Conferenza

D6: Melinda Gates: "All Lives Have Equal Value"

For years, Melinda Gates has remained behind the scenes at the Gates Foundation, at $60 billion the largest philanthropic institution endowment in the world.

Gates said that her interest in philanthropic initiatives grew out of her family’s commitment to volunteerism when she was a child. After her husband Bill’s mother died in 1994, she and her husband asked his father to answer the letters they had been receiving from people asking for help, such as a mother pleading for the money for her child to have a kidney transplant. That experience clearly began to prepare them for a broader awareness about fundamental challenges in the world that properly-applied financial resources could help.

When Gates retired from Microsoft in 1996 to have her first child, she and her husband started a small foundation, initially focused on helping girls to learn about technology. Eventually, it became clear to them that they had more work to do, and it eventually morphed into a broader focus on education in American schools, and then on widespread disease. The basic tenet of the foundation: “All lives have equal value.”

So now, at 500 employees, how do they decide where to focus? Gates said that during regular reviews of the most recent research, “…Bill and I go down the list… ‘What are the greatest killers in the world?’” They then juxtapose that list with the top “DALYs,” or disability-adjusted life years, in the world, defining the diseases that debilitate people enough to keep them from running full and productive lives. “We then do a portfolio review of the ‘products’ that we have, against the goals that we set.”

There’s plenty of work to do, even just with children. Gates has an encyclopedic knowledge of the challenges: 10 million die each year under the age of 5, with 4 million alone in the first year of life. And several million a year die from measles, simply because basic vaccines aren’t widely available.

But there’s a lot that can be done. For example, she said that we’re just on the cusp of being able to eradicate polio, only the second time in history that a disease has been completely wiped out. Yet the ultimate work, Gates said, has to be accomplished by governments; There’s only so much that foundations can do – the state of California alone spends $60 billion on education in a single year, the National Institutes of Health $29 billion – so even foundations like Gates’ have to work through public institutions to accomplish change at scale.

Beyond youth mortality, the sheer volume of the problems in the U.S. school system can be paralyzing. There are 49 million children in public schools (and 6 million in private), she said. As the Foundation began digging into the issues, they found that there are many initiatives focusing on Kindergarten through 8th grade. “The thing that nobody seemed to want to tackle,” she said, “were the high school years.”

Over a million kids a year drop out of high school every year – but don’t ask the federal government to tell you who. According to Gates, just getting the government to track numbers about dropouts is daunting. Even if they graduate, “…another million are completely and totally unprepared to go to college,” she said. “These kids have to take remedial math, remedial English at the community college level, before they can ever go to college… Why are we not preparing these kids?” Her answer: We’re stuck in an industrial-age model of education, one designed to mass-produce trained workers for mass production.

So what’s the solution? Three things: Great curriculum, great teachers, and “small learning communities,” groups of 100 to 150 kids who build tighter bonds than are possible in huge, anonymous schools. Where is this working? “In the NY City School system, we’re working with Mayor Bloomberg and with Joel Klein,” she said – the latter of whom led the charge in Microsoft’s antitrust case for the federal government. “Now, people might wonder what we’re doing working so closely with Joel Klein…” But she lauded Klein for his commitment to kids, and for his (and Bloomberg’s) willingness to make hard decisions, like closing big schools and segmenting them into smaller areas that can let kids build their own communities.

The night before, News Corp’s Rupert Murdoch pointed to teachers’ unions as a significant source of the problem with public schools in the U.S. Mossberg asked Gates why. Her answer: You can’t easily move out non-performing teachers. She used the example of a parent who sets high standards for kids, and metes out rewards and consequences to encourage the right decisions and performance. The same is true for teachers – but highly-local school boards and teachers’ unions make independent rules about teacher performance,

Why can’t the Gates Foundation work to change that structure? “Our role is to work on models that work,” she said. “You can’t just have the Gates foundation saying there needs to be a change.”

Does the model work? According to Gates, schools following their model – previously with 31-38% graduation rates – have gone in a few short years to 71% graduation rates.

