IN THE
COMPANY
OF GIANTS
CANDID CONVERSATIONS
WITH THE VISIONARIES
OF THE DIGITAL WORLD
RAMA D. JAGER
RAFAEL ORTIZ
McGraw-Hill
New York San Francisco Washington, D.C. Auckland Bogotá Caracas Lisbon London Madrid Mexico City Milan
Montreal New Delhi San Juan Singapore
Sydney Tokyo Toronto
McGraw abc
-Hill
Copyright © 1997 by Rama D. Jagar and Rafael Ortiz. All rights reserved. Manufactured in the United States of America. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written permission of the publisher.
0-07-138342-5
The material in this eBook also appears in the print version of this title: 0-07-032934-6.
All trademarks are trademarks of their respective owners. Rather than put a trademark symbol after every occurrence of a trademarked name, we use names in an editorial fashion only, and to the benefit of the trademark owner, with no intention of infringement of the trademark. Where such designations appear in this book, they have been printed with initial caps.
McGraw-Hill eBooks are available at special quantity discounts to use as premiums and sales promotions, or for use in corporate training programs. For more information, please contact George Hoare, Special Sales, at george_hoare@mcgraw-hill.com or (212) 904-4069.
TERMS OF USE
This is a copyrighted work and The McGraw-Hill Companies, Inc. (“McGraw-Hill”) and its licensors reserve all rights in and to the work. Use of this work is subject to these terms. Except as permitted under the Copyright Act of 1976 and the right to store and retrieve one copy of the work, you may not decompile, disassemble, reverse engineer, reproduce, modify, create derivative works based upon, transmit, distribute, disseminate, sell, publish or sublicense the work or any part of it without McGraw-Hill’s prior consent. You may use the work for your own noncommercial and personal use; any other use of the work is strictly prohibited. Your right to use the work may be terminated if you fail to comply with these terms.
THE WORK IS PROVIDED “AS IS”. McGRAW-HILL AND ITS LICENSORS MAKE NO GUARANTEES OR WARRANTIES AS TO THE ACCURACY, ADEQUACY OR COMPLETENESS OF
OR RESULTS TO BE OBTAINED FROM USING THE WORK, INCLUDING ANY INFORMATION THAT CAN BE ACCESSED THROUGH THE WORK VIA HYPERLINK OR OTHERWISE, AND EXPRESSLY DISCLAIM ANY WARRANTY, EXPRESS OR IMPLIED, INCLUDING BUT
NOT LIMITED TO IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE. McGraw-Hill and its licensors do not warrant or guarantee that the functions contained in the work will meet your requirements or that its operation will be uninterrupted or error free. Neither McGraw-Hill nor its licensors shall be liable to you or anyone else for any inac-curacy, error or omission, regardless of cause, in the work or for any damages resulting therefrom.
McGraw-Hill has no responsibility for the content of any information accessed through the work.
Under no circumstances shall McGraw-Hill and/or its licensors be liable for any indirect, incidental, special, punitive, consequential or similar damages that result from the use of or inability to use the work, even if any of them has been advised of the possibility of such damages. This limitation of liability shall apply to any claim or cause whatsoever whether such claim or cause arises in contract, tort or otherwise.
DOI: 10.1036/0071383425
To my mother—who, in spite of all of these giants, remains the primary source of my inspiration.
—RDJ
To my parents, who taught me to read, and to Lisa, for teaching me what it means to write.
—RGO
This page intentionally left blank.
CONTENTS
Acknowledgments
xi
Preface
xiii
INTRODUCTION
1
1
STEVE JOBS
Apple Computer, NeXT Software, and Pixar
ONLY THE BEST—PEOPLE, PRODUCT, PURPOSE
9
2
T. J. RODGERS
Cypress Semiconductor
THE IMPORTANCE OF VISION, ACCORDING TO THE
GENERAL
27
3
GORDON EUBANKS
Symantec
BRANDS AND BANDS
45
4
STEVE CASE
America Online
IT’S THE CUSTOMER, STUPID.
61
vii
Copyright 1997 Rama D. Jagar and Rafael Ortiz. Click Here for Terms of Use.
viii
CONTENTS
5
SCOTT COOK
Intuit
IT’S THE CUSTOMER, STUPID. PART II
73
6
SANDY KURTZIG
ASK
GO FOR IT!
87
7
JOHN WARNOCK/CHARLES GESCHKE
Adobe Systems
ON PARTNERSHIP
99
8
MICHAEL DELL
Dell Computer
GROWING TEXAS REIGN
115
9
CHARLES WANG
Computer Associates
MANAGIN’, NEW YAWK STYLE
127
10
BILL GATES
Microsoft
RUNNING THE PANZER DIVISION
143
CONTENTS
ix
11
ANDY GROVE
Intel
AN IMMIGRANT IN THE TRENCHES
161
12
TRIP HAWKINS
Electronic Arts/3DO
CREATIVITY, THE ULTIMATE GAME
175
13
ED MCCRACKEN
Silicon Graphics
MEDITATIVE MANAGEMENT
191
14
KEN OLSEN
Digital Equipment Corporation
REFLECTIONS ON THE REVOLUTION
209
15
BILL HEWLETT
Hewlett-Packard
PEOPLE ARE EVERYTHING
225
This page intentionally left blank.
