Steve Ballmer – Microsoft Monkey Boy

The “monkey boy” comment came up several years ago when YouTube was first starting and a Ballmer video surfaced of him going nuts on stage in front of 15,000 people. It was interesting to see and hear the general publics reaction to this video. What kind of guy is running Microsoft?  What a psycho.  Wierdo.  Nut job.  It ran a lot on the local news. 

Having been at Microsoft for a long time I did not even blink an eye when I saw the video.  After all I had seen it so many times I frankly could not see what all the fuss was about. The Microsoft Global Sales Summit (later changed to Exchange) was where this always happened.  In my 18 years at Microsoft I went to 14 Sales summits. .  Always in July and always somewhere really hot. I always got to see Steve running around the crowd, jumping up and down, listening to his voice go horse, etc..  So lets run through my favorite “monkey boy” moments.

Climate wise the first was probably the best as it was in San Diego.  I can’t remember much of Steve from that meeting.  He came out yelling and screaming, so the new exec who followed Steve just thought that was what you do.  He came out yelling and screaming.  I don’t have the  definition of fool handy but I am sure that execs name can be found in the definition,

In 1996 we went to Montreal.  I like that city and the province, “Jem le Quebec”.  We always had a big opening act.  We had members from the dance troop from the musical “Stomp”  Very cool as they came about with 5 foot bamboo staffs.  Pounding the stage with those staffs and dancing and jumping it was great entertainment.  All of a sudden from backstage like a caged lion who had been released comes 260lbs of Steve Ballmer with a 5 foot staff.  Now you want to see some one pound a stage and jumping with mega force and screaming, well that was Steve.  It was very motivating.  After that he went to the podium and attempted to speak french.  Not so good, but a positive memory was imprinted in my heart and soul.

In 1999 we went to San Francisco.  As Mark Twain once said, “The coldest winter I ever spent was a summer night in San Francisco”.  It was the only sales summit I can remember being cold at.  It was just before the DOJ case was to burst into the mainstream media.  It was the first time i had felt the mood at a Microsoft Summit was a bit down.  Steve came out as always  the San Francisco convention center.  He was rather heavy at this time, looking like we was enjoying the life of a CEO.  When he finally finished his run  around the center he got up to speak.  The problem was he was so out of shape and so winded he could hardly speak.  I just kept thinking, “great, this is just f***ing great.  The company I love is about to be put on trial for anti-trust and our CEO is about to have a heart-attack and die in front of 12,000 people”.  The monkey boy lived.

A few years later we were in Atlanta.  It was July. It was hot. I was walking around the conference center in downtown Atlanta when I spotted Steve going down an escalator.  What struck me as odd was he was wearing a rather heavy and ugly brown coat.  It will be explained a little later.  Now one thing about Steve is when he is on stage he perspires..a lot.  At one company meeting hosted by Dana Carey (of SNL fame), Dana had three words of advice for Steve “Aired Extra Dry”.  When Steve finally got on stage after dashing around the crowd it was quite apparent what was going on.  He was as sick as a dog (thus the reason for the big brown coat).  After 5 minutes he was not just sweating he was drenched.  His collar was completely soaked.  Steve managed to speak for 2 hours.  It was a great moment of leadership, passion and love for the company.  Orlando Ayala our VP of WorldWide sales acknowledged the performance afterwards as he should.

With the years passing and the company growing (shrinking now) Steve has continued his same performance.  He still has an immense love of the company.  But it seems to have lost its luster.  This years event in Atlanta as has become custom the performance made it to YouTube.  Despite best efforts as I am told by Microsoft to stop this.  The CNBC team even commented how lifeless the audience seemed to be in watching their CEO.  I can suggest a couple of reasons.  In the early days when Steve was out high fiving and yelling, most of those sales reps he was slapping hands with were people he had met and often had been on sales calls with them.  There was areal personal connection between Steve and the sales force.  Second most of the people who attend the sales summit’s these days are new hires.  The summit is the first time they have ever seen Steve in person.  Finally the overall event has lost its innocence and feels just like a big corporate sponsored event.  I don’t view this as a negative it is something that just happens when a company goes from 7500 employees to 90,000 employees.

