COPYRIGHT, 1992, by Paul Andrews and Stephen Manes
Ross Perot, the billionaire all-but-declared presidential candidate, hasn't blown many deals. But he kicks himself when he thinks about the one that got away.
In 1979, Perot, then head of Dallas-based Electronic Data Systems, negotiated to buy Microsoft when it was a young $2 million Bellevue software company, and Bill Gates, its leader, was just 23 years old.
Today the stock market values Microsoft Corp. at more than $21 billion, and Gates has become the richest person in the United States, holding Microsoft stock worth nearly $7 billion - more than twice Perot's estimated net worth.
"He did give me an opportunity to buy a ringside seat," Perot said in an interview last September for a biography of Gates to be published later this year. "He has never kidded me about that, but I think if the shoe were on the other foot, I'd probably needle him."
In 1979, Perot was 49 and a computer-industry kingpin, having parlayed a 1962 investment of $1,000 into a financial empire worth nearly $1 billion. Microsoft was an up-and-coming, but little-known, 28-employee partnership that Gates and his longtime friend, Paul Allen, had founded in 1975 on a similar $1,500 shoestring.
"I should've just said, `Now Bill, you set the price, and I'll take it,' " Perot said. "I should've just said, `Bill, whatever you think is fair.' "
Instead, Perot found Gates' asking price, which he recalled as between $40 million and $60 million, "really way too high." And Gates, who remembered the figure as between $6 million and $15 million, was uninterested in selling.
A RARE HAIRCUT
"I was very bowled over by their size and everything," said Gates, who had been flattered enough by Perot's interest to get a then-rare haircut before their meeting. "But when we talked about the product vision, it was just strange - they weren't really thinking about it."
The talks came at pivotal times for both, and each had something to offer the other. Perot was contemplating investments in fledgling makers of small computers, such as Apple, and saw Gates as a supplier of software for them. To Microsoft, EDS represented entree into a vast corporate marketplace.
EDS supplied hardware-software systems to banks, government and large corporations for computerizing records and services. Perot quit IBM in 1962 because the computer giant wouldn't bite on his suggestion to provide a whole-package solution to these big clients.
"We thought, `Hey, these guys can help take micros into these big corporations,' " Gates recalled. The point was to "really get these guys to proliferate the micro-based idea."
Perot said he believed Gates "was absolutely on the right track with what he was doing. And we were really impressed with the people he had working with him and his ability to get the people working with him to work to the outer limits of their capability" - a talent Perot prided himself on as well.
The two met in Perot's wood-paneled office on the top floor of a seven-story Dallas building. Gates was impressed by the patriotic Perot's American flag, historical paintings and insignia of an American eagle - a reference to Perot's recruitment philosophy that "eagles don't flock, you have to find them one at a time."
As for the 5-foot-6 Perot himself, Gates was somewhat surprised at "this tiny little guy" emerging from the elevator.
Perot asked him, " `Well, if I buy this, will I make money?' " Gates recalled with a laugh. " `Why would you sell?' "
Gates was nonchalant about the opportunity.
"I don't think he ever gave it any kind of serious thought at all," recalled Mary Gates, Gates' mother, who at the time still nurtured hopes her son would return to Harvard for his undergraduate degree. She, on the other hand, "gave it a lot of serious thought."
She recalls telling him: "Son, now let's talk about this again! Just think what you could do, the flexibility that you'd have in your life."
But Bill Gates said that after their meeting he sent Perot "a nice `No' letter."
"I think Bill expected a lot more at that phase of the game, and I think we did not have the leap of faith," said Mort Meyerson, then-president of EDS, who recently was named to head Perot Systems.
Neither Perot nor Gates went on to great success in the other's arena. Last year Perot resigned from the board of Steve Jobs' NeXT Computer, which he helped bankroll after Jobs was ousted from Apple. Gates is still urging corporate America to standardize on Microsoft's Windows software.
STILL KEEPS IN TOUCH
Perot still keeps in touch with Gates, who is noncommittal about Perot's presidential ambitions. And Perot still has regrets.
"I consider it one of the biggest business mistakes I've ever made," he said.
"My satisfaction wouldn't be in all the money I'd made. It'd be in the day-to-day contact with Bill and the people at Microsoft in watching them do it. That would have been a hell of a seat, right?"
Editor's note: Paul Andrews, a Seattle Times staff reporter, took a year's leave of absence to work with Stephen Manes, a Seattle-based PC Computing magazine columnist, to research and write a book about Bill Gates of Microsoft. The book will be published by Doubleday later this year.