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Business @ The Speed of Thought

Bill Gates hosted a video chat on March 31, 1999. Viewers emailed questions
                   which Gates answered live. Read the transcript of Gates’ opening
                   remarks and answers from the video chat below. Also see the selection of
                   additional questions from viewers that Gates answered after the chat.

                   NOTE: The following questions were answered during the video chat and are
                   attributed to the people who emailed the questions. In some cases the
                   questions have been paraphrased for brevity.

                   A brief INTRODUCTION from Bill Gates

                   Question 1: "In the next 10 to 50 years, what will be the fate of the retailer,
                   particularly the small operator with a surge of Internet commerce?"

                   Question 2: "Technology drives businesses faster, which in turn drives
                   technology faster. Can technology help me to keep up with this frenzied pace?"
                   -Sri, Chicago

                   Question 3: "How can we, in education, also move at the speed of thought?
                   Once we have the computers in place and the educators trained, how can we
                   continually leverage all of the great technologies?"

                   Question 4: "Does business culture need to change to take advantage of a
                   digital nervous system?"

                   Question 5: "How do you see the future of e-business in developing countries?
                   Will we have the same opportunities as big American companies?"
                   -Jorge, Peru

                   Question 6: "How do you think technology can impact the legal profession,
                   which is still very reliant on paper?"

                   Question 7: "Does your daughter use a computer yet?"
                   -Sara, St. Louis

                   Question 8: "My company has been run as a decentralized business for almost
                   100 years and does not share information freely. What are your thoughts about
                   how to bring us into the digital age?"
                   -Hank, Montreal

                   Question 9: "What should the middleman do to shore up against the coming
                   revolution in business?"

                   Question 10: "How long does it usually take to transform a company to a fully
                   digital nervous system?"
                   -Ryan, California

                   Question 11: "What will Windows look like when we have bandwidth up to 10
                   million bits per second?"
                   -Don, Toronto

                   Question 12: "What about a small company? What can be done to build a
                   digital nervous system there?"
                   -Terry, Texas

                   Question 13: "Christina asks about starting a career in computers. She's a
                   single parent and wants to know, how can she obtain certification?"

                   Question 14: "How can nonprofits compete in this environment?"
                   -John, National District Attorneys Association

                   Question 15: "How at Microsoft do [you] measure the effectiveness of people
                   utilizing the PC to analyze digital data to make decisions?"
                     -Bob, Trenton, New Jersey

                   Question 16: "Do you think companies will leverage an efficient digital
                   infrastructure to perform one-on-one marketing in the future?"
                   Eddie, Framington, Massachusetts

                   Question 17: "As we become more dependent on the Internet, will viruses
                   become commonplace?"
                   -Rita, Fort Worth, Texas

                   Question 18: "Is traditional patent law able to handle the pace of innovation
                   without placing unreasonable constraints on knowledge sharing/evolution?"
                   -Robert, Texas

                   Question 19: "What are some of the most important things you deal with on a
                   day to day basis?"
                   -Henny, California

                   Question 20: "E-mail is a great tool, but can it become an abused application?
                   How can businesspeople deal with 50 to 100 plus e-mails a day? How many
                   e-mails do I get a day?"

                   Question 21: " I am currently reading your book, but what are you reading

                   Question 22: "If you were to start a company now with less than a half million
                   dollars, what would be the three things you'd put your money into?"
                   -Rick, Mill Creek, Washington

                   Question 23: "What do you see as the future of Windows CE? Will these
                   devices eventually be a common household appliance?"
                   -Gary, Michigan

                   BILL GATES: Welcome. Thanks for joining me for this video chat. I hope you're
                   finding the book interesting. It was certainly fun to write it because I was getting
                   so many questions from businesspeople about what should they do to address
                   the digital economy; and to sit down and really gather my thoughts and be able
                   to share the best examples was something that I really enjoyed doing. This
                   video chat is a way to continue that dialogue. I'll start off with a few thoughts
                   and then I'll open it up and we'll get through as many questions as we can.

                   Last week I did the book tour and it was great to sit down with some business
                   school students. I was in New York at Georgetown and at Columbia and Stern,
                   and down in Washington, D.C., at Georgetown, and then last Friday over in
                   London at London Business School. These students really are deeply involved
                   in how they're going to go out and be change agents, taking these ideas that
                   business can be done in a better way and making sure the companies they're
                   working in are adopting them and getting lots of advantages from that.

