Hard Drive: Bill Gates and the Making of the Microsoft Empire (28 page)

Finding Xerox defectors wasn’t difficult. MacGregor and Nikora, like Simonyi before them, had grown disillusioned with the fact that so many good ideas developed by PARC never got to market or failed when they did so.

“Xerox was the epitome of corporate culture, ’ said Nikora. “Everything was run by committee, and there was not too much individuality—and I’m talking about the creative side of Xerox. Microsoft, on the other hand, was a bunch of individualists, with the whole show run minute-to-minute by Bill Gates. He was in on eyery decision, from top to bottom.”

Nikora decided to leave Xerox when he watched the Star crash and burn after years of painstaking evolution. He felt the fault lay not in product design but in marketing, and decided it was time for a career move. The first person he called was Gates, who he remembered from the presentation Gates had made to Xerox with Steve Smith years before. He had been particularly impressed with Gates’ chutzpah. Gates, he’d discovered, was not just a brilliant programmer and technical person, but also a terrific salesman and marketer.

When Nikora contacted Gates in August of 1983 and told him of his interest to switch to marketing, Gates reacted enthusiastically. I’d much rather teach a technician marketing than teach a marketer the technology.” Gates offered to make Nikora marketing manager for Windows and to teach him the marketing end of the business.

After a formal job offer with generous stock options, Nikora made the jump to Microsoft. He wasn’t quite expecting the run- and-gun style that characterized Microsoft, however. On his first day at work, he was ordered to hop on a plane and report to IBM in Boca Raton. Gates and Ballmer were already there for a scheduled conference. Upon reaching IBM’s offices, Nikora linked up with Gates and Ballmer and walked into the meeting without a hint of what it was about.

I was introduced as the marketing manager for Windows,” Nikora recalled, “and we started talking with IBM. I wasn’t told what was going on, why I was there, what I was supposed to do, and I have no idea what happened that day. It was totally over my head.”

That feeling continued throughout the day. During the plane ride back, Gates and Ballmer launched into an involved conversation about DOS, leaving Nikora without a clue about what they were discussing. The two executives were debating a point about the command-line prompt in DOS—“A:>”—that tells the user which disk drive is operating. Nikora had no idea what Gates and Ballmer meant when they referred to the “greater than” prompt. “I had never used DOS in my life. I was at Xerox. We were in the Ivory Tower. We built everything ourselves. So I had never even seen DOS.”

In October of 1983, VisiCorp announced that it planned to start shipping VisiOn. Gates’ boast nine months before—that Microsoft would be the first to market with a graphical user interface—evaporated like so much hot air. VisiCorp’s bombshell was followed by one from Quarterdeck, a startup software publisher that announced it, too, would build a graphical user interface, named DESQ. The market was becoming more crowded, and Microsoft began to take on the look of an also- ran.

Gates was furious. To steal some of the spotlight from VisiCorp and Quarterdeck, he ordered that Windows be formally announced. Within two weeks, MacGregor was airborne with Gates, headed for New York.

Gates felt he couldn’t afford to keep Windows under wraps any longer. He had learned that one way to prevent potential customers from flocking to a competitor s product was to announce that your company was working on something even better. It was a tried-and-true IBM gambit that worked well when customers looked to your firm to set standards; they usually would gladly wait for the market leader’s product to come out.

InfoWorld
magazine would later coin a term for such a product—“vaporware.”

“There seemed to be this notion that since all of our competitors were announcing products that were vaporware, we had to have one too,” recalled one Microsoft manager of the decision to announce Windows.

Gates had other motives, as well. He knew the still-secret Macintosh with its graphical user interface and mouse was going to shake up the industry when it was released early in 1984, and by announcing Windows now Microsoft could make a preemptive strike. Gates wanted the industry to know Microsoft was surfing the curl of the breaking GUI groundswell, not languishing in the backwash. The announcement would also help to neutralize not just competing software publishers but also IBM. Big Blue had recently moved away from Microsoft with its decision to publish Top View. Gates had fought back like a Chinese warlord by forging alliances with 24 computer makers who agreed to support Windows, including Compaq, Texas Instruments, Hewlett-Packard, Zenith, Burroughs, and Digital Equipment Corporation. Clone manufacturers didn’t want IBM to shut them out of the market by setting the standard for Windows environments, and they were only too happy to rally behind Microsoft. The wrath of mighty IBM was evident—the company signed an agreement with VisiCorp making IBM a distributor for VisiOn.

