Ballmer's chief mistake was sticking to what worked in the past. He was not willing to let go of the Windows monopoly, and Azure in its early days was based on Windows servers. Then Satya came in and said, no it is OK to support Linux, and in fact it is OK to run Microsoft's own services on Linux. It is OK to support Open Source, and in fact we'll open source some of our stuff. That put Microsoft back on track. For now.
Satya's mistake though is that he has filled Microsoft with average people. The best fresh graduates from the top colleges went to Google and Facebook in the last decade -- because they paid significantly more -- and Microsoft picked up the rest. What is the impact of that? Microsoft's execution ability is lower, and we'll see the impact of that in the coming years.
Another of Satya's mistakes is his faux pas related to women employees. He was accused -- unfairly in my opinion -- of saying women employees should not ask for a raise. He did no such thing. He said employees should not ask for a raise (not women employees specifically) and instead should rely on the system to give you the appropriate raise at the appropriate time. But since he said that at a women's conference the accusation stood that he meant women employees specifically. Satya has had to fight against this accusation and he has done so by establishing a quota system for promoting women employees. Executive compensation at all levels at Microsoft is directly tied to promotion of women employees, and as a result, a lot of women now occupy positions they would not otherwise. Again, the impact is decreased ability to execute.
Microsoft today is the second most valuable company behind Nvidia. But you wouldn't know that looking at their products. They don't have any interesting new products. To some extend they are coasting. Will their success continue into the next decade? It's going to be interesting to watch.
Google has largely stagnated with products that they largely already had before Satya Nadella took over. Facebook was kind of at its peak then and they had bought Whatsapp and added Instagram to their portfolio. But since then, Meta has had a few duds as well and it seems a bit lackluster lately. Messenger launched and imploded. Then VR. And now they are messing up with AI.
The point is, if Google and Meta got the best people, what the hell did they do in the last ten years? I think they mostly got more people and less ability to do anything very well. It hasn't worked out that great for them. Neither of them has much to show for their efforts. Google bootstrapped AI and then had their people walk off to form OpenAI who are (for now) best buddies with MS. Facebook/Meta keeps changing their mind about what they are about. Social media, VR, and now AI. But it seems they end up chasing their tail every time.
MS actually got better over the last ten years. They too had a few nice acquisitions. But more importantly, they revitalized what was a pretty dead development strategy. Github was critical. The attitude towards Linux and the complete 180 on open source in general was critical. MS did quite a few things right under Nadella.
> They don't have any interesting new products.
None of these companies do.
> what the hell did they do in the last ten years?
Having the best people and knowing how to use them effectively are two very, very different things
I think the point here is that there is nothing to back up the dubious claim that MS recruits were inferior; your observation essentially reinforces that point.
I've heard the claim so many times, and pay (that I was good enough to achieve) at MS was lower than salaries for FB and Google posted on Blind, but who knows how real those were. I never bothered to look into it myself. Honestly I was just kind of a Microsoft fanboy at the time, haha.
Knowing how google interviews… I have some doubts that they are in fact hiring the best people.
Google search became less effective (imo) but probably more profitable.
Google hired the greatest minds to avoid competition that threatened googles monopoly on the search money printer
It became so good I had to finally switch to use something else.
>The best fresh graduates from the top colleges went to Google and Facebook in the last decade -- because they paid significantly more -- and Microsoft picked up the rest.
That seems shaky as a justification. I don’t have any data behind it, but in a world of eight billion people, it’s a hard sell that there’s only enough top talent for 3 companies.
Plus, feel free to correct me but I don’t feel Meta has brought anything technically brilliant to the table lately. Google might be a better sell with alphafold and some other projects but none of it seems mainstream tech either.
Maybe pixels if you want to stretch it, but search, maps, Gmail, YouTube, android, and even photos were there a decade ago already.
Small startups will always excel in talent density because of the increase risk (and reward) and alignment along equity, but all of the large companies have enough technically brilliant people. Many in their 30s or 40s want to do excellent work and also have stability to provide for their families. Whether management gets out of their way is another question.
