Hans Hoffmann's Blog

During the last decade at Microsoft things changed dramatically at the company.  Like any big change some good and some bad.  One of the interesting success stories was and remains to this day the development of the xBox.

When you read what is on the internet a lot of credit was given to the developer Seamus Blackley, but having been at Microsoft at the time I think the biggest credit yet again goes to J Allard.  I think most importantly what he identified was a problem in the gaming industry. At the time the big thing in the gaming industry was Sony with the Playstation.  Nintendo seemed to be fading and after that there was no alternative.  The problem was the gaming developer.  Sony was basically dictating to game developers the terms of development for the Playstation.  Microsoft (J Allard) figured that the opportunity was to make a cheaper entry point into game development and allow developers to have a platform that made it easy to take games developed for the console and port to the PC – thus creating a bigger market.

The challenge internally was going to be to sell the executives that this was a good opportunity and more importantly to make it really work Microsoft would have to build and own the gaming console, in short get into the hardware business.  The one thing I will say about Billg is as much as he loves software he is not a “gamer”.  However J Allard is an old school guy who has great opinions and has the ear of the senior execs.  He was the guy who sold Billg on the internet,  he is a guy with a lot of clout at Microsoft (check out this expose in Wired) .  In the end he got everyone on board to take the plunge.

Early on at Microsoft it was clear that the xBox was something different.  I do not mean this from a technical level but as a whole organization within Microsoft.  They seemed to be marching to the same beat over in xBox land.  They had a start-up allure that at the time was dormant at Microsoft and was being reinvigorated.  Out of the gate I thought they had the name right and I thought owning the game console was the right thing to do.   In hind site we were owning the experience.  THere were several things xBox did and they did right:

1. Brand marketing
2. Understand the “gamer” and the “gamer” experience
3. Look to te future and the role the internet would play in gaming

To the first point at Microsoft then and today the number one brand is Windows and the Windows Logo.  Had corporate marketing been allowed to participate in having influence in the game experience I can only imagine what they would have come up with, but I am sure it would have included the Windows “Start” button.  But to the good of the company and the community, xBox built its own brand.  I think that was very important as it essentially separated the xBox team from the rest of the company.  They were not beholden to what was already at Microsoft they were their own business.  It allowed the team to start with a clean slate.  That being said they would never admit to this.  I was attending an internal Microsoft tech conference and one of the agenda items was “xBox keys to organizational success”.  they had a GM talk and what amazed me was how he evaded questions and gave us insulting answers.  THings like, “we come to work passionate and ready to work hard”.  the whole time I kept thinking the answer was obvious, ” you are not the WIndows team, you have no history, no historical politics, legacy code, OEM agreements, etc..”  I guess he did not want to hurt anyones feelings.  Gutless.

Second it was apparent they had spent the time to understand what the “gamer” was doing when they were playing.  In many instances they had music going via a iPod or other MP3 player. so they made sure to incorporate that into the experience of playing a xBox game.  For the console they allowed 3rd parties to create “cool” or “funky” panels to put on the face of the console.  The xBox team took time to focus on the experience.  Microsoft in my view sometimes falls into the trap that they believe technology is the experience, but in reality technology enables the experience but IS NOT the experience.  It’s a subtle difference in thinking but it’s very important.  I think the xBox team understood this and it is a large reason for their success

Finally they did what I viewed as a very simple thing which was support online gaming.  Sony was slow to pick this up, but then again that seems to be a trend with them.  Remember whan talking about music players with hard drives, they felt “hard drives were interesting technology”…hello Apple.  As I often say “seeing the future is easy, timing it is hard and missing it is unforgivable”.  Driving traffic over a network utilizing the internet seems very obvious as it takes an “individual” experience and makes it a “community” experience.  As a parent video games are best when played as a group activity and not having one kid play while 3 watch.