The morning of November 10, at the Helmsley Palace Hotel in New York City, Microsoft staged what was up to then the most elaborate product introduction ever witnessed in the industry, one that made Lotus Corporation’s introduction of 1-2-3 look like “cold cuts,” in the words of a writer who attended the event. For most of the morning, one Microsoft technician after another trooped to the stage, putting on a detailed demonstration of a Windows prototype and showing what the finished product would be able to do, at least in theory. It wasn’t an unprecedented display of the power of GUI. But the idea that you could get a clunky IBM PC to use graphics was considered reasonably amazing.

Taking his place at the podium, Gates explained to the press that Windows would end the problem of compatibility of > applications once and for all, and that it would be able to run most software written for MS-DOS. The statement was an attempt to head off growing industry enthusiasm for software that included several functions, such as a word processor and spreadsheet. Lotus had an integrated program, Symphony, in the works, and there were no similar integrated applications on the horizon at Microsoft. Gates wanted people to believe that Windows would make integrated software obsolete.

By the end of 1984 Gates boldly predicted, as he stood center stage pushing up his boxy glasses, Windows would be used on more than 90 percent of all IBM compatible computers. It was a brash prophecy that Microsoft, and particularly the fledgling Windows development team, would come to greatly regret.

The day before the Windows announcement in New York City, Steve Ballmer and Scott MacGregor made a brief recruiting trip to Carnegie Mellon University in Pittsburgh.

Ballmer had been Microsoft’s recruiting coordinator almost from the day he was hired as Gates’ assistant, and it was an assignment he relished. In some ways it was similar to his days as the equipment manager for the Harvard football team. Once again, he was helping his team win.

Crisp thinking and a high IQ were essential to landing a technical job at Microsoft. Except in very rare cases, Gates wanted young people right out of college with a background in science, math, or computers. Usually, candidates were interviewed on campus and later flown out to Microsoft for a brief visit. Though the company did not pay well, Microsoft usually was able to hire anyone it really wanted by promising generous stock options and a chance to work in a free-spirited environment.

“We initially tried to recruit people from other companies,” recalled Ingrid Rasch, Microsoft’s first human resources director who was part of a wave of new managers hired in 1983. “But we could never find the type of experience we wanted. We wound up having to go back to universities and recruiting new kids.”

In addition to a high IQ, the recruiters looked for candidates with drive and initiative. During a phone screening, Microsoft personnel would ask a series of open-ended questions: “We’d have them describe a typical work week, or their typical day. We wanted to know how many hours they were awake, what they did in those hours. We’d ask how they felt about projects that didn’t get done. The kind of person we wanted was the one who responded, ‘God, I just hate that!’. . . . We were looking for what people did with their time, and the amount of energy in their voice would tell us what we wanted to know. We wanted to know if they were driven enough, so we could drop them into our atmosphere and have them thrive.”

Microsoft’s favorite recruiting grounds were Harvard, Yale, Massachusetts Institute of Technology, Carnegie Mellon, and a little college near Toronto named the University of Waterloo, which specialized in mathematics. Eventually, 15 universities in the United States, four in Canada, and six in Japan were targeted. Microsoft recruiters made personal visits to each of these schools in search of brilliant students, diligent and driven, who were cut from a cloth different than their peers. In short, Microsoft hired clones of its leader, over and over again.

“There’s a standing policy here,” Ballmer told
InfoWorld
magazine in a 1983 interview. “Whenever you meet, a kick-ass guy, get him. Do we have a head-count budget? No way. There are some guys you meet only once in a lifetime. So why screw around?”

