Like middle-aged rock stars after a big concert, Bill Gates and Steve Ballmer kicked back and cracked jokes after Microsoft's 30th-anniversary...

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Like middle-aged rock stars after a big concert, Bill Gates and Steve Ballmer kicked back and cracked jokes after Microsoft’s 30th-anniversary company party yesterday at Safeco Field.

In a rare joint interview in a suite overlooking the field where they had just rallied 17,000 employees, they reflected on the company’s history, its challenges and how two college pals can stay friends while running the world’s largest software company.

Gates met Ballmer at Harvard and later persuaded him to move west and help build his fledgling software company. From the start, Ballmer brought a business focus that balanced Gates’ technical vision, a relationship that continues today with Ballmer running the company as chief executive and Gates serving as its chairman and chief software architect.

Both said yesterday that they never expected the company to be so successful and have such a huge effect on the world. They also downplayed recent attention on morale challenges at the company, attention that was heightened when Ballmer reorganized its product groups on Tuesday after a trying period developing the next version of Windows.

Here’s an edited transcript of the discussion:

Q. Is this where you expected Microsoft to be at 30 years?

Gates: Well, the company’s way more successful in terms of the number of people, the sales, the profits, the global presence, way beyond what we ever would have expected. One thing that helped us as a company is we always thought about, OK, what does it take for us to double the employees, double the sales?

Ballmer: When I joined, there were 30 people and the first disagreement we had was about whether we should go from 30 to 48. In hindsight that seems sort of ultimately a smart thing that we set the tone early, that we’re going to be disciplined in the way we run Microsoft as a business. It sort of tells us that in spite of our optimism for the technology and the vision and the possibilities we have been, you know, the business and the numbers have just been amazing.

Q: What are the biggest challenges now facing Microsoft internally?

Ballmer: I would say that most of what we have to do starts with building on strengths. We had a chance to talk to our employees in Puget Sound today. We said, look, we’re an innovator. We’ve got the most exciting pipeline in the next 12 months, pipeline of products and innovation, that we’ve ever had, by far, in my opinion.

Q: There seems to be a sense of loss among some employees that it’s not like it used to be, that things aren’t working right. What’s going on, and what are you doing about it?

Gates: Well, in 1978 was the first time somebody said that to me: “It’s not the same as it used to be.”

Ballmer: I think I saw him today, in fact.

Gates: Hey, companies can’t stay the same. The requirements for the jobs — people have to step up to bigger jobs, so we’re not trying to stay the same. We just want to be the place where the greatest software developers love to work and get a lot done. We’re working on the most interesting software of anyone….

Ballmer: One of our core values is essentially a culture of self-criticism and self-improvement. And as Bill said, you take any time in history there have been folks — and there always will be, because we value it — [who question how can] we do better, how do we improve, what needs to change? We don’t just cherish that, we promote it….

Q: Many couples don’t stay married for 30 years. What’s your relationship like now, and how have you kept it going so long?

Ballmer: You’ve got a relationship that’s grounded in three things. No.1, we’re friends. No. 2, we respect each other. And No. 3 — not to push your analogy too far, but it makes sense — we also have a family together. It’s a family that’s now over 60,000 people who we care about deeply and we care about their work. I’ll say a fourth thing. We care about the customers and the people we touch with our innovations around the world. … The bond that all four of those things builds is really quite incredible.

Gates: And we have a lot of fun working together. I love when Steve comes in, he wants to change something, he’s excited about something. We’re very used to working together. We had one change in the way we worked together.

Ballmer: We really had two, but we only talk about the one. When I came here there. …

Gates: It went from us being friends. …

Ballmer: To working together. It was a change. It took us about a year to develop a rhythm. And then we were in a rhythm for basically 19 years. Then we changed roles five years and it took us about a year to find a new rhythm. Even with the friendship and the enjoyment, change and working out different roles is something we’ve got to work at.

Q: How does your wealth and visibility affect your role as parents? Also, how much has Microsoft changed as a result of your becoming family men?

Ballmer: I think the answers in some senses will be more the same than different. I love Microsoft, yet there’s nothing more important to me than my family. That’s true for him as well. … I think hard work is a characteristic everybody ought to want to teach their kids, so I think my role and job at Microsoft in some senses is also part of the way I teach my kids sort of good practice and behavior, if you will, for them.

Gates: Technology’s helped a lot. Where it used to be go back into the office after dinner, now it’s much more when the kids get to bed, get on e-mail, read stuff, write thoughtful e-mail. On the weekends — I write a lot of my most thoughtful e-mail over the weekend. Sunday night or Monday morning, people get in, there’s plenty there for ’em.

Q: A former Microsoft executive told me the “old Microsoft” was stronger because of its looser, more confrontational leadership style. He said Bill’s approach involved a lot of debate with smart folks about their ideas, and he contrasted that with a more corporate approach, with more businessy leaders, under Steve. Have you found the right balance between these approaches?

Ballmer: That’s an interesting contrast. I wouldn’t say there’s any change. I think that we’re a company that needs to bet the long term, and execute agilely and well in the short term. I think that’s always been the case and there’s always been a good, healthy interaction between Bill and I that encourages both behavior types. The fact that we’re partners, we get both of those things mixed in well.

There are points where Bill is sort of Mr. Execution and Mr. Long-term and the other way around. I think there’s a more natural bias for Bill to be Mr. Long-term and me to be Mr. Execution, but that’s a good balance, a good partnership.

Gates: If somebody’s trying to draw a distinction between my passion and Steve’s passion, if anything Steve’s passion’s more evident, but we’re both on the extreme end of passion about the work we’re doing and the job and the excellence.