                   A lot of the questions I got on the book tour related to how different countries
                   are moving to adopt these technologies. And it is fascinating that U.S.
                   businesses have been the first to really latch onto this, to use technology in
                   some new ways. Now that's creating a very positive dynamic where other U.S.
                   businesses see it, businesses outside the U.S. see it and everybody has to
                   rise up to this new level.

                   They've got to improve their game to play at a world class level. In responding to
                   the questions about the book, the one area that I wish I'd put even more in
                   would relate to small businesses, because small businesses have to work in a
                   digital fashion to be competitive with larger businesses. They've got to work
                   across distance, they've got to work with lots of customers, they have to have
                   people who do lots of different things. So the imperative here for them is even
                   greater than for the large businesses.

                   With that, let me go ahead and take some of these questions that are coming
                   in and give some answers. First, from Benjamin Stewart we have a question
                   about the future of retail. He asks, in the next 10 to 50 years, what will be the
                   fate of the retailer, particularly the small operator with a surge of Internet

                   The role of the retailer certainly is going to change and nobody really can
                   predict exactly for different product categories how quickly people will switch to
                   use the Internet as the way that they want to buy products. Today the most
                   market share the Internet has is for trading stocks, and that's fairly natural. You
                   want to have the latest data there. The people who are doing it are quite affluent
                   and so they have these high-end tools. A little over a third of retail stock trading
                   is done on the Internet and that number is continuing to go up.

                   Now in areas like books or insurance or things like groceries or drugs, there will
                   be a significant Internet presence, particularly if the delivery systems are
                   enhanced so that products can be delivered to your house many times a day if
                   they've been ordered over the Internet. So retailers that are just taking standard
                   products and not really providing much additional in the way of service or advice
                   may be in for a drop in volume that will cause them to change how they think
                   about their business.

                   Now when they're offering products that are fairly unique or that require advice or
                   installation, the retailer's involvement and business is going to be in good
                   shape. In fact, in many cases, they'll be able to expand their business because
                   they'll be able to take their unique value-added and go up on the Internet and
                   talk about that and therefore attract in a larger customer base than they could
                   have previously. So there's a separation here of the retailers that are adding
                   value versus just purely distribution. If it's purely distribution, then in areas
                   where this Web lifestyle is taking off and you've got the physical distribution, the
                   small retailers probably will have to change their strategy and contribute in a
                   new way.

                   The next question is from Sri from Chicago. The question is, technology drives
                   businesses faster, which in turn drives technology faster. Can technology help
                   me to keep up with this frenzied pace?

                   Well, of course, the pace is only going to go as fast as people adopt to it, and
                   that's partly why I titled the book Business @ the Speed of Thought, not
                   Business @ the Speed of Light. You don't really want to make decisions any
                   faster than you have the right information to make them, so there is a limit even
                   with the best tools of how frenzied you want to be.

                   Now technology is going to make these things a lot easier. The ability to filter
                   out things, find out what you might be interested in that's coming in over the
                   Internet and prioritize that for you; notifying you of something new that's going
                   on that, based on your patterns of interest, you find it worthwhile to be notified
                   about. So technology is a tool here. Certainly it's better to have the filtering
                   capabilities of the digital world and the ability to summarize information and see
                   it in very rich views than to simply have a stack of paper that represents all the
                   information that might be relevant. So used in the right way, technology can
                   allow you to focus in on what you care about and deal with this increasing pace
                   out there.

                   The next question is from Rick Mislan. His question is, how can we in
                   education also move at the speed of thought? Once we have the computers in
                   place and the educators trained, how can we continually leverage all of the great

                   Of course, I devoted a chapter in the book to education and some of the great
                   things that are going on there. In a sense, students are the ultimate knowledge
                   workers. They want to find out about such a wide range of topics and they want
                   to collaborate with other students who might be learning about the same thing.
                   The Internet creates a framework where all that information is there and you can
                   match up with other people as well. It also creates a framework where teachers
                   can share with each other. So one of the things we're going to see is that
                   teachers will take advantage of course material that's created online and not
                   only share their comments about how to use it, but also edit it, add to it. You'll
                   have teachers building on each other's work. In the past, teachers didn't get
                   much of a chance to go into each other's classrooms and see how things were
                   being presented and therefore combine all those good approaches. Here with
                   the electronic interchange, you'll have Web sites that bring all of that together.
                   So teachers collaborating with teachers, students collaborating with students
                   and parents being able to be brought into the mix to see what's going on and
                   share with their kids or even share with the class as a whole in a very new way.