There would be some misses along the way as Nintendo came back from the dead by altering the playing field with the Wii.  Microsoft is working hard on something that will alter the playing field once again, which is code-named “Project Natal”.  Sony, well they are being Sony and falling further behind.  They just do not realize it yet.  My thinking all along with these new controllers is that it will extend the gaming console into new markets, namely health and fitness.  It seems apparent that the game console will become the media hub for all your content.  As we see technologies like IPTV (now that we have moved to Digital Cable) the carriers; telecommunications, satellite, and Cable will want partnerships with the major game console vendors (Microsoft, Nintendo and Sony)

 Today xBox is a ort of nearly every ones vocabulary.  It has really been one of the brightest if not the brightest success story Microsoft has had this past decade.  It stated very simply as a problem was identified, but it was a problem that played to a Microsoft core strength the developer.  To many of the other big initiatives at Microsoft like Bing or Zune did not start because a problem was identified and needed to be addressed, they were born more out of panic and a realization we had fallen behind.  It does go to show that even in a company as big as Microsoft we could still teach a hungry start-up a thing or two.  We just needed to return to our roots.

Good Night and Good Luck,

Hans Henrik Hoffmann April 15th , 2010

One of the most interesting things through the years at Microsoft was to follow the competition as they came and went.  It was an annual ritual at the Microsoft Global Sales summit to listen to the COO, Steve B, or Bill G list and talk through the key competitors for the year.   It seemed every year there was a new competitor, some of the old (Oracle and IBM), but like the industry it was a list in constant motion.  Not a year would go by without Billg saying the biggest fear from a competitive standpoint was that small hungry startup that just wanted it more than Microsoft.

In 2001 Eric Schmidt left his job as CEO of Novell to take over the helm at what was then a little know start-up called Google.  Eric was a well-respected man in the industry, one of those people who had great technical skills combined with good business acumen.   When he had left Sun Microsystems to take over Novell in 1997 I think everyone said aloud, “Why?”.  At the time everyone could see that Novell was a sinking ship.  Now moving in to Google I think everyone thought this was a promising move for one of the industry’s top talents.  Little did anyone realize how good a move it would be.  It was a young hungry start-up.

In the world of industry I am not sure there is a commercial sector that as part of its sales training does not recommend Sun Tzu’s classic “The Art of War”.  One of the basic tenants laid out on the book is going into battle against superior armed forces. When competing against Microsoft this was often the case of smaller companies.  But Sun Tzu would argue in such circumstances that it is imperative for the army with smaller forces to change the battle field to its advantage.  When competing against Microsoft it was a mistake to offer packaged software and license agreements, because you can argue who invented it, but make no mistake Microsoft owns it.

Google was interesting in that they were not the first search engine company, there had been many (Yahoo, Alta Vista, Lycos etc..).  Started by a couple young men Larry Page and Sergey Brin, they stumbled upon something unique.  Yes they had the kick ass algorithm that made search fast and provided useful information.  However, what really set them apart was the ad generated business model where Google was paid for ads based on key word searches.  It was a way to monetize their internet search engine and as will be discussed it has been succesful, very successful.  It was a new business model, in fact a new battle field.

The Google mission statement is brilliant “to organize the world’s information and make it universally accessible and useful”.  As I said about Microsoft’s original mission statement, Google’s does the same,  it lays out what the company wants to do without really stating what it is the company does.  Google writes software to do search , you would not know that from the  mission statement, but it is implied.

The simple combination if an ad driven business model and a concise mission statement has allowed Google to fund further software development, in a way you could say it is an indirect business model.  Where Microsoft provides bundled software to create more software , Google uses its ad driven revenues to fund further software development.  In short, back to our friend Sun Tzu, they changed the playing field.

When asked if Microsoft has made any mistakes I heard repeatedly from SteveB and Billg, “we really blew it in search”.  Ray Ozzie shortly after joining Microsoft from Groove stated in his first “visionary” paper how the industry was now developing this indirect ad driven revenue model and Microsoft needed to do that as well.  As much as I heard this I always felt then as I do now, Microsoft would never have figured this out on their own.  It is the challenge many companies face when they have a cash cow as  part of a stable financial diet  Microsoft was making billions on Office and Windows through their traditional channels of packaged software and OEM agreements.  It’s very hard to think outside of the box when you are making lots of money.  There were efforts but even things like Service Provider License Agreements and hosted product offerings were not done with  full corporate backing, but were hidden for small groups to build into something big, which took a long time and usually never materialized.

