Gone From Microsoft, Ballmer Begins A Surprising Second Act

"I love great views," Steve Ballmer says with a grin as he takes me on a quick tour of the 40th-floor apartment he just rented in Bellevue, Wash. One set of picture windows faces the downtown Seattle skyline. Another provides a gorgeous view of Mount Rainier to the south. As Ballmer settles into a large tan sofa, I realize one outlook is missing: to the northeast. The apartment's interior walls prevent us from looking inland toward Microsoft's giant campus, where Ballmer worked for most of his adult life.

The past is vanishing. From this new perch, Microsoft is literally behind Ballmer and out of sight. The longtime chief executive still commands the room with the same booming voice and wild gesticulations that made his public appearances at Microsoft legendary spectacles. But it's not his job anymore to cheer-lead for Windows, Bing or a host of other Microsoft efforts. Control has passed to a new chief executive, Satya Nadella, who is smoothly recalibrating Microsoft's strategy. When I ask Ballmer how often he hears from his successor, the wry answer is: "Once a month--maybe."

Instead of waiting for calls that won't come or, even worse, butting in, Ballmer is on to the next thing and trying to pull off the biggest relaunch of his career: himself.

"I've got a seven-part plan," says Ballmer, swirling an iced tea. Playfully, he starts talking about the little stuff: getting himself into better physical shape, improving his golf game and keeping tabs on his 333 million shares of Microsoft. He's getting tutored in areas that intrigue him, such as Hebrew: "I never had a bar mitzvah when I was a child." Eager to rectify that gap, he wants strong enough Hebrew skills to be able to recite his Torah portion. But then the banter stops. Ballmer knows that at age 58, with a $22.5 billion net worth that puts him at No. 18 on The Forbes 400, he is too young, too rich and too full of unrealized goals to while away his next decades with the small hobbies of an ordinary corporate retiree.

So now we get to the big items on Ballmer's list. Atop the priorities: maximizing his recent, eye-popping $2 billion purchase of the Los Angeles Clippers basketball team. Regardless of how many people think he overpaid--pretty much everybody--Ballmer sees value. Meanwhile, he and his wife, Connie, are feeling the first stirrings of wanting to do something sizable in the civic/philanthropic areas. Analytical to a fault, Ballmer has been hanging out with everyone from bloggers to the head of the Congressional Budget Office, trying to figure out if there's some gap in government redistribution programs where he--and his money--could make everything work better. Finally, Ballmer is wrestling with the tangled legacy of his 34 years at Microsoft. He is closely associated with the company's biggest successes (Windows and Office) and its most awkward missteps (Bing search, the Windows phone, the Zune MP3 player). Ballmer says his record speaks for itself, particularly his success in tripling Microsoft's profits during his 14 years as CEO. "Only two companies in America--put the oil companies aside--make the kind of money we make," he says.

Linking everything is Ballmer's long-simmering need to establish himself as his own man after having lived in the shadow of Bill Gates and Microsoft for decades . When the two men were Harvard classmates in the mid-1970s, Gates was the Pied Piper, encouraging the highly conscientious Ballmer to join him in skipping classes, on the (correct) belief that both could muster an A on the final anyway. During Microsoft's early years Ballmer constantly was put to work fixing the company's toughest problems, yet was never given the title of president until at least three other executives had cycled through that job. Even more recently, when Ballmer was CEO and Gates was semiretired, the leadership baton never fully passed. People feared Ballmer, but they revered Gates.

As Ballmer plots his calendar, it's easy to see how this hunger for autonomy and recognition influences him. Several friends note that Ballmer is spending a lot more time in Los Angeles these days, not just because he bought the Clippers but also because it lets him break free of Seattle and mingle with new friends. He's revisiting his legacy this autumn by teaching at Stanford and USC business schools. Eager to talk about both his stumbles and successes, Ballmer's main goal is to show that his playbook remains relevant to a new generation of leaders. Most tellingly, Ballmer is starting to sketch out a philanthropic vision that doesn't involve being a small planet orbiting the giant sun of the $40 billion Bill & Melinda Gates Foundation. The Ballmers have yet to set up their own foundation, but he waves off the notion of following Warren Buffett's example and passively submitting his wealth to the Gates team to manage. "It's great what Bill and Melinda are doing," he says, before pausing a beat. In the end, Ballmer continues, he wants to find his own path this time.