We often say that corporate executives live in ivory towers and have lost touch with what is happening on the ground floor.  I think that has happened to Steve as much as he would fight against me saying that.  However that has not dimmed his enthusiasm for the company.  When the whole Monkey Boy thing came about I remember Steve Saying at eth corporate meeting, “I may be monkey boy!  But I’m your monkey boy!”  Yes Steve you are and you always will be.

Good Night and Good Luck

Hans H Hoffmann July 27th 2010

The Cloud – The Microsoft Conundrum

“The future comes slower than we think yet change happens quicker” – Bill Baker, then at Microsoft.  I remember Bill Baker from his days at Microsoft.  He was the business intelligence guy Microsoft recruited from Oracle.  However this particular blog will not be about business intelligence but about the coming era of  cloud computing and the opportunities and challenges it will present to Microsoft.

The idea of the cloud is not something new.  To Bill Baker’s quote it has been envisioned for some time, it has just been slow in coming..  A lot of industry veterans will talk about the early IBM visions of a “psuedo” cloud idea, but that was from a time when the mainframe was king and we did not have browsers but terminals with green screens.  The dotcom era was filled with these type of visions as Application Service Providers (ASP) were all the rage.  I spent a lot of time on planes flying around to meet these young start up’s with big visions.  The problem was the technology was not there yet nor was the band width. This is all in line with the future comes slowly.

Now we enter a time where we have the bandwidth and we have the technology, not to mention we have a generation of end users who spend their days in a web browser.  Before I was let go at Microsoft the economic downturn was enabling a lot of companies to look at cloud platform solutions.  Tight pocket books will cause business customers to always listen to reps and seek out companies who claim they can save them money.  Another big factor is the developer.  As I said in my last blog quoting Boris, “75% of all development is web development”.  This focus on the web by developers has led to advancements in what is capable from an internet app.  When you look at the web today delivering things like Google Apps, SalesForce.Com, Maps – there was a time these type of rich applications were believed to only be possible by leveraging the power of the PC and the desktop OS (Windows).  If you underestimate the web, you rick irrelevance.  Change happens quickly.

The Microsoft Cloud got off to a bit of a rocky start when it was announced at the Microsoft Professional Developers Conference in Los Angeles in the fall of 2008.  This was Microsoft CTO’s Ray Ozzie first big splash since Bill Gates had stepped down to focus on his charitable foundation.  The argument for cloud computing was simple – offload your infrastructure so you can focus on providing business value to your internal customers.  The Cloud would provide developers a set of API’s they could write to.  The developers could then deploy their applications without having to deal with the IT people (I presented this once to MTV in New York and you should have seen the developers eyes light up when the realized they would not need the admins to deploy).  At the time I was in the Developer Platform and Evangelism division, so this was a big announcement.  Ray’s session went well until the name was announced.  Ray announced the name would be “Azure”, pronounced “Aaa-zure”.  What followed was kind of humorous in a scary kind of way.  I think on our office for the rest of the month we all discussed how to pronounce Azure.  In technical terms that is not a good thing.

Microsoft announced its quarterly earnings yesterday which broke all records coming in and $16 billion.  Yet the stock has remained flat despite these earnings just as it has for the last 7 years.  the problem with the earnings is not the number.  It is where the number came from: Windows and Office.  The same cash cows thaT have always carried Microsoft to new heights. In addition these two products are being sold the same way they have been sold for the last 20 years, primarily through the OEM channel and large Enterprise Agreements. But where is the next big revenue growth coming from?  Well Microsoft says it’s going in large part be its cloud computing platform, Azure.  Assuming that is true the next big step for Microsoft will be transition revenue streams from a paid license model to a subscription based service.  Can both exist together?  Perhaps in the short run, but in a world of universal connectivity it is not hard to envision a world where you receive software as a service, when you want it, how you want it.  We are nowhere near the inflection point on the classic hockey stick for Cloud Computing.  The revenue for Microsoft needs to grow in a way that it does not cannibalize existing revenue.   We see today web-based apps like Google’s Apps that could start to take revenue from Microsoft Office (Microsoft has responded with Office Online).  The effort to create a browser-based OS (like Chrome) could start to change the Windows license model and revenue streams.

