Month: February 2010

As I said when I started my blog this was not just going to be a Microsoft love fest and now we enter an area where I was probably the most disappointed in the company.  With the announcement of Windows Phone 7 it may be a good time to look back at Microsoft’s entry into the mobile phone business.  It has been a rough ride of late for the mobile business at Microsoft.  I will admit even when they thought they were doing well I was never that impressed with the products they were delivering.  I may be a “non” Microsoftee on this analysis, but it is how I saw things and though I never worked directly in the group I sat in the building (Building 117) with them for several years and saw how they went about their business.  I also covered some of the accounts that they called into;  ATT Wireless, Western Wireless and T-Mobile.

The first time I ever saw a Microsoft phone was around 1999 at a Microsoft Telecom Service providers event in downtown Seattle.  At the time it was a project code-named “Stingray” or “Stinger”.  It was as expected a brick, but it was the first step.  For Microsoft it made sense to go into the Mobile space, simply for one reason: During the 90’s the mobile phone had gone beyond being just a phone, it now had a user Interface (UI) which you could do things with, like texting.  If there was a UI then there was an opportunity for Microsoft to play, in fact it was so ingrained into Microsoft’s DNA  that it had to play and it had to be the leader.

Early on Microsoft tapped a former exec of Symbian, the OS used in most mobile phones at the time, he was a Dane (so naturally I thought that was cool) named Juha Christiansen.  Later on they would call back from Asia, Pieter Knook to act as Senior VP reporting straight to Ballmer.  They decided early on that Microsoft’s strategy would be to take down Research in Motion (RIM) with their cool Blackberry device.  Microsoft wanted to focus on business professionals and the smartphone market.  I think this strategy was significant as it meant that Microsoft would not provide consumers with an offering for mobile phones.  Second I will add I am not a big fan of the term “smartphone”.  To me all that means is feature creep, as phones get more powerful they add more features and before you know it all phones are “smartphones”, but I guess marketing people like these kind of things to show they are monitoring something important, no matter how obvious it is.

A second thing that Microsoft was thinking was the role of software with the phone.  Microsoft viewed hardware and software as two different things and were still under the guise of Bill Gates who said “you are either  a hardware vendor or software vendor but not both”.  Microsoft thought it could sell the software separately from the phone, so if you bought a mobile phone and an update came out for Windows Mobile, you could purchase for $5-$10 off of a website and upgrade your phone.  Then and today it is still amazing to me how Microsoft was so not in tune with the end-user.  Microsoft also wanted to replicate the OEM channel like it had with the PC by getting Motorola, Samsung, LG, Ericsson, and all the big mobile phone providers, minus Nokia to act as a channel. The problem here is unlike the PC, which was virgin territory and created companies like Dell, Compaq, and Gateway, Microsoft was dealing with mature established companies.  These companies did not need to be educated about the mobile market place.

A third area was Microsoft did not get SMS (texting).  Texting had become a global phenomena, driven by the younger audience.  It is a crude technology as you have a limit of 160 characters (140 bytes).  It looks like a mobile version of DOS.  But it is useful.    I asked one of my nieces once why she liked it  (we shall call her the Russian Princess) and the Russian princess relied, “A lot of times I just have a question I need answered and I do not want the formality of a phone call”.  Smart girl.  I can only guess here what the discussions were at Microsoft but based on the actions of the Bus Development folks, I think Microsoft looked at SMS as old, simple and stupid.  Why not use a rich email client to do the same thing?  Microsoft Outlook offered way more for the end-user than a text message. Two reasons why that did not really work: 1) consumers wanted light and simple (outlook is feature rich and big) 2) Telecom carriers make a huge amount of money per text and what Microsoft was offering was part of a flat rate data plan.  Telling Fortune 1000 companies to cannibalize their revenue stream was not a smart idea.  Today over 2 trillion text message are sent annually around the globe, which in monetary terms equals billions of dollars of profit to telecommunications carriers.

