Q&A with Steve Ballmer

Nate Orenstam
Saturday, April 13, 2002

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Chewing The Fat With Steve Ballmer

I recently met up with CEO Steve Ballmer at thermo-nuclear powered Dixie's BBQ in Bellevue, Washington to find out more about Microsoft's new organizational structure. Over a lunch of raw beef and skewered executives, we discussed Microsoft's inner workings, the departure of President Rick Belluzzo and new security challenges.

Tell me about the reorganization. Why are you splitting into different divisions?

Basically, the company had gotten too big to manage with a couple of executives at the top. We want to push the decision making down a notch by having seven separate divisions. It's all about having visibility and accountability. We've told the general managers that there basically six top spots. So whoever comes in last, well, you get the picture. They're drinking decaf in the big Starbucks in the sky along with Microsoft Bob and Clippy. We're trying to make sure the culture stays focused. Rick Belluzzo didn't even last as long as Clippy. That's saying something.

What went wrong for Rick Belluzzo? It seemed like you had high expectations for him.

Rick is a really good guy. He's a team player, good values, always looking to treat customers and partners right. So he never fit in here. I mean, this isn't the boyscouts, ya know? Always going on about "do the right thing" and the "HP Way." Jesus Christ. We didn't want to duplicate his HP or SGI track record here at Microsoft. The stock would be at negative 12 if we followed his lead. But I'm big enough to admit a mistake. Bill should never have approved hiring Rick.

Wasn't it your idea to hire him in the first place?

Look, at Microsoft, Bill and I don't worry about whose idea it was. Bill was still CEO at that time, so it was his call. I supported him completely. I've worked with Bill for 22 years, I'm not going to diss him just because he screwed up hiring three or four presidents who couldn't tell a DOS prompt from a disk drive. Shirley, Hallman, Towne and now Belluzzo. These guys were all Microsoft XP'd, ya know? Ex-Presidents marked for Expedient Demise. But if Bill wants to recruit a guy I've worked with, well, I'm gonna do everything possible to support him for as long as Bill is paying attention. You have to remember, I've know Bill since Harvard. So what if he screws up once in a while? Still, when a company gets to be a certain size, it makes sense to put a college graduate in charge.

I thought you were going to join KISS in their farewell tour. Was Belluzzo's departure wrapped up in this?

You know, I very nearly did leave Microsoft. But when I saw Rick trying to take down the KISS posters in my office and I thought, why throw away 22 years of good times just because Hailstorm is screwed up? And here's Rick, still an outsider after two and a half years muscling in. It just came as one of those perfect moments. The guy walked right into it. I canceled the tour, tore up my resignation letter and assigned Hailstorm to Rick. Problem solved. A week later, we held the project review with Bill and it was a disaster. To be perfectly honest, I was disturbed when I find out the state of the problems with Hailstorm. He'd barely been on it a week and it was already a year behind schedule. He wasn't even up to date on the financials I routed through internal mail that morning. Bill went nuts.

So we had a facemail meeting and took him out to the woodshed, so to speak. He just went off the deep end. He became extremely paranoid. He was convinced people were out to get him. In the end, he just fled town. No one has seen him since. We notified his family as soon as we could. Shame the way this happens sometimes with high-strung executives. Seems to have happened a few times here, actually. Sudden failure syndrome, I think they call it.

What kind of impact did Belluzzo have?

Rick was very effective in some key areas at Microsoft. He really went to town on the cafeteria menus we have. Totally streamlined the operations. I mean, we pride ourselves on efficiency but when I assigned Rick to work the grill in building 10, we saw some real improvements. He scored some big points with Bill making sure cheeseburgers were available for breakfast. That was a pretty savvy move on his part and one of the key reasons we promoted him to President last year.