With all the recent cloud announcements from a variety of companies from Rackspace to Amazon the field is becoming crowded.  It is still very open, though Amazon has received a lot of the early accolades at the end of the day it is a relatively new space for Amazon and there are companies entering (including Microsoft) that have years of experience supporting both small business and fortune 1000 companies.  This area represents a lot of opportunity and something Microsoft is banking the future on (along with Windows 7 phone, but that is another story).  Microsoft has some of its smartest people behind this and some of their best technical luminaries. The cloud is coming after many years of predicting the future and that change will happen quickly.

Good Night and Good Luck

Hans H Hoffmann July 23, 2010 Phoenix, Arizona

The Developer and Microsoft

Anyone who has followed Microsoft as a company would know that probably the biggest reason for its storied success is not the Windows operating system, but the ability of the company to get developers to write applications for the platform. At the end of the day it’s not what end users do within Windows but it’s the applications that they use that run on Windows  that make day-to-day life easier and more productive, that is the value of Windows.

The history of the developer and Microsoft is a colorful one.  It is one I have been around for the last 20 years.  When I first started at Microsoft the idea of Object Oriented Programming was just starting to surface.  Just not yet at Microsoft.  We were still shipping Basic 7.0 and C 6.0.  We had a Fortran, Cobol and Macro Assembler.  The company that was setting the development world on fire was Borland, lead by the charming and belligerent Frenchman Phillipe Kahn.  They were at the time possibly the biggest threat to Microsoft.  I remember at my first company meeting in th e Kingdome Bill saying that for a short period had Borland played their cards right they could have started defining some of the API’s in Windows.  As was so often the case Microsoft competitors at the time rarely could see very far and usually fell on their face.  Not long after Microsoft would launch C/C++ 7.0 and Visual Basic 1.0 and all would be good again in the developer world.

When we launched C/C++ I remember attending a Product Manager session where he equated a presentation on C/C++ to watching paint dry.  It was probably true but I did learn how to write “hello world” in C++.  The other thing about the product was the box it came in was huge.  It was a bunch of disks with about 100lbs of books.  It was a workout just to haul it to your car. 

Not long after the introduction of C/C++ 7.0 Microsoft would launch Visual Basic 1.0.  This was a big deal for developers and even as someone who was new to computing at the time this was something I could understand.  If you have to create the same object over and over again, why not create a template (or object) where all you do is settings (object size, line style, color, fonts etc..) .  You still had to write code around these object but in theory you would write less code, in particular that mundane code you wrote over and over again.  The developer could focus then on the truly creative stuff.  Visual Basic would be a huge success and lead to follow up releases and a ton of 3rd party add ons for VB, thus creating a new industry.

The first big change in development took place when Sun Microsystems release Java.  Sun to their credit saw that the development world was becoming one that wrote to Windows and they set out to stop it with the release of Java and the Java Virtual Machine (JVM).  The theory behind the JVM is it would talk to the underlying OS (Windows and many flavors of Unix), the developer would just write to the JVM and not worry about the OS.  In theory nice but the problem is Operating Systems are always being upgraded and therefore instead of write once run everywhere it became write once and debug everywhere.

The second big change and it was a big change was the Internet.  The reason was you view the content on the internet through your browser, not the operating systems.  What does this mean?  To write an internet application you do not need access to the WIndows API’s.  The Windows API’s are not as important as they used to be.  In fact today about 80% of the Windows API’s are not really used.  I have heard of some people at Microsoft calling this a opprtunity.  I call it a catastrophe.  But in all honesty can anyone imagine starting a business today and not having a web page? a commerce site?

I was in San Jose at a bar once chatting with my friend David, the Cisco Account Exec for Microsoft and the PM for Microsoft C++, we’ll call him Boris.  I remember Boris saying that  the data they had said that 75% of development is web development, 20% is Windows and 5% is other.  At the same time we were seeing a significant uptick in market share for non-Microsoft browsers (Firefox, Safari, Opera etc..this was pre-Chrome).  You were also seeing things like Adobe Flash take significant hold of the market, a technology that was non-OS dependent and could run in browsers that ran on Linux, Windows or the MAC OS.