In audience questioning, one attendee asked why the Foundation wasn’t focusing on problems that would last for one or two hundred years. Aside from the fact that the question lacked much thought – we have plenty of pressing problems today – Gates was gracious, responding that the Foundation was founded with an explicit requirement that all of its funds must be disbursed within a specific time after the two Gates are gone. And a similar requirement guides Warren Buffett’s contribution to the Gates Foundation endowment as well. And she encouraged everyone in the audience to get focused as well – find the thing they care the most about, even at the local level, and get involved.

At the end of the conversation, Walt Mossberg turned to Gates’ role in the Foundation. She said that now that her kids are all in school, she’s increasing her time at the office. What she didn’t mention is that until the past year, she had taken only a backroom role with the organization, letting former CEO Patty Stonesifer and her husband Bill take the forefront. But as chronicled in a January 2008 article in Fortune Magazine, Melinda decided that it was time for her to take a more visible role.

And the world is a better place for it. Melinda Gates is a marvelous and inspiring presence on the stage, an extraordinary person taking on an extraordinary task.

gB

D6: Facebook's Zuckerberg and Sandberg: Stay Social

Facebook founder and CEO Mark Zuckerberg and his number two exec, Sheryl Sandberg, took the stage at the end of the main sessions, just before dinner. (News Corp’s Rupert Murdoch will dominate the evening session, after dinner). Swisher began by apologizing for calling Zuckerberg a "toddler CEO" in a late-night posting on AllThingsD.com. “I shouldn’t have said that,” she confessed. "But it was funny."

Whether because he was comfortable with Swisher, or because the presence of Sandberg made him more at ease, Zuckerberg was the most relaxed I’ve seen him on stage, smiling and engaged, to the point of telling an engaging story about being late preparing for an art course at Harvard. Rather than researching a long list of art pictures requiring annotation, he posted them online, and emailed all of his classmates about his “study tool” – which they all annotated within a few hours, saving Zuckerberg from having to do his own research.

Swisher asked Zuckerberg why he should be the company's leader; after all, he’s only 24, and the company is valued at $15 billion by Microsoft’s investment last October. After initially dodging the question, he said that CEOs really do two things: Set the vision, and hire the team.

But he missed the third component: They have to manage the team, as well. Perhaps that's where Sandberg comes in: An early Google executive who had a broad impact on both the main company and on its Google.org foundation, Sandberg is seen by many as providing "adult supervision” at Facebook. After six and a half years in pivotal roles at Google (as well as the World Bank and the U.S. Treasury Department), and after a second maternity leave, she found herself responding to outside opportunities, and eventually chose Facebook. Why? "Mark has a vision," she said, of where the Web is going – and that direction, as far as Sandberg is concerned, is social.

Zuckerberg’s vision is that the world can only get more social, with increasing online interaction. That means business opportunity for Facebook, which Zuckerberg steadfastly maintains is a technology company. “And we think technology can change the dialog between advertisers and users,” said Sandberg.

During audience questioning, director Barry Sonnenfeld talked about his teenage children’s obliviousness to privacy issues, posting information without filtering. “Aren’t we creating a sad dreary future for our children?” asked Sonnenfeld. But Zuckerberg claimed that awareness of privacy issues is rapidly increasing. “A huge amount of our users are tweaking their privacy settings in various ways,” he claimed.

In the end, the session didn’t uncover any new or surprising initiatives by Facebook. Rather, the conversation mostly roamed around issues like the company’s relationship with Microsoft (good), and how the company will leverage its strength in the social arena.

What’s certain, though, is that Zuckerberg will remain at the helm for the foreseeable future. “Can they sell the company without your say-so?” asked Swisher. After a thoughtful moment, Zuckerberg said, “I don’t think so,” with a smile.

gB

D6: Robert Kotick of Activision: Rock On

It’s likely that few in the audience really know about the business of Activision. Despite being one of the top gaming companies in the world, and having recently engineered a mega-merger with the producer of the wildly-popular “World of Warcraft,” the video game industry isn’t exactly well-known to the typical tech-industry insider. But the numbers around games like “WoW” should make any software executive take notice, especially those delivering software as a service: 11 million subscribers (including 4 million in China), with $1.1 billion in revenue at about 50% profit.