The first task for Microsoft Mobile was to get a carrier to resell the Microsoft phone and that duty fell onto my client ATT Wireless.  The hardware manufacturer was a Taiwanese company, HTC.    The first phone cannot be called elegant.  It was not great, but it was the first and soon thereafter a lot of people on the Microsoft campus had them.  It was a significant change as now as an employee you get your email anywhere (at Microsoft email is king).  Microsoft was on its way.  Pieter Knook had laid out a plan to ship 1 billion phones with Microsoft software in 5 years.

As time went by the phones went global and more manufacturers came on board Motorola and Samsung released Windows Mobile  phones and through time I would own about 10 different phones.  Some good, some bad none were great.  My issues with the Microsoft Mobile offering were more corporate.  For starters corporate marketing required that the phone experience be in line with the Windows OS, so the look and feel was Windows.  It had a start button.  The browser experience was usually not good and sometimes just plain awful.  It really highlighted to me a lack of the fundamental understanding of the end-user experience.

A second issue that cane to light was internal politics.  As the realm of mobile applications became larger it was natural that other groups within Microsoft would have their own mobile offering.  There was CRM ERP and MSN offerings.  The problem was from the Mobile team not all offerings were Windows Mobile specific.   The MSN team could not limit themselves to Windows Mobile phones since that covered less than 20 percent of the market place.  However the bus development folks would make a point of trying to keep them out of accounts.  I can certainly understand a passion for your product, I know the people in Windows Mobile worked hard, but at the same time I felt arrogance got in the way of reality.  To say you needed to limit MSN offerings like Hotmail to Windows Mobile would cede the market to the main competition at the time: Yahoo and AOL. 

Despite all the issues with Windows Mobile through the first part of the decade they did pretty well as they saw global market share increase, but as in many things you do not know reality until you look under the covers.  The core code was fragmented and it seemed like rather than innovating new features Windows Mobile was just trying to replicate what others were doing in the market.  This would all catch up to Microsoft on  June 21, 2007, that was the day that ATT launched the Apple iPhone.  It was hilarious in an infuriating way how the Windows Mobile team tried to downplay this launch and provide info on all the things the iPhone could not do.  For example it could not copy and paste.  Funny I did not know Windows Mobile could do that, but then I have never used Pocket Word to write an essay.  How stupid could I be.  When Bill Gates saw the iPhone he said, “Microsoft did not set the bar high enough”.

I think Apple hit a home run in several areas.  First and foremost was the touch screen which remains to this day the best I have seen and used.  It enables everything from there.  When I clicked on apps it was responsive.  By being so responsive it created the apps for the iPhone phenomena.  Finally the browse experience was the best I have seen.  It is easy, useful and responsive.  In short Apple controlled the whole experience.   

It raises significant questions about business models.  Apple’s experience is contained in one form factor (there is only one Apple hardware/software experience).  RIM does this to a certain extent but has more form factors.  Microsoft and Google Android chose to distribute to any hardware vendor who is interested.  Microsoft was really big into choice.  I always thought this was a big mistake and frankly positioned very poorly.  First off consumers always had choice. It was not like Microsoft invented it.  You walk into any ATT or Verizon Wireless store you have wall to wall choices in phones.  Microsoft does not enable choice the carrier does.  Second user experience is very personal and it is based on the hardware and software experience.  I met a sharp girl in San Francisco once at a Microsoft dinner.  She had a Motorola Razor.  Why?  She liked the color (Pink) and it was so slim she could put it in her back pocket, without a  bulge.  Girls do not like to look fat.  If Microsoft could develop Mobile software for that, well then they would be on to something.

When I left Microsoft there were 7000 iPhones on the Microsoft network.  Certain groups (XBox and Zune) encouraged employees to get an iPhone as a challenge to the Windows Mobile team.  They even embarked ona “skunk’ works project to develop a Zune phone.  One of the last executives I ever saw talk was Scott Guthrie, VP of development Tools.  He had a iPhone and mapped out what was happening.  The kernel code for Windows Mobile had to be scrapped and they needed to start over.  Andy Lees, VP of Windows Mobile was brought over to revamp the team (Pieter Knook had left and taken a job with Vodafone).  Andy did not want the job, but when SteveB tells you this is what you will be  doing it is not a negotiation.  the few times I have seen Andy speak he has not looked comfortable.  I think he realizes that mobile software and the mobile industry in general require sex and sizzle.  Andy is a very smart guy but he has no sex and sizzle.