ASK PEOPLE TO RATE Ballmer's performance in running Microsoft and you'll collect a shockingly wide range of opinions. His harshest critics focus on all the things that didn't go right: a messy, five-year struggle to launch the Vista operating system; ill-fated acquisitions such as the $6 billion purchase of aQuantive; and the chronic inability to catch up with Google in search or Apple in mobile phones, music players and tablets. Such fault-finding led prominent hedge fund manager David Einhorn to call for Ballmer's ouster in 2011, contending that "Ballmer is stuck in the past and is at best a caretaker at Microsoft."

In the other camp are panoramic thinkers like Warren Buffett, who noted in his 2009 annual shareholders' letter that Ballmer had the bad luck to take office in early 2000, just as the tech-stock bubble was about to pop. The ensuing fast skid--and slow recovery--of Microsoft's share price has meant that the company's stock performance during Ballmer's tenure has forever been tarnished by an unfair starting point. By measures such as profit growth or the longevity of the huge Office and Windows franchises, Microsoft's performance during the Ballmer era looks far better.

Given the chance to appraise himself, Ballmer starts speaking softly, asking if he could begin the clock in 1980, when he joined the company, rather than in 2000. Told that he could do so, Ballmer begins going over his own report card, getting louder and more wide-eyed with each crescendo.

"My total time kicked ass," he declares. "I made mistakes. I kicked ass! I tried some things that haven't worked, could still work, did great. I'm not going to tell you it was perfect. That would be silly. On the other hand, let me say that I was a leader--the leader! Do whatever you want with Bill and I over the years, where the relationship changed periodically. Over the past 35 years we have probably generated as much profit for shareholders as almost any company in America."

The business-according-to-Ballmer book will not be in stores anytime soon, if ever. Unlike Jack Welch, whose career recap was an immediate bestseller upon his retirement from General Electric, or Lou Gerstner, who scored with his IBM postmortem, Ballmer isn't inclined to pen such a book, and realistically, with the exception of the late Steve Jobs, there aren't any big-company CEOs whose life stories or business tips are likely to appeal to the current era's highly cynical audience.

About 90 M.B.A. students are currently getting the wisdom of Ballmer once a week at Strategic Management 588, a class Ballmer is teaching at the Stanford Graduate School of Business with professor Susan Athey. The syllabus covers topics such as product development, business models, managing people and creative destruction. Most of the examples will come from Microsoft. One lecture on brand building through storytelling, for example, will contrast Microsoft's spectacular rollout of Windows 95 two decades ago with its patchier efforts last year to bring the Surface tablet to market.

"He's willing to be critical," says Athey. "He really wants to get the right answer, and he's not going to stop until he understands something."

Kicking around Microsoft's past in a classroom may be the safest place for Ballmer to sort out why the company lost some of its innovative magic in recent years. But it's not Ballmer's style to grouse about his old employer in public. Noting that Microsoft stock is up about 26% since Satya Nadella took over as CEO on Feb. 4, Ballmer says he is thrilled, adding, "He's off to a fantastic start." And when our interview recording is briefly halted by a mix-up involving my Android phone, Ballmer gives me a withering look. "You wouldn't be having these problems," he declares, "if you used a Windows phone."

SPORTS HAVE BEEN a profound part of Ballmer's life since high school, when he was a 260-pound lineman for Detroit Country Day School. Ballmer still remembers the thrill, as a senior, of getting to wear jersey 71--the same number as his hero, Detroit Lions defensive tackle Alex Karras. Glory turned out to be fleeting. By game five of the season Ballmer was benched in favor of a lighter teammate with greater agility. He took the lesson to heart in college, heading to the sidelines at Harvard and becoming the varsity football team's student manager.

