The Art of Doing Deals....

Almost all businesses do deals.... So deal making is very important....

I just want to highlight one particular deal.

Many people rave on about Bill Gates, because he's now the richest person in the world.... They want to learn the secret of his success.

What is that secret?

Well, some say it could be traced to ONE deal he made.... Or, perhaps more accurately, it's the result of two simultaneous deals....

The first deal was the deal that Bill Gates and Steve Ballmer hammered out with IBM in 1980. IBM wanted to get into personal computers. The guy in charge of the IBM PC project was a guy named Bill Lowe. He was given a very short deadline: the IBM PC was to be out in one year.

Normally, IBM did everything in-house. However, this short deadline forced Lowe to outsource the operating system. Originally, they wanted to do a deal with someone else, but they wouldn't sign the non-disclosure agreement, so IBM couldn't tell him all they had in mind. That's where Bill Gates came in....

Because Gates did sign the non-disclosure agreement, he knew the big plans IBM had. He knew what an important position the company which provided the operating system to IBM would be in....

So, Bill Gates and Steve Ballmer did a deal to provide the operating system for the IBM PC.

But Microsoft did not have an operating system.

Almost simultaneously, Paul Allen (the other co-founder of Microsoft) was doing another deal with another company, a small company called Seattle Computer. There, he did a deal to buy an operating system called QDOS.... Later renamed as MS-DOS. This was the operating system they then licensed to IBM for the IBM PC....

These two deals gave Microsoft an unprecedented powerful position in the software market....

The lesson here is, the strength did not come from the product -- Microsoft bought that. Their strength came from their deals....

And that's one of the reasons that I've gotten interested in the art of the deal....

Clearly, skillful deal-making is a useful trait for an entrepreneur to have!

- Dien Rice