Yup. You heard that right.
👇🏽 Here's a little-known truth about the rise of Microsoft:
The Bill Gates story is well-told: Drops out of Harvard to start Microsoft with his friend, Paul Allen.
Microsoft starts off selling code interpreters to companies.
1976 Revenue: $16k
1978 Revenue: $1M
Then in 1980 IBM knocks on the door. They want Gates to build them an operating system for their new personal pc's. He's never built an OS before.
First, he points them to a friend who might help. When that doesn't work out due to deal-structure disputes, they come back to Gates.
He buys the Quick and Dirty Operating System (QDOS) from Seattle Computers for $50k. He then reworks and repackages it into the now-famous Microsoft DOS.
The part where he sells this OS to IBM is where things get interesting.
The deal was structured such that the royalties were non-exclusive. Translation: Microsoft could sell the OS to anyone else in the world.
1981 Revenue: $16M
1985 Revenue: $140M
Microsoft had begun licensing its OS to other computer-makers like Commodore and Tandy.
IBM made a *huge* mistake.
Microsoft had zero leverage over them. They were a minnow at this stage. Instead of enforcing exclusivity, IBM allows Microsoft unlimited distribution of their product, through IBM computers.
IBM even returns to Microsoft a few years later and asks them to build another new OS - OS/2. They completed it but also continued selling their own version of the OS (an upgrade of the original MS-DOS delivered to IBM), which later becomes Microsoft Windows.
By 1993, Microsoft was a more valuable company than IBM, who were - at the time of the original deal - over 3000x the size of Microsoft.
This deal was Gates' lucky break. With an exclusive-only deal, Microsoft would certainly not be the $2 Trillion dollar + company it is today.
So, what can we learn?