he has been more of a Clippers owner.

Ballmer is currently Microsoft's largest individual shareholder, and he hasn't sold his shares for years, and his value has risen with the value of Microsoft's stock. According to the Bloomberg Billionaires Index, Ballmer's stake is worth about $130 billion, and Ballmer's fortune has increased by $44 billion this year alone as Microsoft's share price has risen nearly 60% this year.

Microsoft paid shareholders a dividend of $2.79 per share in 2023, which is equivalent to paying Ballmer about $930 million in annual dividends — meaning that Ballmer has an extra $1 billion in pocket money while lying down and doing nothing.

It is worth mentioning that in the top 10 of the Bloomberg billionaires list, Ballmer is the only CEO on the list as a "non-founder".

On Bloomberg's live-updated billionaires list, only Elon Musk, Bernard Arnott, Jeff Bezos and Bill Gates are ahead of Ballmer, and Larry Ellison, Warren Buffett, Larry Page, Mark Zuckerberg and Sergey Brin are in the top 10 behind Ballmer.

Of these, only Ballmer himself made the list as a professional manager, and the others were the founders of business empires. What is even more surprising is that Ballmer's total wealth is now only a few billion dollars short of Gates. With Microsoft's current stock rally, Ballmer could even overtake his former boss Bill Gates as the No. 4 billionaire on the list in the near future.

If Bill Gates hadn't sold Microsoft's stock, he would undoubtedly have remained the world's richest man for many years.

This earth-shattering wealth was missed by Gates so that Ballmer got it lying down.

All in AI

Microsoft's stock price has performed so well because of the AI boom.

Microsoft's entire 2023 is all about "AI".

Since the release of New Bing equipped with Chat-GPT on February 7, Microsoft has been making a series of moves in the field of AI.

3月，推出Microsoft Dynamics 365 Copilot和Microsoft 365 Copilot，将AI能力集成到自己的CRM、ERP和Word、PowerPoint办公软件中；

In May, more than 50 updates were announced at the Microsoft Build conference, including Copilot on Windows 11, the launch of the Copilot Stack service, the Azure AI Studio development toolchain, the Azure AI Safety service, and the Microsoft Fabric data analysis platform.

In June, three AI customer commitments were announced, including sharing experience in developing and deploying AI, creating AI assurance plans, and supporting customers in deploying their own AI systems. At the same time, they have upgraded their quantum computing platform, Azure Quantum Elements, to accelerate scientific discovery by integrating the latest breakthroughs in high-performance computing, artificial intelligence, and quantum computing.

In July, it announced support for the Llama2 series of large language models on Azure and Windows;

In August, it announced a partnership with electronic medical record company Epic to integrate Microsoft's cloud and AI technologies into Epic's systems, with the aim of accelerating the development of solutions that meet healthcare's most critical needs;

In September, Microsoft Copilot, an everyday AI companion, was launched and integrated into Windows 11, Microsoft 365, Edge and Bing, as well as context menus;

In November, at the Microsoft Ignite conference, more than 100 new products and features centered on AI in cloud computing infrastructure, model-as-a-service MaaS, data platform, Copilot AI assistant and other aspects were announced in one go, including two custom chips Azure Cobalt and Azure Maia 100, Azure AI Studio, an end-to-end development platform for AI developers, Microsoft Copilot Studio, a low-code tool, Microsoft Copilot for Azure, an accessibility feature for Azure, Windows AI Studio to help developers deploy local AI, and more;

In December, it was announced that Copilot had begun testing some new features, including the integration of GPT-4 Turbo models and DALL-E 3 models, web grammar correction capabilities, multimodal search, code interpreter, deep search, and more.

In October of this year, Microsoft released CEO Satya Nadella's annual open letter to all employees, and if there is one word to summarize what the letter says, it is "artificial intelligence". In the letter, Nadella said that "the next generation of AI will reshape all software categories, including Microsoft itself," and highlighted Microsoft's next strategic priorities, including maintaining its leading position in the commercial cloud space, integrating AI into every layer of the technology stack, strengthening operational efficiency, and aligning cost structures with revenue growth.

In addition to the strategic priorities, Nadella also mentioned the following:

Infrastructure to secure AI services: Invest in AI supercomputers, integrate computing resources across data centers and clouds, upgrade intelligent data platforms, and upgrade Azure's AI series of services.

Leverage AI to iterate productivity in different scenarios: GitHub Copilot transforms software development processes, Dynamics 365 Copilot transforms ERP and CRM processes, and Microsoft 365 Copilot transforms online office processes...... Copilot is now an important symbol of Microsoft's AI strategy;

It can be said that Microsoft's AI layout has included all aspects of the entire AI industry chain of "chip-server-cloud platform-model application", no matter what large model customers use and what applications they develop, Microsoft can provide services.

Taking the financial data released by the open letter as an example, Microsoft achieved a record revenue of $211 billion and an operating profit of more than $88 billion in fiscal year 2023 (July 1, 2022 - June 30, 2023), of which Dynamics' total revenue exceeded $50 billion, and Github's recurring revenue also exceeded $1 billion.

Nadella's efforts have allowed Ballmer to increase his wealth by tens of billions of dollars while lying down.