Gate's style/importance to MSFT:
washingtonpost.com
<<Gates's Style Inspires a Cult Following
By David Streitfeld
Washington Post Staff Writer
Monday, May 1, 2000; Page A01
REDMOND, Wash. ? During Naveen Jain's seven years as a Microsoft Corp. executive, he got a front-row demonstration of how Bill Gates affected the software company he co-founded, ran and controlled.
Gates was obsessed by work, and so were his employees. He wasn't interested in money, and neither were they. He would do anything to beat out a competitor, and they would too. Employees feared but mostly revered him. "Face time with Bill" was prepared for endlessly, sweated over and later bragged about.
Jain learned a crucial lesson, one that has defined the computer world's perception of Gates for more than a decade: A high-tech executive must have the charisma of a cult leader.
"Especially in the beginning, when you're starting a company, you have nothing to offer other than yourself, your vision and passion," said Jain, who went on to found the Internet services company InfoSpace Inc. "People in high tech can get 20 job offers in a day. Why would they stay with you unless they believe in you absolutely?"
After the Justice Department's request Friday to split Microsoft into two competing companies, the most Draconian sanction possible, some critics are questioning whether the cult-like atmosphere at the company is directly responsible for its predicament. But if Microsoft's hard-bitten style has brought the company to its current flirtation with disaster, for a long time it was a highly successful formula indeed.
The Gates leadership style has been mimicked by Jain, as well as hundreds of technology start-ups. That's because a high-tech company is ultimately all about belief ? that new products and services can create new markets, that the winds of technological change won't suddenly ravage the firm, and above all that the executive team can properly execute. Because if the boss can't do it, generally the company can't either.
"These companies are like organisms," said Marc Andreessen, the Netscape Communications Corp. Wunderkind who recently co-founded his own Internet services company, Loudcloud Inc. "It's as if you took a DNA sample from the chief executive and blew it up to monstrous size. The founder and the company share all the same strengths and weaknesses."
In a rising market, where stock options are rapidly vesting and it seems every employee is on track to be a millionaire, it's easy to be a genius chief executive. But when the market is swooning, as it has had a habit of doing in recent weeks, the chief's vision and passion, and the depth of his employees' commitment to those things, become the only thing keeping the firm afloat.
Michael Saylor, chief executive of the embattled MicroStrategy Inc., is known for his grandiose and long-winded speeches to employees ? at least one of them reportedly running eight hours. Despite accounting irregularities that have snowballed into a public relations fiasco, bringing the stock down 90 percent from its high, Saylor is still on the stump. And it still works: at a recent public appearance, he was mobbed by audience members who wanted to give him re¯sume¯s.
Jain, 40, whose wealth from Microsoft and InfoSpace puts him in the billionaire category, isn't a big lecturer, but he believes absolutely in Jain. So do others. InfoSpace Inc. has 500 employees, a market value of $13 billion and an ample supply of confidence that borders on arrogance.
For example, Jain is fond of saying, "I'll make the attorney general's job easy. We're going for a hundred percent market share. They won't have to prove anything about our monopoly." It's a defiant echo of Microsoft chief executive Steve Ballmer's famous 1997 comment, "to heck with Janet Reno."
Jain professes himself unconcerned that InfoSpace stock, which had a spectacular run-up last fall and winter, has fallen almost 50 percent since early March. "In the bad times, you always know who your friends are, both in the company and outside," he said. "This is when you find out who believes in you and who doesn't."
It's not by chance that so many more high-tech companies have dynamic leaders than, for example, the packaged-goods industry. "Other industries hire people for jobs. The assets are in real estate or a factory. But in high tech, the people are the assets," Jain said. "So you need a charismatic leader to attract the people."
Nor is it a coincidence that one of the most widespread expressions in the tech world, used to show someone's absolute belief in his own company, is: "He's drunk the Kool-Aid." The reference is to the fatal juice swallowed in 1979 by hundreds of followers of the Rev. Jim Jones, a cult leader in the traditional sense.
At Microsoft, the main campus of which is only a couple of miles from InfoSpace's cramped headquarters in Redmond, they've been drinking the Kool-Aid for a long time. The software colossus did more than create the standard for operating systems; it created the standard for how to be a tech cult. Critics as well as neutral academics, former employees and potential recruits have been using the label to describe the company for years.
They use it to explain the company's extraordinary success and fierce will to win, as well as its inability to question its own tactics, its refusal to compromise, its ham-fisted attempts to shore up popular support for itself by arranging "spontaneous" letter-writing campaigns.
"The Microsoft corporate culture can be broken down into four key parts: a tremendous work ethic; Bill Gates is always right; an us-versus-them mentality; and Bill Gates is always right," said Michael Gartenberg, an analyst at Gartner Group Inc. "If you execute successfully on all of that, you get to retire in your thirties as a multimillionaire."
The Microsoft mind-set was evident to Silicon Valley lawyer Andrew Brenner when he came here two years ago to interview for a job on the company's ever-growing legal team.
Brenner was discomfited by what he saw. "All the lawyers seemed to think it was a forgone conclusion Microsoft would take over the world," he said. "It was not 'if' but 'when.'?"
Ultimately, Brenner decided not to pursue the job. "It's a very strong culture. Too strong for me. It's a good thing Microsoft isn't in Texas, because they all would have been Branch Davidians."
Microsoft hires young. More than a quarter of the firm's employees are in their twenties; most of the rest are in their thirties. People come to work there often directly from school.