With Ballmer’s recent announcement of the launch of Windows Phone 7 for the holidays (which is 9 months from now) it will challenge the Microsoft partner model.  All I  can say is every phone I have had though they have the same look the experience is greatly different.  The market is also getting very crowded (Apple, RIM, Nokia, Google, Palm, Samsung, LG, Motorola etc..).  Form factors are also getting more plentiful as the world of mobility expands.  You have Laptops, Tablets, Netbooks, PDA’s, Smartphones etc..It is a very exciting time in the world of mobility but the question will be what is Microsoft’s role?

Good night and good luck.

Hans Hoffmann

February 24th , 2010 (Happy B-day to me eldest son)

As I continue my journey into the next decade at Microsoft it is probably worth while to look back at just how far we had come and what it meant.  It had been a magical journey, something that may rekindle thoughts of other industries, like the great railroads that were constructed in the mid to latter 1800’s (check out Stephen Ambrose’s book “Nothing Like it in the World”).  Or the start of the automotive industry.  I had been in the game at the start of something huge, something that will define the 21st century.  Like so many things in history it all started so innocently. 

When I joined the company on November 4th, 1991 the company was only 7500 employees and the organizational structure was very flat with almost every employee only 3-4 jumps away from Bill Gates.  The product line was about two things; Windows and Office.  The industry was adopting desktop PC’s and they were also making their way into the home.  By 2000 things had changed as Microsoft had entered the networking arena with a lot of Server technology being pushed out the  pipe and the game changing force of the Internet had started to build momentum.

What I remember early on is a lot of good people came through telesales, where I started and many of those people had no technology exposure.  In fact many did not have college degrees.  But many of those people developed a passion for technology and became stalwart employees.  Everyone was young and having a lot fo fun, from the product managers who came over and presented the latest and greatest products to the new rep taking their first call on the phone and not having a clue what the person on the other end was talking about.  The sad downside of explosive growth and bitter competition is those people will never have the opportunity to work at todays Microsoft.  Finding the diamond in the rough is not in the cards anymore.  Don’t get me wrong, I am not bitter about this.  When companies become large they just have more processes in place, they become more systematic, and they are far less willing to take risk, because they do not have to. 

There seemed to be a party for everything.  A new product release?  We need a party? Christmas?  A big party.  Global Sales Summit? A bigger party.  Because it was a young organization with many employees single and in their late 20’s people hung out a lot together after work.  It could be drinking beer or doing co-ed sports after work like soccer or baseball.  Early on it seemed every time I saw a product demo I got a T-Shirt, so I had stacks of t-shirts for Microsoft Test, MASM, FORTRAN, Visual C++, DOS  etc. Microsoft in those days was an extension of college, except I got paid.  Like everything else in life you hit milestones, you get married, you have kids and the dynamics of your life changes. 

When Microsoft failed in those days it was not as big a deal.  A classic case was Microsoft Bob.  A simple idea really related to simplifying and humanizing the user interface for Windows I had first seen it in San Diego as a demo for something code-named “Utopia”, it seemed a bit clunky to me.  The graphical UI in Bob which allowed you to look at files like you were literally in a library, was at best described as veneer you would put over your Windows Operating system..  But I thought maybe it was something the new PC user might gravitate towards.  They did not. It was a risk and in the end a complete flop.  But Bill netted a wife out of it so it could not be all bad.  

The PC was new to the general public so many were naturally intimidated by this technological paradigm shift. This was the era of “the geek”.  They could come out of their closet and join the human race.  They could attend parties and talk technical and people were interested in what they would say.  They were also young and rich.  Microsoft was in its element at a societal level that no engineer had ever experienced before.  A vivid memory of this time I had when went to the company store one day and out came four technical geeks with their copies of Visual C++ (a big, big box…with lots of books, remember the CD for the PC was still early on at this point) and they all hopped into a shiny Rolls-Royce.  Nice.

