How’s the life of a billionaire? “Quite strange,” says Bill Gates, who fielded questions from University of Washington students on Thursday evening as part of a lecture on the future of computing.

Gates’ talk, at a packed hall in the UW’s computer science building, focused on some areas where he thinks cheap, powerful computing will have a major impact on society, including education, disease, and robotics.

Gates recalled spending time on the UW campus as a young man, back in the days when computers were huge, powerful machines locked up in big research facilities.

“At strange hours you could essentially break in and use computer time,” Gates said. “I never did get a degree here, or anywhere else. But fortunately for me, my addiction to computers became easier to satisfy.”

Given the chance to ask Gates about anything, students treated the evening like a visit with the oracle, asking the Microsoft co-founder to expound on problems with the political system and the tax code, predict the future of computer interfaces, and more.

Gates didn’t disappoint, giving long answers that included some glimpses at his personal life, such as meeting his daughter’s boyfriend’s parents over Skype and being such a bookworm as a kid that “I had to have a quota about how much I was allowed to read.”

The webcast will be archived online by UW, but here are the highlights from where I sat:

BEING RICH
A student from Beijing said her dream as a child was to be one of the richest people on Earth, so she asked Gates “what is one word of advice that you would give to someone like me to become someone like you?”

“I didn’t start out with the dream of being super-rich. And even after we started Microsoft, and the guys who ran Intel—Gordon Moore and those guys—were billionaires, I was like, ‘Wow, that must be strange.’ And so—it is, it’s quite strange,” he said to laughs from the crowd.

“But I think most people who’ve done well have sort of found something that they just are kind of nuts about doing. And then they figure out a system to hire their friends to do it with them. And if it’s an area of great impact, then sometimes you get financial independence,” Gates said.

“But wealth above a certain level, really, it’s a responsibility that then you’re going have to either, a.) leave it to your children, which may or may not be good for them, or b.) try to be smart about giving it away.

“So I can understand wanting to have millions of dollars, because there’s meaningful freedom that comes with that. But once you get much beyond that—you know, I have to tell you, it’s the same hamburger. Dick’s has not raised their prices enough,” Gates said to laughs. “But, you know, being ambitious is good. You just have to pick what you enjoy doing.”

MONEY & POLITICS
Asked if he thought there was a societal problem of wealth being concentrated in the hands of too few powerful forces with an outsized ability to influence politics, Gates pointed out that worldwide poverty is getting far better over time. But he also acknowledged … Next Page »

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By his own estimate, Nick Hanauer makes 500 times as much money as me. So why is he angry?

Easy. Because it’s looking like Initiative 1098, Washington state’s proposed income tax on people making more than $200,000 a year ($400,000 for couples), probably won’t pass at the polls tomorrow. Hanauer and Bill Gates, Sr. are strong proponents of the measure, as is Microsoft co-founder and chairman Bill Gates. Opposing them are Steve Ballmer, Paul Allen, Jeff Bezos, and what Hanauer estimates to be 70 percent of the wealthy people in the state.

This is an issue that has divided the technology and business community at all income levels. Indeed, it seems obvious that rich people like Hanauer, an early investor in Amazon.com (and many other lucrative ventures), have the most to lose if the measure passes. But he sees things very differently, as he explained when we met last week in Seattle.

Hanauer is a founder of Second Avenue Partners and has been an investor in some very successful companies besides Amazon, including aQuantive (acquired by Microsoft for $6.4 billion in 2007), and Insitu (acquired by Boeing for some $400 million in 2008). Ever the contrarian, Hanauer has become increasingly active in Democratic Party politics over the years, and is working on a new book with Eric Liu about reinventing government and economic thinking. (The two co-wrote The True Patriot, which was released in 2008.)

As Hanauer sees it, the argument over I-1098 boils down to two things: a moral issue and an economic prosperity issue. Forget the moral argument for now (although I think that’s where his heart is). Opponents of the measure—including prominent Seattle venture capitalists Bob Nelsen and Matt McIlwain and big companies like Microsoft and Boeing—have argued that instituting the tax will make Washington state less competitive in its quest to recruit high-tech talent. They have also argued that new taxes on the rich would eventually lead to new taxes for everyone.

Hanauer counters that this is part of the longstanding fallacy that as regulation, government activism, and taxes on the rich go up, business and the economy go down. “The limited government story just isn’t true,” he chides. “If it was true, Somalia would be a garden spot, and Canada a hellhole.” What’s more, he says, all of the richest and most tech-competitive states have high taxes, including California, New York, and Massachusetts.

So what’s his economic prosperity argument, as pertains to Washington’s innovation ecosystem? In fact, the new tax “will lead to more prosperity for me,” he says.

If Washington’s wealthy citizens paid their fair share, he says, more money could go into government for crucial infrastructure like education and health care. Ideally, that translates into a bigger pool of healthy, talented workers to drive growth at businesses. It would create better jobs, and more prosperous consumers who would spend more money on new products, Hanauer says. And that means more money for the companies Hanauer and others invest in—and ultimately greater returns for them. Asked to quantify this return, Hanauer estimates he’d get 10 times his money back on … Next Page »

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On Friday, we reported that Tiger 21, a New York-based network and support group for the very wealthy, is setting up a Seattle chapter, headed by the local entrepreneur and investor Andy Sack. (Tiger 21 had planned to announce the news today, but another media outlet jumped the gun on Friday.)

