Bill Gates owned 45% of Microsoft when they went public in 1986.
Today, he owns 1.3%.
If he kept the 45%, with Microsoft worth 2.2 trillion today, not factoring in dividends, he’d be worth 990 billion, making him basically the first trillionaire.
Why did he sell so much of his equity when there was no reason to do that?
Looking at a net worth timeline, this is Bill Gates.
1986
350 million dollars upon IPO.
1987
1.2-1.3 billion after success of Microsoft as a stock.
1990
15 billion with early tech bubble developing.
1997
40 billion as the bubble goes crazy.
1999
85 billion where the tech bubble was at bursting point.
2000
63 billion as it drops.
2003
47 billion with tech bottoming out while also donating more to charity.
Gates went up massively in the 90s, with tech stocks going insane and Microsoft being the leader, but saw a drop in the early 2000s, with part of it being donations and the main part being a decrease in Microsoft stock.
But here’s the reason it seems likely he exited.
Microsoft’s market cap was 619 billion in 1999.
In 2000, it’s 250 billion as the average for that year.
It wouldn’t return to the 1999 number until 18 years later in 2017.
Gates moving out of Microsoft stock, was likely a reflection of seeing tech stocks drop rapidly and wanting to diversify to more stable returns, mimicking what Warren Buffett does.
And it worked out for him pretty well.
Gates is worth 132 billion currently, but in 2015, it was 79 billion.
Which is actually higher than what it would be if he kept his money in Microsoft stock at similar levels to 2000, factoring in he still made the donations to charity.
For Gates, he’d be worth over half a trillion dollars today if he kept his net worth all in Microsoft stock and still made his charitable donations, but he now has something a lot more stable which don’t burst in a bubble or if the CEO calls smart phones a passing fad.
Which fun fact, Steve Ballmer, the CEO Gates voted to remove now actually owns more than equity Gates.