Today Google stands at revenues of $23.6 billion with Net Profits of $6.5 billion as of the end of 2009.  For a company that incorporated in 1998 that is very impressive.  When I first joined Microsoft in 1991 we were just beginning to start uttering the word billion, which was in the 16th year of the company.   In the internet age I often think in terms if the velocity of business.   What I mean by this is simply laid out by the definition of velocity. In physics velocity means the rate of change of position.  Going from a small tech startup to technology power  within 10 years would be a prime definition of  the velocity of business.

Looking forward Google has laid the groundwork for future success.  The acquisition of YouTube, though at the time in some technology quarters was  looked down upon, in time I think will be proven brilliant.  There is no question in mind the future of search will be closely tied to video,  Today we get decent broadband streaming services but with the advent of 100gb networks this is only going to get better, much better.  Once again the ability to tie ad revenues to video services will be key to driving growth.  Today I think everyone gets a clip or two a day of funny videos, sports highlights (did anyone see Lionel Messi’s  four goals yesterday?), movie clips etc…In the not too distant future we will have houses full of monitors all capable of streaming what ever video content we want.  Google see’s this future and wants to own it.

There is another aspect of Google which is targeting the web developer.  Today 70% of all development is targeting the web.  Google hired former Microsoft exec Vic Gundrota to help drive developer audience efforts.  I had seen Vic speak a number of times while at Microsoft.  He is a visionary guy with a flair for “dramatic” presentations.  Sometimes a bit corny, but always interesting.    Google is borrowing a bit from Microsoft by creating a partner channel and encouraging developers to use Google’s tools and write applications for Android and Chrome.  Android is about mobility but Chrome to me is the more interesting technology play.  Anyone who wants to write software these days and make money  is targeting the web.  This is not rocket science.  At Microsoft three years ago I was watching yet another  exciting Microsoft “rah rah” video in Las Vegas, when the lovely lady on-screen said, “do you know 80% of all activity on the desktop today is on the web?”.  You don’t say.  Microsoft has a lot of smart people, but sometimes I did wonder.  Maybe it was rocket science. Chrome was a browser.  Yes another one.  What it is and will become over time is an internet development platform.  From a developer standpoint you won’t be as dependent on Windows API’s for writing your applications and because it’s in the browser you can run whatever underlying OS that you want.  The naysayers can say what they want but it is the smart thing for Google to do.  At Microsoft the PR you receive is the standard “why would developers do this?” .  Why does Google support multiple OS’s, like Android and Chrome, it will never work (at one point Microsoft had Windows and NT, but that is another story).  But if you look at what is being talked about there is a lot of discussion around the features in the upcoming release of  Internet Explorer 9 as for the next release of Windows..not a word.  As a former Microsoft employee my fear is once again Microsoft is following and not leading.  Maybe in the end Windows will just be a buggy set of device drivers?

Since I left Microsoft I have tried other technologies on the web, one being setting up a gMail account.  Google’s gMail has been a huge success and it seems like most people setting up their internet mail accounts seem to gravitate towards gMail.  It used to be people used Hotmail. Someone sent me a word document as an attachment and gMail in its wisdom said I could open the document using Google Docs.    I tried it and it worked flawlessly.  This  gets to a final discussion on changing the playing field as well as using your competitors playbook.  Google is using its ad revenues to fund other software projects.  In this case targeting one that would compete directly with Microsoft’s great cash cow Office.   By allowing users to read Microsoft Word docs they borrow from what Microsoft was doing when I first joined in 1991, which was provide Microsoft Word users the ability to read WordPerfect and WordStar documents.  If you want users to migrate off an existing application make it easy for them to do so.

Looking forward Microsoft has done some very good things, there Bing search engine caused an immediate response from Larry Page and Sergey Brin, to study the new search, it’s a good thing to get your competitors to react once in a while.  Microsoft is also trying to get an online version of Office.  One of the great challenges for any company with the assets like Microsoft is to change with the industry while keeping shareholders happy.  However as a whole it looks like rather than take the fight to Google it waits to see what Google is going and then reacts to it.