As the decade started to come to a close things started to change very quickly.  The internet was going to solve everything.  What is interesting to look back on is that though the internet was cool and seemed to be making Microsoft irrelevant, the reality was that was not happening.  In order to connect to the internet people needed software they trusted.  Apple was still very expensive and Linux, though free, required a PHd to install.  So people bought PC’s.  In many ways the internet brought the grand vision of a “A PC on every desktop and in every home” to its conclusion.  I think the fact that Microsoft achieved a vision is pretty significant, how many people work for companies and never know what the mission statement is?  The beauty of the statement is nowhere does it mention the business that Microsoft is in.  We did not make PC’s we made software.  Billg always would say, “Software, that is where the magic happens”.

As I sat in the audience in September 2000 for the annual Microsoft company meeting, I listened to Bill talk about the upcoming decade.  He called the new decade the “Software decade”.  As he is so often when talking about the future he was right.  It would seem this would be the era that Microsoft would be come even bigger and more glorious. After all we were the largest software company on the planet.   Microsoft certainly has become much larger but the glory has not followed.  The software decade meant that software would become pervasive in many of the things we do.  As digital convergence happened the expectation is that the software would just work and tha Mr. end customer would not need to call his “geek” friend.  With the rebirth of Apple, the rise of mobile phones and pretty much everything in color, technology was cool and becoming part of fashion  The geek world was gone, geek’s don’t do Armani.  But the decade while it lasted was one greatest periods of my professional career.

Good night and good luck,

Hans Hoffmann

February 17, 2010

I am a member of the Microsoft Political Action Committee.  Even though I am no longer at Microsoft I maintain close relations with fellow MSPAC members and am still invited to events.  The other day they had Michael Brown, founder of a non-profit called City Year.  Before speaking he showed a video of teachers, administrators and supporters.  Among those supporters was an attorney named Joel Klein.  Had Michael showed this video 10 years earlier he would have been escorted out of the room.  For those who did not follow or do not remember, Mr Klein was the lead attorney for the Department of Justice in their landmark case of the US versus Microsoft.  Since I had already decided the DOJ would be my next topic I can only say “how fortunate can a blogger be?”.

The winds of the DOJ had already started following the release of Windows 95.  As Netscape started to lose ground in the browser war it was increasingly clear that they would not be able to compete.  Internally around 1997 or 1998 a memo went around in email written by Jim Alchin.  It was pretty simple – Microsoft should leverage its greatest asset in the browser wars, the Windows Operating System.  Even at that time I did not think twice, it made total sense for Microsoft to bundle the browser with the operating system.  However the industry did not see things the same way and so the rumors began to swirl and build. 

 The case had already begun in Spring of 1998.  At the Microsoft Global Sales Summit in 1999, held in San Francisco it was almost eery how the DOJ cast a shadow over the event. . For starters on the opening night everyone went to the usual reception part, everyone froze their butt off.  Unlike previous events in Orlando, New Orléans or San Diego, we were not trying to cool off with a beer or six.  It was a cold summer night in San Francisco.  It brought to life the famous Mark Twain quote, “The coldest winter I ever spent was a summer night in San Francisco”.  The event lacked luster after that.  There were no big product releases, nothing really to rally around.  When Ballmer did his keynote he ran around the audience like a crazed lunatic (he still does to this day).  When he finally settled down and got onstage it took him 5 minutes to catch his breadth.  I thought he was going to have a heart-attack.  I thought to myself, not only is the company being  targeted by the DOJ, now one of our key executives is going to die on stage in front of 10,000 people.  I remember leaving MGS that year not as in love with the company as I had been in the past.  It seemed like we had lost something.  On a good note the last evenings entertainment was the B-52’s!!

