Steve Ballmer: Western Washington University Business Forum

Remarks by Steve Ballmer, CEO, Microsoft Corporation

Western Washington University Business Forum

Seattle, Washington

April 18, 2006

STEVE BALLMER: Well, thanks. Thanks, everybody, very, very much. I’m honored to have a chance to be here with you today. I want to particularly thank Angelica for doing that introduction. I just saw her go like this, so I think maybe it was kind of a big deal, and she did a great job, so thank you very much. (Applause.)

Western Washington is a fantastic institution. Everybody in this room knows that better than I do. But I have sort of a very important and intimate and personal relationship with Western in a significant way: About 21 years ago I think, 22 could be, we hired a young graduate of Western Washington into Microsoft, who within literally months of arriving made an amazing impact on our company, who helped create, ship, grow the success of some of the most important things Microsoft has ever done, our Excel product, our Windows product, some of our great browsing technology, our MSN service.

And so when David Cole, who was at the time a young college graduate, joined us 21 years ago, and I look back today, and David came to me recently and said, “Would you speak at the Western Washington event,” I said, “Well, I have no affiliation, but I love you, baby, so I love Western Washington.” (Laughter, applause.)

And I know we have a few tables of Western grads here today, we have a lot of Western graduates at Microsoft, and so it really was just a great opportunity for me, and I’m honored to have a chance to be here with you.

I have to admit though I’m never quite sure what to say with an audience like this. It’s lunchtime, it’s a university setting, and I’m the CEO of a software company. So we go through, okay, what are we talking about today? History of the company: nah, too well known at this stage, but some people actually get a kick out of it, how did the company succeed, particularly students like to understand a little bit what the template is.

There’s always the temptation to lapse into the present. We’ve got a lot of stuff to sell and I see a room full of users, frankly, when I look out — (laughter) — and there’s always a little bit of temptation to do that, and probably I won’t be able to resist temptation totally today.

There’s always the opportunity to talk about the future, and in a sense that probably is where I’ll spend a bit of my time, because the future of technology is so exciting, and I think it’s important for students, for alums, for businesspeople, for academic people to understand that in some senses, as they say, the best is really yet to come out of the technology industry, and I would say definitely out of Microsoft.

There’s also a temptation at a luncheon like this to talk about policy issues. I was in this room not too long ago, chamber of commerce lunch, and I talked a lot about transportation. And I can’t tell you I know much about transportation, except I do know traffic jams, and I do know what an impact that’s going to have at least on Microsoft and what we’re able to do for employment in the region.

And there are important policy issues in front of us, and education in the state of Washington is clearly one of them, and I probably won’t be able to resist the temptation to talk a little bit about that.

But I think I’ll start a little bit with where the technology industry is, the changes, the excitement, the things that are going on.

I get asked all the time, “Is this a decent time to join Microsoft? Is it good, is it bad? Oh, I should have been there in 1982, blah, blah-blah, blah, blah.” (Laughter.) “It’s all been done, it’s all been figured out.” Or, “Hey, there’s some other guys out there figuring it all out now,” or “Hey, blah, blah-blah, blah, blah.” (Laughter.)

There is no better time, absolutely guarantee it, to get involved in the technology industry, to care about what technology is going to do to positively transform society than right now, right now.

I predict that when we get back together again ten years from now for this luncheon, and if you invite me I’ll be here, but when we get back together in ten years and we say, hmm, did more things change in the way we work in live in that ten years than in the 10 years you can see today looking back let’s say to 1996 — 1996 was a long time ago technology years.

In 1996 most of you didn’t own a cell phone — let’s start with that. Statistically — I’m sure Western alums are far more advanced, but statistically, most of you didn’t own a cell phone, most of you didn’t have a computer at home. If you had a computer at home, fairly typically it would have been running something called DOS, which some of you don’t even know what it is anymore because it’s so outmoded. And if you knew what the Internet was — unlikely — you sure weren’t worrying about whether you had a broadband, let alone a wireless connection.

A ton has changed, and yet I’d tell you the next 10 years will bring more positive developments than the last ten. People say oftentimes to Bill Gates and I, “Well, then write out the script, tell us exactly what the world is going to look like in 2006.” And I’d tell you in broad strokes, I can tell you all the things that are going to be important 10 years from now, and in every specific in terms of how they get implemented and what it means about market sizing, we would be wrong, in every specific we’d be wrong.

But computers 10 years from now will really know what you mean when you talk to them. And the interesting thing about that isn’t the fact that maybe the computer would be able to tell what words I’ve spoken, the computer will actually understand my intent. I say to my secretary today, “Get me ready for the car ride down to the convention center.” She knows what that means. She knows go get the briefing documents, go get the printout for my speech, go get the e-mail, go get the list of people who are going to be there, blahty-blahty-blah. It turns out my computer actually holds all that data; why can’t my computer figure that all out? Answer: It’s just an issue of software. Ten years from now, at $6 billion a year of R&D, we’d better have solved that problem. (Laughter.)

