Bill Gates: Behind Microsoft, Money, Malaria

by Forbes Staff

  To put together its list of 14 “challenges,” a panel of scientists sifted through recommendations from 1,000 researchers—from biochemists to mathematicians—around the world. Grant winners will have to invent technology on a deadline. Miss a milestone and the money stops. That hardheaded approach makes the applications more like business plans than traditional research programs, Klausner says.

  Such research also represents a healthy half-step between pure academic research and for-profit development. “It’s good to try things that stretch the university a bit toward providing products in situations where the commercial world won’t,” says Nobel Laureate David Baltimore, who also serves as president of the California Institute of Technology and has won a $13.9 million Gates grant. The grantees pledge to make their technologies available at no or little charge to developing nations, though they retain marketing rights in developed markets.

  When Florence Wambugu, founder of A Harvest Biotech Foundation International in Kenya, heard about the Gates grants, she immediately thought about three packages of sorghum seeds sitting in cold storage in Des Moines, Iowa. A cousin of corn, sorghum is a staple for half a billion people worldwide, even though it lacks much nutritional value. Five years ago Pioneer Hi-Bred International (a subsidiary of DuPont) figured out how to slide a critical gene from corn into sorghum to make a variant with more lysine—an essential amino acid. The researchers published their work, then filed the details (along with 200 seeds) in cold storage. The sorghum market simply wasn’t big enough for Pioneer, says Paul Anderson, research director of DuPont crop genetics.

  But Wambugu, who remembered the project from past discussions with Anderson, wanted those seeds. She called Anderson and asked if Pioneer would help her foundation develop better sorghum for African farmers. Wambugu and Anderson worked on their joint proposal for 20 months, ultimately winning $16.9 million from the Gates Foundation. Pioneer agreed to further nutritional enhancements to the sorghum strain, to train African scientists and to donate the know-how (and seeds) from its earlier work. Wambugu has created a network of allies in Africa that will develop new crops as well as coax governments to OK the use of bioengineered seeds.

  Delivering a drug via inhalation—that challenge inspired Harvard professor David Edwards to found a company in 1997. The novel delivery mechanism has commercial potential in treating diabetes, since prosperous countries are full of diabetics. Eli Lilly & Co. and Alkermes (which now owns the technology) are trying out inhaled insulin on 1,000 patients.

  How about the same method to deliver vaccines, sparing the costs of refrigeration and needles? There’s scant commercial potential here, but there’s a need. In 2003 Edwards started the nonprofit Medicine in Need to develop the technology, which is very tricky. You have to dry the vaccine without killing the cells in it, and you have to make the particles small enough to be inhaled but not so small that they are exhaled. Edwards and his collaborators are getting a $7.6 million Gates grant.

  Caltech’s grant was for finding a way to equip the body to fight a disease that it may not be prepared to tackle, such as AIDS. Most vaccines and therapies try to bulk up the body’s existing defenses, say, by boosting the immune system. Baltimore wants to rewrite the body’s disease-fighting instruction manual. He aims to take hematopoietic stem cells—the bone marrow cells that form blood cells in the body—and reprogram them by adding genes that direct the cells to produce unnatural antibodies. So far he and his colleagues have primarily demonstrated that they could help mice beat tumors this way. “This approach is such a leap beyond where we are today,” says Baltimore.

  Malaria is a classic example of a disease that pharmaceutical companies are reluctant to tackle. The parasites that cause malaria go through four major developmental stages, some in humans and some in mosquitoes. Most experimental malaria vaccines target the mature parasite as it is wreaking havoc in a patient’s blood. Kappe’s $13.5 million grant, by contrast, aims to stop the equivalent of teenage parasites while they’re developing in the human liver.

  In his insect swamp, Kappe develops a culture of red blood cells with malaria parasites that lack a key gene for development. The mosquitoes feed on the blood, absorbing the parasites. After the parasites have matured further, Kappe harvests them to build a mouse vaccine. Although the parasites can’t develop further (and so can’t cause malaria in the mice), they do excite the immune system. Kappe is using his grant to begin human trials.

