REDMOND, Wash., Oct. 11, 2000 — To commemorate the company’s 25 th anniversary, Microsoft this month published Inside Out , a book written by and for Microsoft employees that highlights the products, people and culture that transformed Bill Gates’ and Paul Allen’s vision for personal computing into reality. Featuring new essays by Gates and individual stories from hundreds of current and former Microsoft employees, the book provides personal anecdotes of triumph and failure, facts and trivia, and a look ahead to the company’s next 25 years.
Throughout the week, PressPass will publish excerpts and photographs from the book; the stories below are taken from “What it Takes,” a chapter in which employees share stories of the hard work and play that helped make the company a success. Scott Oki , former senior vice president for sales, marketing and service, recounts the growth of Microsoft’s international business, while Ed Fries , vice president of games publishing, talks about his love for games, whether they’re played on a computer or in the halls of Microsoft offices.
I had worked for HP and knew that they derived a good part of their revenue and profit from their international business. I figured Microsoft was missing a big, big opportunity called international. I had absolutely no experience doing anything internationally, but I really thought we should put focus there. So, as a new employee, I wrote a business plan, asked Bill for $1 million in seed money, and he said okay, have at it. It took up the next 4 1/2 years of my life.
We opened up subsidiaries in London, Munich, and Paris almost simultaneously. Perhaps the biggest challenge was finding the right people to run them. If you get the wrong people, it can be an utter disaster. But if you get the right people, that’s more than half the battle. When you’re hiring top-level executives, you typically look for someone who has experience in your industry, but we didn’t have that luxury. In 1982, there wasn’t much of an industry around the microprocessor. We essentially had to cast our net and look at related industries; I would say we were very, very lucky.
One of the basic rules I had was to find people with start-up experience. The start-ups didn’t have to be successful ones. They could be failures like the one I had before coming to Microsoft, but I wanted people who had that scar tissue from the maniacal kind of focus and intensity level that a start-up requires. In the UK, we hired David Fraser. In Germany, we hired Joachim Kempin. Then we hired Bernard Vergnes to run Microsoft France.
I also wanted to be sure that the Microsoft culture was set in cement in each subsidiary. I don’t think that culture has changed much over time. It’s very competitive, and the passion level is unbelievably high. If you’re not passionate about what you’re doing, you don’t belong here. We look for people not only with high intelligence but also large batteries. In Microsoft nomenclature, it would be called bandwidth. You also need to have the tenacity to stick to it and do what it takes to be successful. I think this culture transferred well to the subs and is alive and well today.
About a year after we got the European subsidiaries off the ground, I decided that we should open in Australia. I asked Linda Graham, who was one of the owners of our distributor there, to be the general manager for Microsoft Australia. She gave that subsidiary a tremendous start.
Japan, for me, was perhaps the biggest challenge, in part because I’m Japanese-American. I look Japanese but don’t speak the language. So there was some confusion for the people I dealt with there. The first 3 years of my tenure were interesting. We had an exclusive agent agreement with ASCII Microsoft, which was founded by Bill’s friend Kay Nishi. If Kay liked an idea, he was a great guy to make it happen. If he didn’t like it, it was often tough. I also felt that with a market as important as Japan, going through an agency wasn’t the right approach anymore. So eventually, we started a wholly-owned subsidiary in Japan and worked out an agreement with ASCII to let some of their people who had been working on behalf of Microsoft come across. Sam Furukawa from ASCII became the general manager. He gave a great boost to our efforts in Japan. Today, Microsoft Japan is the largest Microsoft subsidiary.
An integral part of my management philosophy is management by example. If I wanted 18 hours a day from my people, then I worked 19. If I wanted a business plan that was strategically correct and without a single typo, the documents I wrote had to be of the same quality. I think that was really important. By working closely with the general managers at the beginning, I was able to give them a strong, hands-on sense of what our expectations were. Then, with the world-class managers we now had and the infrastructure we put in place, our international division began operating pretty quickly on all 12 cylinders. What we accomplished in just 4 years was truly incredible. The international division accounted for over 50 percent of the company’s profits.
One of the big secrets to our success was that we were among the first to provide localized products in Europe. That gave us incredible leverage in these markets. It’s one reason why products like Multiplan and Excel and others competed so successfully against VisiCalc and Lotus 1-2-3. I remember making a presentation to the board about how we needed a localization factory in Europe if we wanted to get our European products out the door on time. The board quickly agreed to divert some resources. It’s another example of how Microsoft has always been willing to make investments and take high-risk positions in order to succeed. Sometimes it takes a few years to get things right. In fact, we usually we don’t get it right the first time, but the perseverance factor in this company is amazing. There are so many examples of that, from opening international markets to Windows to the Internet.
I take a great deal of pride in having formed the nucleus of extraordinary leadership for Microsoft’s International Division. Those guys were so good that about the only thing I had to do was get out of their way and let them get on with it. I learned that from Bill. Much to his credit, Bill is a very hands-off manager. He wasn’t constantly looking over my shoulder. His expectations are very high–if I said I was going to deliver something, he expected me to deliver it. But he gave me a great deal of freedom. I love that high-risk, high-reward formula.