I said earlier video is going to play an even larger part in ad driven revenues moving forward.  One of the technologies Microsoft has been touting is Silverlight, the Adobe Flash killer (YouTube supports Flash).  I have used Silverlight and it is easy to work and seems to work very well, but to be really successful it needs to be translated into ad revenues for Bing.  Microsoft is a very good technical company but with so many business it competes against itself internally and fails to capitalize on opportunities.  Billg said the key to Microsoft’s future success is “integrated innovation”.  It is the integrated piece that is sorely lacking.  However if Microsoft can stop acting like the US Congress the opportunity to lead as a technical leader and not a financial leader is before them.  One  of the original Apple employees and Silicon Valley legend Guy Kawasaki was speaking to a group of venture capitalists in the valley and he made the point to the audience, “don’t focus so much on if your investment will make money, but focus on the technical innovation and enthusiasm of what your investing in, making money is implied”.  Microsoft would be wise to head these words.  There was a time when it did.  I think under the guise of Satya Nadella it is starting to wake again.

Anyone who knows me knows I am always interested in things from a global perspective. One one of my favorite tech topics is the whole trend towards offshoring, and specifically offshoring to India.  A little background on myself may serve well to lay the groundwork of how I got to the views I have today.

In 1987 I spent my school year in Copenhagen, Denmark.  It was something my mother had wanted me to do, since both my parents were from Denmark and I had a rather large family to get to know while I was there.  During my school year we traveled a lot as part of the program.  We went to Budapest and Prague during the first semester (this was before the wall fell) and visited with companies local to the respective areas, met with politicians and went to Karl Marx University.  In the second semester we went to Stockholm and then to the European Union Headquarters in Belgium.   The second semester in particular had a huge focus on the European Union and what was emerging at the time – a Europe without borders.  I think all students were exposed  to a new way of thinking as we had all grown up in our own countries borders (US, Canada or Australia).  It greatly influenced my thinking on how the world works and how it is evolving.  I think rather than be concerned about the issue of offshoring I have moe or less embraced the concept.  The initial leader without question has been India and despite a series of new entrants it remains the head of the class to this date.

One of India’s unique advantages stems from its history as a colony ruled by the British Empire.   By all accounts the British ruled India with anywhere from 20,000-200,00 people.  When you consider that India wa a country of hundreds of millions of people it raises the question of why didn’t Indians band together and stampede over the British?  Not an easy question to answer, but I think it is important to note the idea of India as a country is a British concept.  India is a collective of different religions, castes, languages  and people,  that it operates more or less like thousands of counties (not states or provinces).  A great book to read and help understand India is Edmond Luce’s “In Spite of the Gods”.   But the legacy of British involvement in India has provided India with a lot of benefits.  For starters, since there are 22 recognized languages in India and 122 languages spoken by 10,000 people or more India has adopted as its official language Hindi, but more importantly as its second language it adopted English, the predominant language of international business.  In the early going of offshoring it made India a great place to offshore both IT and Business Process Outsourcing (BPO). 

Though offshoring had been around since the mid 80’s it did not come to public or industry attention until the latter part of the 90’s and the leader of this movement, surprisingly to many, was India.  A lot of people would ask how does a country with over 700 million poor people become a leader in a highly educated discipline?  Having been in the tech industry for 18 years I have had the opportunity to meet a number of people in the tech industry who either hail from India or have strong ties to India.  At  Microsoft there were many Indian’s who rose up to become executives (Sanjay Parsathayarthay, Jawad Khaki,  etc..).  In the bay area there were a ton of startups led by Indians, Venture Capital firms led by Indians etc.    The list is long. How does this happen?  I think two things have led to this innovation:

• US University System
• H-1b Visas

On the first point we have the finest university system in the world in the United States.  Every state in America can claim to have at least one university which is a leader in research, academia or something in the world.  If you go to any university you will also see a lot of foreign students who are taking advantage of that system.  A lot of those students getting Engineering and Computer Science degrees come from India.  Many of those students will stay in the United States and compete for jobs an thus help the never-ending cycle of the US economy and growth (a little challenged as of this writing).

