Tuesday, April 19, 2005

Who ain't John Galt

Who ain't John Galt? Perhaps that's a better question as our senior brain drain continues (I still don't have a snazzy name for the blogging trend re: "ex-Microsofties now workin' here" kind of posts).

Okay, who ain't John Galt? Sure is looking like the answer to that is Bill Gates and Microsoft.

As noted today, Mr. Lenn Pryor has moved on:

While Microsoft might have cast the net wide to hire all the bright computer people in the world over the years, somewhere along the way some crap and chum got snagged in the net and crap begets crap and crap hires crap. And as the effects of that oozes across campus in a dulling miasma, you've got to expect the brightest to pull their heads up and say, "You mean there is a place where I can write great software that actually gets shipped and makes money! Sign me up!"

There are no golden handcuffs anymore so it truly comes down to enjoying your job and getting fairly compensated for it. For those of you who kept your options in hopes that the stock would go up, traipse on over to http://stock/ sometime and see how far below water some of your glorious options are still.

Still sticking to my guns: I'd rather see fewer folks working at Microsoft, even if it's the best and brightest leaving first and we have to deal with shambled remains of Microsoft for a while as the effects kick in.

That leads to John Galt. Okay, let's forget about the literary worth of A tlas Shrugged, but take a moment to reflect on some parallels here. Ayn Rand wrote about an America where the true achievers were hampered by mediocre people with mediocre goals. John Galt came along and snatched all these great people away to achieve unhampered greatness. Today, the market and competitors are likewise serving as an alluring John Galt as Microsoft drifts to this mediocre environment propelled only by past achievements and truckloads of cash coming in uncoupled with anything we do right or do wrong.

Back to Lenn's blog posting:

I decided to swap problem sets from one that I am not passionate about any more to one that I AM deeply passionate about. I just couldn't go on being an evangelist for a gospel that I don't believe I can sing. I am returning to focus on what I enjoy most, building amazing things that make people happy, change lives, and make money. In this case Skype was a better place for me to do this and one that shares my core values and beliefs in how the future of both software and business will unfold.

What's the tipping point? Who needs to be the last straw? When does senior management snap-to and start to wonder about what the problem is such that so many talented people are leaving and the bad attrition numbers are going up? Sure, we had a reason for talented folks leaving in droves during the internet boom: money. As folks left for start-ups, Microsofties would give them a cheery goodbye and (if they were good) say (once they were out of earshot), "They'll be back."

Now folks are leaving to relish the passion of creating and shipping great software. And I haven't heard anyone mutter, "They'll be back." I've seen far more moments of wistful envy. You can't compete with that John Galt.

28 comments:

Anonymous said...

We can't have a corporate housecleaning (at least nothing really publically noticeable) until after Longhorn -- or "does-it-matter-horn" as DaveC has taken to calling it -- ships. Once that happens, you'll see lots of old-timers and execs move on "for personal reasons".

Anonymous said...

I would like to think the MSPoll numbers might snap some sense back into the upper echelons of the company and they'll start getting rid of the middling middle managers, myriad Vice Presidents (including some part timers!) and burecracy and let us get back to doing really great things. Instead they'll trot out "increases" in the poll numbers again and life at Microsoft will remain smiling and "happy."

For this reason, I am betting nothing will change. Oh wait, we'll get more rules, policies and procedures and more process excellence and six sigma (ha! what jokes!) All of which will further stifle innovation as we reinvent the wheel (again).

We're a two trick pony (Windows and Office). Our new search is miserable compared to the competition. Anything which challenges or threatens Office or Windows is summarily killed.

Somebody needs to wake-up, smell the coffee and realize that we are killing our core. I don't think the most Microsofties care or even realize there is a brain drain happening. I'm seeing it daily as I clean up the messes made by my peers that are incapable of doing the jobs to which they've been assigned. At the same time "doing it for the team" isn't going to add up to that 4.5 or promotion I've been working toward for the last two years. But if it doesn't get done, schedules slip and ultimately the customer pays.

