The Hidden Mastermind: The Man Who Made Bill Gates $50 Billion Richer

The Man Behind The Wealth

💰 Meet Michael Larson, a man whose name you may not recognize, but his financial prowess certainly has shaped the world. Born in Sacramento, California, in October 1959, Larson was raised in Albuquerque, New Mexico, where he demonstrated his exceptional academic abilities early on. He graduated from high school in two years at the age of 16 and was recruited to prestigious institutions such as West Point, the Coast Guard Academy, and the Merchant Marine Academy. Despite these enticing opportunities, Larson chose to attend Claremont McKenna College, graduating in just three years with a degree in economics. His academic journey didn't stop there, as he subsequently earned an MBA from the University of Chicago at the age of 21.

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Larson's early career saw him working for ARCO, where he handled mergers and acquisitions. After a few years, he moved to Boston to work for Putnam Investments, managing bond funds. It wasn't long before Larson ventured out on his own, running his own fund, and his impressive performance quickly caught the attention of the financial world.

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The Billionaire's Dilemma

🖥️ In the 90s, Gates was making big strides in the software industry. Microsoft's stock was skyrocketing, and Gates had become the world's youngest billionaire. But there was one problem - his newfound wealth was severely undiversified, and his most precious resource, time, was increasingly consumed. Gates was swimming in wealth but was clueless about managing his money. Time, his most valuable asset, was being compromised. As a result, a million-dollar manhunt was launched to find a new money manager.

This is where Larson's story takes an interesting turn. While he was trying to buy a Chicago-based money management firm, he received a call from a head hunter to work for Bill Gates. The head hunter had heard of Larson from a few investors in Tacoma, Washington. In 1994, Larson and his wife moved to Seattle. The investment operation was named Cascade Investment, a generic name chosen by Larson to allow him to operate in the market without drawing attention. Notably, when Larson started at Cascade, he was the only employee.

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The Match Made in Financial Heaven

🤝 After rigorous background checks and in-depth due diligence, the manhunt led Gates to Larson. The rest, as they say, is history. Under Larson's adept management, Gates' fortune saw a consistent compounding growth rate. Larson originally managed $11.5 billion of the Gates fortune and foundation, but this has swelled tremendously over the years as Gates sold his Microsoft stock. It's believed that Larson now manages well over $80 billion, including the Bill & Melinda Gates Foundation and Gates's personal wealth.

Throughout his time at Cascade, Larson has operated under the radar, maintaining a low profile. He was the only employee when he started, but in 1996, he hired Alan Heuberger, a fellow graduate of Claremont McKenna College. Despite his quiet presence in the industry, Larson's influence is not to be underestimated. He's a regular attendee of the Allen & Company Sun Valley Conference and has held numerous influential positions, including Chairman of the Board of Directors at Western Asset and a member of the Board of Directors at several major corporations.

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Lessons Learned: The Power of Financial Management

💡 This tale underlines the importance of financial management and diversification in wealth growth. It's not just about earning; it's also about smartly investing and managing your earnings. Gates recognized that he needed expert help and found it in Larson, who has consistently demonstrated the effectiveness of a diversified investment strategy.

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Controversies and Accusations

💼 Despite his largely successful career, Larson has not been without controversy. In 2017, he was accused of sexual harassment. A lawyer sent the Gateses a letter alleging that Larson had been sexually harassing a woman who managed a bike shop partially owned by Rally Capital, a firm that Cascade had invested in. The woman reached a settlement in 2018, signing a nondisclosure agreement in exchange for a payment. Despite the allegations, Larson continued to work for Gates, and he retained Gates's trust.

Ultimately, Larson's story is one of academic excellence, financial acumen, and a keen eye for opportunity. Despite controversies, his impact on Gates's wealth and the financial world cannot be understated.

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