Another interesting thing was the rise of scripting tools like Ruby on Rails and PHP.  Easy way to explain this is developers who get a degree and learn how to write “proper” code and compile code would never touch this stuff.  However for the guy that wants to pick up a book and build a website..this was the way to go  the last few years of sales calls I did these scripting tools came up again and again.  After I was let go by Microsoft my friend David would call and say he talked to a bunch of “scripters”, he could not bring himself to call them developers.  They don’t know what a compiler is.

Finally in my last role at Microsoft selling development tools it was increasingly apparent we were not taking share from our competitors and getting them to move off of Java.  We were simply trying to up sell our customers on the latest licensing scheme.  There was no effort from a sales and marketing standpoint to go after competitive platforms.  We did do programs to go after the weak companies who were being sold or in danger of bankruptcy (Borland, Mercury etc..).  Go after Open Source tools??…please.

So what is my final analysis?  After all this is the week of the Microsoft Worldwide Partner Conference.  It is apparent based on what I have read that Microsoft wants to regain control of the API’s through its cloud platform Azure.  And to its credit it is doing some cool stuff for consumers by creating the private cloud.  But I will say it is still early and Microsoft is behind in the cloud space to companies like SalesForce.Com, Amazon, Google and Rackspace (I was the account exec there for 6 months during the dotcom days).  From a pure development standpoint Microsoft needs to start fighting the hard battles in particular in eth enterprise wheer Java is king,  They need to figure out how to play and attack Open Source.  Finally Microsoft need’s to embrace scripting technologies rather than tippy toe around them. 

In the end developers go where the market takes them. A few years ago the language Object C was around the 45th most popular language to develop in.  Enter the iPhone and it is now in the top ten,  Similar to the 90’s and Windows.  When Windows took off so did the development languages (VB, VC++ etc..).  If Azure takes off so will Microsoft dev tools but if it is another cloud platform….well that is another blog.

Good Night and Good Luck

Hans H Hoffmann June 15th San Francisco, CA

Microsoft Licensing history and challenges

With the end of the Microsoft fiscal year coming around I thought I would write a little about what my fellow co-workers make their living on – the licensing of Microsoft Software.  It actually is a rich and exciting history and  good insight to the future of Microsoft. In 1976 Bill Gates wrote a letter titled “Open Letter to Hobbyists” in the MIT Homebrew Computer Club newsletter which expressed his frustration that many were using Microsoft’s BASIC programming language and distributing it without having paid for the software.  This letter is probably one of the most important documents ever written, not only for Microsoft, but for the entire technology industry.  The Open Source community may decry my assessment of this as the most vile and evil thing ever written, but without this document they would have no enemy.  If you don’t have an enemy you really don’t have much of a cause.  The letter establishes what Microsoft was going to do to build a business model and lead to billions of dollars in revenue.  All in the name of the right to profit on intellectual property.

When I started in 1991 one thing that had been in place for a while and was generating a lot of revenue was the OEM model.  I wrote about this earlier but this was the simple process of licensing software (early on MS-DOS and later Windows) to hardware companies who manufactured PC’s.  It was a great model for a new industry that was still trying to find its footing.  All these new PC manufacturer’s needed an operating system and at the time MS-DOS was cheap and could be licensed.  Some of those names became big players in the industry like Dell, Compaq and Gateway.  It was cheap for Microsoft.  Once you had created the disc you just made some copies and shipped to eth OEM who installed on their hardware.  It was simple math.  My cost is $1 to duplicate the disc and I charged $75 (this is a rough estimation).  The margins in the intellectual property business are usually greater than 90 percent. It has become multi-billion empire within Microsoft.  Whenever you watch CNBC or read the  Wall St Journal and it says PC shipments are up, it means Microsoft is making hundreds of millions of dollars.

What was beginning when I started at Microsoft was the more structured process of licensing to businesses.  Like all things it started small, but it represented a real “green field” opportunity for Microsoft.  Remember at this time the idea of personal computing was still new to many companies and with it they received a whole host of benefits, but at eth same time they had new headaches they had not experienced before.  When a new operating system was released did the company have to go to the local reseller and buy new copies of the OS?  would they get a discount after they had purchased so many copies?  Why did they have to do this, why couldn’t Microsoft?  Bing (no pun intended), a new licensing model was created.  First there was Select Agreements, soon to be followed by Enterprise Agreements.  Stay with me on this one as I know licensing is about as much fun as watching paint dry, but it is super important to helping one understand how Microsoft makes money and the challenges they face in the not so distant future.

