from Trung Phan | by Trung Phan

Microsoft just reached $2T, pushing Steve Ballmer's net worth to $80B. Interestingly: when Ballmer joined MSFT in 1980, he was employee #30 and received ZERO equity. By its IPO in 1986, he owned 8% of MSFT. How did Ballmer get that stake? A contract quirk. Here's the story🧵 t.co/oX4fuzLE4V

1/ Ballmer's Microsoft tale begins in 1975, his sophomore year at Harvard. He lived down the hall from some dude named Bill Gates. While Gates dropped out to start Microsoft, Ballmer was a total Harvard head -- playing on the Football team and writing for The Crimson. t.co/QVUZpXpDgx

2/ After graduating, Ballmer tried his hands at a few things: ◻️ Product Manager at P&G, where he worked with future GE CEO Jeff Immelt ◻️ A brief attempt at Hollywood screenwriting ◻️ Stanford Business School While at Stanford, Ballmer was convinced by Gates to drop out...

3/ ...and come join Microsoft. It was 1980 and the software co. was seeing explosive revenue growth: $16k in 1976 --> $8m in 1980. Ballmer was to be Gates' first non-technical hire and the offer he gave reflects the fact that Gates' hadn't recruited a business person before. t.co/J01Jpv6vEy

4/ Ballmer's offer: ◻️ the title of "business manager" ◻️ $50k base salary ◻️ZERO equity ◻️CRUCIALLY-- as Microsoft was so desperate for sales know-how -- Gates (and co-founder Paul Allen) gave Ballmer "10% of profit growth" he could generate. t.co/PoHhRAnnSC

5/ With Microsoft growing like a weed (it would 2x to $17m in 1981), Ballmer's "10% of profits" deal was not sustainable. At the time, Microsoft was a partnership (Gates 64% / Allen 36%). One early VC (Dave Marquardt) wanted to restructure the corp for wider stock ownership. t.co/WHofaZYCJ4

6/ Gates wanted nothing to do with the restructuring, so Ballmer and Marquardt took the lead. This was the corporate structure they drafted: ◻️ Gates and Allen own 84% ◻️ 8% goes to investors ◻️ 8% goes to Ballmer (in exchange for *waiving* his 10% profit share deal)

7/ Gates was OK with the deal but Allen was not. He wanted Ballmer to own 5% max...so Gates agreed to drawdown the rest of the equity to give Ballmer from his own pool. By 1986, Ballmer owned 8% of $MSFT. It was worth ~$56m when Microsoft IPO'd at $700m. t.co/hsmtGEri2J

8/ In the decades since, Ballmer -- who was Microsoft's high-energy CEO from 2000-2014 -- has largely kept his stake in $MSFT. Today, he owns ~4% of the tech giant while Gates owns ~1.4% (Allen died in 2018, and long ran down his stake). t.co/1PLmW78Oed

9/ Ballmer is currently the world's 14th richest person and very high-profile owner of the LA Clippers (which he bought for $2B in 2014). As far as "contract quirks" go, the one Ballmer had when he signed with Microsoft has to be one of the most outrageously lucrative ever. t.co/N259YGLxNS

10/ Follow @TrungTPhan for other baller business stories and -- also -- a steady drip of dumb memes: t.co/fGYOp3LrSA

11/ Sources NYT: t.co/pqSiA3CGRO Wiki: t.co/UdFuDeBatM Forbes: t.co/S0ljcLVxaO

12/ Here’s a random video of Ballmer waiving his hands around like Dennis Rodman: t.co/oNuslFC5D8

13/ This may or may not have been Ballmer when he signed the MSFT contract that gave him 8% of the company: t.co/0lhtC3hQRQ