When Susan Desmond-Hellmann was approached by Bill and Melinda Gates about becoming the new CEO of their foundation, she was busy. A cancer doctor who had worked in Uganda early in her career, Desmond-Hellmann had moved on to big jobs in the pharmaceutical industry. As president of product development at Genentech, she helped transform the company into an R&D powerhouse for cancer drugs, and in 2009, after Swiss giant Roche Holdings bought Genentech, she moved to the University of California at San Francisco as its first woman chancellor. There she was happily challenged, heading a research university and medical center with 23,000 employees, and in her spare time serving on the boards of Procter & Gamble and Facebook. Running a nonprofit wasn’t on her list of things to do.
When Melinda Gates flew down from Seattle last fall and asked her whether she would be interested in the job, an unusual executive courtship ensued. Desmond-Hellmann, stunned at first, almost declined to be considered. But after two months of intense conversations with both Gateses, Desmond-Hellmann, 56, became convinced that the opportunity to help eradicate some of the world’s worst diseases was too compelling to pass up. She agreed to step in as CEO of the Bill & Melinda Gates Foundation on May 1. Fortune senior editor-at-large Pattie Sellers — who profiled Melinda Gates in a 2008 cover story — sat down with her and Desmond-Hellmann for an exclusive Fortune interview. In this edited transcript the two women talk about how they sealed their partnership at the world’s largest private foundation, how they plan to deploy its $40 billion, and how Warren Buffett — who has pledged his fortune to the Gates Foundation — views successful leadership.
Fortune: How did the two of you get together?
Desmond-Hellmann: Well, my husband actually worked at the Gates Foundation [from 2005 to 2007]. So I knew a little bit about the foundation and a lot about HIV/AIDS, which Nick [Hellmann] had worked on. But UCSF gives an award called the UCSF Medal. It is our equivalent in the University of California system to an honorary degree. And I was delighted last year to give this UCSF medal to Melinda. So Melinda came down. We had a nice chat.
You had served on an advisory committee at the foundation. But had you met Melinda?
Desmond-Hellmann: We had met a couple of times.
Gates: We met at Sheryl Sandberg’s house. We had a talk there.
Desmond-Hellmann: Melinda came to the Sheryl Sandberg event, and then we met at a couple of things, but real quick, like the meet-and-greet kind of thing where you shake hands. We got to spend more time when Melinda was down for the April event, and I was just so blown away.
Five months later the Gates Foundation announced that its CEO, Jeff Raikes, planned to step down. Melinda Gates called Desmond-Hellmann, and during a meeting in the chancellor’s office at UCSF, Gates asked her whether she’d have an interest in heading the foundation.
Desmond-Hellmann: All I could think about was — you know the job of a chancellor, right? You’re running the place, you’re chief cheerleader, chief real estate person, chief fundraiser, especially at a time when you’re just coming out of a big recession and the State of California hasn’t been exactly opening the money valve. It’s like “chief keep-this-place-great and get-up-every-morning-and-do-that.” I was in full execution mode.
Gates: You were very happy in your job. That was fantastic.
Desmond-Hellmann: The more we talked and the longer we went back and forth, I couldn’t imagine not doing it. I always tell people, If you get a chance, change the world. You know, go big. Solving family planning, making polio go away — why not? I moved from “I’m all in at UCSF” to “Okay, I’m open to thinking about what this would look like.” We wanted to make sure that Bill and Melinda and I would be compatible. We had a lot of discussions about working style, values.
Gates: We saw all the right core values in Sue. We absolutely wanted somebody who’s coming to the foundation because of the mission. That was a given from the get-go, given the time she’d spent in Uganda and the way she thought about global health. And then Sue brought just an amazing set of attributes to the table. Her work in research — and she worked shoulder to shoulder with [Genentech chairman] Art Levinson. So we knew she could work in a role alongside somebody else. But Bill and I have very different personalities, so could each of us work with Sue? Bill would meet alone with Sue, I would meet alone with Sue, we’d meet together. We had some phone conversations where Sue and I would talk on the phone alone and then the three of us would talk together. She was very accommodating because it was late at night after the kids went to bed at 9 o’clock.
When Sue started at Genentech, it was not a renowned cancer company. She had a lot to do with steering capital into cancer research and making Genentech a biotech leader in cancer. Was that a turn-on for you? And will Sue have a role in allocating your money?
Gates: One of the things that came out of the interview process is that we hired a bold CEO. [Laughter.] And we like that.
Desmond-Hellmann: No shrinking violet.
Gates: We actually had to say to ourselves as a couple, Is that going to be okay? We really are okay with this, right? Absolutely! And Sue was really clear about that. She had some what-ifs. “What if I want to try this, Melinda and Bill? What would you think of that?” Which was essentially asking us, “Am I going to have the degree of freedom to do that? What if I wanted to have a staff doing a few things in this direction, would you be okay with that?” Sue, you were really clear that you love precision medicine. It’s not the foundation’s work, but I don’t expect Sue to turn off her views, her values, and her love and passion around precision medicine.
Desmond-Hellmann: Bringing big data to health is what precision medicine is all about. I’m excited about the opportunity to do way more than classic genomics, to look at the environment and the role of population health and public health in precision medicine. So during the interview process, I couldn’t imagine that I would want to be at the foundation without the opportunity to think about that long term, and could I be a strategic partner as the CEO?
You mean, could you be a strategic partner in terms of setting priorities on where the money goes?
Desmond-Hellmann: Exactly. Setting the long-term agenda.
