'A lot of billionaires don't know how much fun giving can be' - Bill Gates

'A lot of billionaires don't know how much fun giving can be'

Jason Pontin, the editor in chief of Technology Review, spoke to the chairman of Microsoft and the Bill and Melinda Gates Foundation on philanthropy, energy and poverty. excerpts:

Explain the moral imperative behind "The Pledge" (in which Gates and Warren Buffett have asked America's 400 wealthiest individuals to pledge half their wealth to charity). What will it achieve that conventional philanthropic giving cannot, besides raising a greater supply of money? Or is that the point?
Well, I think the idea is pretty simple, and I wouldn't use the term "moral imperative." It's absolutely the case that the US is the most generous country in terms of philanthropic giving. If you look at the large estates in the country, about 15% of the value goes to charitable causes, and there are more billionaires today, with more wealth on average, than ever before. And a lot of them may not know how much fun it is to get involved in giving, or know that it's kind of like starting a new career. And so we decided to create this group who had in common a pledge to give — not to all take one approach or pool money, but merely to find people who had things in common. How long should a foundation last, how do you staff, how do you involve your family? Different things will fit for different people. We did these dinners with some wealthy people, some of whom have done a lot of philanthropy, some of whom have done less. Another key factor is that the earlier in life you think about this stuff, the more opportunity there is for you to take your talent and get involved, or have associates that you know are talented through their work with you get involved. You're not going to do your best thinking about this if you wait until you're 92 and probably quite influenced by a small group who may have different thoughts. Starting earlier, giving earlier — that works. Those are the themes, and as this year goes on, hopefully we'll get more people to sign up, and we'll share that at various milestones. But so far we've had a lot of acceptances.

How many people have committed to making major…
We're not saying that. There will come a milestone, and we'll give people an update. We're going to have some more dinners, because that format worked very well. A separate but similar thing will be done in China and India. I'll pick people I know there. They'll get out in front and drive it.
Giving in China isn't particularly well established, is it?

Well, India's further along. China is just asking itself, "When you have billionaires, what are they expected to do?" In India, a lot of the tech billionaires are incredibly generous and are giving away the majority of what they've done.

The Gates Foundation has invested in solutions to big problems like infectious diseases in poor countries. Providing clean energy for the 9 billion people the planet will hold in 2050 is a problem that's also civilizational in scale. What can philanthropy contribute to energy research?
Well, basically not much. The energy market is a gigantic market, and the price of energy is a key determinant in improving lifestyles, whether for the rich, the middle-income, or the poorest. It seems slightly more intense for the poor: things like fertilizer and transport, or health care, are very expensive for them. You know, things like basic lighting are very expensive.

The way capitalism works is that it systematically underfunds innovation, because the innovators can't reap the full benefits. But there's actually a net benefit to society being more R&D-oriented. And that's why in health research, governments do fund R&D.

The Gates Foundation is in that health area, and when we pick a disease to work on, we pick a disease where for some reason the market is not working. Like malaria: rich people don't need a malaria vaccine. They are rarely in malarial areas, and when they are, they can take prophylactic drugs and not worry about it. And yet for the people who live there, over a million a year, mostly kids in Africa, die. When we did our first $50 million grant for malaria, about a decade ago, we more than doubled the amount of money going into malaria research at the time. It's a horrific disease, but there's not a market reward for coming up with a malaria vaccine.

So you made a market.
Yes, you can create a market where there's no natural market. The biggest project, the one that's furthest along, is where GlaxoSmithKline is doing a vaccine called R2SS, which is now in phase 3 (trials). It's not a perfect vaccine. It reduces mortality a bit more than 50 percent.

But to go back to your question, the reason we're involved is because there's not a market. And so our investment is mind-blowing compared to anything else. And you do have that in diseases of the poor world. You know, in the rich world, the percentage of people with AIDS is fairly small, and so the cost of treating people with drugs for a lifetime is affordable. It's not perfect for those people, it's not perfect financially, but the difficulties of coming up with a vaccine are such that there's not a market incentive for it. So an AIDS vaccine is another one that is being funded by a combination of government budgets and philanthropy. The two biggest funders by far are our foundation and the US.

So why couldn't huge, regular, dependable investments from your foundation make a difference?
In energy, we might have some involvement where it's connected to things that wouldn't happen for poor people otherwise. There may be some particular biomass approaches for getting local energy out where there's no roads and infrastructure - there might not be a market signal for that type of innovation. You know, the poor people are the ones who are going to suffer the most from climate change. It's unfortunately the poor people of the world who live in tropical zones, and there's a variety of reasons for that. But that's where agricultural productivity is already barely good enough for survival.

But I've put money into Vinod Khosla's venture fund. I've put money into Nathan Myhrvold (and his Intellectual Ventures Fund). Nathan has this thing that invents ideas broadly, many of which are energy-related. And some of those energy-related things will result in startups. One has so far: this amazing, wild nuclear (reactor design company), TerraPower.