ACKNOWLEDGMENTS
For innumerable reasons, our sincere appreciation goes to Rama’s father, Dr. Rama M. Jager, and to Irv Grousbeck, Andy Grove, and Ed Lazear. Without them, we never would have been able to create Giants.
We are grateful to our editor at McGraw-Hill, Susan Barry, who believed in two fresh first-time authors, and to our agent, Sheryl Fullerton, who patiently steered our exuberant, chaotic efforts in the general direction of a book.
Rafael’s wife, Lisa, graciously offered advice, support, and much-needed reprimands—“Strunk and White wouldn’t like that”—all while keeping her own writing career from being derailed by ours, no small feat.
Rama (Dev) thanks his mother, Dr. Nirmala M. Ray, for her support throughout the entire process—but mostly for her belief in me. Rama also thanks two role models: Dr. Robert Burnett and Dr. Lee Shahinian, Jr., and the rest of the EMCard team, for their patience in dealing with Giants while running a startup.
For advice, guidance, and candid feedback we’d like to thank Connie Bagley, David Bradford, Robert Burgelman, Steve Butler, Dennis Coleman, Ann Crichton, Rohit Deshpande, Jim and Marilyn Lattin, George Parker, Steve Piersante, Garth Saloner, and Diane Savage.
In addition, we would like to thank three executives who
generously gave us time and guidance during the early phases of the project, but regrettably could not be included in Giants: Heidi Roizen (former CEO of T/Maker, current head of Apple Developer Relations), Walter Loewenstern and Ken Oshman (co-founders of ROLM).
xi
Copyright 1997 Rama D. Jagar and Rafael Ortiz. Click Here for Terms of Use.
xii
ACKNOWLEDGMENTS
Finally, we thank the CEOs who agreed to be a part of Giants. Their time is perhaps their most precious resource, and we are grateful for their generosity with it both during our interviews and after, when we needed answers to “just one more question.” By sharing their experiences, they have taught us tremendously.
PREFACE
The professor asked, with a wide grin, “So you want to write a book on high-tech CEOs? Well, gentlemen, it’s a long shot. A huge long shot. And, besides…no CEO knows why he is successful. It’s all just luck.”
On a balmy day in mid-spring, we were two Stanford MBA students trying hard to conceal our disappointment. Coming from a well-known strategic management professor, a comment such as this seemed somewhat ridiculous—for if successful management were all luck, then why were we taking his class? Why, for that matter, were we in business school?
Surely, successful management was not entirely due to luck—
there had to be some successful strategy and ideas at play too.
Louis Pasteur once said that chance favors the prepared mind. If “chance” is a major factor in a company’s success, as our professor believed, then we really wanted to know what successful entrepreneurs do to “prepare” their minds.
What are the crucial skills needed to run a successful company? To hire great people? To ship a great product? What skills should a potential manager try to develop? Why was one manager successful where another wasn’t? Answers to these questions, in the words of the very people who have started succcessful technology companies, comprise this book.
WHO WE CHOSE TO SPEAK WITH AND
WHY WE CHOSE THEM
Bill Gates. Andy Grove. Bill Hewlett. Steve Jobs. Why them?
Why not others?
xiii
Copyright 1997 Rama D. Jagar and Rafael Ortiz. Click Here for Terms of Use.
xiv
PREFACE
Hundreds of entrepreneurs have had great ideas and have started great companies. What differentiates the vast majority of entrepreneurs profiled in this book is that they not only have started their respective companies, but also have had an active role in the company’s growth. These entrepreneurs weren’t booted out of the company after starting it—they weren’t people who had one great original idea, implemented it, and left because they weren’t good managers. Instead, they had a great idea, managed the team that implemented the idea, and then had another great idea and managed the team that implemented that idea. They transformed the company from a “one-great-product” company to a “two-or-more-great-products” company; they made the company grow—they not only planted the seed, they watered the plant.
We chose to focus on the computer industry for two reasons. First and foremost, computers are dynamically changing the way people exist. They are causing generational change.
Compared to our parents—who use computers for word processing or technical applications at best—many of us use the power of computers for surfing the internet, communicating with friends and colleagues, and balancing a checkbook.
“Well, if you’re at heaven’s gate, you might as well walk inside and take a peek.”
WHAT OUR BOOK ATTEMPTS TO DO
Reading this book is not an instant path to guaranteed wealth.
Notice that this book is not entitled How to Start a Billion-Dollar Computer Company, or How to Get Rich Quick Off Chips. Such titles do not genuinely help us convey the messages of this book.
What we do want to convey are stories of some of the
PREFACE
xv
greatest entrepreneurs in history. Their companies directly influence the way we live, what we do, and even what we can’t do. Instead of focusing on these companies, In the Company of Giants focuses on leaders—we attempted to discern who the person was behind the company, what his or her style of management was, and whether this conflicted with, or con-formed to, conventional startup wisdom. Looking at the people behind these companies is one small way of interpreting the revolutionary technological change that the world is experiencing today.