"Steve had hit his athletic ceiling by college, but he loved sports," recalls James Kubacki, who was Harvard's quarterback at the time. "Being the manager was his way to stay connected. He got the footballs in place for our drills. He set up trips and ran the business side. He ran everything. He loved being part of the team, and he appreciated athletes' ability to play at a high level."

Throughout his Microsoft years Ballmer kept competing in tough, demanding sports, even if the results weren't always pretty to watch. In the late 1980s he took up distance running as part of an effort to lose weight. He and his future wife, Connie, went jogging together on one of their early dates. In 1988 Ballmer ran the New York marathon in a respectable 4 hours, 35 minutes. He married Connie in 1990 and quickly switched to predawn basketball. Ballmer established a tradition of meeting Microsoft managers for pickup games at a gym next to the Redmond campus. One team would be the Trotters; the other would be the Generals. People who have seen Ballmer play say he has a surprisingly smooth jump shot, albeit with a vertical leap best measured in millimeters. A dodgy ankle finally put an end to Ballmer's hoops career, forcing him to retreat to the relatively safety of golf.

All the while, Ballmer was making waves as a well-heeled fan. He started buying season tickets in the 1980s to watch the SuperSonics, Seattle's National Basketball Association franchise. By the 1990s Ballmer was chatting sports periodically with Microsoft cofounder Paul Allen, who owned the NBA's Portland Trail Blazers. It didn't take long for Allen to recognize a kindred spirit. "Paul kept saying, 'Steve, you have to get a basketball team,' " Ballmer says. Allen's prediction: "You'd love it."

In 2006, when the SuperSonics' new owners were poised to move the team to Oklahoma City, Ballmer became the lead investor in a group that promised to keep the team in Seattle. Those hopes were dashed when local government support for their bid failed to come through. Ballmer tried again in 2013, attempting to acquire the Sacramento Kings when they were up for sale. No such luck. Then in April Clippers owner Donald Sterling made his idiotic racist comments and got blackballed by the NBA.

"Steve had promised me he wouldn't jump into anything big for the first six months after leaving Microsoft," Connie recalls. But the chance to own an NBA team in a top-tier market was too good to pass up. Ballmer initially told friends he expected to land the team for $1.5 billion, nearly triple what anyone else had ever paid for an NBA franchise. When other bidders appeared willing to pay that much, too, Ballmer unleashed a gigantic $2 billion bid that--at last--won him entry into the NBA owners' club.

Did Ballmer overpay? Even in a business with ego-driven multiples, he paid 12 times this year's estimated revenue (and about 104 times operating earnings) versus the "usual" five times revenue. But Ballmer isn't backing down. In an Aug. 12 ESPN interview Ballmer said, "It's not a cheap price, but when you're used to looking at tech companies with huge risk, no earnings and huge multiples, this doesn't look like the craziest thing I've ever acquired."

After taking a closer look at the books, Ballmer tells FORBES he's even more optimistic. New television contracts will pump up revenue in a big way, he notes. There's also some room to boost merchandise revenue, especially given the popularity of Clippers stars Blake Griffin and Chris Paul. Ticket prices may get a fresh look, too. Ballmer says he likes the idea of keeping some tickets highly affordable for the ordinary fan, while leaving the door open to be more aggressive with premium seats, reflecting the norms being set by the Los Angeles Lakers and the New York teams. "We are not at the high end of ticket prices for affluent cities in America," he observes.

At his first Clippers' news conference, in August, Ballmer darted into the crowd, high-fiving fans and shouting, "I love the Clippers." Such pump-up-the-crowd antics have been part of Ballmer's persona for decades. In the tech community that exuberance made it hard for some people to take Ballmer seriously. But in sports, wild-eyed owners are treasured, not ridiculed. Even the NBA's reigning king of commotion, Dallas Mavericks owner Mark Cuban, singled out Ballmer for praise, saying, "My only advice is that Steve should just be himself."

