Last July, Bill Gates officially stepped away from Microsoft (MSFT), the startup that made him one of the three richest men on the planet (along with Warren Buffett and Carlos Slim). His new business is putting a lot of that money to work eliminating disease, fighting poverty, and improving education as co-chair and trustee, along with his wife, of the Bill & Melinda Gates Foundation. As of last October its resources amounted to $35.1 billion. That's down from $38.7 billion in December 2007, but still a staggering number—pumped up by Buffett's pledge in 2006 to give the bulk of his fortune to the foundation. Bill Gates' first annual letter on the foundation's Web site talks warmly of Buffett and a shared belief that their wealth stems in part from being born in America, "where innovation and risk-taking are rewarded." On Jan. 30 at the World Economic Forum in Davos, I talked with Bill and Melinda about their important work.MARIA BARTIROMO
How is the transition going?BILL GATES
It's been great to get more time with the scientists, more time out in the field. These are intense, complex issues. And as I say in a letter on the foundation Web site, it's really drawn me in. And I find the same magic elements that made me love my work at Microsoft.
You mention in the letter that you're still working on breakthroughs but in a different capacity.BILL GATES
That's right. I get to learn new things. But bringing top people together, taking risks, feeling like something very dramatic can come out of it—that's something that the previous work and the work now have in common.
Melinda, can you tell us a little about the priorities of the foundation?MELINDA GATES
We're involved in three different areas: global health, global development, and the U.S. program, which is primarily focused on education. In global health, we're really focused on top diseases that affect the poor. Malaria, HIV-AIDS, and tuberculosis are the big ones, but also some things like maternal health and newborn death. So many newborns die in the first 28 days of life. In global development, we're really trying to see how you can help the poor lift themselves up in the developing world. So we work on agriculture and financial services.
What kind of progress have you seen since you started the foundation?MELINDA GATES
Malaria, I think, is a great example. There are a number of countries—Rwanda, Zanzibar, Zambia, Ethiopia—where the malaria rates are down over 50% because the world is now paying attention to malaria. And so insecticide-treated bed nets are getting out there. For instance, 60 million nets have been distributed by the Global Fund [a public-private partnership]. That's not going to solve the problem. What's ultimately going to solve the problem is a vaccine. But even that much progress was unheard of two years ago.
Is foreign aid not flowing as freely because of this economic slowdown?BILL GATES
So far, the rich world governments have continued to increase their aid. The one exception to that, which I call out in my letter, is Italy. It's proposing a pretty dramatic cut from a fairly low level. Hopefully, that will be turned around. Now if this [recession] lasts over the next several years, we're concerned that aid will be cut and that people who face not having enough food to eat won't be the priority they should be. But these issues have more visibility, more young people caring about them and speaking out. France was considering some cuts, and there was a strong response.
Has the financial crisis had any impact on the foundation?BILL GATES
The foundation's assets were off 20% last year after years of very good gains, though we will actually increase the payout amount in 2009 [to $3.8 billion]. And then a lot of foundations we partner with are looking at their strategies because almost every foundation has had an asset reduction, and that makes things tougher. It all forces you to step back, prioritize, be more creative.
What has it been like working together?BILL GATES
We get to share what we've seen on a trip, or one of us reads something more in depth than the other and summarizes why maybe it should be a priority for us. We weren't peers at Microsoft, and now at the foundation we are.MELINDA GATES
We have offices next to one another with a door between them. So you can just pop in and say: "Did you read this? Did you see this? Are you thinking about this team in this way?"
Tell me about working with Warren Buffett. How wonderful that his gift dramatically increased the resources of the foundation.MELINDA GATES
It's incredible. It's allowed us to scale some things up a lot faster and be more ambitious. And it's because he sees the same inequalities that we see in the world.
Does he take an active part in the foundation?BILL GATES
Actually, it was Warren's idea that I do an annual letter. I ran a few drafts by him. He is very excited about the work. He's a trustee, and his advice is very helpful. I'm on the phone with him a lot. Partly he's explaining to me how these financial markets are working, and he's one of the few people whose opinion really is meaningful at this point. But he loves his full-time job.