How I Got My Job at Microsoft
After leaving Apple in 1985, I took a job in early 1986 with Convergent Technologies, located in San Jose, California. Paul Ely (now deceased), a former longtime senior executive at Hewlett Packard, was the newly hired chairman and CEO of Convergent. He wanted Convergent to grow, and he hired John Celii and me to form a subsidiary that would acquire 10-12 smaller computer companies over the next year. John was the former CFO of 3Com. We were an odd couple in terms of personalities and life views, but we worked well together.
Within a year we had acquired 10 vertical market niche companies and had created over $200 million in revenue for the parent company. However, a couple of the acquisitions were real turkeys.
This is when Paul Ely uttered the words, “You bought ‘em, you fix ‘em.” John Celii moved to Hunt Valley, Maryland to fix one company and I moved to Ridgefield, Connecticut to fix the other one.
We arrived in Ridgefield in the early spring of 1987. Dataline, the company that I took charge of was in a sorry state. The main product – a complex hardware and software system for automating lumberyards and home centers -- didn’t work. A number of the key employees had departed, we had no money for product improvements, and our largest customers were suing us. Other than that, what’s not to like?
Running this company was a real challenge but I learned a lot. And our family had a great time living in Connecticut. Of particular happiness was the friendship that Joyce and I created with Lynette and Bob Gay. We met them at church and became quick friends. Bob was Mitt Romney’s key partner in creating Bain Capital. Many years later Bob, myself and few others co-founded Unitus (unitus dot com), a poverty alleviation organization that has now worked with over 50 million people. And for the past 5 years Bob and I have created and run an innovative worldwide Self-Reliance Initiative for the LDS Church, now operating in over 122 countries.
But back to the story: By late 1988 two important things happened. The parent company Convergent Technologies was being acquired by Unisys, a gigantic non-descript computer services company; and Dataline, the company I was running was being sold back to its original owners. I couldn’t imagine myself working for Unisys and my job with Dataline was over. So once again, I needed a job.
Out of the blue I received a phone call from a headhunter who was seeking to fill a senior level marketing job at Novell, the computer industry’s dominant networking company located in Utah. Even though I’m a Mormon, I had never lived in Utah and had no inclination to do so. But, I needed a job, and we wanted to return to the West, so I flew out to Utah for the job interview.
The interview went very well. They were going to offer me the job on the spot, even though I knew nothing about networking software, nor their key product Netware. At the last moment they asked the company president and CEO, Ray Noorda, to meet with me as a courtesy. It would be a polite 5-10 minute “meet and greet”.
But Ray got interested in my background at both Apple and Convergent. After a 10-15 minutes he asked, “Now what job are you interviewing for?” I told him. Then he said, “No, I don’t want you to have that job. Instead I want you to become the next president and CEO of Novell. I’ve been looking for my replacement, and I’d like you to be it. What do you think of that?”
I told him that I would be very excited by such an opportunity. Then he said, “We’ll have to do this in stages because some of my direct reports have big egos and they won’t want an outsider to have the job. So I’ll bring you in as a direct report to me with a good job title, and then in 6-12 months I’ll make you the president of Novell.” He and I shook hands. We had a deal. Ray was an older gentleman of impeccable character and integrity.
What should have been a simple 5-10 minute “come work for us” meeting, became an hour long “this will change your life” meeting. Ray indicated he would summarize all of this, including a formal job offer with compensation, in a letter that would come to me in a week or two. I had no reason to doubt him.
I flew home and told this story to my stunned wife. And then we checked the mail daily. No letter came. We wondered what was going on.
In the meantime, I had a casual phone call with Steve Ballmer from Microsoft. Steve and I had been section classmates at the Stanford Graduate School of Business (GSB) in 1979. He left after one year to move up to Seattle to help Bill Gates, his friend from undergraduate days at Harvard. Bill needed a business person to tend to that end of Microsoft’s growth. During my Apple days, I interacted with both Ballmer and Gates on numerous occasions. We were all part of the nascant personal computer industry.
At one point in time I actually tried to recruit Steve to work for me in our Mac marketing group. This was before Microsoft was “Microsoft”. They were still very small. Steve had spent a couple years working at Proctor and Gamble, and we could use someone with a consumer marketing background. He wisely turned down my offer.
But in this particular 1988 phone call, Steve asked me what I was doing. I updated him on Convergent and then told him that I was likely to accept a job at Novell. His response was classic Ballmeresque. He yelled, quite loudly, over the phone, “Don’t go to work for Novell, come instead to Microsoft!” I remember holding the handset of the phone several inches from my face due to the unexpected volume of his enthusiastic voice. Because I had yet to receive Ray Noorda’s offer letter, I said, “Make me an offer.”
Steve was a good recruiter. He flew me out to Seattle immediately and Microsoft offered me the job of running their networking software business. This would be an uphill battle because Novell had a 95% market share and a very good product. I was still hoping to get that offer letter from Ray Noorda.
As part of the Microsoft recruiting process, Joyce came out to Seattle and we had dinner with Bill and Steve. Bill needed a date, so he asked out a young Microsoft product manager named Melinda French. This was their first date.
The offer letter from Noorda never arrived. Later I learned that he was simultaneously acquiring a major competitor called Excelan. The CEO of that company, Kanwal Rekhi, threw a wrench into Ray’s plan of bringing me in as his CEO-in-waiting. There would be too many cooks in the kitchen. This prevented Ray from fulfilling his promise.
I joined Microsoft in March 1989. The offer I accepted required me to take a cut in pay, which was consistent with Microsoft's compensation strategy. I would be making less at Microsoft in 1989 than I made at Apple in 1985. Microsoft's salaries were always below the industry average. But all incoming employees received a stock option grant. These stock options would become worth something only if the value of the company's stock, in future years, increased.
For instance, the stock would need to increase from $10/share to $13/share. This motivated all employees to work long hours and to try to beat the competition. The number of stock options depended on the level of the job. In addition to this grant, I negotiated a special side deal with Ballmer that, according to my spreadsheet calculations, would help bring my annual salary back to what I had made at Convergent and Apple, assuming Microsoft’s stock grew at a conservative 4-5% per year.
Little did anyone know that the decade of the 1990s would bring explosive growth in revenue, profits and stock appreciation. During this period of time Microsoft’s stock price grew at a rate of about 40% per year – every year for ten straight years.
And that’s how I got to Microsoft.