First lets tackle a Select agreement.  In simple terms this is just a negotiated price sheet.  Only two things occur here.  The customer and Microsoft negotiate what will be on the price sheet.  The second being what will the discount be.  They are always three-year agreements.  From a sales reps perspective it is pretty simple – when they sell additional software into a company they place an order through their reseller who provides the quote back to the customer and collects the purchase order.  Pretty simple stuff – there is one additional things – maintenance or the current term software assurance (SA).  I purchase this at the time of order and if I want all future releases of Office I pay for SA, when it ships I automatically receive as part of my contract.  Usually however a Select agreement is not alone. 

Now we hit the big agreement the Enterprise Agreement.  I will say my bias in this whole blog is towards these EA agreements as I spent over half my career at Microsoft calling on Fortune 1000 companies and working with our account teams to facilitate the growth of these large cash cows.  The EA in short is a commitment.  A three year commitment.  It is a large part of the Microsoft licensing machine.  For many sales reps it is their lifeblood (or death depending on how the deal goes).  So what exactly is it?  It is a list of products a customer commits to that includes a product (Windows) with Software Assurance and payments are spread out over three years.  If you do a $60 million deal then it..(I take it most of my readers are good at math).  So there you have it you are all now Microsoft Licensing Specialists.  There is a job title at MS for Licensing Specialist, so apply now you are qualified.

Early on in the early to mid 90’s this was all greenfield opportunities for Microsoft sales reps.  Most companies needed an agreement with Microsoft and the products were really not many – in fact the first ones would be dominated by Windows and Office.  It was a great time to be in the field.  It created an odd sales model as well as when reps made and exceeded quota they were not compensated with huge commission bonuses but stock options.  As we all know in those days the stock options were the road to riches. It also created a very Redmond centric environment where the Product groups were all-powerful and the field was simply a delivery vehicle.   I only say the sales model is odd because to a large degree that mindset remains today and though bonuses are available the Microsoft field rep is not compensated like other industries.  Redmond still holds the view that they are the kings of the company.  It always cracked me up and made me angry when product managers would say “the field does not know how to sell our product”.   This despite the fact that they spent so little time in front of customers. This is why so many senior leaders who have joined Microsoft say that Microsoft truly lacks a sales culture.

To follow-up on this some more the days of stock options are gone and the EA agreements that were originally Windows and Office have grown.  Early on that was a good thing as Microsoft added more and more value into the EA.  However starting even before the financial market meltdown the agreements had encompassed so many products from Windows to Office, development tools, Server products (SQL, Exchange, BizTalk, OCS, MOSS etc..) all with client licenses, it had become apparent companies were in many instances paying for stuff they did not use.  When the market meltdown hit companies really started taking a closer look at not just Microsoft agreements but all agreements.  The challenge the field is now facing at Microsoft is how do you grow a business when companies are trying to shrink what they buy from you?  The answer from current Microsoft COO Kevin Turner has been “you take share from your competitors”.  I always found this a bit simplistic since in my view you are always trying to take share from your competitors – in the good times and the bad.  When it comes right down to it the acct execs and other sales professionals at Microsoft get brought into a spreadsheet excercise and provided the account team has done their job the numbers either go up or go down. 

Moving forward and looking towards the horizon there are big changes in licensing under way as the industry starts to look at cloud computing and subscription based services and move away from the traditional licensing of software.  It is not entirely new.  I was there at the beginning when we introduced at Microsoft Service Provider Licensing Agreements (SPLA) in 1999.  It has just taken a while for the technology to catch up and the market to be ready to make this move.  For sales reps it represents an entirely new “green field” opportunity.  You can see based on the latest sales hiring activities at companies like VMWare and  For Microsoft it represents both an opportunity and a challenge as they have to transition from traditional licensing models to new licensing models.  It is the challenge of having a legacy, which many companies entering the cloud do not have.  I have no doubt Microsoft will overcome th technical challenges it faces but the ability to handle the financial transition from “old school” licensing of IP to the modern world, in my view, will play a huge part in determining the success or failure of Microsoft in the next five years. 

Good Night and Good Luck.

Hans Henrik Hoffmann July 1, 2010