The Microsoft Story

How the Tech Giant Rebooted Its Culture, Upgraded Its Strategy, and Found Success in the Cloud

Dan Good

• Publisher: HarperCollins Leadership
• Year: 2020
• ISBN:
  9781400223916
• Topic: Business
• Subtopic: Business History
• Index: Business

Imagine?if you could see the playbook that returned a struggling tech empire to the top of the tech leaderboard.?The Microsoft Story?will help you understand and adopt the competitive strategies, workplace culture, and daily business practices that enabled the tech company to become a leading tech innovator once again.

It wasn't so long ago that Microsoft and its Windows operating system dominated the tech industry so much so that they faced antitrust charges for what was perceived by many to be predatory, monopolistic practices. Less than a decade later, the tide had turned and Microsoft lost its dominance in the personal tech marketplace amidst the launch of the iPhone, the rise of Google, and the cloud computing phenomenon.

But, now, Microsoft is back on top. The company's value is soaring and once again Microsoft is being recognized as a tech leader once again. What changed?

The company culture has become one of creativity and innovation, no longer requiring that all products revolve around Windows. The company has reevaluated their business lines, getting rid of underperforming initiatives such as smartphones, and focused on the area of growth where the company excelled: the cloud.

Through the story of Microsoft, you'll learn:

• How to build a nimble company culture that supports innovation and growth.
• How to return a forgotten brand to the spotlight.
• How to recognize and build upon successful business lines, while letting go of underperforming initiatives.
• When to change the entire?way?you do business.

Discover how this iconic organization got it right and created a successful long-lasting business, and how you can do the same for your company.

CHAPTER ONE

THE EARLY YEARS

The future was here. Paul Allen rushed through Harvard Square to reach his friend Bill Gates to show him the January 1975 issue of Popular Electronics, the magazine devoted to gadgets and gizmos.

The gizmo on the cover would change computers forever—and inspire the creation of one of the world’s most influential companies.

World’s First Minicomputer Kit to Rival Commercial Models . . . “Altair 8800”

The article about the Altair 8800 picked up on page thirty-three.

The era of the computer in every home—a favorite topic among science-fiction writers—has arrived! It’s made possible by the POPULAR ELECTRONICS/MITS Altair 8800, a full-blown computer that can hold its own against sophisticated minicomputers now on the market. And it doesn’t cost several thousand dollars. In fact, it’s in a color TV-receiver’s price class—under $400 for a complete kit.

The Altair 8800 is not a “demonstrator” or souped-up calculator. It is the most powerful computer ever presented as a construction project in any electronics magazine. In many ways, it represents a revolutionary development in electronic design and thinking.¹

The computer’s front panel included rows of switches and LEDs. Behind the lid, the Altair featured an 8-bit parallel processor and 65,000 words of maximum memory, along with a new LSI chip and seventy-eight basic machine instructions (as compared with forty in the usual minicomputer). “This means that you can write an extensive and detailed program,” the authors wrote.² But someone would have to write that program. Allen and Gates thought they might be the people to do it. The pair had been teaming up ever since their days at the Lakeside School, a private boys’ school in Washington State. Allen, a multifaceted dreamer, was born in 1953. Gates, a bookish, driven pragmatist, came along two years later. They both were drawn to computers and coding while attending the Lakeside School.³ At the time, computers were massive and clunky and expensive and exclusive, generally only available to government agencies or major companies or academics in math and science disciplines.

Lakeside had a Teletype Model ASR-33 (for Automatic Send and Receive) terminal with a paper tape reader that linked over the school’s phone line to a GE-635, “a General Electric mainframe computer in a distant, unknown office,” Allen recalled decades later.

“The Teletype made a terrific racket, a mix of low humming, the Gatling gun of the paper-tape punch, and the ka-chacko-whack of the printer keys. The room’s walls and ceiling had to be lined with white corkboard for soundproofing. But though it was noisy and slow, a dumb remote terminal with no display screen or lower-case letters, the ASR-33 was also state-of-the-art. I was transfixed. I sensed that you could do things with this machine.”⁴

The school’s Mothers Club held a rummage sale and used the proceeds to buy the Teletype and computer time on the GE computer. But computer time was expensive—whoever was using it had to be efficient and creative. “You would type the programs off-line on this yellow paper tape and then put it into the tape reader, dial up the computer, and very quickly feed in the paper tape and run your program,” Gates said. “They charged you not only for the connect time, but also for storage units and CPU time. So, if you had a program that had a loop in it of some type you could spend a lot of money very quickly. And so we went through the money that the Mothers Club had given very rapidly. It was a little awkward for the teachers, because it was just students sitting there and zoom—the money was gone.”⁵

The system used a computer language called BASIC that was developed in 1964 by Dartmouth College math professors John Kemeny and Thomas Kurtz (BASIC, speaking to its ambitions for widespread use, stands for Beginners’ All-purpose Symbolic Instruction Code).⁶ Computers needed language to run, and even if computers weren’t readily available for public use, BASIC created the potential of computer programming for the masses.