Rama D. Jager
Rafael Ortiz
This page intentionally left blank.
IN THE
COMPANY
OF GIANTS
This page intentionally left blank.
I N T R O D U C T I O N
FROM SAND TO
GOLD
A BRIEF AND RELEVANT
HISTORY OF THE
HIGH-TECH INDUSTRY
On January 22, 1984, 100 million people were watching the Los Angeles Raiders as they crushed the Washington Redskins 38-9 in Super Bowl XXVIII. The halftime show, a made-for-TV extravaganza, proved but a sidelight to the production value of the television advertisements that elbowed their way into viewers’ living rooms.
One such commercial, never aired again, stood above the rest and branded the nation’s collective consciousness.
In it, gray brainwashed automatons marched toward a gi-gantic screen of sinister Big Brother (a thinly veiled IBM) rhapsodizing about “everybody using one standard.” Out of the shadows, a lone woman, clearly not indoctrinated like those around her, charges and hurls a sledgehammer at his project-ed image. The result: a shattered false oracle and newfound freedom for the oppressed masses. The somewhat surreal Orwellian ad ends with a voice proclaiming, “On January 24th, Apple Computer will introduce Macintosh. And you’ll see why 1984 won’t be like ‘1984.’”
Literally a smashing success, this ad promoted the alternative to an IBM-centric vision of computing and launched 1
Copyright 1997 Rama D. Jagar and Rafael Ortiz. Click Here for Terms of Use.
2
INTRODUCTION
Apple Computer’s next generation of personal computing, the Apple Macintosh.
Part of that commercial’s and eventually, the Macintosh’s, success was because of Apple’s chairman, Steve Jobs. That year, Jobs formally unveiled the Macintosh at the company’s annual shareholder meeting in Cupertino, California. With showman’s style, he unveiled the Macintosh computer—capable of accepting user commands using a graphical, desktop interface and manipulated by the user with menu-based commands. No more obscure keyboard commands. No more rat’s nest of wires and cables. It was a hit.
As one attendee of that emotive shareholder’s meeting told us, “You can’t begin to understand the emotional intensity in the auditorium that day. Remember that the place was crowded with hundreds of disgruntled Apple employees still reeling from the failure of the Lisa [Apple’s first attempt at graphics-based computing] and dozens of cynical analysts from New York who’d seen and heard it all. I can tell you this: at the end of the meeting, everybody was on their feet wildly cheering. There wasn’t a dry eye in the house.”
Jobs and others like him in this book have created companies that have skyrocketed to glory. What are their secrets? Is it just luck? Though fortune undeniably plays a role in all ventures, the ability to start and grow one or more companies in the tumultuous, rollicking computer industry takes some talent. Indeed, considering that as many as 90 percent of new firms fail within five years, it’s more appropriate to recognize that the Giants profiled in this book were both beneficiaries and creators of luck. Collectively, their companies command almost $100 billion in yearly revenues.
As the industrial age had its magnates, the information age boasts its own pantheon of self-made barons. This chapter provides a brief history of the contemporary American computer industry a
nd the businesspeople who shaped it. By orienting you, the reader, with the story behind the computers we work and play with, we hope to contextualize this industry’s amazing growth and the people who led it.
By the mid-1970s, California’s Santa Clara orchards gave
INTRODUCTION
3
way to an onslaught of commercial construction. New companies and newly minted millionaires crowded Silicon Valley and the Route 128 area outside of Boston. It was the dawn of a new era in American capitalism, a new gold rush.
But this was a gold rush of a different sort: Instead of rac-ing to extract precious metals from the ground, young opportunists converted sand’s base substance, silicon, into microchip components, pound-for-pound worth more than gold.
Others with Midas-like insight crafted lengthy, cryptic messages using these very microchips, to automate heretofore time-consuming, manual administrative work.
It is difficult to meaningfully convey the extent to which computers have evolved and shaped our daily march through life. Intel co-founder Gordon Moore put it in perspective by describing the phenomenon commonly known as “Moore’s Law.” This principle states that the number of transistors–and therefore the computing power–per microprocessor will double every 18 months.
To illustrate this point, consider that the raw computational power of IBM’s powerful, million-dollar mainframes in the
’70s today fits into the diminutive package of a handheld cal-culator. It is this incredible development that has fueled the unprecedented change in business processes the world-over.
Moore’s Law is in full effect.
Ironically, many of the stories of successful entrepreneurs were not born from master plans for world domination but of sheer frustration with the ineptitude, politics and mediocrity of the companies they abandoned.
Case in point: Thomas Watson, Sr., IBM’s spiritual father, was fired earlier in his career by his previous firm’s jealous and arbitrary executive. Undaunted, he founded a promising card tabulating company and in his disciplined, autocratic manner, led the company to incredible heights. His company’s early domination of the computer industry created tremendous wealth for IBM shareholders. At a 1954 shareholder meeting, Watson remarked:
A purchase of 100 shares in 1914 would have cost
4