Job candidates were often asked difficult questions that had nothing to do with programming. Ballmer liked to find out quickly how smart someone was, and in the middle of an interview he would fire a logic problem at the prospective employee, trying to throw the person off balance. “You don’t have to be a programmer to tell if someone is smart,” said Ballmer.

Ballmer sometimes asked game-theory questions. He would ask the job candidate a basic question, and once that was answered he would take them through harder and harder variations of the question.

“What we were interested in was not just if someone knew the answer, but could they
think,"
said one senior Microsoft programmer who made recruiting trips to college campuses in 1983. “A lot of bright people don’t always do well in Microsoft interviews because they can’t handle the pressure . . . the first person you interview with has the first say on whether you get the job. If you don’t do well, that’s the end of the road.”

Microsoft recruiters had to change their questions from time to time because students who didn’t get a job would tell their friends what questions had been asked. And the word spread quickly, from campus to campus.

Although Ballmer interviewed all software developers hired at Microsoft, Gates and other senior technical people from the company would often accompany him on recruiting trips and ask the tough technical questions.

“We would rip people to pieces,” said McGregor. “We would ask them very difficult technical questions, hand them a piece of paper and pen and say solve this problem. We probably lost some people but the people we did hire were good at solving
very difficult p
roblems under pressure.”

With the stopover at Carnegie Mellon University on November 9, Ballmer and MacGregor were following up on a planned recruiting visit that had been announced weeks before at the school. Students who were interested in a job at Microsoft had signed up for an interview and submitted a resume. One student who did not sign up for an interview was Neal Friedman. He didn’t think much of personal computers. He had decided the future was in big computers, like the one he was working on at the university.

“I figured this PC stuff was just some mom and pop thing, that there was no future in it,” said Friedman. “When I saw this notice that Microsoft was going to be on campus, I thought, This is just some garage-type operation, and I’m not interested.’ ”

But Microsoft had sent away for the university’s resume book on graduating students. A few days before the company’s recruiters were to arrive on campus, Friedman received a mail- gram from Steve Ballmer, saying Microsoft was impressed by his resume and an interview spot had been reserved for him. Having never received a personal mailgram before, Friedman, too, was impressed. He decided he’d go to the interview.

Ballmer handled one group of students, MacGregor another. Each interview lasted about 30 minutes. Friedman was interviewed by MacGregor, who was wearing a sweater and jeans. Friedman was able to handle MacGregor’s first tough question, the high-low number puzzle. This is a game theory question in which the candidate has to guess a number from 1 to 100 that the interviewer has selected. The candidate is told if the guess is high or low and continues until guessing the correct number. There is a mathematical strategy for getting the number in the fewest possible guesses, which is about seven.

Friedman was also asked a more difficult technical question: How would he represent numbers in base negative one? (The binary language of computers is a base two numbering system.) He handled that mind twister, as well.

When the interview was successfully finished, MacGregor threw out a hook to reel in his catch. He told Friedman he was headed for New York City where Microsoft planned to announce a big new project called Windows.

“I got a 24-hour scoop on the world,” said Friedman, who was hooked and agreed to fly out to Microsoft for a visit. He had previously interviewed at IBM.

“The difference in attitude was actually visible when you visited Microsoft and compared it to other companies,” he said. “There was no dress code. At other companies you didn’t see people in tennis shoes and sneakers. I was told at IBM that men are expected to wear ties at least two times a week. At IBM I encountered one guy wearing a neon multicolored tie. That was the limit at IBM. At Microsoft you didn’t wear a tie.”

Friedman eventually narrowed his choice of jobs to Microsoft and Tektronix, the engineering company where James Towne had worked before joining Microsoft as its first outside president. Tektronix had also offered Friedman a job. A few weeks after he had narrowed his choice, while in his Portland hotel room waiting for a breakfast interview with someone from Tektronix, Friedman flipped on the television and saw Jane Pauley doing a segment of the NBC Today show on Microsoft. Friedman saw a camera shot of two programmers in a hallway, fencing with rubber swords.

