corporate america

Microsoft Turns 31 – How A few People Took A Chance On A Billion Dollar Idea

Microsoft Turns 31 – How A few People Took A Chance On A Billion Dollar Idea

By Ryan Velez

March 13, 2017, was a major day for those following the tech industry, and Celebrity Net Worth called this into focus by profiling the day 31 years prior where Microsoft went public, jump-starting not only an entire industry but starting one of the largest fortunes on earth. The legacy of Microsoft’s going public is clear in the modern day, with Microsoft’s market cap of $501.6 billion and Bill Gates’ net worth of $90 billion. However, you may have a few questions about the day that made all this possible.

Rewinding to 1981, when Microsoft initially incorporated, Steve Ballmer, owned 8% of the company, Paul Allen 25% and Bill Gates 45%. The remaining 22% was split between people who are likely the envy of any tech investor today. The day prior, Larry Ellison’s Oracle Corp had its own IPO, and by the end of its trading day, Oracle shares sat at $19.25, above their initial plan of $15 per share. This would be key for Microsoft, as the opening price of MSFT shares would be raised from $16 to $21.

The end result? A flurry of buying that had the Goldman Sachs CEO shouting. “It’s wild! I’ve never seen anything like it – every last person here is trading Microsoft and nothing else!” By the time the dust settled after the first day of trading. 3.6 million shares had been exchanged and the stock price ended the day at $27.75. So what did this smash success mean for Gates, Allen, and Ballmer? Gates’ 45% stake was worth $350 million. Allen’s 25% was worth $195 million and Ballmer’s 8% was worth $51.5 million. Compare this to the $850 million bonus check Snapchat CEO Evan Speigel got for guiding Snapchat through its IPO, and it’s clear how much the game has changed.

For a bit of an interesting fact, let’s say that you decided to buy some MSFT shares 31 years ago and held onto them to this day. Needless to say, the stock and company have grown to massive levels since then, and after factoring in all the dividends and splits, someone who invested $10,000 in Microsoft back then would have $9 million today. This same growth level propelled Bill Gates not only to be the richest person on the planet, but the 12th richest person of all time adjusting for inflation, with a net worth briefly topping $136 billion at the height of the dot-com bubble.

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