Ballmer: 'The world borrowed too much money'

Microsoft CEO Steve Ballmer speaks to a crowd at Stanford University on Wednesday.

(Credit: Ina Fried/CNET)

PALO ALTO, Calif.--Microsoft CEO Steve Ballmer began his talk at Stanford University by offering a quick course in economics.

Explaining the economic crisis that has slowed business worldwide and caused Microsoft to have its first companywide layoffs, Ballmer told the crowd at the school's packed Memorial Auditorium, "The world borrowed too much money."

Then he went back to his obligatory chat about the early days at Microsoft, including when he dropped out of Stanford's business school to join the software maker. He noted that he knew how to read a balance sheet, but not much else.

"All I'd ever done is interview for jobs and market brownie bits," he said, a reference to his days at Proctor and Gamble.

His decision to drop out was not well received at home, Ballmer noted. "My dad said 'What the heck is software?' and my mom said 'Why the heck would anyone want a computer?'"

The problem with software wasn't that people didn't want computers, though. The challenge, Ballmer said later in his chat, is that software doesn't wear out, meaning companies have to do something new and different to get people to upgrade.

At the same time, he said, software products are only as good as their last couple of versions. "Windows is only as good as its last release or two," Ballmer said, laughing and acknowledging his own backhanded dig at Windows Vista.

I'll be updating this post during the chat, but for those that want even more coverage, it seems like everyone in the room is tweeting the speech.

Ballmer has had memorable appearances at Stanford in recent years.

In 2007, he used his to label Google's growth plans as "insane" and called the company a one-trick pony. Back in 2005, he noted that, had he not gone into software, he probably would have landed in the insurance business. He also said he would probably retire around 2017.

Update at 5:45 p.m. PDT:

Ballmer moved on to questions.

He was asked about the company's browser strategy. Ballmer said the company's goal is to create a platform where more capable applications can be built. That said, the need for standards acts as a gate on the speed of change.

He also noted there is value in integrating search and other technologies into the browser but noted that because Internet Explorer is part of Windows it will also be separate in some ways from search and other Internet products. Rivals, he said, may "wire in" their search into the browser.

"That can't be our approach," Ballmer said.

Asked about his role in shaping Microsoft's culture, he said that he thinks he has had a big role. "I've shaped Microsoft culture a lot, for better and for worse," Ballmer said.

Ballmer said he and Bill Gates shaped each other and the company.

"We kind of, in a sense, grew up together," Ballmer said. "The ultimate test is if you are able to get done what you want to get done." Ballmer was also pressed on a comment he made that fewer bad ideas will be funded in the current economy. Ballmer said that, in general, truly bad ideas don't get funded, but that the number of companies does scale up with the availability of money. If there was four times as much venture capital funding, he said, "you'd have four times as many companies, but I am not sure you would have four times as much innovation."