Anonymous said...

1. At the risk of being pedantic, DaveC called Longhorn "Doesn't-matterhorn". Obviously no question in his mind.
2. As a former middle manager at Microsoft I can tell you that any negative results from my MSPoll were long forgotten (or at least rationalized away) long before I got my 4.0 review

Anonymous said...

I read this blog but i'm starting to get sick of it. Everybody bitching and nobody doing anything. The anwser is not just fewer people. The answer is getting people who want to be here vs. people who are here because they can't find another job. I started at MS in the early 90's made some money on options quit and came back. The only that has really changed is the company is bigger now. I don't care if MarkL leaves or any of these other so called brains. Hell MarkL hasn't done any thing in probably 10 years. He spent a year in Office and didn't produce anything. Hailstorm was a big joke also. now this Leon dude is leaving... who cares!!! Let them leave. I don't plan on going anywhere. I have been out there and MS is a great place to work. Yes we are big and we have our problems but it is still a great company. For all you losers who don't want to be here leave and quit bitching.

Anonymous said...

Mini, I love your blog, but I disagree that Microsoft's woes are the result of mediocre employees. In my opinion, the problem is a combination of the following:

1) Too many cooks. You can't get anything done without buy-in from 183 people, including the 6 layers of execs above you and the 12 teams scattered across the company that you have dependencies on. Getting everyone aligned requires rigid process, countless meetings, and "consensus", none of which fosters creativity, initiative, or accountability.

2) The money is gone. People will happily put in 80 hours a week if it means becoming a millionaire in 5 years. What's the motivation now - so that you can get promoted into the ranks of middle management?

3) Creativity is not a part of its corporate culture, and it never has been. Microsoft made its money doing a better job of executing other people's good ideas. I can't think of anything revolutionary that Microsoft has produced. The next big thing and every other big thing after that will not come out of Redmond.

4) Microsoft leadership lacks vision. Bill Gates is where he is because he is a tenacious and fierce competitor. Neither he nor any of his henchmen have the imagination or social instincts to catch or generate the next big wave. We missed the incredibly high margin business that Google and Yahoo created around search. We missed the music business Apple created around ITunes and IPod. We missed the fucking Internet!

Greatness is all about potential, and you need the right environment to bring it out. Most of the "mediocrity" you see at Microsoft these days is the result of systemic paralysis.

Blog on, brother, blog on!

lori said...
This comment has been removed by a blog administrator.
Anonymous said...

got to tell you, old Lenn boy is not exactly one to be missed. If ever there was a self-promoting marketing tool, he was it. i think i met Lenn maybe six times over three years working in an affiliated team at MS, and each time he had to be re-introduced to me. If you are looking for the paradigm of that which ms needs, look elsewhere.

lenn said...

Ouch ... guess I need to be better at remembering names. I am a tool now ;)

- lenn

Anonymous said...

We missed the incredibly high margin business that Google and Yahoo created around search. We missed the music business Apple created around ITunes and IPod. We missed the fucking Internet!

Boohoo. This ain't spitting context - who spits further. MS wasn't FIRST - yes. But did it matter in case of Internet? No. Does it matter in case of iTunes/iPod? Hell yes, but to say that it's all over is oversimplify the matter. As long as company benefits from a particular trend, it's all good. How good is the question that bothers you. You want to be first at everything? A good thing to wish, but what if Apple stumbled? Wouldn't you be running around and muttering how good our management was that it didn't jump both feet in it?

There is nothing wrong with evolutionary changes. The fact that our stock is where its at today has very little to do with upper management or bloat. It has a lot to do with big numbers (how exactly do you increase your sales 100% if it means another 400mln people?) and the fact that everyone else was flying up and down while we were not moving at all. Don't forget all those little squibbles with competitors, resulting in payoffs of billions of dollars. It does affect the stock, ya know? The fact that AAPL quadripled in last 1.5yrs. conviniently hides the previous stat - that it was on a brink of bankrupcy for years before.