  His colleague in Africa, Patrick Duffy, won a $19 million award to pin down which forms of malaria are most deadly to children, and Dominic Kwiatkowski at Oxford University got a $16.4 million grant to explore which variations in the human genome protect some people from ever contracting malaria.

  “These grants are different from standard research programs, which are about learning, not about producing things,” says Baltimore. “The Gateses have made a commitment to seeing that something gets done.”

  BILL GATES’ INDIAN EDUCATION

  By Elizabeth Flock

  July 2009

  ON A HUMID AFTERNOON former prostitute Fathima welcomes a group of illiterate women still in the trade and needing protection from AIDS into the Mukta clinic in Pune, India. As a “peer educator,” she has the job of conveying to them the message of safety. But the visitors shuffle tentatively amid the expensive-looking English-language posters that paper the walls around them.

  Why would a clinic serving illiterate, non-English-speaking visitors use more English than Indian languages?

  The answer lies in where that money comes from. The Pune clinic is part of a network of 100-plus nonprofits working under the umbrella of Avahan, an AIDS-prevention effort. Avahan, or “Call to Action,” is the brainchild of the world’s most generous philanthropist, Bill Gates.

  Gates announced the 10-year, $100 million Avahan during his much-publicized visit to the country in 2002. This was, and still is, the largest-ever initiative in India for the Bill & Melinda Gates Foundation. (To see the Gates Foundation’s response, click here.)

  AIDS in India has become an epidemic after nearly two decades of piecemeal efforts to counter it. Millions of poor people have been exposed to the virus; government agencies and private groups didn’t have the money to preach safety or treat the infected. Gates showed his seriousness by later raising the Avahan outlay to $258 million.

  Seven years after Gates’ visit, Fathima (we’ve changed her name) has counseled the women at the Pune clinic, given them condoms and sent them back home. It is time to worry about the future. The bad news is that Avahan is ready to pack and go soon from the Pune clinic, and Fathima is set to lose her income. (In March Avahan began handing over the reins to the government-run National AIDS Control Organisation, which is unenthusiastic about inheriting the venture.) She doesn’t want to slip back into prostitution. At age 45 she doesn’t have much of a career in that, anyway.

  When it hit the ground in 2003, Avahan set itself three goals: Arrest the spread of the human immunodeficiency virus in India, expand the program across the nation and develop a model that the government can adopt. Now, as it begins to wind down, Avahan finds that it hasn’t achieved any of these goals. Doubtless the effort has made a dent in the problem, but the impact is small in relation to the spending. When NACO takes over, it will try to prune the costs of the program. Salaries for peer educators will go.

  When the Gates Foundation got down to work in India, Avahan was ready to spend what it took to get the best bosses; it started its search at McKinsey, the consulting powerhouse. The recruiters zeroed in on Ashok Alexander, now 55, who had spent 17 years turning Indian businesses into global challengers. “They made me an offer I couldn’t refuse,” Alexander recalls, sitting at his plush office in New Delhi. “I liked the ambitious arch of the HIV/AIDS program, and it was a chance for me to do something new.”

  Soon 15 people were hired. Ten of them had come from private-sector backgrounds. They tackled the virus much as they would a problem at McKinsey. Alexander’s offi
ce is papered with data and maps containing colored dots plotting the spread of the disease across the country. The argot is sheer B-school: Avahan is a “venture,” the prevention program a “franchise,” a prostitute a “consumer.”

  At Avahan Alexander and his colleagues oversaw the work of more than 100 other groups. The lack of practical experience at the top manifested itself in different ways. When Avahan introduced sleek mobile vans to bring clinics directly to the brothels, the expensive-looking vehicles were sometimes met with intense suspicion. At the Mukta clinic, Dr. Laxmi Mali says the women initially thought the van was from the police or the government. They refused help.

  Accounts of the early missteps are largely anecdotal. But in 2005 an internal evaluation showed a big portion of Avahan’s efforts had gone to waste. As many as 31,000 people had been contacted by Avahan’s outreach program, but only 11,000 had visited the clinics. The Avahan executives had assumed that the peer educators would already know what the prevention services were without explanation; the reality was that they didn’t.

