Digital Nerd

Sunday, May 29, 2005

The Microsoft Millionaires Come of Age!

NY Times reports:
FIVE years ago, Chris Peters was a former programmer who had made a fortune from his Microsoft stock options. Then he learned that the Professional Bowlers Association was for sale.

Undeterred by his lack of experience in sports, broadcasting or any other directly relevant business, he recruited some friends as investors and bought the league. "I was not very athletic" as a child, Mr. Peters said by way of explaining his new career, "but I always loved bowling with my father."

Skip to next paragraph Peter Yates for The New York TimesMany former Microsoft employees have used their riches from stock options to pursue their dreams, and they credit the lessons they learned at the company for their success. Chris Peters is now the chairman and an owner of the Professional Bowlers Association.

Peter Yates for The New York TimesStephanie DeVaan helped found a political action committee.Stephanie DeVaan cashed out of Microsoft in 1995, after five years of marketing office software. Just 34 at the time, she went on to spend several years volunteering at charitable institutions. But by 2002, she was itching to do more, so she put her wealth to work in support of abortion rights and helped to found a political action committee called Washington Women for Choice.

Mr. Peters and Ms. DeVaan, who both live in the Seattle area, are members of one of the most remarkable groups of workers in the history of American capitalism. They were young, hard-working employees who hit an astounding jackpot by being at the right company - in their cases, Microsoft - at the right time.

From the 1986 to 1996, Microsoft's stock soared more than a hundredfold as the company's Windows operating system and Office applications dominated the PC industry. That explosive climb made millionaires of employees who had accepted options as a substantial part of their compensation for 60-hour workweeks fueled by a diet of Twinkies, Coca-Cola and marshmallow Peeps. The sudden riches led many to refer to themselves as "lottery winners."

"While the exact number is not known, it is reasonable to assume that there were approximately 10,000 Microsoft millionaires created by the year 2000," said Richard S. Conway Jr., a Seattle economist whom Microsoft hired to study its impact on Washington State. "The wealth that has come to this area is staggering."
Many employees spent their money immediately, in a variety of ways. If the stock price hit a new high, for example, five new sports cars might drive into Microsoft's parking lot in Redmond, Wash., the next day. Big-screen video projection theaters and indoor pools built to resemble the rocky caves of Hawaii appeared in employees' homes. One employee treated 30 family members to a weeklong vacation at a five-star resort. Another endowed a professorship in his name at Oxford University.

Some left Microsoft for new ventures on their own, and brought with them the creativity and drive that fueled Microsoft's early growth. Now, many of them are still only in their 40's, and they are turning up in the worlds of sports, politics, business and philanthropy, in Seattle and elsewhere.

As owner of the bowling association, Mr. Peters realized that he knew little about running a sports league, so he hired a team of former Nike executives who capped the number of players in order to increase head-to-head competition, create rivalries and excite fans. They added a trick-shot segment and opened matches to women.
Five years after Mr. Peters and his partners, all friends he met at Microsoft, bought the association for an undisclosed sum (estimated at $5 million), it is on track to become profitable next year. Revenue has more than doubled over that span, and the number of 18- to 34-year-olds watching the tour's events on television has increased 80 percent. Corporate sponsors, which did not exist when they bought the tour, now number 19, and include Denny's, Pepsi and Motel 6.

"I love bowling. I wanted to save bowling," Mr. Peters said. "The only way to do that was to make it profitable."
Ms. DeVaan's passion was also rooted in her childhood. She said she created her first protest poster with her mother when she was just 10. Her grandmother continued to register voters for the National Organization for Women when she was 84.
The idea of working to support abortion rights came several years after Ms. DeVaan left Microsoft, at a meeting with friends over satay at the Wild Ginger restaurant in Seattle. The women - whom she described as entrepreneurs, venture capitalists, lawyers and others - decided to focus their time and money on abortion rights because they felt that its support around the country was not reflected in national politics.
Besides donating money to political candidates and helping to connect them to wealthy Democratic Party donors around Seattle, group members - now numbering about 70 - also work directly for campaigns as volunteers.
Ms. DeVaan says her Microsoft experience is serving her well. "When you're at Microsoft, you're working with an incredible group of talented, passionate people," she said. "You really hit a groove and get things done. That's imprinted on you, and when you leave, you want to find that again."

RICH TONG said he knew that it was time to leave Microsoft when he made a presentation to its chief executive, Steve Ballmer, and was no longer scared. "I realized that if I could confidently tell him how I thought the company should be organized, then I was qualified to run my own business," Mr. Tong said. In his 12 years there, he led several marketing teams. One helped raise sales of Windows to about $400 million a year, from $50 million, in two years.

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