Choose something - a stable company or small, VC-dependent,we-do-everything-from-scratch-without-any-management company. Can't have both - or be willing to move between divisions in the company in search of "now-hot-on-every-VP-radar-new-business-model-using" group.

-Oleg

Anonymous said...

This ain't spitting contest

No, it's a making money contest. And guess what - we're not making any money on search or music. Sure, we're making money on the internet, but only after spending a whole bunch playing catch-up.

The sad things is that we're spending billions on research so that we can be the company that creates and profits from something unique. Hard to argue that the investment has paid off.

And BTW - a company that doesn't grow is not going to be stable for long.

Scott Hughes said...

Why would you say that we should forgot about the literary worth of Atlas Shrugged? I like your blog, and enjoyed seeing the reference to John Galt, but this dismissal of the literary worth of one of the greatest novels ever written really rubs me the wrong way.

As an outsider, I still see Microsoft as a bastion of greatness... Though, I have noticed that it is getting slower at reacting to the market. I don't know if those sorts of "growing pains" are unavoidable or not. And I'm pretty sure John Galt, Hank Rearden, or Dagny Taggart were not very intent on being the CEO of the new "it" company. The character Hank Rearden spent a lot of money developing a new alloy, but he eventually cashed in on his research and stomped the competition. He didn't hop on a new fad technology or even reshape his company's public/private image to do so.

Scott Hughes said...
This comment has been removed by a blog administrator.
Anonymous said...

No, it's a making money contest. And guess what - we're not making any money on search or music. Sure, we're making money on the internet, but only after spending a whole bunch playing catch-up.


Earth to Anonymous - both markets are just born - in a sense. Both have huge potential - but not necessarily in the way one can imagine. Apple doesn't make money through iTunes! Check it out, latest SEC filing - barely profitable. It is being used as a way to sell iPods! Same goes for Google - there is no money in SEARCH - but in advertising. Check latest Microsoft announcements - AdCenter is the answer there.

And BTW - a company that doesn't grow is not going to be stable for long.

And when you say "grow" you surely don't mean stock price, right? Because we all know how rational THAT indicator can be. As for revenues and net income, both, last time I checked, have been growing rather nice - relatively speaking. You cannot expect 25% YoY growth forever. You're selling in finite market (Windows/Office) and there are only so many customers out there. Expansion in different markets (MSN, Xbox...) has required additional investments and hence temporary slow down in net income. Imagine if all those monies went to bottom line instead of being spent on marketing, R&D etc...

I agree with many points mini-MS is making, but his/her problem is that there is no way to comprehend the whole Microsoft picture. While majority of people are working in Redmond, there are thousands and thousands of employees scattered around the globe - working feverishly to satisfy customers and local markets. So let's hope not everyone is as bitchy as individuals sharing their opinions here.

Anonymous said...
This comment has been removed by a blog administrator.
Anonymous said...

"So let's hope not everyone is as bitchy as individuals sharing their opinions here."

LOL, you crack me up. Not to worry, we have hired enough FTEs in India that we'll have plenty of people that are "not as bitchy" as you put it. They will be happy, as we have hired them after they said "Yes" to "Do you like computers?" - essentially. Not their fault, its ours. "Crap begets crap and crap hires crap". How true, Mini - that made my day today!

If you think most of us bitch because of some sort of personal loss of possible early retirenment or because we don't have bottled water anymore - I beg to differ. I bitch because I think we as a company seem to be willing to make customers sacrifice more than they should and hardly ever bend over for them instead. Because there is barely any real-life innovation that goes on that is about to be released. Because every day, we read more and more Dilberts that suddenly apply to us and we wonder what the heck happened. We are not cool. Some of my friends told me they are even ashamed to say they work at MS when mingling at some party.

I bitch because I work my ass off to help customers when they are in trouble but at the end of the day - the ONLY thing that my management cares about is how accurately I track my time spent at the office, so a beancounter somewhere can be happy.