Playing computer games is what got me into programming in the first place. I started writing games when I was in high school. So after 10 years here working on Excel and Word, I sought out the job of running the games group. A lot of people tried to talk me out of it because I have a technical background and they didn’t see this as a very technical job. They figured they could fill it with someone with a business degree so I could continue to work on development projects. But I convinced them that we had the potential to become a major power in the games world, and my technical background gives me a certain amount of credibility when it comes to recruiting great game developers, so they finally gave me my light-sword and sent me into the battlefield.
When I first took over the games group, we basically were known for Flight Simulator but not much else, so people didn’t expect much from us. Today, we have some of the best-selling games in the world–like Age of Empires. We built the sports line, the racing line, we built partnerships with people like Chris Roberts, who did the Wing Commander series and has a new game coming out called Freelancer. We’ve grown from a group of about 150 people to about 550, and today our games business generates about $200 million a year.
Games are probably pushing the technological edge more than anything else right now. They are completely using up everything that is out there in terms of hardware advancements. Originally, game teams were almost all programmers, with maybe an artist to draw a view or icons. Today, the mix of programmers and artists is closer to 50-50 because all of a sudden it’s becoming less about technology and more about what are you going to do in this world? How are you going to make real-looking people?
Some people think gaming is a waste of time, but I don’t think it’s good for people to spend every waking hour doing something productive. That’s kind of a sad way to live. Statistics say people spend more time watching television than they do at work. It’s that passive television-watching time that I want from them. That’s when they could be embarking on some epic adventure, or learning how to fly a plane, or recreating a battle and discovering what it’s like to be a general or a foot-soldier. I think that’s a better use of their time. Is it a productive use? I don’t care. I think people are productive enough. That’s what work is for. When people are at work, they want to work. And when they’re home, they want to have fun.
With the Internet, games are really changing. My group runs the Internet Gaming Zone, which is a huge online gaming site. We have more than 18 million users. We get more than half a million individual people from around the world logging onto our site at any given day. That’s more people than visit all the Disneylands in the world on any day. Sometimes we have as many as 75,000 people simultaneously playing games with each other. That’s a stadium full of people, all there at one time. And it’s all about social interaction. The number-one game on the Zone right now is the card game Spades. Card games are all about getting together with people. Even on the Internet, the game is almost secondary to interacting with people. I always like to say that no one ever had to invent Spades 2.0. You don’t need to add features because it works just the way it is.
What makes a game interesting is the people. Games have always been about playing with other people. Then computers came in and games shifted to being this solitary thing. It was still fun, but it was just you against the machine. When multi-player games started, suddenly you could play with 4 or 8 people. And now that’s basically a requirement of any game that comes out. They all need to have a multi-player mode. It’s interesting that if you look at the top 4 card and board games on the Internet Gaming Zone right now, the players are evenly divided between men and women. To me, that says we’re finally reaching out to a broad audience.
These days, almost any number can play. In what we call peer-to-peer gaming, the limit is 8 to 16 people. But we now have massively multi-player games like Fighter Ace where you can get on line with hundreds of other people and fly World War II airplanes around and try to shoot each other down. All of the planes you see in the virtual environment are being flown by other real people. You can chat with them, chat with the people on your team, or even chat with the guy you just shot down.
Another big thing that’s happening right now is the phenomenon of online role-playing games. These are all giant virtual worlds where you go in and there are thousands of other people there at the same time. Ultima Online came out about two years ago and got over a hundred thousand subscribers. Sony came out with Everquest at the beginning of last year. Our own multi-player role-playing game is Asheron’s Call. It’s filled with monsters and dungeons. You start as a small character, then team up with other people and go on adventures. As you spend time there, your character grows and you get stronger, and you venture deeper into a world that’s an alternate reality to your own.
My favorite real-world game was Swing Around the Wing, this huge golf event I started at Microsoft in 1987. I was working late one night and brought in a putter because I’m a struggling golfer so I thought I could practice a little. One night, a couple of friends joined me and we were taking longer and longer putts down the hallway and someone said,
“Why don’t we go all the way around the building?”
So we tried it just for fun and we got hooked.
It always took place on the second floor, so there was a chance that your ball could go down the stairs. And then you had to take the elevator up, so we lost quite a few balls between the floors. It cost you one stroke to get in the elevator and one more to get back out. Six was par to get around the building, but our typical score was 20.
Pretty soon, people from all over the company started hearing about it, and it became a regular thing every Friday night at 6 o’clock. I would e-mail tee times to the people who wanted to play, and then I’d send them out in groups of six to eight. There was a big database of scores, and things got very competitive. We even had a trophy. We started with a little Gumby, and if you won, you had to add something to it. By the end of the first year, it had turned into a giant Gumby with all sorts of crazy things hanging off it.
Doug Klunder became famous for his motto, which was
“Power is the key.”
He would hit every shot as hard as he possibly could. It didn’t matter whether the shot required subtlety of some kind. I remember I wrote a poem about the fact that once he hit 13 shots in a row without passing anyone. Part of his problem was that he had embedded his ball in a big lounge chair, and it took him a bunch of shots just to get it back out. The balls would often end up on people’s keyboards, or in potted plants. A lot of crazy things happened over the years that the game lasted, and Mike Maples even played a couple of times, when he was president of Microsoft. But the best part was that we had people from all over the company coming by to play in this massive tournament that started out as a little putting practice.