The Dealmaking Adventures of a Super-Nerd
By Robert J. Ringer
Many people think of Bill Gates as a computer geek who achieved super success because of his awesome hi-tech skills. But Gates is much more than a computer maven. The real roots of his success lie in his incredible dealmaking abilities.
Gates did not invent the DOS operating system that launched Microsoft into the stratosphere. But what he did do was make the deal of the century when he negotiated the purchase of DOS (referred to it at that time as “86-DOS”) for what turned out to be pocket change — $50,000.
Funny how life works. I’ll bet you don’t even know the name of the guy who actually wrote the DOS program (for a now-defunct company called Seattle Computer Products). It was a twenty-two-year-old programmer by the name of Tim Paterson, and he accomplished the feat in — get this — four months!
Paterson earned a pittance for his efforts, while Gates, the great dealmaker, parlayed the acquisition of Paterson’s creation into becoming the wealthiest person in America.
Of course, Gates was just getting started. He then turned right around and set up a meeting with top execs at IBM. At that now-historic session, the IBM corporate types wore pin-striped business suits, while Gates showed up in a stained T-shirt. According to one observer who was at the meeting, he looked like a seventeen-year-old kid negotiating with grown men.
Underneath that nerdy-kid persona, however, was a master dealmaker. Gates managed to negotiate yet another deal of the century when he got the guys in the pin-striped suits to agree to install DOS on all of IBM’s PCs.
But he still wasn’t through. Perhaps an even more masterful dealmaking accomplishment was that Gates reserved the right for Microsoft to license DOS to other companies (which, in dealmaking parlance, I like to refer to as a “throwaway bonus” — something the other side doesn’t see as a particularly big item to agree to when negotiating). This single dealmaking coup laid the foundation for Microsoft’s worldwide domination of the software industry — and, to use a fitting cliché, the rest is history.
When I was a young real estate broker, a wealthy builder (“Al”) once said to me, “Though it goes against conventional wisdom, I can tell you with certainty that having the best product or service in your industry doesn’t guarantee success. The twin keys to making money are dealmaking and marketing. And it’s important to understand that dealmaking is what makes marketing possible.”
I was fascinated by Al’s comments, and anxiously began to pursue the subject with him. When I asked him which businesses lent themselves best to dealmaking, his answer not only surprised me, it had a major impact on my approach to business.
The nature of the business is irrelevant,” Al said. “I like to think of dealmaking as a profession unto itself — the world’s highest-paying profession. Things don’t just fall into place by accident. A good dealmaker understands that it’s his job to finesse things into place. And that’s true in any kind of business.”
His words were nothing short of life-changing. They’ve been indelibly stamped on my forebrain for three decades, and have paid huge dividends for me — in the real estate business … in the cellular-telephone business … in the newsletter business … and in scores of other businesses and one-off deals that I’ve been involved in over the years. Clearly, good marketing is crucial to business success, but adept dealmaking must precede marketing. Why? Because if you don’t make the deal, there’s nothing to market!
Bill Gates is the poster nerd for this. He’s proven to be both a great businessman and savvy marketer, but he never would have been in a position to market DOS had he not first negotiated it away from Seattle Computer Products.
It’s easy to see this same principle at work in every kind of business one can think of. For example, anyone who’s had any experience in buying and selling real estate knows that the money is made at the time a property is purchased. Meaning that if you’re able to negotiate the right price for the property, your profit is locked in before you even try to sell it.
Al’s insights into dealmaking proved to be the spark that catapulted me to a seven-figure income as a real estate broker, while still in my twenties, specializing in large apartment developments. The secret to my success was my ability to locate makeable deals, persuade owners to sign my listing agreements, and, finally, close the deal once I had a serious buyer lined up.
I used the same dealmaking skills to make millions in such diverse businesses as book publishing, newsletter publishing, and cellular telephone. Every success I’ve had was a direct result of my dealmaking and marketing efforts.
Learn more about Robert Ringer's dealmaking course here.