A few projects just in ML: DeepMind has plenty enough for Google alone but Jax and the TPU project are technically ambitious and very strategically important for Google; they hired Adam Paszke away from Meta. Besides Gemini they have Gemma and Veo and they have a reputation in the industry of having extremely high MFU averages. From Facebook there's PyTorch but that's a whole cluster of projects (compiler, abstractions for many accelerators, torchao, torchtitan). They're also famous for DINO and SAM models, as well as many others by FAIR (e.g. Mask R-CNN).
>I don’t feel Meta has brought anything technically brilliant to the table lately
I was pleasantly surprised by Llama.
> Plus, feel free to correct me but I don’t feel Meta has brought anything technically brilliant to the table lately
PyTorch?
> Maybe pixels if you want to stretch it, but search, maps, Gmail, YouTube, android, and even photos were there a decade ago already.
I don't disagree really, in the end all three suck: G, MS, FB. Google did in fact hire all the top talent but only to make sure they don't work on something good for someone else.
PyTorch was released nine years ago.
I hear you, I might give people the benefit of the doubt too much, but I interpreted what he said more like while Facebook and Google were going out of their way to make sure they hired only the best, hiring was just not a point of emphasis for Microsoft and as a result it didn’t hire as many good people
I think that point is fair - at the very least, Microsoft wasn’t in the conversation as far as where the typical CS grad wanted to work - FANG doesn’t even include Microsoft in the acronym (I kid, I realize this doesn’t actually mean anything)
Azure began adopting and offering Linux while Ballmer was CEO.
Microsoft already began the process of open sourcing stuff while Ballmer was CEO. Eg. What would become DotNet Core.
There are a number of other errors in your points. Some public, some not. I encourage you to re-examine what you think to be true.
Look, I agree it was time for Ballmer to retire and I’m glad Satya is CEO, but while he made some miscalculations, he wasn’t the zero some try to make him to be.
Once a company are over a certain size its ability to execute is throttled by business process, not individual's abilities. Individuals are kept from making an impact as they don't want that, they want predictable, replaceable cogs in the machine. Google and Meta suffer the same problem but, as businesses, they are slightly more nimble as they 3x smaller, but that has 0 to do with their hiring/promotion practices.
So you're saying average people are fine for a big company? I would agree, if all you want to do is maintain existing products.
I think you can actually do a lot with average people, if you have sufficient structure, process, guard rails, documentation, training and reviews. And big companies have a lot of this, specifically put in place to harvest above-average work from average talent. Yes, a company full of John Carmacks, un-shackled by process, can probably run circles around an average tech giant, but who can actually find and hire all these John Carmacks?
I think a company of Carmacks would probably be a mess; maybe resembling Xerox PARC, in that they came up with many interesting ideas, but rarely if ever actually created a profitable suite of products.
its risky for big companies to move quickly. They mostly want to maintain what they have. its a myth that they want to innovate daily
Big companies 100% focus on maintaining their products/position, relying on acquisitions for innovation.
I was hired as employee 500 and now we are at 5000 (numbers rounded to protect the innocent)
It’s really really interesting what happens - obviously 5000 doesn’t compare to the behemoth that Microsoft is, but it’s still been interesting to see
It really is a confluence of factors that slows things down and I don’t think it’s as simple as saying business process
Some off the top of my head observations:
You have to try really hard to not settle on hires - the more you grow, the bigger the pile of work and you just want help - to the point where you might hire someone who’s good enough vs holding out for someone exceptional
It’s one thing for 100 people to be throwing money at problems in terms of tooling and outside contractors, once you’re big buying things is way more scrutinized - this is good because you don’t waste money on stupid tools, bad because it slows down buying of non stupid tools that you actually need
Things that didn’t matter before start to matter - security things, legal things, privacy things - these activities take time and also slow things down
Some work just doesn’t scale well - where in the past you could get away with throwing cheap manual labor at the problem, at some point you have to build automation to take care of - this speed things up in the long run, but usually you hit a wall first - as in things get so big they get slow - before you finally build the tools. Knowing which tools are worth building ahead of time is really hard
Related to the above - where in the past it made sense to buy a lot saas apps to run your business, these tend to be expensive so you start building your own
That’s just off the top of my head and nothing scientific. Also, I didn’t mention it specifically but of course you still have your run of the mill bureaucracy that slows things down
But Microsoft in 2000 to 2005 was still huge and had the best browser, OS, dev environment, smartphone, and messenger .