“I said to myself when I saw the thing on TV, ‘Oh wow! That’s my company!’ ”

When he was hired, Friedman was specifically told not to discuss with colleagues the stock options he had been given. Each new employee got the same lecture but not the same options. The option to buy stock in the company was a powerful recruiting tool, and the prospect of getting rich convinced more than one programming whiz kid just out of college to come to work for Microsoft. These options were dangled in their faces like strings of pearls.

His first day on the job, Friedman got a window office. A week later he had his first major project—connecting Microsoft’s foreign offices to corporate headquarters in Bellevue by E-Mail. When he had visited IBM, Friedman had been told more than a hundred people usually worked on the same project. At Microsoft, he had the E-Mail job pretty much to himself. He was soon in Paris, hooking up the system at that end.

“Everyone put in long hours,” Friedman said. “The people were just as bright as I thought when I first interviewed with them. The environment was friendly and open. I had a lot of intellectual freedom, or creative freedom. There weren’t any constraints on how I did things. E-Mail to Europe had to work, and they didn’t much care how I did it.”

Friedman found a feel-good spirit in the hallways of the Northup building where programmers not only conducted sword fights but rolled tennis balls filled with pennies into empty pop cans arranged like bowling pins. Pranks were perpetrated any hour of the day or night. Ballmer was the victim of one such prank when upon his return from a business trip, he found his office filled from floor to ceiling with small, rubber “bouncy balls.” At least it appeared that way from outside the office, looking through the glass partition. In his absence, employees had built a plywood sleeve behind the glass and filled it with the balls, making the office appear to be packed with them.

Bouncy balls had become a fixture at the company before the Ballmer incident, although it’s unclear how the tradition started. Some workers bought them by the gross, and it wasn’t unusual for programmers to arrive in the morning and find them on their keyboards, in coffee cups, in their desks—they seemed to multiply like Tribbles in a well-known episode of “Star Trek.” There were pick-up bouncy ball games outside, and bouncy ball hockey games in the hallways. Somebody once introduced an orange to a bouncy ball fight in the hallway. It made quite a mess. At one point, a memo was sent out banning juggling in the hallway during daylight hours, so a group of programmers set aside a special room just for juggling.

Microsoft’s programmers, who by late 1983 numbered more than 100 of the nearly 450 company employees, worked hard and played hard, just as a handful of their brethren had done years earlier in Albuquerque. They had all been hand- picked by Gates and Ballmer. They were special, and everyone in the company knew it.

“The software engineers got the best of everything,” said one programmer who was hired from MIT about the same time as Friedman. “From the day you started you got your own office. That was really nice, really a motivating thing. It was about the only company where you could get your own offi
ce at that stage in your career
.
There was a lot of respect for a young kid right out of college. The software engineers are the lifeblood of the company. If you want to surround yourself with world class engineers, give them the respect that they need.”

Friedman was particularly impressed that Gates not only knew the name and face of every programmer but also their telephone extension number. Gates also knew the license number of the programmer’s car. A former Microsoft manager recalled walking through the parking lot of the Northup building with Gates one morning in 1983. Gates would glance at each license plate and name the employee—he had memorized every tag. The manager didn’t think that Gates had tried to memorize them—“he just noticed them and remembered.”

Friedman’s office was only five doors down from Gates, who was very visible and often talked shop with programmers in the hallways late at night about projects they were working on. The management structure on the “creative” side of the company was purposefully very flat. There were no middle managers getting in the way of access to “Bill,” as everyone called him. Just

being able to see Gates in the hallway was important to many of the young programmers who had joined Microsoft’s crusade.

Gates was becoming a cult figure in the industry. At Microsoft, he was a hero. It was little wonder that, as they idolized him, the programmers also emulated him. Within the industry, stories abounded of Microsoft programmers and executives who became Gates clones, adopting his speech patterns, his mannerisms, even his trademark quirk, that oddball rocking tic.

“I know people who came back from working at Microsoft,” said an executive with a rival software company, “and they had this expression to describe the influence Gates had there. And their expression was, ‘If Bill said drink Kool-Aid, they would do it’.” This was not flattery. The description alluded to the infamous Jonestown Massacre, where the Reverend Jim Jones killed himself and hundreds of his fanatic religious followers by ordering them to drink poisoned Kool-Aid.