The point of Tiger 21 is to give high net-worth individuals (more than $10 million is the base criterion) a safe haven to discuss their portfolios and problems with peers who can relate to them. This is a serious issue for the wealthy. “People are either jealous or they can’t understand you have problems,” says Lewis Haskell, a managing director of Tiger 21. “They say, ‘I should have such problems,’ or ‘How hard can it be?’”

I thought it would be useful to share what actually goes on behind the closed doors of Tiger 21 meetings, as related to me by Haskell and Sack. The meetings take place once a month in each chapter. Besides New York, the chapters tend to be in wealthy cities like Miami, Dallas, San Francisco, Los Angeles, and San Diego. Chapters typically have 10 to 12 members, says Haskell.

Monthly meetings are usually held in a board room from 9 a.m. until 4 or 4:30 p.m., and are followed by a social event. The first hour is called “world update.” Each member shares what’s been going on with his or her portfolio in the past 30 days, as well as their view of the landscape—concerns about anything from wars to interest rates to foreign competition. (I bet the October and November meetings were pretty ugly.) If there are personal issues to discuss, such as problems with children or relatives, they might be shared then too.

The next part of the meeting is about “issues and opportunities,” Haskell says. Members have an organized discussion about things like concerns over getting money out of a hedge fund, for instance. They might discuss relationship issues in more depth, like how to have difficult conversations with relatives who want to borrow money, or other people who want a piece of them.

Two guest speakers are brought in for each meeting, one before lunch and one after. Previous speakers include shareholder activist Carl Icahn, oil baron T. Boone Pickens, and former U.S. Senate Majority Leader George Mitchell. Topics range from economics and management to historical perspectives on war and other global issues.

In the final part of the meeting, one member gets up and gives a portfolio defense to the group. The individual shares his or her strategy, intentions, and ideas about their personal wealth and how to maximize it, and the rest of the group gives feedback—things like whether the member has too much stock versus other investments. “It’s really useful to have people look over your portfolio,” says Sack.

As one might imagine, it takes a special kind of person to be this open, and to be this invested in both learning and helping their peers. Here’s hoping the Seattle chapter of Tiger 21 finds the right mix to benefit both its members and the greater innovation community.

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Think the super-rich don’t have problems? Try fending off friends and relatives who always want to borrow money, or raising spoiled brats who don’t take responsibility for their actions. Not to mention the more obvious financial questions of how to manage such hefty portfolios—especially in economic times like these. (Granted, some of this might be viewed as insensitive at a time when local food banks are running out of food.)

Enter Tiger 21, an exclusive network for the very wealthy that is opening in Seattle this month. Its goal is to provide a support group for people of high net worth to talk about their investments, portfolios, and problems. Local entrepreneur and investor Andy Sack of Founder’s Co-op will be chairing the Seattle chapter of the national group. Last month, I sat down with Sack and Lewis Haskell, the managing director who runs Tiger 21 west of the Mississippi. I’m a little under-qualified to speak on the problems of the wealthy, but Sack and Haskell filled me in nicely.

First, some background. Tiger 21 was founded in New York in 1999 by Michael Sonnenfeldt. Sonnenfeldt had recently sold his interest in Emmes & Company, a real estate holdings company, for tens of millions, and was looking to build a safe haven for people in similar circumstances to meet and talk. The confidential network has grown into a big business. Besides New York, Tiger 21 has existing chapters in some of the country’s wealthiest places—San Francisco, San Diego, Los Angeles, Dallas, and Miami. It has about 170 members who have an average net worth between $30 million and $50 million.

And that’s the catch: to join Tiger 21, you have to have at least $10 million, exclusive of houses, cars, and other properties (how they verify this, I’m not sure). And it costs $30,000 a year to be a member. All members sign confidentiality agreements.

Sack’s connection with the group is through its founder. Back at MIT around 15 years ago, Sonnenfeldt was Sack’s mentor at the Sloan School of Management, and the two have invested together. Seattle brings some unique challenges to the very wealthy, Sack says. They might be overexposed because the community is relatively small. “The network of support is not as high, or as sophisticated, in Seattle,” he adds.

With the likes of Bill Gates, Paul Allen, Nathan Myhrvold, Steve Ballmer, Jeff Bezos, Howard Schultz, Craig McCaw, and Jim Jannard (founder of Oakley eyewear) in the area, you’d think Washington state would have such a support network in place already. But what Tiger 21 provides that other wealthy social networks don’t is a focus on members sharing how they manage their financial lives, says Haskell.

As for its future Seattle members, Sack and Haskell have been recruiting for about 10 openings. I’m guessing they’re not taking unsolicited applications. Sack says members have to have an interest in learning, and be willing to be open with their peers. And, he added, “There’s a ‘no asshole’ rule.”

Stay tuned for what goes on behind Tiger 21′s closed doors in Part 2—Eds.

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