I’ve worked through all 3 CEO eras of Microsoft. Satya’s biggest mistake will be breaking the internal culture that made Microsoft what it is, for better and worse. Classic “be careful what you wish for” or perhaps law of unintended consequences, imo.
And yes, part of that involves the way they’ve changed the hiring and retention objectives.
This take seems bad top to bottom.
And the Satya revisionist history on his quote is absurd since it’s well documented. He didn’t just say it at a women’s conference. He was asked “For women who aren’t comfortable asking for a raise, what’s your advice for them?”. And part of response included “That might be one of the initial ‘super powers’ that, quite frankly, women don’t ask for a raise have. It’s good karma. It will come back.”
He has since sufficiently walked this back, so it’s odd the need to lie about what he said.
>The best fresh graduates from the top colleges went to Google and Facebook in the last decade -- because they paid significantly more -- and Microsoft picked up the rest.
1. The best new grads are absolutely not going to Google or Meta. There are many far sexier companies. As a CS grad, landing in big tech is mostly regarded as having settled for mediocrity.
2. Microsoft's compensation for early career is competitive with Google and Meta (at least for the first couple of years; Meta will grow your level faster and Google gives better annual RSU refreshers, but many people don't know this and go by the offer's face value). I don't think there's much of a difference in the talent that they can pick up.
Microsoft also aggressively sops up the best talent in Tier 2 geos -- it's unlikely that the best devs in the Bay Area work at Microsoft but some of the best devs in Vancouver or Atlanta probably work at Microsoft.
>Microsoft's compensation for early career is competitive with Google and Meta (at least for the first couple of years; Meta will grow your level faster and Google gives better annual RSU refreshers
It's not. Microsoft's stock grants are a joke. I left Microsoft after 8 years with ~36k in unvested stock (vesting over 4-5 years) and a title of Senior (L63). Both Google and Meta offered me a downlevel (L4) for a 40% increase in total comp and with annual stock refreshers significantly larger than 5 years worth of stock grants at MSFT.
Microsoft starts to become competitive around Principal/Staff, sort of, but from a compensation perspective working at them at a junior/midlevel/senior level is a huge mistake.
Yes but as I said, that's mainly because Microsoft doesn't give good refreshers. For a new grad, a Microsoft L60 and Google L3 offer should have similar "TC".
That’s an interesting modern perspective.
I would say though that you’re both correct. Satya came in 2014 and during the last 11 years I would say that the majority of that is as the GP described.
I’m not sure when what you are describing became the outside perspective, but I suspect somewhere around 2019-2022, when Google lost a very large amount of its shine as the former Oracle Execs started to take over fully.
> he has filled Microsoft with average people. The best fresh graduates from the top colleges went to Google and Facebook in the last decade
Is there a way to demonstrate that this actually mattered? That paying more did get them “better” talent that actually made a difference? Ie. not any self serving “they did because they’re better and they’re better because they were paid more.”
Look at AI. Microsoft was an early leader in AI but that was only because of their investment in OpenAI. What has Microsoft done in AI since then? Is anyone excited about Copilot? Look at what Google has done since then. Lots of interesting stuff. Only recently has Microsoft released something interesting: Mustafa Suleyman released the company’s first model trained internally from start to finish [1].
[1] https://www.cnbc.com/2025/08/28/microsoft-tests-mai-1-previe...