The Microsoft work force of young programmers was nothing if not motivated. Gates expected his programmers to work as hard as he did, which meant 60- to 80-hour weeks. Bonuses were awarded only for working overtime, along with Saturdays, Sundays, and holidays.

“You are surrounded with people who are very much the same, and the people who run the company are the same, so you just go and go and go,” said Rasch, the company’s human resources director. “There would be times when people would work more than we wanted them to, and we would try to get them to slow down. But sometimes you couldn’t get them to stop. When they collapsed you covered them with a blanket and turned off the computer. Sometimes we would try to lock them out of their offices, temporarily.”

Added a former Microsoft vice-president: “I saw kids, you know, who worked at Microsoft for a few years and truly, I wondered if they would ever be able to work again.”

There is a story that circulates in the industry that Gates at one time required his managers to park in the order they arrived

for work in the morning. No one wanted to leave until the person who had arrived earlier and parked in the space next to them had slumped exhausted behind the wheel arid driven home.

Microsoft officials insist the story is apocryphal. But Mark Eisner, president of Softbridge Microsystems, a Massachusetts software company, remembered visiting Gates in 1983. “We were walking out of the building about 8:00 o’clock at night, and a programmer was just signing out for the day. He said, ‘Hey Bill, I’ve been here for 12 hours.’

“And Bill looked at him and said, ‘Ahhhhh, working halfdays again?’ It was funny, but you could tell Bill was half- serious.”

Gates often wore his people down not just by his own personal tenacity but also by his sometimes shocking lack of diplomacy. In discussions, he wielded his formidable intellect like a blunt instrument. He could be rude and sarcastic, even insulting, when he wanted to make a point. If angered, said one ex-employee, he became “apoplectic.”

For many programmers, attending a technical staff meeting with Gates was like going through an oral examination with a verbal executioner. He had the uncanny ability to spot the weak link in even the most logical argument. Show him the Mona Lisa, and he would see the errant brush stroke. Once the flaw was pinpointed, he would rip the person to shreds, hurling favorite insults such as “stupid” and “random.”

“In those days,” said a Microsoft product manager, “when you would attend a meeting with him, he’d be rocking and his knee would be jerking up and down, and there’s all this idiosyncratic motion which I guess is a channel for some of his internal energy. You just knew there was a dynamo moving inside. He was a very clear thinker. But he would get emotional. ... He would browbeat people. Just imposing your intellectual prowess on somebody doesn’t win the battle, and he didn’t know that. It may not be the right thing to do to bash your point across, but he didn’t know that then. He was very rich and very immature. He had never matured emotionally.”

The commercial ran only once, on January 22, 1984, while millions of people were watching the Oakland Raiders destroy the Washington Redskins, 38-9, in Super Bowl XVIII.

Apple Computer was about to introduce its Macintosh computer to the world, and the commercial was intended to stir up anticipation for the big event. It showed a roomful of gaunt, zombie-like workers with shaved heads, dressed in pajamas like those worn by concentration camp prisoners, watching a huge viewing screen as Big Brother intoned about the great accomplishments of the computer age. The scene was stark, in dull, gray tones. Suddenly, a tanned and beautiful young woman wearing bright red track clothes sprinted into the room and hurled a sledgehammer into the screen, which exploded into blackness. Then a message appeared: “On January 24, Apple Computer will introduce the Macintosh. And you’ll see why

; If the $400,000 commercial did not get across the notion that IBM was an Orwellian despot, Steve Jobs certainly did when he took the stage of a packed auditorium at Apple’s headquarters in Cupertino in the Silicon Valley for the official unveiling of the Macintosh.

“IBM wants it all and is aiming its guns on its last obstacle to industry control, Apple. Will Big Blue dominate the entire industry?” Jobs exhorted the crowd.

“No!” they shouted.

“Was George Orwell right?”

“No!” they shouted again.