Allen and Gates Meet

It was in that Teletype room, amid the Gatling gun of the paper-tape punch and ka-chacko-whack of the printer keys, that Paul Allen and Bill Gates first connected. The pair reflected an image of contrasts. The older Allen, with his long sideburns and stocky build, looked a decade older than the boyish, gaunt Gates.

---

It was in that Teletype room, amid the Gatling gun of the paper-tape punch and ka-chacko-whack of the printer keys, that Paul Allen and Bill Gates first connected. The pair reflected an image of contrasts.

---

Where Allen’s family struggled to afford tuition but wanted to challenge him (his father was a University of Washington librarian and his mother was a schoolteacher),⁷ Gates, nicknamed “Trey” as a child, had been raised in a prominent family—his father was a successful lawyer and his mother was involved with the boards of nonprofits.⁸

Despite all of their differences, they also had many similarities. They both were drawn to the limitless potential of computers and felt like a wave of opportunity was approaching. Companies such as Hewlett-Packard and Intel Corporation were emerging, and developments in memory storage and word processing were on the horizon.

Something big was happening. And Allen and Gates wanted to be a part of it.

The Lakeside Programming Group

Gates and Allen joined two other students—Ric Weiland and Kent Evans—as the most consistent visitors to the computer room. The older Allen and Weiland often paired up together, and the younger Gates and Evans quickly became best friends, reading business magazines and planning their future companies.

“We were always creating funny company names and having people send us their product literature,” Gates said. “Trying to think about how business worked. And in particular, looking at computer companies and what was going on with them.”⁹

As the group kept burning through the Mothers Club’s computer budget, a new opportunity emerged—a time-sharing company called the Computer Center Corporation, or C-Cubed, opened in Seattle and needed testers for its Digital Equipment Corporation PDP-10 computer, since its TOPS-10 operating system was known to crash.¹⁰

C-Cubed offered the teens unlimited free time as testers on the company’s terminals. There, they began studying code and mastering different machine language such as BASIC, COBOL (Common Business-Oriented Language), and FORTRAN (Formula Translation). Computer pioneers at C-Cubed would loan Gates and the other teens system manuals and teach them about assembly code in drips and drabs. Other times, Allen and Gates would go dumpster diving through the trash to find discarded operating system listings. Gates’s weight made it easier for Allen to propel him.

“It was so exciting to get a little glimpse and beginning to figure out how computers were built, and why they were expensive,” Gates recalled decades later. “I certainly think that having some dimension, when you’re young, that you feel a mastery of, versus the other people around you is a very positive thing.”¹¹

After testing of the PDP-10 was completed, C-Cubed began charging the teens for computer time. One month, Allen’s charge came to $78, which would amount to more than $500 in 2019. “I know you’re learning, but can’t you cut back?” his father asked him.¹²

Gates and Allen tried to tap into C-Cubed’s internal files in hopes of finding a free account. Instead, they got caught, and they lost their C-Cubed privileges for the summer. That fall, Allen—in exchange for free computer time—was tasked with trying to improve C-Cubed’s BASIC compiler, a program that translates source code.¹³

Allen pored through the assembly code “like an apprentice watchmaker squinting at the tiny wheels to understand their interplay,” he wrote, piecing the code together word by word and becoming a BASIC virtuoso.¹⁴

C-Cubed taught the boys another lesson in 1970 when it closed. The company never established a solid business model. There was money to be made through computers, but you couldn’t fund a company on the strength of free computer time.

With C-Cubed closed, the teens branched out. Allen, then a high school senior, began spending his time at the University of Washington’s graduate computer science lab. “I was a sponge, soaking up knowledge wherever I could,” he said.¹⁵ “All of us were sponges then.”

That fall, a time-sharing company in Portland hired Allen and his three “colleagues”—Gates, Weiland, and Evans—to write a payroll program in COBOL, the high-level language, and the Lakeside Programming Group was born.

---

That fall, a time-sharing company in Portland hired Allen and his three “colleagues”—Gates, Weiland, and Evans—to write a payroll program in COBOL, the high-level language, and the Lakeside Programming Group was born.

---

The project was sprawling and cumbersome. Evans and Gates did much of the heavy lifting, but after Allen and Weiland worried there wouldn’t be enough work to go around, the upperclassmen decided they could take on the project alone.

“I’m sure their friends thought it was weird that we were coming around at all, and then they decide they just want to do it. So they kicked both Kent and I off the project,” Gates said. “And I said, ‘I think you’re underestimating how hard this is. If you ask me to come back, I am going to be totally in charge of this and anything you ever asked me to do again.’”¹⁶

Soon enough, Allen was asking Gates to rejoin the project, and just as he said, Gates took ownership. “It was just more natural for me to be in charge,” he said.

Gates had an innate ability to synthesize information quickly. When confronted with a situation, he’d rock forward and ...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• Contents
• Acknowledgments
• Microsoft Timeline
• Introduction
• 1. The Early Years
• 2. Liftoff
• 3. A New Stratosphere
• 4. Crossroads
• 5. Into Your Living Room
• 6. “I . . . Love . . . This . . . Company!”
• 7. A New Era
• 8. Key Acquisitions
• 9. Microsoft Today
• Business Lessons and Opportunities
• Endnotes
• Index
• Introduction from The Domino’s Story