I was never a fan of Windows, being a Mac guy. However Word used to be good. After a long avoidance I had to use it for work. Teams Word, online Word, Word.app Word. It is a complete cluster fuck and formatting etc is a shambles across versions. The ecosystem within MS products is a dumpster fire. And yet is the state of the art.
The Office suite is one of their key products, and it’s awful.
Don't forget OneDrive and SharePoint and Teams.
But, every big company keeps buying this shit.
Attitude to Linux and open source was not really a problem for Ballmer IMO. Microsoft had vast revenues locked in to their software in PC and business servers. In the regulatory environment in which they were permitted to operate, it made a lot of sense to try to keep competitors out. A cohort of geeks hated Microsoft's attitude, but I'd be surprised if it did much to their bottom line. But Linux and OSS are just a tools, easily adopted when the winds change.
Microsoft under Ballmer completely missed the boat on a bunch of things which should have been pretty close to Microsoft's wheelhouse -- search, social media, mobile/smartphone, and cloud, to name some of the big ones (each one of these spawned a big 10 corporation). It's not that they should be expected to cover all these things or that no other tech company should have become successful, it's just that they had little response to any big developments in the industry for many years.
I think it's less that he wasn't willing to let go of Windows, more that the myopic focus on it blinded them to other issues, or deluded them into believing they could continue using Windows to gatekeep and buy or crush competition. They missed the boat on the internet before Ballmer too, but eventually managed to use the money and power that Windows provided them to grind down the competition.
I have been both impressed and kind of disappointed in Satya's role. He made some hard and direct changes initially that has allowed them to coast very comfortably, but we have also seen Microsoft become very tame in some areas. I was optimistic at first, especially because he was willing to make the hard choices like binning Windows mobile even with all the potential it had.
Cloud is just being the cloud, the AI stuff they are excited on but maybe at the detriment of everything else, Xbox is dying a slow sad death as they are directionless and Windows is just a dump truck for all the more questionable business decisions possible.
Really interesting comment. Is there a source for the promo quota thing? Or is this a policy that’s only discussed internally on a need-to-know basis?
Managers and above know this. In order for execs to get their bonus they have to meet diversity goals. So execs have promoted women to positions they would not ordinarily be promoted, in order to get their bonuses. This started many years ago, and continue to this day.
https://www.theverge.com/2016/11/18/13681738/microsoft-diver...
https://www.businessinsider.com/how-microsoft-execs-earn-the...
https://www.bloomberg.com/news/articles/2016-11-17/microsoft...
Ballmer and MSFT got the last laugh. In 2005-2006 a lot of people counted them out.
I think Microsoft actually just hired experienced H1Bs instead of new college grads. And they have such a moat with their corporate customers using excel, outlook, etc that execution doesnt matter as much for them.
Nonsense. None of the top companies are H1B abusers. Meta, Google, Microsoft are all using H1Bs for the intended purpose. The abusers are companies not in tech industry like Disney etc. who bring in H1Bs to decrease their payroll expense. Top tech companies don't do that.
Disney might not care about appearances, and the HQs might be flagrantly flouting the rules, but what of the hundred subsidiaries and shadow corps that are their hands and feet? They don't need to court those hires.
An acquaintance is an H1B at an Alphabet (owned) corp, hired to work a position that anyone with an Industrial Engineering BS could. And he only found out who owned his employer after an inspection by HQ prior to the scale up for Bard.
I'm happy he got the opportunity, and it enabled his family to marry him and for his new wife to come to the US and start a teaching position at a university, but his role could have been filled by a local grad... if they could have been convinced to accept his salary.
There are a ton of highly qualified American citizens that are not able to find work, or are underemployed. The layoffs of the past few years have made it very clear that there is an abundance of local talent, and big tech hiring from outside is not about a lack of labor supply
Clearly youve never worked inside these companies
I'm a Ballmer truther. He was completely right about many things including his vision for AI. I know that being early is often the same as being wrong but I don't think his big strategic moves as CEO were incorrect. Microsoft during his era was more marked by an inability to execute on those strategies.