And no - I am not a Redmondian, but I still bitch.

Anonymous said...

Earth to Anonymous - both markets are just born - in a sense. Both have huge potential - but not necessarily in the way one can imagine. Apple doesn't make money through iTunes! Check it out, latest SEC filing - barely profitable. It is being used as a way to sell iPods! Same goes for Google - there is no money in SEARCH - but in advertising.

Anonymous to earth - I think you've unwittingly made my point. Steve, Larry, and Sergey had enought imagination to envision how gobs of money could be made in music and search. They could see the nonobvious. Microsoft, on the other hand, lacks the imagination to do anything that hasn't already been blueprinted by someone else.

And judging from some of the apologists commenting here, we also lack the ability imagine Microsoft being any other way.

Anonymous said...

If the stock doesn't move, if rewards aren't apparent and available to the people who ACTUALLY DO THE WORK, then they will continue to lose good people (six year veteran myself, 4.2 review average, and massive amounts of 80 hour weeks, all for stock options that are now worthless). The best thing one hopes for now is a promotion to middle management (for job security more than anything else really). The problem is, we have so many damn middle managers you can't spit without hitting one. Just about half my floor is middle management or some sort of functionary for middle management. And I live with the constant threat of my job going to India or China. This place used to be fun didn't it?

sarrants@gmail.com said...

As a former employee ('80s-'90s) I can tell you that it was different in the early days. It was like going back to college, but not really being graded at each step. There was creativity and free-form experimentation at that time. I was in one of the first documentation groups, and creating the systems for online docs and tutorials involved a lot of untested ideas, technologies, and freedom from feeding the bottom line. It all changed in the early '90s when more and more suits appared on campus. Oh, I have stories, but they'll probably bore you compared to what you go through now...

Anonymous said...

"And when you say "grow" you surely don't mean stock price, right? Because we all know how rational THAT indicator can be. As for revenues and net income, both, last time I checked, have been growing rather nice - relatively speaking. You cannot expect 25% YoY growth forever. You're selling in finite market (Windows/Office) and there are only so many customers out there. Expansion in different markets (MSN, Xbox...) has required additional investments and hence temporary slow down in net income. Imagine if all those monies went to bottom line instead of being spent on marketing, R&D etc..."

Pointing out the obvious - namely that the market isn't always rational - is hardly sufficient to explain away the chronic multi-year underperformance of MSFT the stock. It's all about supply and demand. Given the last ill-advised stock split, supply is now effectively endless and reasons for demand being lukewarm are obvious. Regarding growth "being nice" relatively speaking, relative to what? Do you think anyone in the market thinks 8% growth heading to 5% next year is good or that they're prepared to cut us some slack because of our size? Grab a brain. Does GE get to grow at 1% because of its even greater size? Similarly, the comment about 25% YOY growth is simply ridiculous. At this point, the question is whether we can grow at even 10% on a sustained basis - I doubt it. Re investments in new businesses having a negative impact on income - no shit. But temporary? Is that what you call a total flat line from 00 to 05? And yes, I can imagine what would have happened if those monies had flowed to the bottom line instead. First off, the stock would have performed better and second, we may have been forced to make fewer, smarter investments and been more focused on ensuring their progress to profitability. Instead, we've spent $10's B's on a odd-ball collection of businesses that collectively can't grow worth shit and aren't profitable. Indeed, the market is currently assigning these businesses zero value in our stock price - so maybe they're more rational than you think.

In any event, keep up the rallying cry for being positive while the company and the stock continue their downward spiral - it won't change the trajectory of course but at least you can say you stayed constructive during the process.

Anonymous said...

When are you going to quit Mini? Your entries are getting more and more strident and "reckless". Are you hoping to get fired and save yourself from making the decision to move on? Are you hoping to use the news that MS fired a blogger to get your next job? If so, it's a dishonest thing to do to yourself and your colleagues.

