Monday, July 17, 2023

Mature Companies Can Learn Many Things From Startups

William (Bill) H. Gates, founder, technology advisor of Microsoft Corporation visits The Department of Energy on October 8, 2013. Original public domain image from FlickrSometimes I like to drop the comment socially that “I knew Bill Gates back when he was a regular guy.” I know that dates me a good bit, but it also shows that I have been hanging around startups and big companies for a long time. The honest truth is that I worked directly with him in the early days of Microsoft from my “safe” perch in big IBM, during the startup of the IBM PC.

At that time I couldn’t imagine a startup succeeding that was first called Traf-O-Data to process raw traffic data into reports, later changed to Microsoft to sell Basic Interpreters to microcomputer manufacturers. In retrospect, however, Bill Gates did a lot of things right as a startup that I still look for today in aspiring entrepreneurs and their companies:

  1. Build a strong team. In my opinion, Bill Gates would have failed without his partners Steve Ballmer, and Paul Allen. Bill Gates ran the technical show, but Steve Ballmer never let him forget the marketing and business side of the equation. Steve came from Procter & Gamble Co., handling marketing for Duncan Hines' Moist & Easy cakes – so he and Bill were a perfect mix, so to speak. Paul Allen was the visionary, believing in graphic user interfaces and a mouse, when the Xerox Star was still a kludge.
  1. Market vision, focus, and opportunity. Their vision was a world of “personal” computers, meaning every person in the world was the opportunity. We in IBM didn’t get it at all, and we insisted on calling the IBM PC a “workstation” which in retrospect sounds like “work” for a bunch of robots at their “stations.” Many of my friends at IBM couldn’t imagine why anyone would spend money on such toys.
  1. Enlist community of support. One startup, no matter how smart the people and how well it is funded, can only do so much. You need to convince a thousand partners that they can become winners, if they join you as believers. That’s real viral marketing. Microsoft spent a huge amount of time and money with software developers for applications, and with hardware manufacturers to support multiple PC platforms. IBM wanted to do the whole job themselves, because it was the only way they know how to deliver quality. Quality is a good thing, but it is not everything.
  1. Marketing, marketing, marketing. Before Microsoft, computers had never been “marketed.” Large enterprises engaged major mainframe competitors in a series of benchmarks and technical evaluations, and the best technical solution won. I personally spend many nights and weekends hunched over a computer console optimizing a job stream to make it run a little bit faster. Now CIOs, as well as consumers, buy their next computer based largely on an image set by marketing. IBM learned a lot from Microsoft on this one.

It’s amazing how things change with time (as the world turns). Now Microsoft is a big gorilla, and I am a small startup, working with new businesses. I guess you could now say that my business experience is “well-rounded.” Also I suspect that Steve Ballmer, former CEO, wished he could go back to dealing with startup problems, rather than the biases against large enterprises like Microsoft.

There is a lot more to this story than I can put here. In fact, there are several good books written about Bill Gates and Microsoft. One of my favorites is “Hard Drive: Bill Gates and the Making of the Microsoft Empire.” On the IBM side, the message did get across after lots of pain and struggling, and a culture change occurred. See “Who Says Elephants Can't Dance?” by Louis V. Gerstner, Jr. for that story.

Reminiscing is such fun. We all start out as regular guys. But for those of you that learn these lessons early, the world of ultra-billionaires is still beckoning.

Marty Zwilling




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