I wonder if this is another one of those "two sides of the same coins" situations: on the one hand I agree that Ballmer was too weirdly competitive, e.g. with Linux/etc., plus the cringey takes on the iPhone, Google, etc.
On the other hand Microsoft had a fire and passion that I don't really see anymore. I miss Developers, Developers, Developers. Now it's just ads, AI, blah.
> on the one hand I agree that Ballmer was too weirdly competitive
He was really the epitome of that, and that was the MO of Microsoft at the time. I always thought of him as the embodiment of that, the pinnacle, the ne plus ultra.
What was his vision for AI, and how could it be relevant? He was gone before the current wave hit.
Going on TV and laughing at the iPhone pretty much told me everything I needed to know about Ballmer. The best thing I can say about him is that unlike Nadella, he didn't spend too much of his time actively trying to enshittify Windows.
You know, Steve Ballmer is always fun and interesting to listen to.
Meanwhile you have Satya Nadella. This very sanitized, boring, fake, borderline manufactured personality. I can't imagine sitting through a 3hr interview/podcast with him as a guest. I had no problem listening to this one though.
I agree with you that Satya typically has a flat, measured style that comes across dry and he also stage manages himself rigorously. But it's also worth mentioning that being the CEO of a massive, high-profile public company puts him under different expectations and constraints than a long retired CEO. Nadella is still spokesperson #1 for the company, products and stock.
That said, I'm not sure we'd see a dramatically more forthright and unfiltered Satya when he's ten years out of MSFT. I think much of Satya's style is simply the way he is all the time.
I’m a big, big fan of acquired podcast, listened to every single of their episodes.
But I remember their entire Microsoft episodes felt like a lengthy defense of Steve Ballmer. There were too many instances of “here’s why this bad decision of Steve made sense given the circumstances” or “ here is how people underestimate the contribution of Steve on this good decision.” They were all well argued points, of course, but so numerous that I found myself wondering if the hosts does not have a relationship with Steve.
The existence of this interview does not help with that suspicion.
I think the big thing was Steve did make a lot of great decisions, some of the best the company could at that time in those respective fields but completely missed on everything that Apple did. Portable media players, smart phones and tablets and those are the three huge misses and that is really were it counted.
The old three envelope joke.
You become CEO and there are three envelopes on your office desk, a note says "Every time there is an issue you open them in order and do what is inside". First envelope says "Blame your predecessor.". The second says "Blame yourself". The third says "Prepare three envelopes".
>...The second says "Blame yourself".
The second step in this joke is something like "Reorganize.", not "Blame yourself".
I haven't listened to all their MSFT coverage but it's possible they genuinely feel Ballmer's gotten a worse rap than he deserves and they're trying to contextualize some of the decisions and circumstances.
This is the problem with podcasts, but also modern media, in general. You have to play softball or be ideologically homogeneous to get access. Anything else has a negative k for a variety of reasons.
I’m not against wealthy people, and America has always had a Tycoon class…
But allowing a single person to go from $20B to $130B in assets in 10 years feels like a pretty obvious policy failure.
I don't disagree with the sentiment, but Ballmer essentially made that money by simply not selling his Microsoft stock.
I disagree with the sentiment. Who is made worse off, who is made poorer because he held Microsoft shares? OP describes it as a "policy failure"... what kind of social wrong does a "policy" which would have forced him to sell his shares in 2015 correct?
If you’re asking with genuine curiosity: whatever venture was not invested in because it went to buying Tech Titan stocks instead.
Concentrated wealth doesn’t circulate well, which leads to inflation.
I thought we all had some economic chops on this forum?
Concentrated wealth along with a lack of currency circulation results in deflation, not inflation:
https://en.m.wikipedia.org/wiki/Velocity_of_money
Pretty ironic that you'd call out economic chops when this is a very basic and well understood principle. Perhaps be more cautious and less confident in your presuppositions going forward.
