Ballmer's net worth surpasses Gates for the first time, simply by choosing to continue holding Microsoft!

Yesterday, the former CEO of Microsoft, Steve Ballmer, reached a net worth of $157.2 billion, surpassing Microsoft's founder Bill Gates for the first time, whose net worth is $156.7 billion.

Ballmer's wealth doubled from $77 billion in November 2022 to $157.2 billion, placing him sixth on the Bloomberg Billionaires Index.

Ballmer is now approximately $5 billion behind Larry Page, the co-founder of Alphabet, who ranks fifth on the Bloomberg list with $162 billion.

The surge in Ballmer's net worth is closely related to his holdings in Microsoft. Currently, he likely still holds around 4% of Microsoft's shares. Microsoft's market value has exceeded $3.4 trillion, which is also a significant component of Ballmer's net worth.

Gates lags behind Ballmer because he has been continuously selling his personal Microsoft shares, diversifying his investment portfolio, and making substantial donations to his foundation and other charitable organizations.

How did Ballmer acquire these shares? There is an interesting contract detail behind this.

Ballmer's story with Microsoft began in 1975 when he was a sophomore at Harvard University living on the same corridor as Bill Gates.

While Gates dropped out to start Microsoft, Ballmer continued his studies. After graduation, Ballmer tried various jobs: he worked as a product manager at Procter & Gamble, briefly attempted Hollywood screenwriting, and entered Stanford Business School.

During his time at Stanford, Ballmer was convinced by Gates to drop out and join Microsoft.

When Ballmer joined Microsoft in 1980, he was the 30th employee and did not receive any equity.

At the time of joining Microsoft, his initial position was as a business manager with a base salary of $50,000 plus 10% of the profit growth he generated.

In 1980, Microsoft was experiencing rapid revenue growth, with annual sales increasing from $16,000 in 1976 to $8 million in 1980.

Standing at the peak of the PC wave, Microsoft experienced rapid growth. Its sales doubled to $17 million in 1981, with significant profit growth as well.

This made Ballmer's "10% of profit growth" deal unsustainable. Therefore, Gates and another Microsoft co-founder, Paul Allen, decided to convert this equity into Microsoft shares.

At that time, Microsoft was a partnership, with Gates owning 64% and Allen owning 36%. Initially, Gates drafted a company equity structure:

• Gates and Allen own 84%
• 8% for investors
• 8% for Ballmer (in exchange for giving up the 10% profit growth share deal)

Gates agreed to this deal, but Allen disagreed. Allen wanted Ballmer to have a maximum of 5%. So, Gates agreed to give a portion of his own shares to Ballmer.

By 1986, when Microsoft went public with a valuation of $700 million, Ballmer owned 8% of Microsoft's shares From 2000 to 2014, Ballmer became the CEO of Microsoft and basically retained his stake in Microsoft.

Today, Ballmer owns about 4% of Microsoft, while Gates owns about 1%. Ballmer's stake in Microsoft is about $140 billion, accounting for 90% of his total net worth, making him the sixth richest person in the world.

Now, Ballmer is more known as the owner of the NBA Los Angeles Clippers. After retiring in 2014, he acquired the NBA Los Angeles Clippers for $2 billion, which is now valued at around $4.6 billion.

It is very rare for an employee to become wealthier than the founder of the company, but this low probability event happened to Ballmer.

Of course, Ballmer's fortune is also thanks to the current Microsoft CEO Satya Nadella. Under his leadership, Microsoft's market value has increased tenfold in 10 years, capturing the wave of cloud computing and today's artificial intelligence wave.

Of course, one of the lessons for employees from this is: if you hold "diamonds" in your hands, the best strategy should be long-term holding.

Author: Recording AI Technology and Business, Source: Intelligent Hyperparameters, Original Title: "Ballmer's Net Worth Surpasses Gates for the First Time, He Just Chose to Continue Holding Microsoft!"