CEO search leads Gates Foundation back to Microsoft

The world's richest foundation searched across the globe for its new chief executive.

But in the end, Bill and Melinda Gates chose a manager whose skills and sensibilities, like their own, were honed in the culture of Microsoft.

Jeff Raikes will take the reins at the Bill & Melinda Gates Foundation the day after he retires from Microsoft in September, managing a $37 billion endowment, $3 billion a year in grants, and ambitions that include eradicating malaria and developing a vaccine to prevent AIDS.

Interviewing dozens of job candidates "really reinforced for us how much having somebody who shared our passion and our values was really key," foundation co-chair Melinda Gates said in an interview. "Carrying on our values ... has to be instilled throughout the culture."

The foundation conducted an international search, which eventually produced about 150 potential candidates, including political, academic and business leaders.

With Raikes, who is not well-known outside the software industry, the Gateses chose a trusted insider to manage their growing philanthropic operation. Raikes spent 27 years at Microsoft, longer than any other executive besides Gates and CEO Steve Ballmer.

"I certainly have much to learn," said Raikes, 49. "It's a very exciting time for me personally, and I'm looking forward to this dream job."

He succeeds Patty Stonesifer, another Microsoft veteran with close connections to the Gates family. She announced in February she would be stepping down by the end of the year after serving as chief executive since the foundation's start above a Redmond pizza parlor in 1997.

Harvey Dale, professor of philanthropy and law at New York University, called the job "a massive management challenge."

Choosing someone familiar during a tumultuous time is a safe bet.

"There is a time when you're taking big gambles when you'd like something very stable," Dale said. "If this went bad, it could be catastrophic."

Melinda Gates said both Microsoft and the foundation value "people who look for rigor in their jobs, really try and measure the results. They set ambitious targets, and they move forward on those."

Gates said she was impressed by Raikes' participation in the One Night Count, in which volunteers work overnight to observe and count the local homeless population. During a 2006 gathering for United Way donors in the Gateses' backyard, he described the problem of homeless people sleeping in Seattle alleys on a cold winter night.

"What impressed me was not just the unbelievable humanity of it," she said, but also how Raikes worked with people in the community to figure out what could be done.

"That's exactly what we're trying to do at the foundation," she said. "We're trying to take some great inequity, parse out the pieces and get others to come along and help solve it."

That year Raikes and his wife, Tricia, chaired United Way of King County's fundraising drive, which generated a record $121 million.

The choice of a business executive from the tech sector may fuel criticism that the foundation is too insular and reliant on technology solutions.

While it has focused on "wonderful new technologies," using simple solutions that are already available would be more effective, said Stephen Gloyd, professor of global health at the University of Washington. Health Alliance International, the nonprofit that Gloyd directs, has received Gates Foundation funding.

Whether a new chief executive might change or reinforce that direction remains to be seen, he added.

Raikes is president of the Microsoft Business Division, which generated $10.7 billion in fiscal 2007, more than half of the company's operating profit.

He said his experience working with Microsoft's 750,000 partners has helped prepare him for the challenge of delivering support to people who need it.

"When I think about systems I really mean that holistic approach," he said.

Raikes' new job coincides with Bill Gates's plans to step down from Microsoft and devote himself full time to philanthropy later this year.

Raikes, a Nebraska native, grew up on a farm outside Omaha that his family has owned for 150 years. Initially he planned a career in agriculture before discovering computers.

Raikes said his family worked with hybrid seed corn to improve production, giving him a basic understanding of plant genetics and soil testing. He said he hopes to apply his experience as the Gates Foundation carries out its plan to spur an agricultural revolution in Africa.

While his skills don't translate exactly, he said, "having a basic understanding and a love of agriculture and farming is quite valuable."

Despite his folksy Midwest manner, Raikes is also intensely competitive.

An e-mail message Raikes sent to investor Warren Buffett in 1997 asking him to consider investing in Microsoft was later brought up as evidence against Microsoft in an antitrust case. Raikes described applications such as Office as a "moat" that protects the dominant Windows operating-system business.

Almost a decade later, Buffett, a fellow Nebraska native, pledged most of his own fortune to the Gates Foundation. The gift will effectively double the foundation's annual spending by 2009, posing a challenge for the foundation to spend the money quickly yet effectively, and double its staff to 1,000 employees in the next year without creating chaos.

While Stonesifer set her own salary at $1 a year, the foundation will pay Raikes a salary similar to leaders of other large foundations.

Raikes, whose own net worth was estimated at $490 million in 2003, said he and his wife plan to dedicate most of their wealth to philanthropy.

Through the Raikes Family Foundation, the couple have focused on education and opportunities for underrepresented minorities. The foundation had about $126 million in assets at the end of 2006, according to tax records.

"My compensation will end up being something that goes back to help others," he said.

Kristi Heim: 206-464-2718 or kheim@seattletimes.com