Kotick maintained that the game industry is going through a significant shift, driven mainly by online gaming and group-oriented in-person games like Guitar Hero. “We’re definitely seeing this transition from solitary gaming to social gaming,” Kotick said. And quality is increasing, as a number of games are offering a variety of immersive characteristics, such as his company’s “Guitar Hero,” which has high production values, name-brand artists, and a well-designed physical interface.

One interesting but little-reported aspect of online gaming is that its popularity in emerging markets is a tremendous barrier to the kind of piracy that’s often seen where copyright enforcement is lax. “Emerging markets will be broadband markets,” Kotick stated flatly. It will be interesting to see if many game developers – and even productivity software developers – jump on this bandwagon, releasing disc-based versions in the U.S., and online versions tailored for overseas markets.

Kotick said that Swisher had challenged him to bring a product to demonstrate that hadn’t been shown anywhere before. That turned out to be the next version of their band instrument game, “Guitar Hero World Tour.” Apparently responding to the challenge of “Rock Band,” the ensemble includes a guitar, bass, and drum pad set. To judge an attempt to play the game by audience members, brought out “America’s favorite judge,” Paula Abdul from “American Idol.” She pulled skateboard legend Tony Hawk and a friend onto the stage to, respectively, play guitar and sing (Lenny Kravitz’ “Are You Gonna Go My Way?”, for the record.) She rated Hawk highly, but panned his buddy’s attempt at karaoke.

gB

D6 Kickoff: Gates & Ballmer on Continuous Innovation – and Windows 7.0

The sixth annual D: All Things Digital kicked off at the usual high-volume mixer, with longtime industry players renewing relationships in the anteroom and hallways outside the main ballroom at the Four Seasons Aviara in Carlsbad, Calif.

After rolling a humorous video on Gates’ last day at Microsoft – shown originally at CES in January, and lengthened to a “director’s cut” with more Hollywood and political stars – Bill Gates and Steve Ballmer took the stage with Walt Mossberg and Kara Swisher, 28 years after they first began working together. Mossberg and Swisher got Ballmer and Gates to walk down memory lane, reconstructing the story of how the two became friends at Harvard, how Gates eventually recruited Ballmer to Microsoft, and how the company started.

Gates kept notes on the company taped around his living room, obsessing over customers and payroll. Gates’ philosophy then (and now): If you can imagine a scenario where none of your customers will pay you for the next year, you have enough money in the bank to make payroll. “You take enough technology risk,” said Ballmer. “Why take financial risk?” In fact, at one point early on, Ballmer said he wanted to hire 16 people, and Gates responded with exasperation, “I didn’t ask you to leave business school to bankrupt us.”

And how was the vision for a “PC on every desk and in every home” first articulated? Ballmer was questioning why he left business school to join the nascent Microsoft in Seattle, and he had dinner with Gates to voice his concerns. That’s when Gates trotted out what he saw for the future of the company. “I was forced to be particularly articulate that night,” he confessed.

So, Swisher asked Gates, would you call yourself a businessman? “Oh, I don’t know…” Gates mused. “Sales minus costs equal profit,” he said, waving his hand in the air to draw the equation. “Is there any more?”

Swisher and Mossberg focused on the working relationship between the two, and how they navigated the transition from Gates as “senior partner” and Ballmer as “junior partner,” to switching roles eight years ago. They agreed it took a year for the two of them to adjust to the new order, eventually defining Ballmer as the lead decision-maker for the company. Yet though Gates remains as chairman and major shareholder, Ballmer said that he wouldn’t consult Gates on major decisions just because of these roles – he’d do it because he sees Gates as a great personal resource.