Melinda, what has changed since I profiled you in Fortune in January 2008?
Gates: We were working in family planning in a very small way back then. We hadn’t tried to galvanize partners to say, This is incredibly important for the world. You have to allow a woman to have a family-planning tool, to plan and space the births of her children. And so we’ve come out very strongly as a foundation about that. I think a lot of it has to do with what Bill and I have seen as we’ve traveled. It’s the women who carry so much of the work in Africa.
Regarding family planning, what’s your goal around this mission that you announced in 2012?
Gates: The goal was to give 120 million new women access to contraceptives. The U.K. government made significant commitments, as did a number of host countries. We’ve garnered resources to the tune of $2.6 billion to say we will ensure that we can get contraceptives to 120 million women. We’ve had seven nations come forward with plans. Niger, for example, has the highest fertility rate in the world, and they couldn’t get resources before. Now there’s a structure for that.
Sue, are you going to be an external face of the foundation, along with Melinda and Bill?
Desmond-Hellmann: A fair amount of any leader’s job is to get stuff done. I really like being a manager. I like thinking about what brings out the best in all these talented people who have come to work at the foundation. And I love the use of metrics. And so, particularly early on, I’ll spend a lot of time on that. I’m not expected to be on the stump.
Gates: We do a survey every year of our own internal culture and what people say about their own manager, their own department. We have work to do. And Sue loves to do that work and roll up her sleeves. That was highly attractive to us.
Desmond-Hellmann: I’m a really simple thinker when it comes to things like this. I want to be able to effectively connect all that intellect, competence, and passion to impact as efficiently as possible. People I admire do that well, and they do that over and over again. The second piece of that is, people feel exhilarated by the challenge, not overwhelmed. I like it when the hairs are up on the back of my neck. But then I take a bike ride when I get home. And they go back down. You know what I mean? I don’t think that talented people want to work on easy things.
Melinda, what does the Gates Foundation need to do better?
Gates: I think we can be more efficient internally. Sometimes we’ll have too many people weigh in on a decision. So we’re a little bureaucratic in places. I think Sue will help us sort through some of that.
Sue, did you talk to Warren Buffett about this job?
Desmond-Hellmann: Not when I was deciding to take the job, no.
Gates: But he knew very early that Sue was a candidate. I called and talked to him about that.
Desmond-Hellmann: We had actually met at the [Fortune Most Powerful] Women Summit, although he’s not a biotech investor, he told me. [Laughter.] He doesn’t understand it.
Gates: Warren gave us advice before: “Make sure whoever you hire gets the best out of both of you, individually and together.” His advice was the same this time when I called him. He said, “This is your and Bill’s decision, Melinda.”
Sue, you’ve gone from Genentech to UCSF to the Gates Foundation, and now you’re on the P&G and Facebook boards. Is there a career strategy here?
Desmond-Hellmann: I do have a philosophy. When I worked in Uganda, it was a couple of years after I joined the faculty at UC San Francisco. I was on a typical career path, and going to Uganda was a massive change in my worldview. When I came back, I focused on how I could be useful. So every role I’ve had since then has two things in common: One is that I feel like the work is meaningful and I can help people who are sick or I can help them have a productive life. And the second thing is that my skill set can add value. As I’ve had the opportunity to be a leader, first at Bristol-Myers Squibb and then at Genentech and then at UCSF, I sort of raised the bar for myself. Is there a unique way I can make a contribution?
Gates: I haven’t heard all of that.
I could imagine Sue telling you that as you were considering the candidates.
Gates: She wasn’t ever in sales mode.
Early on, did you think you might not get Sue?
Gates: Absolutely, and even late in the process I thought you might not come. We had a couple of late nights.
What was the block?
Gates: I knew she believed in the mission. But she was so passionate about what she was currently doing. She couldn’t see over the wall to see “How can I give up this thing that I’m dedicated to right now?”
Desmond-Hellmann: So the three of us were on the phone late one Sunday night, and I kept thinking about all these wonderful things that I was working on with my colleagues at UCSF. I mean, brain science and children — and we just did a transaction with Children’s Hospital of Oakland to have a really important children’s hospital that’s going to help a lot of poor kids and families who are suffering. And Bill and Melinda in turn talked a little bit about the hopes and dreams for the foundation. I asked you something like “What are you hoping for in the next five to 10 years?” and each of them articulated.
Okay, we’ve got to go there.
Desmond-Hellmann: I remember so well. Melinda talked about what life was like for women and girls. And Bill talked about polio eradication and solving diseases and bringing vaccines. It was the first time that I got to really hear the passion and the scope of what they were doing, and it’s an opportunity to change the world. I stopped chewing myself out about not living up to being chancellor. And it was like, Okay, I could leave this because this is so super-special. And then I was done.
Gates: Bill’s No. 1 thing that he spends time on is polio, and the No. 1 one thing I spend my time on is family planning. We love everything else. Don’t get me wrong. But that’s how we oriented our lives. I think what you heard that night is just how deeply we’re living this mission. It’s not just a job we go to every day. We’ve had to really juggle our whole family’s lives and calendars around this to make it all work. And that’s what we’re doing because we think it’s the right thing for the world.
Desmond-Hellmann: I don’t know that the outside world is clear on that. How amazing it is for two people who are this talented and who could do a bunch of different things with their time and energy and resources, how extraordinary that is, and how real. If I could help, I would be happy.
A shorter version of this interview appeared in the May 19, 2014 issue of Fortune.