The Mac, as the $2,500 stylish computer would be fondly called, was advertised as “the computer for the rest of us.” It featured a mouse and splashy, easy-to-use graphics that set it apart from the IBM PC. Apple was bucking the “compatibility” trend. It was hoping the Macintosh could challenge IBM in the corporate marketplace, where Big Blue dominated.

Bill Gates led a delegation from Microsoft for the coming- out party for the Macintosh. Despite his strategic relationship with IBM, Gates had bet half the farm on the success of Apple’s new computer and its innovative technology. The Mac’s desk top utilities, such as the alarm clock and calculator, had been developed by Microsoft. A team of Microsoft programmers, under the direction of Charles Simonyi, had been working in secret on applications for the Macintosh since Gates and Jobs signed an agreement to do business together on January 22, 1982. Now, two years later, Multiplan for the Macintosh was ready to ship with the Mac, as was BASIC. And the Microsoft team was still working on Word and a couple other applications for the Macintosh.

Gates predicted to a group of software developers at the Macintosh announcement that Microsoft eventually expected half its revenues to come from the sale of software for the new computer.

In an interview with
Rolling Stone
magazine shortly after the announcement, Gates told author Steven Levy the Apple engineers who developed the Macintosh had “worked miracles.” Gates had been smitten by the simplicity of the Mac ever since he saw a prototype back in the summer of 1981, shortly before IBM announced the PC. Andy Hertzfeld, one of Apple’s software engineers on the Macintosh project, had given Gates the first demonstration. Gates was unfamiliar with the mouse technology used in the Macintosh, and the first question he asked Hertzfeld was what kind of hardware was used to make the pointer move around the screen in response to the movement of the mouse. Actually, Apple had solved the problem with software, not hardware.

“I had gotten a similar type of mouse system going on the Apple II about two weeks earlier,” Hertzfeld recalled, “and just as Gates asked that question I was about to say, ‘Of course we don’t have any hardware for it. We even can do it on an Apple II.’ But Steve Jobs yelled at me, ‘Shut up!’ ”

Jobs wanted Gates to kno>y as little as possible about graphical user interface software.

Microsoft received the first prototypes of the Macintosh in late January of 1982. Programmers needed a machine before they could design applications for it.

In creating the Macintosh, Steve Jobs had gone shopping at PARC, too. He had met with officials of the Xerox Corporation in 1978 and proposed a venture capital deal whereby Xerox could own part of Apple if Jobs could get a peek at the technology under development at its Palo Alto Research Center. Jobs was quoted as saying, “I will let you invest a million dollars in Apple if you will sort of open the kimono at Xerox PARC.”

Both Gates and Jobs obviously knew a good thing when they saw it and appropriated everything they could from PARC, including its best minds. When he was later asked about the similarities between Windows and the graphics used in the Macintosh, Gates kidded that he and Jobs had lived next to a rich neighbor named Xerox and when he (Gates) broke in to steal the television set, he discovered Jobs had already taken it. His point was that Windows came from technology developed at PARC, not Apple.

The development of the Macintosh was something of a pirate operation from the start, kept separate from the rest of the company in a building that was known as Texaco Towers because it was right next to a Texaco station. The engineers, almost all of them in their twenties, kept a pirate flag on the wall, although the rainbow-colored Apple logo had replaced one of the eyes in the pirate skull. Jobs considered the Mac his baby and later neglected other parts of the company to run the show, but he had at first opposed the project, according to Mac team leader Jeff Raskin.

Raskin complained in a memo to Apple Chairman Mike Markkula that Jobs was a “dreadful manager” and that Apple should “see that he gets management training before being allowed to manage other company projects that involve creative work.” When Jobs got a copy of the confidential memo, Raskin was fired.

Publicly, at least, Gates had only nice things to say about Jobs when the Macintosh was released. He told
Rolling Stone
that “people concentrate on finding Jobs’ flaws, but there’s no way this group could have done any of this stuff without Jobs.”

Privately though, Gates had a different opinion, according to colleagues at Microsoft. They said Gates didn’t have respect for Jobs’ technical abilities.