                   Now education will take a long time before all the new course material is
                   redesigned in this way. You'd actually like the textbooks to talk about the
                   Internet and using the Internet as part of that homework process. You'd like
                   teachers to be constantly going out and finding new things on the Internet that
                   can make the subject matter more engaging for the students and then
                   contributing that so other teachers can find it. So I think the way to continually
                   leverage this technology is to become a contributor, participate in the
                   communities that are out there, hear about the best practices, think about how
                   you can step up the way technology is used for something like the "Anytime
                   Anywhere Learning" program that provides a portable computer for every
                   student. That's sort of the ultimate, although it requires a lot of resources to
                   achieve that.

                   Another question, from James Loucks is, does business culture need to change
                   to take advantage of a digital nervous system?

                   There's no doubt that when you bring new communication tools into the
                   business environment, there's an opportunity to have a bit of a different culture,
                   a culture where the top managers aren't the ones who have all the information, a
                   culture where you're not just meeting and sitting and having things presented to
                   you, a culture where you really expect ideas to flow within the company and if
                   somebody's unhappy about something, they can share that very easily.

                   I can use electronic mail to send out a survey form to a group of employees and
                   in just an hour's time I'll have back information about how they feel about the
                   priorities we're setting-do they feel like their leadership is leading them in the
                   right direction? So that kind of culture where you have openness, you can really
                   get response from people where they're not having to waste a lot of their time
                   dealing with overhead type functions. You're really saying to them, we value
                   your ideas. We're giving you a tool that lets you not just sit in front of a few
                   forms that you just fill in, but we're giving you the wealth of information from all
                   the different applications we run so that you can solve customer problems or
                   contribute to the strategy that we have. That does represent a bit of a different
                   culture. And so some companies will find it easier to move into this
                   environment, but they'll all, by the time they're done with it, have a change in the
                   culture of how the company is managed.

                   The next question comes from Peru. It's from Jorge Cornejo and he's asking,
                   how do you see the future of e-business in developing countries? Will we have
                   the same opportunities as big American companies?

                   I think the biggest difference when you get outside the United States is that the
                   Web lifestyle will take much longer in developing countries. The cost of the
                   communications, the cost of the computers will mean that you won't get the
                   majority of consumers using electronic mail and buying electronically for quite
                   some time. What you will get is businesses working this way, so
                   business-to-business commerce will change worldwide in a very rapid fashion,
                   even in developing countries.

                   You'll also have businesses be able to offer their services back into the
                   developed world far more effectively. If they have a specialized product, then all
                   the buyers will be able to know about that. If they have some services they can
                   offer, then they'll be surprised where in the world the interest in those
                   capabilities might come from. So e-business is particularly important for the
                   export activities of developing countries even though their consumer markets will
                   take longer to develop. So this is certainly a global phenomenon. The PC and
                   the Internet are the foundation of this are global standard that everybody has
                   access to.

                   The next question is from Peter Amshell. He asks, how do you think technology
                   can impact the legal profession, which is still very reliant on paper?

                   Well, I know at Microsoft we're a lot more efficient in dealing with legal issues
                   because of the pervasive use of rich electronic mail. Whenever there's a
                   contract, I get that in my [electronic] inbox. I see the annotations of changes
                   that are being proposed or what the history of that contract is. I can see
                   comments that people have made. I'm able to have electronic mail to get legal
                   advice on issues on a very casual basis just during the course of the day. For
                   something complex, of course, we'll meet face to face, but we're able to avoid a
                   lot of the meetings that you'd need that would have been routine in the past.
                   We're able to brainstorm and get input from even outside law firms where that
                   might be appropriate.

                   So lawyers have got to use electronic mail. Because of the benefit of sharing
                   with clients, it will become really a requirement. They've got to have their
                   electronic documents filed away so that they can go back and find them very
                   easily. They're dealing with a case; all of the information should be in electronic
                   form so they can search that information. The ultimate step here is to actually
                   get the courts to accept case filings in electronic form. In Singapore, they've
                   already done some of that. It will allow the court to manage cases in a better
                   way, to take the information that should be accessible and make that very
                   easy. So the whole legal business is headed towards being purely digital. I'd
                   say they should be among the first to embrace these technologies.

                   Sara Jacobee from St. Louis asks, does my daughter use a computer yet?

