Bill Gates sat down with Bloomberg Television anchor Erik Schatzker at the Sibos conference in Boston today, where they discussed Microsoft Corporation (NASDAQ:MSFT)’s strategy, the Ebola outbreak, his philanthropic efforts, financial payment systems in Africa and more.
On whether Microsoft CEO Satya Nadella is moving fast enough, Gates said, “I’m very happy with what he’s doing. I see a new sense of energy. There’s a lot of opportunity there, some things the company isn’t the leader on, and he sees that he needs to change that.”
On Ebola hitting the U.S., Gates said, “…the fact that this Dallas patient was identified, the contacts are being traced, I feel confident the CDC is very much on top of that. I wish every country had a health system like that…the US government’s really stepping up on this and I think that is going to let the world get on top of it.”
On whether we’ll see him courtside at the Staples Center cheering on the L.A. Clippers with new owner Steve Ballmer, Gates said, “I’m not a guy who spends a ton of time watching sports games, but my friends who own teams, I enjoy spending time with them. So at some point probably.”
Bill Gates Says He’s Very Happy With Microsoft’s Nadella
ERIK SCHATZKER: I am here with Bill Gates. We know him from Microsoft. We now know him from the Bill and Melinda Gates Foundation. Bill, it’s great to see you, great to see here in particular because we know the Gates Foundation for its work on infectious diseases, child health, nutrition, agriculture, education. The list goes on. Why does Bill Gates care about finance?
Bill Gates: Well it’s all about helping the poorest. And one thing they don’t have access to is bank accounts. The fee structure if you have small amounts of money is just too high. And we got involved in some traditional micro lending but just didn’t see how that could scale up and get inexpensive enough. So now we’re involved in trying to make sure we get a very efficient digital payment structure set up for all the poorest in the world to get financial products that work for them.
SCHATZKER: What are you doing?
Bill Gates: Well the idea is that typically through the cell phone you should be able to send money to your relatives. You should be able to track the money that’s coming in, set aside money to buy seeds the next year. And there are countries where this is beginning to take off. Kenya, Bangladesh, even Somalia, maybe the last country you’d expect. Up in Somaliland, almost half of the GDP is done digitally.
SCHATZKER: I don’t need to tell you that the poor have been unbanked for as long as there have been banks. Why is this time different?
Bill Gates: Well it’s really the digital revolution. The poorest have bought cows, stored gold, put currency under their mattress, but they are getting cell phones. And the cell phone capability of identifying who’s using the cell phone, letting you look at your spending patterns, that’s going to be common sense. People are going to have help and lots of innovative products competing on top of this digital currency platform.
SCHATZKER: So if technology, mobile phones for example, digital money, helps to increase access to financial services at the same time as it lowers the cost of delivery, why is philanthropy needed?
Bill Gates: Philanthropy should just be here to bootstrap this. There are a lot of regulations in this area, and understanding how those regulations can make the cost of remittances where you’re sending money back to your family and your country of origin, how right that has about a 5 percent overhead on it. We think we have a role to make sure that particularly for the smaller transactions the regulations don’t impose those very high costs.
Once this gets going, then we’ll step up to the applications and say, okay, what is – how – how does a savings application help the mother make sure money’s focused on the kids? How does it help them stay in school, set money aside for the uniform or – or for good future planning?
SCHATZKER: Some of what you just described, the need to move money from place to place, the cost of doing so, the overhead as you put it, makes me think, believe it or not, of bitcoin because some people have said, hey, bitcoin is the answer to those problems. Are you a believer?
Bill Gates: Well bitcoin is exciting because it shows how cheap it can be. Bitcoin is better than currency in that you don’t have to be physically in the same place. And of course for large transactions currency can get pretty inconvenient. The customers we’re talking about aren’t trying to be anonymous. They’re willing to be known. So bitcoin technology is key, and you could add to it or you could build a similar technology where there’s enough attribution that people feel comfortable this has nothing to do with terrorism or any type of money laundering.
SCHATZKER: What kinds of people or private enterprises right now are helping to solve the same problems you’re interested in?
Bill Gates: Well in some countries the mobile companies have been fantastic. In a few other companies, it’s been the banks. In some countries it’s a startup company that’s neither a bank nor a mobile company. In Bangladesh the B cash (ph) offering runs across any phone and they’ve gotten the regulations so that they have a product that we think will get very, very pervasive. So entrepreneurs are there.
The enablement this creates, if you want to put in say electricity in a city, collecting your bills is one of the reasons why the underspending in infrastructure in these areas is – is a real thing holding back the economy.
SCHATZKER: You mentioned banks. Are the legacy institutions, for the most part banks, credit card companies, payment processors, friend or foe?
Bill Gates: Many of them want to have these additional customers, but they have to embrace the idea that the fees are going to be a lot lower, and so they have to find a way to service these new customers. Now that means these customers aren’t going to be coming into their branches and they can charge a higher fee when you want to actually cash out. But if it’s a pure digital-digital transaction, then you should be paying less than a percent to move that money from you to a merchant or from you to a friend even with meeting all the regulatory requirements.
SCHATZKER: Don’t you expect them to stand in your way to protect their margins?
Bill Gates: Well ti’s a competitive field and governments have a real interest in seeing this happen. Governments often want to make payments to the poorest. And if they can identify them and get that money out to them efficiently, countries like Mexico and Brazil have shown that’s a way to lift people up. So the government, if they understand this, will usually want to create a competitive framework that draws