Back at corporate it was very hard I believe on all the employees.  For starters for those of you who hate big government and don’t believe they can do anything right, this is not your story.  However you feel about Microsoft, anti-trust, or government intervention in markets etc..the DOJ from a marketing and PR standpoint simply crushed Microsoft.  It was embarrassing.  At one internal company town hall an employee got up obviously flustered and said “I don’t even recognize the company being portrayed in the media”.  It was sad, but how true it was.  Every executive who testified in court seemed over matched from the start.  It seemed every day I went to work during the trial that nothing was going well.  I was traveling a lot in those days around the country meeting with customers.  It seemed like every conversation had to start with a talk about the state of the DOJ case.  To the DOJ’s credit every mistake made on the stand was a chance to show the world via the cable networks how bad we were, they were always attacking and we were always defending.  As much as executives tried to say don’t worry about the DOJ just focus on your work, in the age of the internet it was just impossible to ignore.

As the case wound down Netscape was aquired by AOL.  It put some temporary brakes on the DOJ momentum, but not much.  The Microsoft take was the technology industry was too innovative and fast paced, that change would happen by itself and needed to regulation.  As Windows and Office today slowly begin to die I feel that was true then and is still true today.  But to try and explain to courts and the public was difficult.  In hearings before congress you would have Scott McNeely and Jim Barksdale sitting next to Steve and Bill.  Scott and Jim talked about the challenges of competing against a “monopoly”.  The case was essentially about Microsoft’s ability to use the OS to bundle new software offering thus limiting the ability of the competition.  In this case the new software offering was the browser. Bill would say this was the weakest case that could have  been brought against Microsoft.  Had they gone after the OEM business, in my opinion, the case could have got ugly fast.

I had a business trip scheduled back east in November of 2000.  I was on United Airlines flying to Washington DC and had brought my latest issue of Wired Magazine.  It was titled “The Truth,  The Whole Truth and Nothing But The Truth” by John Heilermann.  It was a very long and thorough article on the inner workings of the DOJ trial.  How the DOJ was pushing hard to get Steve Jobs to testify, the emotional toll the case was taking on Bill Gates, how the Microsoft competition were lobbying on Capitol Hill.  It took me all 5 hours on the plane to read the article and when I landed I was tired.  From a Microsoft standpoint the article was emotional and hard to swallow.  Could this be true?

On the way home from DC I was with a fellow co-worker Janet Wu.  We were in the United Red Carpet club.  As everyone did we went to laptop lane.  This was still Dotcom boom time so every plane was cramped and the airport was always super busy. In laptop lane you had wall to wall modems set up so it was just a question of finding space and getting connected.  Getting connected was not easy.  You had to VPN in and of course it was all dial-up.  I had a Toshiba laptop and found a spot.  Janet was at the other end.  I remember I struggled trying to get connected.  I finally got frustrated and went down to see if Janet had got connected.  She had so I went back to my laptop sand sat down and…Iwas connected!!  The strange thing was in my inbox the fonts were different and I had a lot of emails from executives.  I remember Steve Guggenheimer (now a VP at MS)  had sent me an email.  I was a bit confused by my new found popularity.  I looked to the person next to me, but the chair was empty.  They had a Toshiba laptop too.  Son of a bitch I had sat down at the wrong laptop!! When the person came back I apologized..greatly, as it was clear this was a person of some power.  Turns out the person  was David Heiner, anti-trust attorney.  I had just been reading emails about one of the largest cases of the century.  Of course it did raise questions of David’s basic knowledge of PC Security.  We left, Janet and I to catch our flight.

I got to my seat ( a middle seat!!) on United’s filled to capacity flight back to Seattle and who should sit next to me..David Heiner!!  We got to talking and I learned the David was now starting to focus on what was going in Europe as they spun up their own case through the European Union (EU).  I then mentioned that I had read the article in Wired Magazine.  David lit up, “that article is absolute bullshit!!” He then proceeded to go on a small little tirade on why.  However in the end as the conversation winded down he uttered the words I’ll never forget, “…but man that guy had good sources”.  I guess it was all true.

As it became increasing clear that Microsoft was not going to win  the remedy plans started to surface.  One thing I never understood was the scenarios that were being proposed to break Microsoft up.  Some were stupid.  One was an idea to follow the baby Bell model.  We would have had regional OS’s – I don’t think anyone took that seriously.  Others wanted to separate the Office and Windows business.  Split off the MSN business.  In the end the settlement  that was finalized on Nov 2, 2001 was what many view as a slap on the wrist.  Microsoft was allowed to continue to bundle software withe OS, but had to share some API’s.  Many view the settlement as a failure, but the tarnish to Microsoft’s public image had been done.

