Microsoft's New Brain Project

The most classified program at Microsoft isn't an operating system. It isn't a Web browser. It's a 9-year-old boy named Rupert.

When Microsoft executives talk about fear, they often use the phrase "garage factor." The term comes from computer history, which is full of stories about code geeks hatching the Next Big Thing in their parents' basement, and it refers to the possibility that a new product or company might come out of nowhere, overnight, and crush the industry's dominant corporation. In other words, do to Microsoft what Microsoft did to IBM. "Bill Gates' greatest fear is not that some kid is brewing the next killer app in his garage in Kenosha," says Robert Warburg, an analyst with the Bay Area venture capital firm Klein & Fairfield. "His greatest fear is that some kid will brew up the next killer app in his garage in Kenosha and Microsoft won't own it."

The US Justice Department's antitrust suit against Microsoft can be seen as one consequence of the software giant's fear of garage factor. "When [Netscape] Navigator hit the market in '96, all of a sudden this garage factor X became real," recalls a former product manager who worked on Microsoft's rival product, Internet Explorer. (In the Justice Department suit, which is still being argued in court, Microsoft is charged with unfair business practices in an effort to sink Navigator.)

Chastened by their experience with Netscape, Gates and a small circle of top executives—including company president Steven Ballmer and chief technology officer Nathan Myhrvold—met in the fall of 1997 to find a way to co-opt the garage factor. What they came up with is a program whose existence has been known, until recently, only to an elite cadre of Microsoft vice presidents. Instead of buying start-up companies whose innovations might be a threat to Microsoft, the company would, as one executive reportedly put it, "leap two rungs up the food chain." Under the code name "Manchuria," Gates gave the green light to a program that would identify child prodigies and bring them under the proprietary wing of the Redmond software giant. In exchange for stock options that ultimately may be worth anywhere from $5 million to $100 million, Microsoft would care for, house, feed, and educate the children until the age of 18. "If they're going to invent the next Apple or Linux," says one executive, "they're going to do it in our garage."

On the face of it, the idea sounds insane. And indeed, Manchuria has been slow to get off the ground. There's only one entrant in the program so far. But since his arrival in Redmond early last year, he's been the subject of endless in-house e-mail gossip. One string of messages debates whether he's a Mozart-level genius. Another lays bets on when he'll occupy Bill Gates' chair. A third questions whether the program, and the entrant, even exist.

The doubters can relax. Three things about Manchuria are now known for certain. The entrant exists. His name is Rupert Tollefsen. And Rupert is 9 years old.

A black budget job

"I don't know who told you that, but I've never heard of any such program. Or person. We get a lot of weird rumors around here, but that's one of the weirdest." That's Microsoft spokesman Emmett Richter, filling in for an antitrust-weary Mark Murray. And he may well speak the truth. That is, he's never heard of Manchuria. The program operates completely off the budget books. Even Microsoft's chief financial officer is said to be unaware of its existence.

"You have heard of the Pentagon's 'black budget'? That is the model upon which the program is based," says Vikram Narayan, a former research fellow at Microsoft's research center in Cambridge, England. Narayan (not his real name), who left Microsoft earlier this year, was brought over to Redmond in December 1997 to get Manchuria up and running. He agreed to talk about the program only if his name was not used. "Everyone who contacts Rupert is subject to double-secret nondisclosure agreements," he explains. During Tollefsen's first weeks on campus, one of Gates' personal assistants was assigned to tail the boy and secure NDAs from everyone he talked to. That duty has since been eliminated. "They realized they could not shut everyone up," Narayan says, "so they concocted a cover story about Rupert being Bill Gates' nephew."

A day in the life

Although Microsoft officially denies his existence, if you happen to stroll by the northwest entrance to Microsoft's Building 8—where Chairman Bill works—on a weekday morning around 5:30, you may catch a glimpse of a sandy-haired boy entering the well-guarded premises. With his unkempt bowl cut, black jeans, and Airwalk sneakers, Rupert Tollefsen looks like a shrunken version of a Microsoft programmer, minus the goatee. He swings a Buffy the Vampire Slayer lunchbox, which is full of Magic: The Gathering cards, not food. Lunch is always ordered in: a peanut-butter-and-potato-chip sandwich, two cans of Mr. Pibb, and a Rocket Pop. Some days Gates joins him, some days not.