If I put the pieces together you are in your late 20s or early 30s and most of your career has been at MS. You lack perspective, and aren't learning new things. Do yourself a favor and go work somewhere else. It may not work, but you will learn a lot.

Anonymous said...

Pointing out the obvious - namely that the market isn't always rational - is hardly sufficient to explain away the chronic multi-year underperformance of MSFT the stock. It's all about supply and demand. Given the last ill-advised stock split, supply is now effectively endless and reasons for demand being lukewarm are obvious.

Well do me a favor then and point to one company that consistently performed during last 5 years. I've compared AAPL, IBM, NOVL, _IXIC (Nasdaq) with MSFT's last 5 years performance - and ALL look almost identical. Everybody tanked during those years - especially during dotcom bust. We didn't tank BAD ENOUGH - which meant that recovery wouldn't be as GOOD as expected.I am not optimistic - I am realistic about prospects. Stock split didn't affect anything in supply/demand - it doesn't affect anything other than the price of the stock, really.

Regarding growth "being nice" relatively speaking, relative to what? Do you think anyone in the market thinks 8% growth heading to 5% next year is good or that they're prepared to cut us some slack because of our size? Grab a brain. Does GE get to grow at 1% because of its even greater size?

Growth relative to previous years. I'd grab my brain, except it's hidden under thick skull. As for GE, do me a favor and check this chart - http://finance.yahoo.com/q/bc?t=5y&s=GE&l=on&z=m&q=l&c=MSFT - I am sure GE shareholders were very happy sometime between Jan'03 and Jan'04, right?

Indeed, the market is currently assigning these businesses zero value in our stock price - so maybe they're more rational than you think.

Yet again, peel off your eyes off of stock monitor and do some work. Stock market is as rational as my mother-in-law. You don't make investments based on stock price.

This company's stock WILL NOT GROW at 30%/YoY. Just live with it. You ROI is now based on dividends and HOPEFULLY some growth in stock price. That's a reality and no matter how much each and every one of us is bitching about stock price, nothing will change. You can replace whole upper management - yet you won't be able to convince additional 200mln people and 1mln businesses to buy more of our stuff. We make darn good products and guess what - they don't rust, break or disappear after 4-5 years of usage! People enjoy using them and they don't want to change. In addition to relatively rich areas of the world, you have those that can't afford their breakfast - and guess what - those people couldn't give a hoot about Windows, Office, Xbox or some other product this company may decide to sell.

You want to see your stock grow? Resign and join smaller company that has speculative model where nobody really knows what the hell this company will do next.

To increase one's investment return, one must increase Risk beta. Do that. Right now you're sitting on your ass and coding away - with almost guaranteed employment, excellent benefits and overall not so bad working environment. Move to a smaller company then.

Anonymous said...

"Well do me a favor then and point to one company that consistently performed during last 5 years."

SYMC for one but there are numerous others. Even your choice AAPL has grossly outperformed MSFT over your chosen 5 year timeframe. And of course, if we make the comparison period 3 years vs 5 we can choose just about anyone at random including all the major indexes.

"Stock split didn't affect anything in supply/demand - it doesn't affect anything other than the price of the stock, really."

It's a lot harder to generate a supply squeeze with 10B shares outstanding vs 5B. Add to that the company's failure to fully avoid options dilution (thereby increasing shares outstanding) and Gates massive bails (which add to the available float) and you have a huge effective increase in supply.

"Growth relative to previous years"

What years? Growth is at an all-time low and forecast to get slower still.

"As for GE, do me a favor and check this chart"

So pointing out that one of the biggest companies in the world with only average profitability was still able to outperform MSFT over 5 years and esp over the past 2 is meant to convince me? Stop it my stiches...BTW, movinf forward (which is all that matters) GE is almost guaranteed to grow at 10%/annum for the foreseeable future. When do you think we might accomplish that feat again? Ever?