Reflecting back the DOJ trial was a titanic shift for Microsoft and it’s employees.  It hurt everyone there at the time.  It was a loss of our innocence.  I would get very involved with the MSPAC after the events of the DOJ, because to sit outside the political game was no longer reality.  Gone were the days of admiration just because you worked at Microsoft.    The arrogance and self confidence that had created Microsoft’s success was now a detriment.  Soon there after the brain drain would begin.  There was a time when no one left Microsoft, but things were changing and there were exciting things happening elsewhere in the industry.  It was a challenging time to be at Microsoft and it was a time I will never forget.

I guess it is time to get back to the focus of my blog which is my career at Microsoft.  We are into 1998 moving quickly to 1999.  Though it had not been by design I had landed myself in the middle of the Dotcom bubble.  Our telesales organization was sought after by many  within Microsoft as we called on Internet Service Providers around the country, we were capturing intelligence and were on the front line of understanding what the customers were looking for, but in many cases the customers did not know what they wanted.  Our group wa literally talking to the pulse of what was becoming the internet. Everybody had big ideas and grand visions. I will try and break down the Dotcom boom into two phases: Access and Applications.

The first part of the bubble was all about access.  How do I get on the internet and who is providing the service.  A lot of people thought that the service piece was going to make them a lot of money.  The big names in terms of “dial-up” users were AOL, Mindspring, Earthlink, Compuserve and a few others.   There was a whole host of companies that started up and spent the first years laying down the fiber or probably a better term the “backbone” of the internet.  These were companies like Qwest (before they acquired US West), Level 3, Williams Communications, Savvis, Global Crossing and a whole host of others. The Telco’s were really not in the game yet though everyone knew they were coming, the same could be said for the Cable providers.  Those two industries owned the most important piece, what we called the last mile.  They owned the fiber that ran into the home.  Another entity that had access to the home was the utility companies – and there were a few that played around with internet access offering.  So what was Microsoft’s strategy in this phase?  Well first and foremost it was about the browser and getting ahead of Netscape.  It did not matter whether they were large or small, we wanted them to deploy Internet Explorer.  Over time this was actually successful as Netscape tried to monetize the browser and Microsoft gave away for free (eventually as part of the operating system).  The second item was getting service providers to use our software to deliver email, hosting services etc..This proved a daunting task as none of our software and been designed.  One of the early whiteboard sessions I sat in on was a discussion around the internet infrastructure, and what was clear is once you left the desktop and got on the wire it was all Unix.  As usual Microsoft thought that needed to be changed.

Before we launch into the second phase an update on what was happening organizationally. Our group under Linda Griffin was changing to at this time, a colleague David George, left Microsoft for his exciting dotcom opportunity (what we called the expensive MBA program).  He joined a Dallas based hosting company called Data Return.  Our relationship with our friends in the Internet Customer Unit would change as well.  They had hired a new director, Mark Chestnut, who was returning to Microsoft.  This  would set in motion the move of the telesales team from our home in Ridgewood over to the main Microsoft campus, so in the middle of 1999 Ken Fiore, Steve Bissell and our new hire Sean Maplethorpe would move to Mark’s team.  In addition to this move Mark hired a middle manager, the Frenchman, Pascal Martin.   On top of all this Cameron Myhrvold, who was VP of ICU was leaving Microsoft and being replaced by the former head of Microsoft Germany, Thomas Koll.  The name of ICU was changed to the Network Service Providers Group.

As we moved into 1999 I was still covering Canada and the Central region of the United States.  Early in 1999 I was asked to fly to Houston to meet with an Application Service Provider called Interliant.  It would be a chance meeting that would lead to one of the more exciting opps in account management with Microsoft.   Interliant was not an access provider they were providing application services to customers.  Specifically they were offering Lotus Nots apps.  The idea was that a company could host your application rather than the customer having to support it on premise.  Thus they did not need to buy hardware or hire application developers.   This, for me, would launch into the second phase of the Dotcom boom – the application service provider phase.

