A Teenager Eschews Hourly Billing: Cause and Effect?

I recently read I am John Galt, a great book even if you're not a fan of Ayn Rand.In the book, they discuss a 16 year-old teenager, who in early 1971:

A computer time-share company in Portland, Oregon, needed a payroll program written for one of its clients, and had heard through the grapevine about a talented group of students up in Seattle with experience coding for the PDP-10. With legal help from his father, [he] formed the Lakeside Programmers Group ...then boarded a bus to Oregon to meet his new client. [He] hammered out a creative royalty agreement to guarantee his group a residual income stream instead of a standard fixed price or hourly rate.

It would have been easy for him to bill by the hour, like his father did in his law firm.But he understood what he was selling—intellectual capital, not time.A better business model?Who was this prescient kid?Bill Gates.