Wealth doesn't circulate. Currency circulates. They aren't the same thing. And a "concentration of wealth" can't lead to inflation or debasement, I'm not sure what that sentence means.
Yes and: Our economy now has fewer young(er) small- to mid-sized companies. The kind that have historically been the engines for creating jobs, for creating wealth (vs merely transferring it), and innovation.
I was excited by all new green energy startups due to Biden Admin's policies (BIL, IRA, etc). Oh well...
I know you know all this; I'm just compelled to repeatedly point out the obvious.
Others have given some answer to who was made poorer by Ballmer holding Microsoft shares, but I'd argue that this is the wrong question. Instead of looking at a specific individual, we should look at systems.
A system that allows this kind of extreme wealth accumulation is quite fundamentally at odds with democracy because extreme wealth can be and is in practice used to influence politics in a way that undermines democracy.
Some people might not care about that, but if your goal is improving the outcomes of the largest number of people, then pretty much everything else is secondary to having a functioning democracy.
This is genuinely the only response I ever get - that wealth can be used to influence politics. In my view this is a poor argument for two reasons.
1. The amount wealth actually influences politics is hard to measure but likely much lower than most people assume. Trump was outspent significantly both times he won. Bloomberg dropped $1B in a couple months and won nowhere but American Somoa. Probably the two biggest boogiemen, Koch and Soros, have spent billions over the years on their causes, and the present administration and general overton window is actually something neither of them like! The nonelected king-makers in American and EU politics are not actually wealthy people at all, just those with a lot of accumulated political capital, for instance, Jim Clyburn who single-handedly gave the 2020 nomination to Biden.
2. The amount that it takes to finance initiatives is much lower than centibillionaire level. Is the original $20B OP mentioned not sufficient to finance some ballot initiative? Why is it the increase to $130B that causes concern? The truth is that even a wealthy non-billionaire can easily do that, or bankroll someone's run for congress, or fund a partisan thinktank. The maximum level of wealth you'd have to set your ban-limit at would be problematically low.
Why? It's not like this money is in a giant vault filled with money and he swims around it. All of this money is being put to use in the U.S. economy.
Investor dollars are not kept in a giant vault, but they are also not necessarily "being put to use the U.S. economy." If I buy $1000 of Microsoft stock, Microsoft doesn't suddenly have $1000 more to fund their projects. Some other investor gets it because he sold, and he's not necessarily putting that money to actual use either. It's all just numbers getting updated in a giant database somewhere, over and over until someone cashes out and actually spends that money to buy groceries or something. I guess some might consider those database updates and the growth itself to be "put to use" but I don't.
Not sure if you’re really curious but it’s because it means the US is going from using tax to sustain itself to borrowing money (hence the ballon of debt). When your government relies on borrowing money, the rich always win no matter how you slice it because typically, you borrow money from them somehow. This reliance is the beginning of oligarchy and bad policies that strongly favor the rich from this endless cycle of debt. It’s been true for any developed nations like Four Asian Tigers and been true for nations with strong historic roots like the UK. How do you think the British “royals” sustain themselves?
Almost all of that was an increase in stock price. That's about as close as you can get to just sitting in a vault. If he were selling it and using the money for something else, that would be one thing, but he's really not using much of it.
This is not to say it's his fault. That's how our laws are written. But that is the point of OP. That our policies should be forcing him to sell and put that money back into the economy.
> Almost all of that was an increase in stock price. That's about as close as you can get to just sitting in a vault.
It would be at least as accurate to say it's as close as money can get to not existing at all. Policy should probably not be "forcing" people to realize gains that, in many cases (maybe not MS, but policy has to work for everyone), may as well be Monopoly money.
Owning stock is the polar opposite of having money in a vault - it is giving money to the economy. Specifically to a part of the economy that is a money-generating machine: a company. Put in circulation precisely to be invested on the economy.
When you buy a stock, "the economy" is not getting the money. Some other investor is getting it, who may or may not be putting that money to use. They may just turn around and buy another stock, giving that money to another investor, who buys a different stock, and on and on and on, with no other actual economic activity happening.