The second area is US immigration law and H1-B visas.  These are for companies who hire people from outside the US and get them a work visa in the United States (nice legal piece located here).  In technology the game of recruiting is pretty simple: the tech sector needs really smart people.  Technology does not care if you are white, black, Chinese, Nigerian, Russian etc..Tech does not care if you are atheist, Catholic, Islamic, Jewish etc…It only cares about the intelligence you bring to the table.  Where you live is just an annoyance, but it will be dealt  with if a H1-b can be completed.  The aftermath of 9/11 unfortunately has created a problem as H1-b quotas are limited to 65000 per year and linked with immigration reform in the US Congress.  The H1-b visas are all gone within 3 months.  The jobs available for H1-b visa hires are good paying  jobs , most which cannot be filled by the local employee base in the US.  Instead these jobs sit vacant.  With collaboration software making great strides and with the promise of 100gb networks the use of teleconferencing will be second nature in business in the near future.  The reality will be that these jobs that are not filled today will be filled, just not in the Unites States.  At a time when the US economy is struggling the current quota set for H1-B visas makes no sense to me.

In my line of work towards the end of the 90’s you started to hear a lot more about these companies – namely WiPro, Infosys, Satyam and Tata Consulting Services.  Some Telecoms would have nothing to do with it – BellSouth was very much a case of do it in America.   Others like ATT Wireless started down the path as they looked to cut costs and get positioned to sell the company.  How companies handled these transitions is what led a lot of Americans to dislike offshoring.  It became a presidential campaign issue in 2004.  Employees were told their job was being moved to India and their last act would be to go to India to train their replacement. I witnessed this myself covering ATT Wireless as an account.  To be honest it is a brutal reality and may seem unfair, but one thing about public companies that has always been true and will always be true, if they can save money on the bottom line, they will, do not expect loyalty for your services.

Another area we hear a lot about is the large number of engineers graduating from Indian universities.   Some if the Universities are good, such as the India Institute of Technology (IIT), which was modeled after the famous MIT,  However as Nandan Nilekane points out in his fantastic book “Imagining India” many universities have along way to go.  He recently got involved in his alma mater, and to his point while the US has a large base of alumni to help support the university system, this concept of alumni as a financial donor is still relatively new in India.

One of the largest events to happen in my lifetime was the fall of the Berlin Wall.  As we looked at the world we no longer had to look at as east and west.  The US had won.  We saw a great many countries start to open up their economies.  Having pursued a Socialist economic policy, following British rule, India found itself faced with bankruptcy in 1991 and had to make a bold decision.  Under the guise of, then finance minister, Monmohan Singh, started to open its markets and pursue a free market policy. 

The second event that accelerated India’s growth as an offshore leader was the dotcom boom.  As I wrote in my earlier blog “The dotcom boom and its legacy”, the dotcom boom was a success for many in the 3rd world.  As was well written in Thomas Friedman’s classic book, “The World is Flat”, billions of dollars were poured into the dotcom infrastructure that enabled many to get on the internet super-highway and ride for free.  With the internet available it simplified communications and distribution of the software project taken on by offshore vendors.  I know a lot of people will argue that the software quality was poor, that projects were delayed and did not meet the original specifications and in the end it was not cheaper and would have been better left alone.  I don’t see it that way.  I agree that a lot of poor code was written and the savings did not measure up, but it is still early on in the offshore model.  As time passes things are worked through and resolved.  These are just business process and technical hurdles that will be overcome.

One thing I have noticed in the Indian community is many have a strong desire to return home to India.  I think this gets back to the point of the American dream.  Many view the american dream as the sole ownership of people within the borders of the United States.  And that is the big change.  There is opportunity in the world to make your dreams come true it just does not have to happen solely in the US.  If you look at the Forbes richest people in the world a lot are outside the US, some place you expect like Japan, but a lot are in India, China and Brazil.