As the second phase kicked off of the internet  boom it was again being spear-headed to a large degree by Sun.  They had hit upon this idea that software should run like a utility.  Your computer should turn on just lie your light.  It made for good PR and great marketing slogans, it was a bit far from reality, but I think that the basic idea fueled a lot of what the application service provider model was all about.  Before we knew it we had account lists and most of the accounts one the list were these so – called ASP’s.  I had a bunch – Interliant, Corio, CenterBeam, Exodus, Interland, AIT, Data Return, Excite@home, Equant, Allegrix and a bunch more.  They were all over the country and I flew all over the country hearing about their grand schemes.  Everyone had pretty much the same idea – we will deliver an application and you pay us a monthly fee based on users, hours etc..Some were more ambitious than others.  Corio had a former Oracle exec as CTO, Tom Spagnola, who wanted to deliver cookie cutter CRM apps built with Siebel.  For those who have used Siebel, stop laughing and stay with me.  For those who have never used CRM software let me say this;  every customer I have dealt with wants to feel special and how they receive and deliver software is no exception, there is always something specific to their business that they want or need because it makes them unique.  It’s a simple concept because at its core its human nature.

As things progressed NSG got into a new business – investments.  At the time NSG covered big and small, they had acct execs on ATT, SBC, Bell Atlantic, Lucent, Cisco down to the start-ups that I worked with etc..and though many were not using our software we did have one thing they needed…cash.  And so the investment game began.  At first they were big – ATT received a huge infusion of over $500 million.  The Microsoft CFO at the time was Greg Maffei.  Unlike earlier CFO’s who manged money, Greg liked the deal.  In time that would put him at odds with Steve Ballmer.  If I have time I will come back to my investment deals.  They were fun and a great learning experience in negotiations.

Another thing that was happening was many of these companies were going public.  As an account executive I started receiving offers to participate in the friends and family plans for these startups.  At first I was a bit hesitant because I felt there may some conflict of interest, but at the time Microsoft had no policies on this so I jumped on two offers I received at Interliant and Data Return.  I did end up making a bit of money in the long run, but had I sold at the peak of the bubble I would have made a lot more.  Later on executive VP Jeff Raikes would send out an email saying to “stop” this practice of participating in these offerings.

On a personal note somewhere during this chaos I added more chaos to my life.  On February 24th, 1999 Jean and welcomed the birth of our first child, Henrik Thomas Mernaugh Hoffmann.  Had our last name stated with a “L” instead of an “H” his initials would have been HTML.  That is a technical joke so for those who are not technical please ignore.  It was a difficult birth that left little Henrik in intensive care at the University of Washington Hospital.  It was a difficult way to start parenthood.   Luckily two weeks later we were able to bring him home.  He still lives with us. 

During this period the world seemed at everyone’s feet, people were making money hand over fist, the start-ups were young and exciting, when we went to events like ISPCon in San José, it was just party after party.  I was on the jet setter life style traveling 2-3 weeks every month.  But amidst it all things were not all well at Microsoft.  When we talked to potential partners it always seemed they were never interested in what Microsoft could do from a technology perspective, but were more interested in what we could give them financially. No one wanted to talk about Windows or Office.  It seemed some of our competitors were angry and they knew how to play the political game.  Microsoft was not there.  In one of my last meeting in Ridgewood, before we moved over to campus under Mark Chestnut one of our VP’s came to review our business.  His name was Sam Jadallah, a long time Microsoft exec.  During a casual moment he spoke of a dinner meeting the other exexs had with Microsoft VP of legal, Bill Neukom.  At dinner Bill had been quite clear.  It is time for Microsoft execs to stat meeting with Senators and Congressmen.  To give to political campaigns and foster powerful relationships.  Sam said that all the VP’s (who were all technical guys) had difficulty grasping this new concept or even desiring to do so.  After the meeting Sam was rushed back to campus where a helicopter was waiting to transport him down to Billg’s Hood Canal compound, for a big executive meeting.  The winds of the DOJ were becoming ever clearer and growing stronger.