STEVE AND CONNIE BALLMER have been quietly active philanthropists in the Seattle area for years, inspired mostly by Connie's empathy for children and teens caught in a web of foster-care programs and fragmented social services. But there's room--perhaps even an obligation--for the Ballmers to share their wealth in a much more substantial, systematic way. The big question: Do you give with your head or your heart? That's the dilemma that anyone writing sizable checks must confront, particularly those with 11-figure fortunes.

"I'm more of a save-the-world person than Steve is," Connie Ballmer explains, "so I need him to catch up with me. It's all really new for him."

Last year Calvin Lyons, the CEO of the Seattle area's Boys & Girls Clubs, stopped by Microsoft's offices after hours to see if the Ballmers wanted to support a major revitalization of his programs. The meeting went well, Lyons says, but he can't forget what happened a few minutes later. Just as Lyons was leaving the building, Ballmer came sprinting through the marble lobby, shirttails flying, shouting, "Hey, I just thought of something else!" He shared a handful of new ideas about how Lyons' organization could make a deeper impact in Seattle's toughest neighborhoods. Analytical Ballmer had given way to euphoric Ballmer. The Boys & Girls Club was about to get what Lyons now calls "very, very substantial support."

Except for that one giddy moment, though, Steve Ballmer isn't ready to crack open his $23.5 billion fortune to whatever worthy causes can move him the most. Instead, he is approaching the vast world of social programs with an economist's precision: reading books, gathering data and talking to experts everywhere from Washington, D.C. to leading universities. It's as if he's trying to complete a self-assigned Ph.D. program in public-good studies before taking the irreversible step of moving any major chunk of his money into a foundation.

Ballmer is quick to unleash a barrage of facts that he has learned during his "coursework": Government pays for 55% of the health care in the country. We spend $1.1 trillion on education. The capital gains tax raises just $200 billion a year. Partway through one of his recitations, Ballmer concedes: "It's very complicated. That's what I've decided."

Seeking insight everywhere, Ballmer has marched through all 577 pages of Capital, French economist Thomas Piketty's testy critique of income inequality. "I'm way too capitalistic to agree with his conclusion," Ballmer says. "But a lot of his framing is highly useful. He's the one who says, 'Savings in most developed countries is about 5.5 to 6 times GDP, of which half is in residential housing.' That's something you can keep in your head."

Asked where all this knowledge-accretion is taking him, Ballmer quickly concedes: "I don't know." And yet he presses on. In recent months he has chatted with the likes of Congressional Budget Office director Doug Elmendorf and Maine Senator Susan Collins. He has made friends with libertarian blogger Christopher Chantrill. His apartment is littered with CBO printouts; his calendar is sprinkled with must-attend conferences on health care and other topics.

Longtime friends say there's a pattern to Ballmer's eclectic wanderings. When a new area first intrigues him, he's a superb, open-minded listener craving fresh data. Gradually he starts forming his own views and becomes much more selective about what he hears. And then, once his mental model is fully built, he reverts back to being Thundering Ballmer--the man with all the answers.

No one knows this better than Connie Ballmer. "We're somewhere between 12 months and five years from knowing exactly what we'll do" with regard to charity and civic causes, she says. Perhaps Steve's walkabout will point him toward a corner of overall income redistribution policies, where he thinks he can accomplish something that the government can't. Or maybe he will need to build and tear down a series of initiatives before he gets it right. "Steve's persistent, but he's not patient," she says. "You can have the best intentions, but it's so difficult to make progress in these areas. It would be delightful to see him dig in and really persevere at something here."

When the stakes are high enough, nobody does stubborn like Ballmer. Back in 1984 he took charge of Microsoft Windows when it was a raw, incoherent project. It took him eight years--and a lot of missed deadlines--until he and his team were able to rock the world with Windows 3.1. Don't be fooled by his present-day shrugs. That same competitive fire is stirring him once more.