  Avahan’s craving for scale also meant it overshot by a lot. It started with a bang in six states, with 50 sites for truckers in the south. But by mid-2005 only 12% of truck drivers were even aware of its services, and only 7% took advantage of them. This forced Avahan to reduce the sites to 20. For similar reasons, Avahan’s 6,000 centers for treating sexually transmitted diseases were reduced to 800.

  At the core of Avahan’s failure to make a serious difference in India’s fight against AIDS is the way it spent money. In a country where a branded condom sells for 10 cents, where did Avahan’s money go? It’s difficult to say because Avahan’s finances are largely opaque. Avahan’s outlets sell 5 million condoms a month and give away another 10 million. Asked how so much could be spent on condoms, Alexander laughs, saying, “It’s a bit more complicated than that.” Probed further, Alexander says he doesn’t know the financials offhand. Nor was he able to give them later.

  Travel was one drain. Jonty Rajagopalan, Avahan program officer from 2006 to 2008, says she would take flights every month from her base in Hyderabad to her focus areas in the states of Andhra Pradesh and Tamil Nadu, instead of being based in a focus area.

  Another chunk: salaries. Alexander’s compensation was $424,900 in 2007, the second highest in the foundation globally, not including presidents and operating officers. Avahan’s “targeting intervention officers,” who oversee the field work, are paid three or four times what a typical NACO officer is paid.

  Avahan’s marketing was done in style. Eldred Tellis, head of Sankalp, a Mumbai group fighting AIDS that has worked with Avahan, says he has seen a lot of money go into fancy publications reporting the program’s work. Very little went to the people on the ground. Vijay Mahajan, the chairman of Basix, a microfinance institution, comments on Avahan: “There is too much money and too many really smart people, with too little coming out.”

  Knowing that it would have to inherit the project, NACO sent out evaluation teams to sites in four states to get some clarity on costs. NACO’s head, Sujatha Rao, says the evaluation threw up one clear message: Large parts of the program are not sustainable by NACO. “We told them you can’t create a huge number of assets and then just leave and expect the government to take over everything,” says Rao.

  But Alexander disagrees. “We are not perpetual funders. We try to be catalytic,” he says. “In five years we would hope the HIV/AIDS epidemic is contained enough that we will no longer have to be involved.” Either way, it will have to be: Avahan is now repositioning, focusing on maternal and newborn health.

  Ashok Row Kavi, consultant for UNAIDS and chairman of the Humsafar Trust for gay and transgender health, says Avahan’s expectations were unrealistic. “They wanted HIV to disappear in five years. For that to happen a lot of people would have to die.”

  NACO’s annual budget is $225 million, none of it currently spent on Avahan. Rao can’t find enough money to continue the project. “We can never offer a replicable model. And if we are unable to sustain the program, all of their effort will be for naught,” she says.

  When probed about the difficulties of handing over the program to the government, Alexander says the transfer is going just fine. Kavi differs; he says that the transfer discussions between NACO and the Gates Foundation are stymied. Costs need to be brought down, but they can’t figure out how. He also fears Avahan’s now experienced MBA-degreed field monitors, facing shrinking salaries, will depart. The question of running air-conditioned clinics the way Avahan did doesn’t even arise.

  The biggest hole in quality will appear where it can hurt most. Hussain Makandar, HIV counselor at the Mukta clinic, is worried about condoms: The ones from Avahan are lubricated; the ones from NACO break and the prostitutes stop using them.

  Alexander insists that only a tenth of the project will transfer to the government this year, and the rest will happen slowly over the next five. “We’re doing a transition program. We’re not saying, ‘Oh, here’s the program, and we’re off.’” But NACO and Mukta officials, among others, are watching the calendar, confused.