                   My daughter turns three this month and she's already a very happy computer
                   user. In fact, just last night we were sitting and playing with some of the Jump
                   Start educational software. Now, she uses a trackball, one of the big yellow
                   Microsoft track balls, because it's a lot easier for her to manipulate that than the
                   mouse. But she sits and does puzzles and letters and songs and all sorts of
                   things that I think are really helping her with the alphabet. And it's just a lot of
                   fun. Now we only let her use the computer about an hour a day so it's balanced
                   with lots and lots of reading and school, other activities, but I think she's already
                   better off because of the fun she's having.

                   Hank Jonas from Montreal asks, my company has been run as a decentralized
                   business for almost 100 years and does not share information freely. What are
                   your thoughts about how to bring us into the digital age?

                   The digital age makes it easier to share information so that if you want to have
                   data about customers or data about what you're seeing in the market or move
                   people around in the company or talk about what's going on in the market, you'll
                   be able to do that. If a company is decentralized in the sense of people in many
                   locations and they don't have a chance to get together face to face very often
                   and they're not really sure what topics they might have in common, electronic
                   mail is great for that because it's very simple to say, hey, you might be
                   interested in this. If it's not worthwhile, then the people can just delete the
                   e-mail message, and yet they can still pursue the decentralized approach
                   where they're really focused on their own activities and just from time to time
                   sending e-mail off to the other people inside the business.

                   They might find cases where they want to act more in concert with each other
                   because the tools help them to identify those opportunities. So businesses
                   where people are moving around a lot and they don't have this regular structure
                   that forces them to share information-electronic tools I think are even more
                   valuable in that case. You do have to decide that there are issues in common.
                   Even with these electronic tools that make it easy to share, if you find you have
                   nothing in common, then really what you're talking about is two different
                   companies that are on their own agenda. You might then think about really
                   splitting up so that the compensation and all the other systems, you get the
                   benefit of the independence that might be possible.

                   Clay Hamilton asks about the fate of the middleman. What should the
                   middleman do to shore up against the coming revolution in business?

                   The value-added is changing from the manufacturer down to the person who
                   uses the product. This is not a case where all middlemen will disappear. In fact,
                   in some cases because you can get into the flow of what's going on and add
                   advice, add services in a different way, you'll have middlemen who grow up that
                   wouldn't have been possible in the way that the chain worked before. If all the
                   middleman is doing is simply providing the physical location or passing that
                   transaction along, then you really do have to say that the strategy has got to

                   If the middleman has some expertise, then that expertise can be applied to a
                   broader set of transactions than just the ones that happen to come through their
                   storefront or just happen to come from the products that they're involved in the
                   actual sales of. So if you're a middleman, this revolution really forces you to
                   step back and think about competition in a new way, to think about what kind of
                   unique things will you be able to offer.

                   It really does change the pricing of a lot of activities. In the past if you could
                   take a percentage of the regular transaction flow, you'd have some of those
                   transactions you added a lot of value to and some that you didn't. The Internet
                   will allow some simple transactions to go around you. You'll have to price the
                   value that you create on top of those other transactions in a different way and
                   get people to be more explicit about understanding how you're really helping
                   them out. So that's a challenge for lots of businesses where they've mixed
                   together things under a single pricing umbrella and now some of those things
                   will be done in a different way.

                   Ryan Ornelas of California asks, how long does it usually take to transform a
                   company to a fully digital nervous system?

                   It takes two or three years to get 100 percent of the way to a digital nervous
                   system, but even in the first nine months the difference can be dramatic. When
                   you get somebody showing off to another executive how they're able to look at
                   sales, they're able to look at the new market, they're able to look at profitability,
                   when you have a case where the paperwork has gone away and yet you have
                   better visibility to the information and that information is more up to date, that
                   can really spread quickly because the workers, their expectation of how they
                   should be able to interact, how information should flow is very, very different.

                   So if you kick it off the right way with leadership from the top and pick a few
                   things and make sure they work very, very well, get the electronic mail culture
                   going, get some fascinating data online that empowers people, then you'll find
                   that it's an unstoppable phenomenon. It really develops an energy of its own and
                   even though some of the tougher issues about getting integrated views across
                   all the data you have and really capturing all of that digitally, that may take a
                   couple of years, you'll be really on the track. For Microsoft there are still some
                   things we need to do related to how we categorize information about our
                   customers and the interaction with customers-and get that information all the
                   way back to the product designers. We're still working on refining that, even
                   though we're already a couple years into the process. So that's one of the ones
                   where many iterations are necessary.

Bill Gates, March 31, 1999, via video/internet live chat.

October 17, 2007 

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