If the stock market worked the way you imagine, it wouldn't exist.
It always strikes me as interesting that this entire community was founded around startups and providing value to customers and making money in return, however it's now mostly dominated by those who think it's wrong to provide value and get money in return
Shareholders do not provide value, workers do. After he retired, Steve Ballmer did not provide $110B of value to Microsoft customers, but he received that wealth anyway.
There is absolutely value in providing risk capital. That's literally the lifeblood of commercial innovation.
Who exactly do you suggest to manage these $130B better than him? Government? Pension fund? An example of a company managed by pension funds is Intel.
The whole point of capitalism is to put chunks of economy under control of capable people. If they managed to get rich then on average they're much better at that than the general population.
This is not an unpleasant side-effect, this is the main reason the whole system exists, remove it and it's not capitalism anymore.
You say manage this 130 billion as though it materialized from nothing. The point of the original comment was that his accrual of this much money is the failure.
Who do you think generated that excess 110 billion? Ballmer's advanced managerial capabilities? Sure "the market" might have valued equity more, but that's still the policy failure. Saying that "this is how this works" is silly. It could just as well work some other way.
I'm not saying "this is how it works", I'm saying "this is how it should be". The whole point is for entrepreneurs to have control over businesses or big chunks of them.
The only way for your "policy" to "prevent" is to redistribute the control to someone else, usually bureaucrats. And I, again, strongly believe that it's better for businesses to be controlled by entrepreneurs and not by bureaucrats.
> An example of a company managed by pension funds is Intel.
What does this even mean? Pension funds have a lot of board seats? I only see one person from Blackrock on their board right now.
Why would it be bad for a pension fund to have influence on running a company? Are their incentives somehow mis-aligned with other investors?
> What does this even mean? Pension funds have a lot of board seats? I only see one person from Blackrock on their board right now.
The Board members are appointed by the Intel Corporate Governance & Nominating Committee, the chair of the committee is Barbara G. Novick, co-founder of BlackRock. The board is de-facto run by the trio of BlackRock, Vanguard and State Street, smaller investors follow their lead.
> Why would it be bad for a pension fund to have influence on running a company? Are their incentives somehow mis-aligned with other investors?
Alignment of interest is not magical: it's necessary to achieve results but it isn't sufficient. You need actual talents, vision, execution to make things happen, not just interest.
Pension funds have no vision beyond "stock go up", no strategy other than "more revenue, less costs". In the end they are roughly as good at running things as are socialist states: economy is owned by everyone so no one in particular, run by people who never proved that can run a lemonade stand. In fact a successful socialist state (if they ever existed) would be indistinguishable from a huge pension fund that swallowed the whole economy.
> The Board members are appointed by the Intel Corporate Governance & Nominating Committee, the chair of the committee is Barbara G. Novick, co-founder of BlackRock. The board is de-facto run by the trio of BlackRock, Vanguard and State Street, smaller investors follow their lead.
Thanks I learned something new today. Is Intel unique or is it common? Does Novick have this position due to pension funds specifically, or index funds in general? AIUI index funds own large stakes in many public companies so if this is true, they are all effectively run by Blackrock and Vanguard (or should be).
> You need actual talents, vision, execution to make things happen, not just interest. Pension funds have no vision beyond "stock go up", no strategy other than "more revenue, less costs".
As opposed to other investors? Outside of founder-owners you've described 99% of retail and institutional investors. Why do you believe pension funds specifically lack "talent"? As long as there is competitive pressure in every market, it doesn't matter. Some of them will be right and actually deliver better products, services, and profits.
> In fact a successful socialist state (if they ever existed) would be indistinguishable from a huge pension fund that swallowed the whole economy.
I've long believed that's the only way to make the welfare state numbers (in any country) work in the long run. Not the whole economy but like substantial proportions of the stock market. You can't tax labor to fund retirees when capital captures most of the returns and there are fewer and fewer workers. And you can't renege on promises already made to people who have been contributing throughout their careers. This can work: sovereign wealth funds are an example. Rising productivity is an updraft that pension funds should capture.
