Bill Gates Page 16

  The firm continues Gates’s belief in intellectual capital, as all of the products sold by Corbis are images, videos, or the rights to use the visual likeness of various celebrities, musicians, and movies. Like software, the items being licensed are not anything that has to be created multiple times for use. For instance a photograph created once can be relicensed multiple times with little additional cost, especially when purchases can all be conducted online. Each additional license thus has very little in terms of marginal cost to the firm, which means profit can exist on each additional sale despite low sales costs.

  Gary Shenk is the CEO of Corbis, and Bill Gates is the chairman of the firm, much like the arrangement at Microsoft had been when Bill Gates continued to serve as executive chairman while Steve Ballmer served as CEO until the appointment of Satya Nadella as the new CEO in February 2014 (when Gates decided to undertake a mentoring role instead).

  Within the Corbis organization, there are a total of four subsidiaries that provide services to distinct customer segments. Corbis Images focuses on the sale of still photographs, while Corbis Motion focuses on videos, including aerial videos of cities and landscapes. For instance, an individual can purchase and license the use of photographs of Bill Gates through Corbis Images. The intellectual property of celebrity marketing, existing movies, and music is controlled by Corbis Entertainment, which also uses the name Green Light Rights. For instance, any use of images for Albert Einstein, Charlie Chaplin, Dr. Martin Luther King Jr., and Steve McQueen would require authorization from a company controlled by Bill Gates. Another subsidiary is called Veer, which sells artistic photos and specialized fonts for computer users, usually the lower-cost items sold by the organization. Then there is Splash News, which specializes in current photos, news, and stories related to celebrities and individuals involved with popular culture.

  Bill Gates speaks at the 2006 Corbis annual meeting. Corbis and subsidiary firms are wholly owned by Gates. (AP Photo/Bebeto Matthews)

  According to Corbis’s fact sheet, the company has approximately 650 employees and customers in more than 50 countries as of January 1, 2014. The library of images available from Corbis represents the work of more than 30,000 photographers around the world, all searchable online for quick and easy purchasing by businesses and organizations desiring to use those photos.16

  Corbis was not always a profitable company and required restructuring at one point in time. In an interview with CEO Shenk, there were three primary issues that confronted the company in the 2006/2007 timeframe. As has been seen in other industries like photography, there was a rapid shift from print photographs to digital. In addition, more capable devices like cell phones and tablets were able to take and display digital photographs. Finally, the creation of photographs by millions of individuals around the world created a market where low-cost—or free—options were readily available when Corbis had specialized in higher-cost options that started at $150 and ranged to $500.

  The issue of providing high-cost options when lower-cost options were becoming prevalent was compounded by the global recession that started shortly thereafter. Fortunately, Bill Gates saw the need to re-envision the company once again, from a company that was oriented toward digital media on televisions to specialized media rights to providing a full range of licensing that includes low-cost as well as high-cost options, for individuals and professionals.17

  Lawsuit against Corbis

  Corbis was sued in a fraud case for stealing the intellectual property of a firm called InfoFlows. The most recent public documents about the case suggest that the Washington State Court of Appeals ruled that Corbis would be required to pay $12.75 million in damages to InfoFlows. This was a number reduced from an original $36 million in damages. Based upon the initial claim, the reaffirmation of the fine against Corbis would suggest that intellectual property of InfoFlows was used to create a patent application for Corbis:

  According to the claim by Infoflows, Corbis abruptly terminated the contract after four months and claimed ownership of the technology. Infoflows then discovered that Corbis was patenting its own system based on what Infoflows saw as its own IP. In January 2007, Corbis sued Infoflows for breach of contract and trade secret misappropriation. Infoflows countersued claiming several charges of fraud.18

  Chapter 11

  BILL AND MELINDA GATES FOUNDATION AND GIVING PLEDGE

  The couple founded what is now the largest independent charitable foundation in the world, committing to dispersing the vast majority of their accumulated wealth. Beginning with his departure from Microsoft in 2008, Gates has declared his work with the Bill and Melinda Gates Foundation to be his full-time work.

  Bill Gates recognized the importance of being involved in social causes as his mother had been throughout his upbringing until her death in 1994. However, he was very clear that the social involvement was not being driven by a requirement from his mother. In fact, Gates finds exceptional personal reward and satisfaction in the ability to contribute to solving problems with the resources he had amassed.

  PRECEDENTS FOR MASSIVE GIVING

  Gates, Allen, Ballmer, and Jobs all became exceptionally wealthy as part of the micro-computer revolution. In terms of philanthropy, Gates did have role models from other individuals who had amassed incredible amounts of wealth through previous revolutions in business, like another cluster of famous names—John D. Rockefeller, Andrew Carnegie, and John Pierpont (J.P.) Morgan, all born between 1835 and 1839.

  How did John D. Rockefeller give? He gave primarily to educational institutions throughout the country, benefiting others who had often been neglected, like providing funding to help found Spelman College—a school founded in the 19th century to educate African American women in Atlanta—as well as initiatives to help promote public health, including efforts to eradicate hookworm.