In my view the idea of offshoring as a business model is still early in the game and maturing.  It is not a temporary phenomena, but something that will continue to grow as part of the normal economic evolution that has been going on for centuries.  It will challenge the United States and other countries as jobs start to move around the globe more dynamically then they have on the past.  It will challenge global economies in news ways.  When 100 million Indians own cars do you think that will cause global oil prices to increase?  In order to succeed in the world of globalization it will be important not only to expand outward, but to reflect inward.

I was talking with my friend Methun from India one night and as we did when I worked at Microsoft we talked about his homeland.  A country I have never been to but have been fascinated by for years and I have read a great many books on India..  We argued, we laughed and as always I enjoyed my conversation with my friend.  One comment that Methun made that greatly interested me was that after having lived in the US for 10 years he believed the American dream is fading.  I am not sure I totally agree, but I will say it is changing.  With everything I have noted I believe that the American dream is no longer solely American.  Many people dream of returning home to where they were born and making a difference,  To achieve those dreams they had when they were young.  When you look at the Forbes richest people you see more and more are coming from outside the US.  Things are changing very fast around the world and for the most part many of those changes are positive.  The great thing about the fall of the Berlin Wall is we  no longer have to think of east versus west.  Countries can now pursue economic policies that fit their social and economic needs.  It has spurred great innovation on a global scale and allowed more to participate in the American dream.  In short the American dream still exists….. it has just gone offshore.

Good Night and Good Luck.

Hans Henrik Hoffmann

March 22, 2010

Keeping on the theme of the dotcom era there were some interesting things that happened on the journey and some valuable learning that came out of it.  During this time everyone thought they were going to make a fortune on the stock market and stocks seemed to regularly shoot up by $5-$10 in a day.  I had a few myself – Data Return and Interliant.  Data Return I remember went over $90..if only I had sold.  On top of those great stock prices I was managing both Data Return and Interliant as the account manager.   It probably was a conflict of interest, but that was how things were run in those days.

At Microsoft HQ the CFO at the time, Gregg Maffei had an epiphany.  Why not take the Microsoft billions and invest in these companies.  We could take  an equity stake in these established companies and startups and then sell the stock for huge profits?  And thus the rush for gold began.

At the time I was a Business Development Manager working under the talented, but totalitarian Frenchman Pascal Martin (I think he would be pleased with both comments).  During the dotcom era Microsoft was a lost soul as everyone was racing for the internet and Microsoft was viewed as the Windows and Office company.  At the time we did not have a whole lot to offer.  We did, however, have one thing that every start-up on the planet needs…cash.  As much as the venture capitalists had, we had much more just sitting in the bank.  At the time Microsoft had in the bank between $15-$20 billion.

Needless to say when the investments started making the press my accounts came and started asking.  Some of the deals Microsoft did were huge, in the hundreds of millions.  The big one being AT&T – at the time AT&T owned what would later become Comcast.  There were  other big investments in what were deemed then to be major dotcom players like US Internetworking and Winstar.  From my neck of the woods came Interliant.  Their VP of Business Development, Jesse Bornfruend would be the major driver from their side and from Microsoft’s it would be myself.

The interesting thing about doing an investment deal was all the moving parts you had to bring together.  First there was my boss, Pascal Martin, to support the effort and provide his blessing.  Then we needed the product group.  From our side that meant the Microsoft Exchange team and the program Manager who led the effort was Keith McCall.  He and Jesse had a relationship dating back to their days at IBM.  We needed an attorney, who I cannot remember her name, but she was a single Mom who worked hard for us.  Then we needed the finance guy, Michael Leitner.  We only needed Michael to determine the amount of the investment.  When we needed a heavy hitter in negotiations we brought in our GM Mark Chestnut.  Mark had developed his negotiating skills during his days in the OEM business and working with IBM.

So why were even considering this deal?  To make money off of Interliant stock?  That was part of the deal but that was more about hedging our bets.  Interliant had something that Exchange team needed.  The two CTO’s at Interliant, Eric Sachs and Robert Dana had architected for Lotus Notes the ability on a single instance of Notes to house multiple companies.  This basically meant that Company A had an exclusive space for their applications.  Company B had their own space etc..  Microsoft Exchange could not do this.  If you tried to put multiple companies on an exchange server Company A would see what Company B has etc..In order to make Exchange useful for the Internet, it needed this “multi-tenant” capability.