So the next 10 years are going to be amazing and fascinating and great things are going to happen. People say, “Well, what about Microsoft? You’ve got 60,000 people nowadays. Steve, you’re 50, you’ve got to be midlife, maybe Microsoft has got to be midlife; can’t be all that good.” And I’ll tell you in a sense it’s one of the most exciting times ever at Microsoft. People say, “Oh, it must have been great when you joined, there were only 30 people, it was dynamic, it was exciting.” No, it’s actually more exciting today. We were mostly afraid of all the things going on, and we were a tiny company, and we never would have predicted that the opportunity, the market, the chance to make a difference was as dramatic as we’ve actually had a chance to realize.

I almost left Microsoft actually after a month and a half. I’d left Stanford Business School; I was going to drop out, that was the plan. My father had never gone to college himself, he was not a high school graduate; I told him I’m dropping out of Stanford Business School to come up to Microsoft, and he said, “You’re an idiot, you’re insane, this is nuts.” I was here a month and a half, and I decided that perhaps I had dropped out of Stanford Business School to be the bookkeeper of a 30-person company, and that didn’t seem to make much sense.

So you can’t always judge exactly what things are like by kind of what happened or what happened 20 years later.

Today, I look around Microsoft and I see fantastic things where we’re without peer in the way we’re changing the world. We have a whole new line of products that we’re bringing to market at the end of this year with Windows [Vista] and Office that will really revolutionize the way people use computing technology to be productive in their business, their scholastic, their educational or their personal world. It’s a fantastic thing, we’re leading the world, very exciting.

You have technologies where we’re the newbies, we’re the guys who are coming a little later, whether it’s in the videogame business where we’re poised frankly to dramatically change Sony’s market position might be a good way to say that. [Laughter.] We’re moving into the business of delivering TV over Internet, which is just a fantastic thing, and you’ll begin to see that percolate out as more and more and more things, more and more video streams get delivered over the Internet.

You’d say, why would we ever want TV delivered over the Internet. Two key reasons: number one, can change the viewing experience; and number two, we can broaden the list of content you can take a look at.

When I watch TV today, at least from my machine, I have my IM list always available. My buddy list is there, it’s part of the experience. And as more and more capable systems come to market, you’ll find more transformations in the way video and communities and instant messaging, shopping all weave together for the consumer and for the advertiser.

But the thing I’m most excited about is more content. And some of you may be a little bit like my wife, my wife doesn’t know why we need the first 99 channels, let alone the next 200 channels, but I’m still missing channels myself. [Laughter.] I’m sitting there dying for one channel and one channel only. The president and I were talking over lunch, and we’re both Michigan people originally, we grew up there. I love my high school in Michigan, a place called the Detroit Country Day School. And it’s got a great basketball team. And I want Detroit Country Day basketball online at my TV 24 hours a day. And you might say, “C’mon, this is ridiculous.” Well, it’s not that ridiculous. They’re videoing those games, they’ve put them up on some Web site; the only thing I can’t do is find it, tune into it, and watch it through my television set.

The things that are happening in interactive entertainment, we’re newbies, we’re newbies to the world of the iPod, some of the other things that are going on, but I’ll tell you we are investing, and we are aggressive, and we’re sort of enthused and challenged by those opportunities.

And then we’ve got a few of these areas where people say, “Hey, you really are just Johnny Come Lately. You know Google and Yahoo! are out in front of you,” and David and I’ve we’ve been sort of battling those battles.

But in all parts of our industry things are going to change so much in the next ten years that I’d tell Angelica or I’d tell anybody else who’s interested in the technology field and Microsoft, most of the future is going to get written in the future, most of the market position, most of what happens, nothing is assured. That’s a business statement, that’s a technology statement, that’s an innovation statement, that’s a transformation statement, and it’s so exciting.

So when we’re talking about Microsoft and where we’re going and what it’s going to take to succeed going forward, we really start with kind of two basic principles: number one, we’ve got to get the greatest people; and number two, we’ve got to give them the environment for them to do their best work. And if we do those two things, we are going to be phenomenally successful, and people who join Microsoft in 2006 are going to be able to say 10 years from now, “I helped change the world in important ways, I did something that made a difference, I did an innovation that millions of people around the world are benefiting from each and every day.”

Getting great people is always a challenge. It’s a challenge not only for our company and our industry, it’s a challenge in every industry bar none. And we spend a lot of time on it, recruiting, finding, screening.

Angelica and I were talking, we were talking sort of over lunch, what does it take to succeed at Microsoft, and she said, “Why don’t we just have somebody go through the job interview process; by the time you’re done you know,” because we kind of in a nice way beat people up a little bit in terms of lots of questions, eight interviews, pop, pop, pop, pop, pop, pop, pop, pop, people give you pop quizzes, pop tests in the interviews, what’s that like, because we’re just looking for people who are bright and passionate and energetic. That’s so important, and you want people who have that fire and have that creativity.

But you need to give those people a great environment. In our case, that actually means a few things. It means certainly we’ve got to have a great mission as a company. Nobody in our industry wants to join a business that isn’t trying to change the world in some important way.

