Gates frequently went to Cupertino for demonstrations of the Macintosh operating system, and he was not very impressed. “I remember the first time we went down, Steve had this app where it was just things bouncing around on the screen,” he said. “That was the only app that ran.” Gates was also put off by Jobs’s attitude. “It was kind of a weird seduction visit, where Steve was saying, ‘We don’t really need you and we’re doing this great thing, and it’s under the cover.’ He’s in his Steve Jobs sales mode, but kind of the sales mode that also says, ‘I don’t need you, but I might let you be involved.’”
The Macintosh pirates found Gates hard to take. “You could tell that Bill Gates was not a very good listener. He couldn’t bear to have anyone explain how something worked to him—he had to leap ahead instead and guess about how he thought it would work,” Hertzfeld recalled. They showed him how the Macintosh’s cursor moved smoothly across the screen without flickering. “What kind of hardware do you use to draw the cursor?” Gates asked. Hertzfeld, who took great pride that they could achieve their functionality solely using software, replied, “We don’t have any special hardware for it!” Gates insisted that it was necessary to have special hardware to move the cursor that way. “So what do you say to somebody like that?” Bruce Horn, one of the Macintosh engineers, later said. “It made it clear to me that Gates was not the kind of person that would understand or appreciate the elegance of a Macintosh.”
Despite their mutual wariness, both teams were excited by the prospect that Microsoft would create graphical software for the Macintosh that would take personal computing into a new realm, and they went to dinner at a fancy restaurant to celebrate. Microsoft soon dedicated a large team to the task. “We had more people working on the Mac than he did,” Gates said. “He had about fourteen or fifteen people. We had like twenty people. We really bet our life on it.” And even though Jobs thought that they didn’t exhibit much taste, the Microsoft programmers were persistent. “They came out with applications that were terrible,” Jobs recalled, “but they kept at it and they made them better.” Eventually Jobs became so enamored of Excel that he made a secret bargain with Gates: If Microsoft would make Excel exclusively for the Macintosh for two years, and not make a version for IBM PCs, then Jobs would shut down his team working on a version of BASIC for the Macintosh and instead indefinitely license Microsoft’s BASIC. Gates smartly took the deal, which infuriated the Apple team whose project got canceled and gave Microsoft a lever in future negotiations.
For the time being, Gates and Jobs forged a bond. That summer they went to a conference hosted by the industry analyst Ben Rosen at a Playboy Club retreat in Lake Geneva, Wisconsin, where nobody knew about the graphical interfaces that Apple was developing. “Everybody was acting like the IBM PC was everything, which was nice, but Steve and I were kind of smiling that, hey, we’ve got something,” Gates recalled. “And he’s kind of leaking, but nobody actually caught on.” Gates became a regular at Apple retreats. “I went to every luau,” said Gates. “I was part of the crew.”
Gates enjoyed his frequent visits to Cupertino, where he got to watch Jobs interact erratically with his employees and display his obsessions. “Steve was in his ultimate pied piper mode, proclaiming how the Mac will change the world and overworking people like mad, with incredible tensions and complex personal relationships.” Sometimes Jobs would begin on a high, then lapse into sharing his fears with Gates. “We’d go down Friday night, have dinner, and Steve would just be promoting that everything is great. Then the second day, without fail, he’d be kind of, ‘Oh shit, is this thing going to sell, oh God, I have to raise the price, I’m sorry I did that to you, and my team is a bunch of idiots.’”
Gates saw Jobs’s reality distortion field at play when the Xerox Star was launched. At a joint team dinner one Friday night, Jobs asked Gates how many Stars had been sold thus far. Gates said six hundred. The next day, in front of Gates and the whole team, Jobs said that three hundred Stars had been sold, forgetting that Gates had just told everyone it was actually six hundred. “So his whole team starts looking at me like, ‘Are you going to tell him that he’s full of shit?’” Gates recalled. “And in that case I didn’t take the bait.” On another occasion Jobs and his team were visiting Microsoft and having dinner at the Seattle Tennis Club. Jobs launched into a sermon about how the Macintosh and its software would be so easy to use that there would be no manuals. “It was like anybody who ever thought that there would be a manual for any Mac application was the greatest idiot,” said Gates. “And we were like, ‘Does he really mean it? Should we not tell him that we have people who are actually working on manuals?’”
After a while the relationship became bumpier. The original plan was to have some of the Microsoft applications—such as Excel, Chart, and File—carry the Apple logo and come bundled with the purchase of a Macintosh. “We were going to get $10 per app, per machine,” said Gates. But this arrangement upset competing software makers. In addition, it seemed that some of Microsoft’s programs might be late. So Jobs invoked a provision in his deal with Microsoft and decided not to bundle its software; Microsoft would have to scramble to distribute its software as products sold directly to consumers.
Gates went along without much complaint. He was already getting used to the fact that, as he put it, Jobs could “play fast and loose,” and he suspected that the unbundling would actually help Microsoft. “We could make more money selling our software separately,” Gates said. “It works better that way if you’re willing to think you’re going to have reasonable market share.” Microsoft ended up making its software for various other platforms, and it began to give priority to the IBM PC version of Microsoft Word rather than the Macintosh version. In the end, Jobs’s decision to back out of the bundling deal hurt Apple more than it did Microsoft.
When Excel for the Macintosh was released, Jobs and Gates unveiled it together at a press dinner at New York’s Tavern on the Green. Asked if Microsoft would make a version of it for IBM PCs, Gates did not reveal the bargain he had made with Jobs but merely answered that “in time” that might happen. Jobs took the microphone. “I’m sure ‘in time’ we’ll all be dead,” he joked.