The deal would take a few months to complete.  The main issue being to create a suitable contract for each party.  It was a fantastic learning experience.  I learned the great thing about lawyers around creating a contract, which was the correct wording of the contract, having the right definitions in the contract.  I also learned that you have to reign them in from time to time since they seem to think they own the negotiations when in reality they are there to advise.  I am sure our lawyer beyond the words had no clue what we were negotiating to acquire.

As things got close to the end it was time for us to bring Mark into the fold as from the Interliant side they had brought in Brad Feld, who was a member of the board and a major VC player in the valley. Interliant was looking for $20 million from Microsoft and we were looking to make sure we got the IP we wanted.  Things at times got heated with Mark and Brad, but in the end we reached an agreement.  However finance (Michael) had made it clear the number would not be $20 million. In the end we agreed on a $10 million investment for the right to acquire the IP from Interliant.  We received the signed contract and  Pascal and I took the contract to our VP, Thomas Koll, to sign the agreement.  Then we went out to celebrate at El Goucho, a great steak house in Seattle.

Pascal and I flew down to Houston after the deal was done where we had lunch with Jesse and a few others from Interliant at the Hilton Hotel.  We were in the kitchen  at the chef’s table.  We had a great lunch with great wine.  On the wall was the signature of President Bill Clinton.  Life was a wonderful adventure

Within 2 months of the agreement both Robert Dana and Eric Sachs resigned from Interliant.  We had the code, we had a team of devs at Interliant, but the IP had walked out the door.  It was a good lesson to learn.  It was a stressful period with a lot of late night conference calls, lots of emails, lots of travel, lot so dinners. 

Since that time Microsoft Exchange does now have “multi-tenant” capabilities and Microsoft under the guidance of Pascal have a hosted Exchange option.  It was a lot of fun at the beginning.

A second, but smaller deal I worked was with a small ASP called Allegrix.  I will say initially Allegrix wanted the investment deal like the rest of the Dotcoms.  We started down that path, but the reality was it was late in the game and the interest in doing these type of deals was beginning to fade.  One day I flew down to San Jose for a dinner with my friends at Allegrix.  It was at Gopi’s house, where his wife, Patricia, served really awesome Indian food .  Of course the downer was I had to deliver the news that Microsoft would not be investing in Allegrix.  At that moment I think I defined the term “bad dinner guest”.  Luckily there was still a deal to de done.

It helped that the people at Allegrix from President Chris Clabaugh, to Gopi Kallayil were not just first-rate professionals but a pleasure to work with and get to know.   I still stay in touch with many of them to this day.

Allegrix had a creative marketing guy, named Mike Foster who had created this little marketing packet called “ASP in a Box”.  It turned out the partner marketing group was interested in acquiring the content, so off I went in assembling another team – lawyer, finance, partner team, etc..Since it was a smaller deal the team was smaller and the financing came from the partner marketing team as they had budget for it.  Sometimes the smaller deals are the most fun.  Because the dollars were not as large it was less stressful.   Because of the experience I had gained from the larger deal I was really able to own and drive the deal forward  and be on point for everything. The end price was $200k and by the next time I saw Mike he was already working in his next idea, something or other to do with ASP on a coffee table. 

Reflecting back on this period it does show that even though a company with as large a “recent” history as Microsoft, who was not cool or even considered the future at the time, if you have a big horde of cash you will be relevant.  In one of the earnings statements it came out that Microsoft has made $1 billion on its investments.  Wall Street was not thrilled about this as they did not see how this fit into Microsoft’s business strategy and it was also at this time that an apparent riff surfaced between Steve Ballmer and our CFO Greg Maffei.  Gregg as time would show always had ideas of a bigger role for himself.  At Microsoft it was a two-horse show: Steve and Bill.  There was no room for a third.  Gregg left not too long after the investment rush.  Microsoft got back to basics and focussed on Windows and Office (not a bad decision).  The billion we made we gave back when the dotcom went dotbomb.

Good Night and Good Luck.

Hans H Hoffmann

March 10th, 2010