  THE POWER TO SAVE LIVES

  By Matthew Herper

  November 2011

  THE REPUBLIC OF CHAD, a landlocked desert dictatorship once described by Forbes as the planet’s most corrupt, is a strange place to find Bill Gates. Yet there he was in September, beside Chad’s Qaddafi-trained president, General Idriss Deby. “He and I walked around giving polio drops to a bunch of kids,” recalls Gates. “I shared in confidence with him some views of how he might be even more effective in the way he manages his campaign.”

  Yes, a far cry from hunkering down with Paul Allen in an Albuquerque motel to reimagine how the world conveys information, or with Warren Buffett in Sun Valley to brainstorm the future of philanthropy. But to Gates diplomacy with thugs is now just as important, a dispassionate component of what he views as his final legacy. “The metric of success is lives saved, kids who aren’t crippled,” says Gates. “Which is slightly different than units sold, profits achieved. But it’s all very measurable, and you can set ambitious goals and see how you do.”

  Notice the words: metric, measurable, goals. While Gates’ vaccine-based giving—closing in on $6 billion to fight measles, hepatitis B, rotavirus and AIDS, among others—is part of the largest, most human-driven philanthropy in the history of mankind, what’s missing in his language are the individual humans.

  In many ways that’s the point. Gates’ clipped manner in discussing the children he and his wife met in India and Africa (“Melinda and I spend time with these kids, and we see that they’re suffering; they’re dying”) disappears when the underlying numbers come up, his speech getting more rapid, his voice ever higher. “A 23-cent vaccine,” he says, “and you’ll never get measles,” a disease that “at its peak was killing about a million and a half a year; it’s down below 300,000.” Gates rattles off milestones in the history of global health and the prices of vaccines down to the penny, but blanks on the name of one of his favorite vaccine heroes, John Enders, the late Nobel laureate, or Joe Cohen, a key inventor of the new malaria vaccine Gates helped bankroll.

  It’s heady, historic stuff: America’s richest man—he’d be the world’s richest had he not already given away so much money—still in his prime (he just turned 56), with the reputation, resources and determination to stamp out infectious disease. “I’d be deeply disappointed,” says Gates, if in the next 25 years he can’t lower the death toll by 80%. Otherwise, “we’re just not doing our job very well.”

  Sitting with Gates, overlooking the Bill and Melinda Gates Foundation’s gleaming new $500 million campus, full of glimmering reflecting pools and glass edifices, it’s possible to see a future with exponentially less pain and suffering. It’s also a remarkably incisive exercise in getting inside the brain of one of history’s greatest business visionaries. By dissecting with him and his wife, Melinda, how he tackles this grand human problem, you can also learn
intuitively how he built Microsoft. How a mechanical genius methodically tackles an abstract problem. And perhaps most of all, how power and capital—both literal and political—can be spent to maximize positive impact on the world.

  Bill Gates’ plan to eradicate disease stems from a bold concept: The demographic theories of Thomas Malthus, generally accepted for the past two centuries, are wrong. Specifically, that subsistence eventually translates into population growth, and population growth eventually translates into misery.

  Bill and Melinda Gates grappled with this concept years before forming their foundation, and months before even getting married, on a pre-wedding 1993 African safari. Their vacation had been planned around watching predators and prey—Darwin in action. “You go to see the animals, and you go to see the savanna, and it’s gorgeous,” says Melinda. But they instead found themselves pondering that classic Malthusian riddle: “Why is that woman walking along the road with sticks on her head, a baby in the belly and a baby on the back?” Gates had no immediate reason to challenge 200 years of dogma: “We know how to get agricultural productivity up, but not that much,” he says. “Jobs, unrest, education—a high population density makes solving all those problems harder.”

  So in 1997, when he and Melinda first ventured into public health—their eponymous foundation would come into being in two years—they focused on birth control, funding a Johns Hopkins effort to use computers to help women in the developing world learn about contraception. The logic was crisp and Bill Gates-friendly. Health = resources ÷ people. And since resources, as Gates noted, are relatively fixed, the answer lay in population control. Thus, vaccines made no sense to him: Why save kids only to consign them to life in overcrowded countries where they risked starving to death or being killed in civil war?