"There's a program for graduate school interns," said former employee, who requested anonymity. "You help each other get through the summer, you bond with these people, and then come back and work at Microsoft full-time and they're there. So you all work long hours together, wearing clothes that say Microsoft. By the time I was in my late twenties Microsoft was my whole identity. Making the break to leave was really hard."
Scott Sandell, another former employee, felt the same sort of need to get out. "Microsoft has a cult-like culture," he said, stressing he wasn't using the adjective in a particularly negative sense. "It assimilates you or spits you out depending on whether you fit in. I wasn't perfect for Microsoft ? I'm too independent ? so I spit myself out."
Microsoft was one of the first companies to realize that the more it did for its employees at the office, the less inclined they would be to go home. "It very intentionally fostered a culture where everything you need to survive is provided," said Sandell, now a top venture capitalist. "That includes subsidized food of high quality, a sports facility, individual offices for almost anyone. You can sleep or do whatever you want there."
Mostly, you worked killer hours, which was just one of the ways you modeled yourself after the boss. "At Microsoft, they all rock back and forth like Gates, they wear the same glasses, they have the same hair style," Loudcloud's Andreessen said. "Maybe they grow them in tanks."
Microsoft spokesman Greg Shaw said: "It is accurate certainly to say there are attributes of Bill Gates that you would see in a lot of people at Microsoft. I do feel it overstates the case to say there is a cult of personality. It is a far more independent-minded place than a cult."
So there are raging hallway discussions about, for example, the merits of the government antitrust case?
Not quite. "I have never encountered a person here who thought the [legal] findings were consistent with their experience of the company," Shaw said.
The Microsoft attitude of being ruthless and not caring who knows it was later adopted by other tech companies. In the InfoSpace reception area, there is a magazine story about Jain mounted on the wall. It features this prominent quote: "I think most people think of me as an arrogant [expletive], and that's the perception I want. It says don't mess with me, or you'll be crushed." This is classic Microsoft.
In a more benign sense, Microsoft also set the pattern for many later tech companies of paying its employees only modestly, but giving them a lot of stock options. This further strengthened the employees' bonds. Each year the company made them much richer.
For a long time, the system worked: hardly any executives of consequence left Microsoft. But starting about three years ago, there was a trickle that has broadened into a stream. There have been at least a dozen executive departures recently.
The rank-and-file are getting restless, too. "I talk to lots of Microsoft people," Jain said. "I know 10 who have left in the last two months. They say it's no fun anymore, and the risk-reward ratio is not there."
Microsoft stock, which was one of the best investments around in its first 13 years, has been a relatively dismal performer during its 14th year. The company has just increased compensation packages, including many more options.
All of this might mean that the cult-like fervor that once pervaded the place may be fading. Partly it's a question of size: At InfoSpace it's easier to keep this mood alive than at a company 60 times bigger. The crucial test for Microsoft's Ballmer, who earlier this year became chief executive, will be whether he can institute a cult of the organization rather than of the company's chairman, Gates.
Ballmer took a step in this direction by highlighting corporate values in a recent speech at George Washington University. "It matters to me that we're a company of high integrity," he said. "It matters a lot."
It's highly unusual for a Microsoft executive to be emphasizing ethics rather than technical superiority. That's just not how Gates built the place.
"To my mind, Microsoft has never been a company," said James Collins, co-author of the classic study, "Built to Last: Successful Habits of Visionary Companies." "It's a single remarkable individual, Gates, with thousands of the smartest, best-paid people anywhere helping that individual. It's basically like a big wheel, with Gates at the hub."
While many high-tech companies may have strong cultures, Collins said, they ultimately fall into two different categories. There's the cult built around one magnetic individual, like Gates or, at Apple Computer Inc., Steve Jobs. And there's the cult of values, where the executives are less important than the system. His example here is Dell Computer Corp.
"Michael Dell is not the messiah type," Collins said. "When the company got in trouble a few years ago, Dell's response was, 'I have to surround myself with extraordinary people who are better than I am.' If Michael Dell were to disappear tomorrow, Dell would click along just fine for some time."
Collins doesn't believe that would happen with Microsoft if Chairman Gates suffered the same fate. "It will be like Disney after Walt, or Polaroid or Digital Equipment after the departure of their geniuses," he said. "Microsoft exists to serve and leverage the talents of Gates. When Bill's gone, you might as well close it down."
As Jain ? only a few years younger than Gates, but shepherding his company at a much different stage of its growth ? tries to build InfoSpace for the future, he's increasingly aware that being a cult leader is a high-wire act.
"Success instills more confidence in people that they're following the right leader," he said. "The more successful the company, the more it becomes blind faith. That puts more and more stress and responsibility on the leader to make sure he doesn't lead these people down the wrong path."
Microsoft's inability to settle the government's antitrust suit may be such a wrong path, leading to years of legal wrangling and a slow sapping of the company's energy. Or it may be Gates's most brilliant move. "We'll only know for sure after it's all over," Collins said.
InfoSpace, meanwhile, for all its Microsoftian qualities, might be edging toward the Dell Computer model. The company recently announced that it had hired Arun Sarin as chief executive, a post Jain is now giving up. Jain will continue as chairman.
"I consider myself as good a cult leader as anyone, and yet we still brought in a person who had the experience of building a company ? Vodafone AirTouch ? from 15 people to 15,000 in 25 countries," Jain said. "This is not being a cult leader, just simple business sense. You have to be a good business cult leader.">>
Morgan |
