A lot of articles have been written lately about the 40th anniversary of Microsoft and so far they have been written by industry observers, who have covered but never worked at Microsoft.  An outsiders view. A lot has transpired since Paul Allen convinced Bill Gates to drop out of Harvard and run off to Albuquerque, New Mexico and write programs for the Altair. The growth and changes are not just a refection of the company but the industry and maybe most importantly, society.  It has been a long journey and I certainly remember those Microsoft offices that sat right off of 520 heading into Seattle in the late seventies.  The first time I remember using Microsoft software was when my friend Jon got an Apple II and in order to start it you had to insert the DOS 1.0 5.25 floppy boot disk.  Later I would walk the halls in Redmond delivering mail to anyone and everyone at Microsoft, including Bill Gates. It never occurred to me at that time that I wanted to or had a desire to work at Microsoft.  I would learn a lot about tech, the industry and business during my 18 years at Microsoft.  However Microsoft is much like me now: middle-aged.  It has, like me, seen its shares of ups and downs in life.  Microsoft has its own mid-life crisis to go through.

If we spend a quick moment we can look back at Microsoft in its late teens and early twenties, when it was naively conquering the world one desktop at a time.  It was a young dynamic company that was really the first of its kind. Passion and ideas were valued over experience.  It was viewed as a young mans company (I do not say this disrespectfully to women, but this was 1991).  There was no dress code.  It was more or less an extension of college where you were paid.  Employees hung out together after work.  There was usually beer at work.  Pop was free. These seem trivial now but at the time it was a new idea.  You had a stock price that was going always up and everyone was vesting via a generous stock option program.  The company had a vibe about it.  No matter what your job you were committed and felt important.  the line between work and play was blurred, in a very good and powerful way.  As we have learned time is a cruel vice.

Today Microsoft seems like a slightly thicker, out of shape middle-aged guy.  There is a lot that is still the same, but so much has changed. Microsoft is no longer the epicenter of the tech industry as many upstart and strong competitors have grown up around it. Recently I had lunch with a friend in building 18.  Part of the complex which includes one of many old buildings I sat in, building 16.  They had completely updated the building.  The lobby had wavy, very colorful couches with backs that were not attached.  Behind me were strands of glittering lights, that reminded me of the beaded doorways of the sixties, but were now modernized.  The halls were open and conference rooms were spacious and cool in both look and feel.  A lot of the halls were covered with nice maple colored wood paneling.  I think Google or Facebook would approve of these spaces.  The problem was the only ones enjoying this modern high-tech spaces were a bunch of middle-aged, grey haired developers.  In many ways this is an observation that highlights Microsoft’s challenges.  A simple thing called age.

What is the biggest change?  Well that has been going on for a long time.  It really stated when Steve Ballmer took over.  No it is not that he missed the mobile boat.  It really came out of the landmark DOJ case that Microsoft was involved in.  While everyone was focused on its eventual outcome another thing was happening at Microsoft.  The company was getting bigger, much bigger.  It had to manage that growth and figure that out quickly.  Jack Welch was the idol of every corporate CEO at the time and Steve was no exception to this idol worship.  One of Ballmer’s first initiatives was reading and learning all he could from Jack Welch.  I remember vividly that we needed some type of direction to manage this growth, the problem with the Welch model it was very structured and structure equals processes, which slows the pace of a company.  We became what Bill had so often feared, a company being attacked by smaller, more nimble, impassioned companies.  In the meantime Microsoft continued to grow, and as if this writing iv over 200,000 employees when you include vendors.

Part of the change at Microsoft had to do with just life in general as people grew older, got married, had kids, created debts, had divorces, more medical issues, etc..These are things that naturally suck the focus out of a company, but really are not a corporate lesson but life’s lessons.  When I joined Microsoft in 1991 the average age of an employee was less than 27 years old.  Today the average age is 38.7 years.  It may seem insignificant, but you certainly notice when you walk the halls of Microsoft.  Conversations filled with a lot of discussion about life outside of work.  A loss of people screaming about the intricacies of memory management.  The correct strategy to defeat WordPerfect. It is a natural evolution.  Thomas Jefferson recognized the passions of those under the age of 25, he did not seem to comment on those over the age of 45.  I can only hope it is wisdom.

Finally as mentioned earlier there is just the question of age and the passage of time.  In technology you can walk through the doors of any company and you can feel a certain vibe.  A level of excitement.  A movement that the company is going somewhere.  That vibe start sup at the top.  When Bill Gates led Microsoft he set the tempo for the day-to-day effort that went into every product.  When he spoke at internal events he had a way of speaking that made the future seem predictable.  And then the question to everyone was, “Do you want to be a part of defining this future?”.  After Bill departed this reverence and fear of the future slowly dissipated.  Replaced by corporate politics. With that transition a lot of talent and “vibe” went with it.

The good news for Microsoft is the industry is once again going through one of its great transitional phases.  Looking beyond mobility.  Microsoft has new leadership and it is trying to recapture some of that swagger that made it the envy of the corporate world.  It seems to be making a genuine effort to try to get out in front of industry trends.  Bill Gates is now dedicating more time back with the company.  He still makes great observations, but with only 30% of his time dedicated one can only hope it is a significant 30%.  He is there to help Satya Nadella, and though it is still early there is a sense that Satya gets it, he seems to understand the industry and where it is headed.  It’s a critical thing to the success of a technology company to know where it is headed rather than try to steer a rudderless ship. As we move from packaged products to cloud and services, it is a critical moment in time for the company.    Time is not Microsoft’s friend at the moment, but then it never seems to be when you are getting older.  As Satya has stated, in tech you cannot live in your past glories.  Microsoft is positioning itself to make a move, to perhaps wake from what has seemed a long winter slumber.  Middle age can be harsh on the body, but the experience of the mind can be very beneficial.  It may seem like a long time, 4o years, but in the grand scheme of things it is but an instant.  I look forward to the next 40 years.

 

Good Night and Good Luck

Hans Henrik Hoffmann April 13, 2015