> Is Intel unique or is it common? Does Novick have this position due to pension funds specifically, or index funds in general?
I'm not a market guru, just happen to know about Intel because I worked there between 2009 and 2015 and it was sad for me personally to witness the downfall. The company started to rot around 2012, but the stock prices shot up and kept rising for 8 years. The strategy was "higher CPU price, less R&D, less people budget, no risky bets like mobile", this drove the earnings up to the pleasure of shareholders. You can't even call this strategy "shortsighted", it's "medium-sighted" because of the huge momentum that took years to dissipate, but the company's fate was sealed then. I don't know details of what happened to Boeing but suspect it was something similar.
> AIUI index funds own large stakes in many public companies so if this is true, they are all effectively run by Blackrock and Vanguard (or should be).
They almost never have the majority so control is determined by the presence of other figures which smaller investors could follow during the vote. A founder even with a partial control is often enough to steer it. When there's no one left but the funds they run the show.
> As opposed to other investors? Outside of founder-owners you've described 99% of retail and institutional investors.
Well first of all in this thread we are discussing precisely the question of how to redistribute the shares of the founder. OP says that the "policy" should have taken them away. "And who to give them?" I ask.
Second, I don't think 99% of investors (measured by volume of investment) have no strategy.
> Why do you believe pension funds specifically lack "talent"?
Because they're not backed by anyone in particular. Talent is always risky, systems that try to please millions of stakeholders are inherently risk-averse.
> I've long believed that's the only way to make the welfare state numbers (in any country) work in the long run.
I do realize many people think like that and that's why it's so scary for me. I don't believe this system could work.
TIL that Ballmer built their enterprise division from scratch.
Figures. It was a highly profitable division that nobody could figure out what it did or how.
He also saved Xbox from death [0]. More specifically the RROD (red ring of death) which afflicted most xbox360 consoles back in the day. I for one replaced my console three times before learning how to adjust the DVD drive's potentiometer after an insanely long disassembly process. Oh the good ole' days.
[0] https://arstechnica.com/gaming/2015/07/hear-how-steve-ballme...
Interesting because he also tried to kill Xbox internally before it was an initiative.
Truly a legendary man for finding himself in the right place at the right time.
That's honestly a bit dismissive. You might not like him because he's loud and "not an engineer", but you gotta give him credit for tripling their revenue under his watch.
Not the person you just spoke to, and I don’t have any skin in this game, but technically speaking we don’t know if it tripled because of him or despite him, right? The truth is likely somewhere in the middle, but who knows where exactly.
Or if another CEO could have done better. While Microsoft was a mature company at the time, it's still part of a very high growth industry. He was CEO for 14 years, so just tripling the revenue (and that's in nominal terms, not counting inflation) isn't exactly spectacular.
Well, there's the CEOs of IBM, Sun, Yahoo, HP, DEC, Compaq, AOL, Palm Computing, and other formerly high flying competitors to compare against. I'm sure people could suggest a few others. Whatever else might be said about him, he didn't crater Microsoft while on the job.
Okay but we do know it did triple under him which in general is pretty good.
Since Steve was the guy who single handedly recruited David Cutler and his gang, I figured he has a lot of tricks in his bag.
Interesting interview in general, but I thought this was interesting framing on selling stock where you're ahead:
> Why would I sell, so we have less to give to philanthropy someday, unless I really think Microsoft’s going to underperform the market by essentially the capital gains rate.
due to the capitalistic nature of america, they lost a brilliant mathematician in ballmer, yet also gained an excellent salesperson / executive.
guess end of day - money is a scale not an item to be measured.
Direct link:
Another interview about the story of Microsoft, who skillfully managed to avoid any mention of Mary Maxwell Gates :-)
https://www.cnbc.com/2020/08/05/how-bill-gates-mother-influe...
That was well covered in another episode.