"Yet again, peel off your eyes off of stock monitor and do some work. Stock market is as rational as my mother-in-law. You don't make investments based on stock price."

yet again, continue to bury your head in the sand. Professionals who move the market buy stength and sell weakness - they leave it to retail investors to do the opposite. That aside, if we can't even grow at 10% sustained, where exactly do yo think this hidden value is going to come from? Also, do you think that maybe our senior execs leading the industry in insider selling is slightly undermining your bullish scenario?

"This company's stock WILL NOT GROW at 30%/YoY. Just live with it. You ROI is now based on dividends and HOPEFULLY some growth in stock price"

Are you delusional? When was the last time it grew at 30%? Do you really think that sub 10% growth is going to be sufficient to maintain a 2X P/E or a 7X price to sales multiple? Do you think claiming "market saturation" is going to give us a pass? Do you think we're likely to perform better if we take it as a given that there's some limit on our growth? This is exactly the kind of self-limiting thinking that has become the hallmark of this company. Ask yourself why $7B/year in R&D isn't sufficient to develop wholly new revenue streams and/or why GE, faced with this same issue numerous times, simply expands their view of the applicable market and proceeds to conquer that. But hey, we're just whiners here.

"You want to see your stock grow? Resign and join smaller company that has speculative model where nobody really knows what the hell this company will do next."

Oh I see, there's some natural law we've hit whereby our stock can't grow but those of much larger entities like GE can? BTW, excellent plan on the resignation suggestion. Tell me, if 50K of us resign, will the company be better off?

"To increase one's investment return, one must increase Risk beta. Do that. Right now you're sitting on your ass and coding away - with almost guaranteed employment, excellent benefits and overall not so bad working environment. Move to a smaller company then."

That's right...I forgot. A company trading at a 2X PE and 7X sales, that's grossly underperformed the market for 3+ years and where growth is just 8% and slowing is actually low risk. And I'm sure those shareholders (remember them?) who have already lost 3+ Enrons will be happy to lose another one or two so that I can have guaranteed employment and enjoy excellent benefits. Please tell me you're not in mgt in any capacity or I may have to start shorting our stock.

Anonymous said...

So pointing out that one of the biggest companies in the world with only average profitability was still able to outperform MSFT over 5 years and esp over the past 2 is meant to convince me?

it is supposed to show you that 2nd or 3rd largest company in the world is expected to grow at the same pace.GE's stock hit 60+ in Jan2001 and now hovering in 30s - what was that you said about guaranteed 10% growth there? Who cares? The law of big numbers kicks in here.

You constantly keep referring to me as if I was all positive about the prospects of the company - all the while I keep saying to you that it is not necessarily the company that's guilty here. There are external circumstances that don't necessarily help us. That's all.

Send me email to kykapa4a@gmail.com - I'd love to continue this discussion internally!

Anonymous said...

"what was that you said about guaranteed 10% growth there?"

I was talking about revenue growth and GE is doing that now and is forecast to continue doing that for the foreseeable future. We aren't and when/if we will again is totally unclear. Assuming they sustain that and ensure that income tracks revenue (unlike us), their stock will continue to perform. Maybe they didn't get the memo on the law of big numbers - or maybe they simply realized that growing at a reasonbale rate despite their size is actually their job.

Anonymous said...

So is Longhorn ever going to ship?

Anonymous said...

"somewhere along the way some crap and chum got snagged in the net and crap begets crap and crap hires crap"

More like we acquired crap along the way. Marginal acquisitions foisted with our cost structure are a big part of the drive to cut benefits.

Anonymous said...

Go speed racer, go.

Anonymous said...

Who cares about Lenn? Marketing? LAME. BOB DAY is gone. To google. No big announcement, just gone. When I was an ISV, evangelists were not useful for me at all. They didn't understand anything and were all about the dog and pony show. Now that I am an FTE, I don't see their use. Is it just to promote products which are unable to promote themselves via viral marketing? If so then why are we allowing them to help us waste money for a longer period on projects which cannot stand on their own two feet after shipping?