  How did Andrew Carnegie give? He worked in education as well, specifically in libraries. At one point in U.S. history, Carnegie had paid for the construction of almost half of the libraries in the entire country, so his initiative provided access. The Carnegie Mellon University is a combination of the university he founded and Mellon Institute; he also provided funds to the Tuskegee Institute to support African American education. He provided funding for science and research, and supported the arts through Carnegie Hall.

  How did J.P. Morgan give? He gave to colleges, universities, and museums, and the items he collected throughout life were used as educational tools and museum pieces.

  So Gates had many potential models to follow—he could use his expertise in technology to benefit education, work with libraries, support higher education, help African Americans and other disadvantaged populations build better lives, work on health initiatives, promote new scientific approaches, or use items collected for educational tools as museum pieces, as Rockefeller, Carnegie, and Morgan had a century before. Or with an exceptionally focused mind and desire to benefit the most people and save lives at the lowest cost, Gates’s philanthropy could very well assist in completing all mentioned earlier. However, Gates did not start his philanthropy—or collecting—with such a broad focus.

  GATES AND LEONARDO DaVINCI

  What do Bill Gates and Leonardo DaVinci have in common aside from an ability to see connections and opportunities where others could not? Gates bought one of DaVinci’s scientific journals, called the Codex Leicester, in 1994 for $30,802,500 at a Christie’s art auction. Why does this one document sell for such a high price? No other work created by DaVinci is owned by a person—all other known documents are owned by governments or museums. But what does one do when owning a work created over 600 years ago by one of the greatest inventors in all of history?

  Gates used the product in his digital imaging company (Corbis) but also wanted to share it with the world, allowing others to view the important document. There was a minor problem along the way, and Gates decided to “test out” the implications of acquiring other expensive artworks and pieces of historical significance over
time. Buying an item in New York for over $30 million was still an expensive purchase despite his wealth, and Gates understood that as a resident of Washington State, he was supposed to pay taxes on the item purchased in another state at the time he brought the item to Washington.

  In 1995, Bill called someone at his father’s law firm to try to get a new law passed, working with an official in the state’s Department of Revenue, who recalled later:

  If Bill Gates had to pay nearly $3 million to bring the da Vinci manuscript into this state, why would he? He has eight or nine homes. He can leave it in a state without paying a use tax. I thought applying the use tax to art collectors would result in someone either not bringing (the art) into the state or not purchasing it at all. I saw it as my job to help draft the legislation so that it was specific and didn’t include more (exemptions) than intended.1

  The law never passed, as there were some objections. Other collectors of valuable items in the state of Washington were apparently not paying the required tax, and the proposed bill quietly went away (until published in the news 10 years later). The reporter noted that Gates paid the legally required tax to bring the valuable into the state, and allowed the document to have public showings in the local community—the Seattle Art Museum in 1997 and the Boeing Museum of Flight in 2006—and around the world. Coincidentally, Bill Gates’s father had married the director of the Seattle Art Museum (Mimi Gardner) in 1996.

  LIBRARY PROJECT AND U.S. INITIATIVE

  The first major project was the Library Project in the United States, from 1996 to 2003, with the primary years from 1998 to 2003. The focus was on providing access to computers and training in U.S. and Canadian public libraries, primarily in poor and rural areas. This single project was valued at almost $180 million: “We funded training and the initial hardware grants, and Microsoft provided some of the software that people used, but the connectivity piece is ongoing.”2

  Using the Internet to communicate with families and looking for jobs was expected; searching for information about medical issues like those soon to be funded by Gates Foundation jumped out. The project covered almost 11,000 facilities with over 47,000 computers and 62,000 opportunities for training. At the time of the grant, the Internet was not available to everyone and the goal of the project was to allow anyone who went to a library to have Internet access, that objective was only 95 percent achieved by Gates’s estimation.

  Gates expected criticism that providing Microsoft products would be seen as attracting new customers but Gates saw this as a have-versus-have-not issue in society: how to allow people without computers or access to the Internet to benefit from the tool. Gates did not expect criticism like he received from the New York Times, suggesting that a goal of connecting people in rural areas was to encourage movement away from the rural areas.

  In his clear vision of the future regarding books and computers, he described how the Wall Street Journal was at 75 percent paper and 25 percent computer-based for reading but “eventually these computer screens are going to get small and portable.” In 2003, Gates already saw the future for devices like Amazon’s Kindle, Apple’s iPad, Barnes & Noble’s Nook, and the tablets of various other manufacturers in revolutionizing the way books could be read, from entirely paper-based to electronic.3

  Others glommed on to the library project with comparisons to Carnegie, who paid for the library construction but required the community to provide the books and resources. Martin wrote that it would be common and expected for technology magnates to donate technology to libraries, that the patrons with no other Internet access would benefit, and that there was a necessary role with instruction of these new resources; although not directly manipulating these individuals without Internet access, it was seen as a form of marketing toward these same groups.4