It means you’ve got to be a company of value that that stands for something not just in terms of what you’re trying to do for your customers, but the way you work. Integrity is an important part of our value statement, the way we work together to try to make one another better. We’re not perfect at all of our values, but we care about them deeply, because we know that the kind of people who come to see us care about them deeply.

And people want to have an impact. It’s amazing to me how people want to join organizations that have an impact, that change the world, that win, that succeed.

And so we’re constantly renewing our value proposition so that the best and the brightest from Western, the best and the brightest from the great universities around the world will come and join us at Microsoft.

Today is kind of an interesting day to be talking about attracting the best and the brightest to Microsoft. President Hu, the president of China is in Seattle at this stage, and this is the first stop on his tour here in the United States. He’ll go on to Washington, D.C., and then give an address at Yale. But I think it’s flattering, it’s complimentary, it’s important to this region that President Hu chose to pick Washington state as a stopping point on this very important tour.

We’re certainly honored at Microsoft to have a chance to welcome him and host him, and have a chance to share some of the excitement and innovation going on in our industry, in the state of Washington, in our region, and I think that’s all very good.

I get asked a lot about if you’re trying to get the best and the brightest, what does that mean, does that mean all the best and the brightest are going to be here in the Pacific Northwest, are you going to get the best and the brightest in China or India, where does all this go. And I think it’s important for all of us that it go the right place.

This is our home. We will add the lion’s share of our people right here in the Pacific Northwest. And, yes, we’re adding people in China, and we add people in India, we buy a company, we have a new lab on Long Island in New York, but this is where the bulk of employment will come, as long as our country and our educational institutions continue to do the right job of attracting people into our field, and educating them, and keeping this a very competitive and energized field.

We have a role in that. Educational institutions like Western Washington have a place in that. The state of Washington has a place in that. I really commend Governor Gregoire for everything she’s doing on competitiveness through the Washington Learns Program to try to really drive the educational institutions in this state to be able to deliver the kinds of education that builds skills that are important to attract.

You know, people say, “Oh, isn’t it cheaper to go hire people in other countries.” In the long run that’s never the case. In the long run you’re going to pay the same thing for somebody of certain performance levels in all parts of the world. So we just have to make ourselves a magnet for the best talent in the world.

In preparation for President Hu’s visit today, we went and checked how many people do we have living in the Northwest, living in the Northwest who speak Chinese. That’s some interesting measure; we’ve got about 2,000 people who live here in the Seattle area who speak Chinese and work for us at Microsoft.

Because we’re trying to be a magnet for the best and the brightest people from around the world, and that’s a little harder post 9/11 with some of the immigration situation that’s in place, some of the immigration laws that are trying to be passed, but we think it’s important that we be a talent magnet. And if we do that and we do that successfully, the bulk of the talent will still be here in the Northwest, and a lot of it will be homegrown here in the state of Washington, as long as great institutions like Western Washington get the help, get the support, and do the fantastic job that they’ve done historically.

So there’s a lot going on about making the world a good place, keeping Microsoft competitive. I want to talk a little bit though more about the environment. How do you make an environment where people can do their best work? I’ve told you what it means at Microsoft, but let me at least in my paid political announcement that I promised you tell you a little bit about at least one aspect that I think is important in all of your businesses and walks of life. If you give people the tools, the tools to access, find, retrieve and use information, the people who work for you will do phenomenal things.

You saw a little ad campaign we just launched for something we’re calling the People-Ready Business. And the People-Ready Business is a business that really believes in its heart and in its soul in the capacity of its workforce, and is always asking how do I give just a little bit more information, a little bit more capacity, a little bit better tools to the people who work for us. Because if I do that, they’re going to use that information in creative and innovative ways. If the teller at the bank has just a little bit more information about the customer, he will or she will be able to sell that person another product when they’re in the branch. If the financial analyst has just a little bit more information about cost, a bunch of cost will disappear from the system. If somebody operating the nuclear power plant or the machine tool and the factory knows just a little bit more about how it’s working, there will be less waste of raw materials. If people have the ability to come together and collaborate and communicate in amazing ways, they will ping-pong off one another, and invent new and interesting and exciting ideas, which will make businesses more and more effective.

I think if you think about the university context, you get a classic picture. Today, it’s almost unthinkable how did we ever do academic research 10, 15 years ago. The tools for authoring, the tools for publishing, the tools for collaborating with colleagues that are remote were downright primitive, frankly, compared to what we have today, and yet the next ten years will only bring us more advances that enable researchers, tellers, clerks, customer service agents to do amazing things.

And that fundamental belief in the capacity and imagination and creativity of people is probably the number one thing that excites me, the number one thing that I think excites a lot of the folks who work at Microsoft to do their best work, and probably the reason I feel like I’ve got the greatest job on the planet today.

I want to say thanks again to President Morse, I want to say thanks again to all of you for your time, for your attention. I encourage you to support broadly education in the state of Washington. And they didn’t ask, but I’ll put in a particular plug, make sure you support Western Washington and the fantastic work that it’s doing. I want to say thanks again for the opportunity to be here, and I wish you all the best. (Applause.)

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