Talk turned to the attempt at acquiring Yahoo. Though the company withdrew its bid, and reserves the right to re-bid at a future time, Microsoft has come back to suggest a new kind of relationship. To recap an explanation Mossberg heard at a previous meeting with Ballmer, he had an assistant roll out a whiteboard, and Ballmer leapt up to map his vision of the online advertising market. There’s a continuous cycle from advertiser paying for visibility through a publisher, who in turns gets more information about readers, which in turn encourages advertisers to put more money into the ecosystem – that is uniquely able to scale rapidly (hence the continuing success of Google). So to accelerate the development of scale, it made sense to Ballmer and Gates to take a leap forward through the Yahoo relationship. Now that the offer is off the table, though Microsoft will continue its own efforts in search, and to leverage its relationship with Facebook, they still believe they need a Yahoo to scale more rapidly – hence ongoing discussion about other ways to partner.

But there’s development for the search arena going on internally as well, according to Gates. He feels they’ve assembled a great team, and that they can compete with “breakthrough innovation,” as Ballmer called it, both in technology and in business model. For example, the company’s new program to offer cash back for customers who buy products through their search platform, Gates and Ballmer see as a business innovation, distributing more of the financial benefit throughout the search ecosystem than “the main competitor” (e.g. Google).

Will they gain market share overnight? Ballmer’s realistic. “The most important thing is that we have a great team – and we’re patient,” he said. “And we keep coming. And coming. And coming.” Mossberg raised a warning hand. “Hey. You’re getting a little scary there…” But that’s really what Microsoft does: They’re the energizer bunny of competition, continuing to iterate until they get it right enough for the market to respond.

Mossberg took Gates to task for some of the perceived challenges of Windows Vista, who defended the product by pointing out the complexity of maintaining compatibility across so many platforms and applications. Ballmer maintained, however, that the most jarring issue for users was the fact that the user interface changed. Despite that major criticism, they claimed that the company is planning on dramatic changes for the next version of its operating system – which gave the two executives the opportunity to show a sneak peak of Windows 7.0.

Leveraging some of the capabilities developed for Windows Surface (a tabletop version of the software shown at last year’s D), the demo showed how the underlying “multitouch” technology allows a user on a touchscreen computer to move and shape elements such as photos. More useful was a “Concierge” application that allowed fingertip manipulation of a Microsoft map, allowing the user to locate local services in a few taps. The key takeaway: Microsoft has taken note of what Apple has done in terms of an accessible finger-driven interface for the iPod, and will incorporate many similar features into Windows.

How soon will it ship? On the order of 15-18 months away, according to Ballmer’s formula.

Last year’s session between Gates and a different Steve (Jobs) ended with a rather touching paean from each to the other, prompted by a question from the audience. This year’s session ended with random questioning, but few consistent insights. Some asked about innovation on the phone (Microsoft’s mobile version for phones is number two in total smartphone shipments, behind Nokia), and the challenges and opportunities of leveraging cloud computing versus local processing. Tim O’Reilly of O’Reilly Media asked what Microsoft’s “big hairy audacious goals” are today. Gates said that the company continually tries to envision what the future office will look like, what the future of television would be, getting a tablet computer into every student’s hands – and that drives audacious goals. And Esther Dyson followed up by pushing the company to put more energy (and money) into solving major problems in the healthcare industry. But the session ended with more of a whisper, with quick applause, and then the audience rapidly filed out to dinner.

Up tomorrow morning: Amazon.com’s Jeff Bezos, Activision’s Robert Kotick, and Sony’s Howard Stringer.

Serious Play indeed!

Wednesday night was the opening of "Serious Play", the third semi-annual conference at The Art Center in Pasedena, produced in conjunction with The Art Center and its faculty and masterminded by Chee Pearlman.

By the looks of it, this will be a giant, creative, wonderful event.

Included herewith are shots of Danny Hillis, whose comment while presenting at the 2006 edition inspired Pearlman's theme for this year, as he navigates the rope dancing patterns of a troupe of phenomenal presenters.