You've talked about the need for "energy miracles." But we've been waiting for such breakthroughs for decades. TerraPower is a travelling -wave reactor, a design that dates back to the 1950s. We've been working on energy miracles _ and we've seen nothing. Wouldn't we be better off making the energy technologies we have more efficient?

Well, no, we haven't been working on those things. The nuclear industry was effectively shut down in the late '70s. And so evolutionary improvements on those so-called Gen 3 designs really didn't happen. And more radical designs that were measured according to their economics didn't happen. There's a lot of paper designs under the heading Gen 4, but most of those are going to be very expensive. They're kind of cool science, but they're very expensive.

What has been the most important health care innovation from the Gates Foundation? The biggest-impact thing we work on is vaccines - in particular, hepatitis B and Hib. (The Gates Foundation was instrumental in getting two vaccines into widespread use: one prevents hepatitis B, an infection that causes liver cancer in adults; the other prevents Haemophilus influenzae type B, a bacterial infection that causes meningitis and other life-threatening diseases during childhood.) In terms of saving lives, changing the rules, that's probably number one on the list.

How many people is that expected to save?
Well, every year you get to add about another 300,000 lives.

That's pretty cool.
It starts to add up. In vaccines, the effect is pretty incredible. The one that I hope to be able to add to that list which isn't there yet is polio eradication. We've gotten very involved, we've put a lot of money in and we're fairly close. The last part is absolutely the hardest part. But the benefit to the world of that second disease eradication after smallpox, and the kind of energy that would create — it would free up money, it would energise the whole global health initiative. That's a big one.

How has your experience as a software executive and visionary translated into your post-Microsoft career?

Well, I've had to learn a lot of new things, which I enjoy. I didn't understand much about vaccines or immunology or how they got delivered, or how they got funded. So I've gotten to meet a lot of people. There's a more political aspect to this in terms of the money that rich-world governments give and in terms of how well governed the recipient countries are and how they make things either easy or hard. We didn't have that complexity at Microsoft. The one thing we have that's great is that everybody has the same goal: saving the children's lives or improving their health. So you really don't have competitors in a sense. You get a level of cooperation when you can get everybody in the malaria community together and have them share their best ideas when there isn't a market for the vaccine. Same for TB. It's different from Microsoft. In some ways it's more like when Microsoft was 400 to 500 people. The foundation's about 700 people.
You and Charles Simonyi created a software factory, this multigenerational software enterprise, where nothing like that had ever really existed before. It was a place where big programs could be developed and launched and maintained and managed over many decades. But now you have to work with enormous numbers of people over whom you have no direct authority. How many of the management techniques you learned at Microsoft are still useful to you?

I think it's all useful. As Microsoft got larger, I couldn't threaten to code things over the weekend. I had to convince people and take the scenario I wanted them to do something with and articulate it in a very clear way, so I had to get good at doing that. I think over time I've gotten better at working with large groups and not being as impatient about cases where people only see part of the picture, and yet they're an important part of things. But it's very similar. It's working with smart people.

How has being a philanthropist broadened you in a way that your career as a software engineer did not?

Well, I'm not trying to make any moral judgment about one versus the other. Believe me, when somebody's in their entrepreneurial mode — being fanatical, inventing new things — the value they're adding to the world is phenomenal. If they invent new technologies, that is an amazing thing. And they don't even have to know how it's going to help people. But it will: in education, medical research, you name it. So I was one of those fanatics in my 20s where I didn't know about poor people or even government budgets much at all. I worked night and day on software. I thought a lot about software. I said, "Hey, I'm a software fanatic. What is that about?" Even some of the marketing and sales things that I eventually learned, I said, "Hey, if the software's good enough, how far do you have to go?" Well, we certainly didn't build an IBM-style sales force; most of our customers we never met. We didn't duplicate the old model, but the truth of what we had to do was not quite as pure as I started out thinking. It wasn't "Hey, here's the software."

So that's a great mode to be in, but throughout the Microsoft experience, whether it was piracy or privacy, policy, or whatever would come up, I got down the learning curve because Microsoft was in a position to hire incredible people. I got to see how they did things. They wanted me along because they thought I would be paid attention to and could be articulate about the software. So in my 20s I was almost just a developer and a fanatic; in my 30s, I got exposure to management, although I was still writing some of the code; then in my 40s, the majority of what I was doing was large-organisation management and picking some strategies, but I didn't write any code that shipped in products. Now, in my 50s, I'm in a role that's kind of like that. I like that my relationship to some of these development teams is like a smaller Microsoft, because for better or for worse, when you have all the TB experts in the world in the room, the room is not very full. That's about 10 or 12 people that you're sitting and talking to about the TB vaccine. —NYT