Look I'm not going to trash the guy. Rick served Microsoft well in the time he managed to stick around. Sure MSN lost ground when he managed it, but we knew that was going to happen. And then there's the delayed Xbox release. Coulda happened to anyone. Hailstorm? I really thought he'd be able to work some magic there. But again, I can't stress enough his impact on the cafeteria system. We're thinking of naming one of the burgers after him. Rick's Belluzzo-Burger. It's very good. Blue cheese, bacon, hot peppers. Bill loves 'em.

Have you thought of re-instigating the Executive Committe or Office of the President?

We tried that once. It was basically an extension of the all-night poker games Bill and I used to play back at Harvard. But after a while, it started getting too complicated. We'd end up re-orging every couple of weeks based on who won or lost. Sometimes whole divisions would get moved just because someone bet two pairs against an inside straight. People were always wondering why Jim Allchin ended up with so much power. What can I say? He bet big and won big. It's not always pretty, but it's not a bad way to keep the troops from getting complacent. And I can't say I'm unhappy with how things have worked out for me. I did pretty well one night and ended up becoming President myself. Then I eliminated the poker game and the whole committee approach. You gotta know when to hold 'em and when to fold 'em. I told Bill we just didn't have time with the government breathing down our necks. That was a pretty good bet also.

Microsoft has had a history of bringing in executives from outside companies and then quietly sidelining them. Why is that?

Sideline? I don't know about that. We just fire them. Ha! These people kept focusing on the wrong things. If I want someone to focus on the wrong things, I'll tell them to, just like we do with the auditors. The problem is that a lof ot these execs were from loser companies. I mean, honestly, what are we going to learn from someone from Apple? We could buy the whole company and shut it down as an April Fool's joke. We'd do that, but then the government would step in and complain again. Frankly, I don't know why they'd even care. They're all running Windows over at the DOJ. Heck, we installed a special enhanced version of Microsoft Office that makes it very easy for us to, ahh, monitor technical support issues. It's a pretty interesting system. Very effective. Lets just say we won't be surprised by any secret governments action again.

So with Bill and I running the company, we don't need a lot of carping from second-tier executives from the outside. We can get that from our staff, thank you very much. But it certainly has shaken our confidence in some of the companies these guys come from. Why do you think Bill finally bought a Gulfstream IV? After we brought in Hallman from Boeing, we figured if he's the best they got, we're just not gonna risk it, ya know what I mean?

So why do you hire outsiders?

It's kind of a trick Bill and I play on people. Mess up their minds. We tell them we really want to change the Microsoft culture and they're going to be a big part of it. Most of the time they completely fall for it. Usually we have a betting pool going on to see how long they last. I made a few bucks on Belluzzo, let me tell you.

What about security issues?

I think we were able to erase all the video tapes. I tell you, I breathed a sigh of relief when I heard that.

No I mean, the security issues with Microsoft products. There's been repeated flaws found in Microsoft's web server, browser and now there are flaws in the flaw detection software.

I'm shocked -- shocked -- to find out security is a problem in the industry. I think the PC vendors and ISPs really need to put more controls in place. From what I can tell, the government should take a serious look at shutting down AOL since that's where a lot of these hackers hang out. But to be clear: Microsoft is committed to doing everything possible to make security a top priority. A couple months back Bill wrote that memo to everyone in the company about how important security is. Unfortunately, it had a link to a white paper that caused the servers to crash. But we're on it and I think we'll have a fix by the end of the year.

We've also named a Chief Security Officer. His identity is actually a secret. He used to work at the CIA or something. Apparantly he's quite well respected in these areas. He's virtually untraceable. Won't use credit cards, refuses to be fingerprinted, that sort of thing. Pretty clever guy. If we locate him, I'm sure we'll get to the bottom of all these security issues once and for all.

What about Linux? How much does the company focus on Linux?

Well we run all of our hotmail servers on Linux and ahh -- wait a sec. I mean, to heck with Linux! Linux is a cancer on the liver of capitalism. We've been asked about doing a Microsoft Office for Linux, but I can't see that happening. Come to think of it, I think that was one of Rick's projects.

About the author
Nate Orenstam is a world-renowned programmer who has met "The Man" at Dixie's BBQ.