  WEALTH DISPARITY AND MINORITY EDUCATION

  In 1997, the JBHE foundation wrote that 7.2 percent of gifts made by Bill Gates at that time were directed explicitly toward historically black colleges and universities (HBCUs). Gates had not ramped up massive amounts of donations at the time, but the authors stated that if all future giving by Gates continued at the existing levels, the amount donated—in 1997 dollars—would be at least three times the then value of the endowments at all private black colleges combined. The authors noted that Gates had made a point to intentionally reach out to those colleges and universities, and that a small percentage of Gates’s wealth would make a profound impact on those colleges and universities.5

  Two years later in the same JBHE journal, Cross wrote that Bill and Melinda Gates Foundation gave $1 billion to be administered primarily by the United Negro College Fund (UNCF) under the Gates Millennium Scholarship Fund Endowment, specifically to provide funding for low-income minorities to seek college education. On average, Cross found that minority families are shown by the Census Bureau to have approximately one-tenth the family wealth of Caucasian families, which precludes some minority students from seeking college studies. However, there were concerns about the use of funds to provide opportunities only to poor minority students, despite the source being a private endowment instead of a government agency.6 The Gates Millennium Scholarship Fund program remains open to African American, American Indian—Alaska Native, Asian Pacific Islander American, and Hispanic American students.7

  A billion dollars to education is a very large number, but a billion dollars would be a small percentage of Bill Gates net worth. Two years later in 2001, the JBHE, extrapolating from 1995 U.S. Census Bureau data, estimated that Bill Gates alone held almost 10 times as much wealth in just Microsoft stock than the entire wealth of all African American households in the U.S. combined. Gates had decided to give away the vast majority of his wealth, but others continued to notice that there was inequity given Gates’s vast comparative wealth compared to others in his own country, no less abroad.8 Despite his commitment to giving away his wealth and two in-progress initiatives, Gates drew heat from an unlikely source: consumer advocate Ralph Nader.

  1998 EDUCATION SPEECH PIEING INCIDENT

  In February 1998, Bill Gates was due to give a speech on education in Brussels, Belgium, when he was hit in the face with four small pies. The two pie throwers were fined approximately $88 each the next year, the minimum allowed under Belgian law for the crime of “mild violence.” Even though Gates was in Belgium to talk about an important issue, he was specifically one of many individuals targeted by the group of pie throwers: “The group’s mastermind, Noel Godin, has vowed to ‘assassinate through ridicule all world celebrities who take themselves spectacularly seriously.’”9

  RALPH NADER’S ACTIVISM IN 1998

  How is Ralph Nader connected to Bill Gates, Warren Buffett, the current mission of the Bill and Melinda Gates Foundation, and the Giving Pledge later initiated by Gates and Buffett? That story starts back in 1998, when Nader was pressing Gates on multiple issues, including those that led to the Microsoft trial. Therefore, on July 27, 1998, Nader sent Gates a letter starting with a sobering figure about Gates’s wealth at that time: according to a study by an economist, Gates alone was reportedly wealthier than the poorest 40 percent of Americans combined.

  Nader took those mathematical figures a bit further, discerning that the wealth of the 385 billionaires in the world at the time exceeded the wealth of the poorest 3 billion people on the earth (that is 3,000,000,000 people). So Nader had a few thoughts about what these exceptionally wealthy people could do to assist others throughout the globe.

  He describes the deaths that occur globally due to diseases that are rare in the United States because medical treatment is effective and inexpensive, yet not acted upon by businesses or governments in any coordinated fashion. He even noted that deaths from tuberculosis and malaria were increasing, with a record of almost 6 million people dying in the previous calendar year. Nader knew, from Gates’s writing, speeches, and events, that Gates and Warren Buffett, two of the top-three wealthiest people in the world, were very good friends. As a result, he m
ade a prescriptive recommendation that Gates and Buffett create a billionaire summit that would use the expertise and resources of these successful businesspersons to solve problems throughout the world by initiating a:

  [C]onference of billionaires and multi-billionaires on the subject of National and Global Wealth Disparities and What to Do About It. The quantity, quality and distributional dimensions of economic output will drive participants to come to grips with the fundamental purposes of economic systems and their economic indicators.10

  Did Bill Gates respond to Nader’s letter? He did indeed on August 4, mentioning his already existing commitment to give away the vast majority of his wealth in his lifetime and that he has to protect his wealth—by effectively running Microsoft—in order to provide the most social good in the future. He also subtly made a jab at himself and/or Nader, specifying that experts in one area should not make recommendations in areas where expertise is lacking: “I am in agreement with my friend, Warren Buffett, when he says that people who are successful in one field should be careful about suggesting they know all the answers in other areas.”11

  Gates knew that technology did provide societal improvements in terms of education and personal health, which he had seen with his library project in the United States. For instance, people used the access to the Internet for communication but also to research medical issues and diagnoses. Gates also used technological advancements and improvements as the theme of both books he authored. He also provided a subtle comment about using success in one aspect in life to infer expertise in other spheres. This statement could be interpreted as applying to each of the three parties (Gates’s expertise was technology/business, Buffett’s expertise was investing, and Nader’s expertise was consumer activism); none were experts in driving initiatives that were intended to drive broad societal improvements.