I Remember Microsoft Once computing’s red-hot center, Microsoft now has a tough time retaining its best and brightest employees. Here, some who left reflect on what they learned–and why they find life on the outside so much more alluring.
(FORTUNE Magazine) – Early in 1997, a 31-year-old Microsoft executive named David Risher told his boss that he was quitting to join an intriguing Seattle startup called Amazon.com. Risher, who had come to Microsoft from Harvard Business School six years earlier, was hardly disgruntled. He loved Microsoft, where he was surrounded by smart, interesting people and had an amazing amount of responsibility. And, of course, he was richer than he’d ever imagined; a rising young executive with his tenure at Microsoft is likely to have at least $2 million in vested stock options.
When he told his superior, Pete Higgins, of his plans, the response was immediate: “You’re going to leave Microsoft for a retailer?” Back then, Microsoft employees had a powerful sense of themselves as being at the center of the computing universe, with opportunities they could find at no other company. The notion that Risher would view this little local startup as offering greater challenges and bigger opportunities–well, to Higgins, that was just unfathomable.
After Higgins failed to talk Risher out of quitting, the young executive was summoned to Bill Gates’ office, where the Microsoft founder–whom Risher had met maybe a half-dozen times–tried to convince him that leaving the company would be “the stupidest decision you’ll ever make.” Not long after that meeting, Risher spent an hour with Steve Ballmer, who also tried to persuade him to stay. Both men seemed agitated that Risher would view the prospect of leaving Microsoft as more exciting than the prospect of staying.
In the end, neither man could change Risher’s mind, and in late January 1997 he joined Amazon.com. There, he did indeed find the challenges he had hoped for–and the opportunities. Today Risher is the head of all U.S. retail operations, making him one of the company’s top ten executives. And he’s now worth around $100 million–even after the recent slump in Amazon stock.
David Risher is what scientists like to call an “index case,” a seemingly isolated incident that a researcher tags as symbolic of an emerging trend. “I was the first person I knew who made this jump” from Microsoft to a dot-com, Risher says. Always before, when people left Microsoft, their motivation was to reclaim their personal lives. Most took their options and retired.
In the year after Risher left Microsoft, others began trickling out to join the Internet economy; now that trickle has become a flood. Recent departees include such stars as Nathan Myhrvold, Brad Silverberg, Greg Maffei, and Risher’s old boss, Pete Higgins, who recently set up shop as a venture capitalist. Just a few weeks ago Tod Nielsen, a vice president who was one of Microsoft’s most visible defenders during last year’s antitrust trial, announced he was leaving. As FORTUNE went to press, three startups were vying to hire him as their CEO.
Most of those leaving, though, are in the Risher mold: smart, ambitious, midlevel execs in their 20s and 30s who have been at Microsoft long enough to have attained millionaire status but have not lost the burning desire, as several put it, “to change the world.” That desire drew them to Microsoft in the first place; now, more than anything else, it is causing them to leave. “I wanted to be part of the Internet wave,” says Sam Jadallah, who had been a rising star at Microsoft. But to do that, he felt he had to quit. Jadallah is now a partner at the Internet Capital Group, a B2B incubator.
Those who have departed in the past year say that Microsoft has come to accept this exodus, painful though it is. “My boss asked me if there was anything he could say to convince me to stay, and when I said there wasn’t, he wished me good luck and told me if there was anything he could do to help, I should let him know,” shrugs Ramesh Parameswaran, who left last summer to found AskMe.com. He adds, “Once you take the discussion out of the realm of compensation, there’s not much they can say.” Parameswaran says that one of his former managers–still at Microsoft–is an investor in his startup.
The official Microsoft position is that nothing new is going on. “I’ve seen very talented people leave over the years,” says spokesman Greg Shaw. “But we’ve also brought in a lot of talented people. And recruiting continues to be great.” According to human resources chief Deborah Willingham, Microsoft’s “voluntary attrition rate” is about 7.5%–“half the industry average.” With its current work force standing at around 35,000, that works out to roughly 50 departures a week.
Many people who have left believe the number is much higher. Naveen Jain, who quit in 1996 to found wireless Web pioneer InfoSpace, claims that based on the number of Microsoft resumes he sees, 100 to 150 people are quitting each week. Jain, to be sure, has a reputation for shooting from the hip. (At the recent InfoSpace annual meeting a shareholder asked where the company was going to find enough talented people. Jain gleefully replied, “There’s this old-economy company called Microsoft.”) But when I mentioned Jain’s estimate to another ex-Microsoft exec, venture capitalist Scot Land, he quickly concluded that, yes, 100 to 150 departures a week was well within the realm of possibility.
What follows is a snapshot of the Microsoft exodus: a look at some of the people who are leaving, the companies they’re starting–and their reflections on the company they’ve left behind. Invariably, they spoke of their time at Microsoft with pride. But not one voiced even the slightest regret at having left; rather, they felt newly energized now that they were part of the Internet economy. Listening to them, I couldn’t help but wonder if the software giant is facing a threat quite different from the ones we’re accustomed to hearing about.
“I’m not worried about the Department of Justice,” says Usama Fayyad, who left just a few months ago to start a company called DigiMine but still frets about his alma mater. “And I’m not worried about Sun or Oracle. But I’m very worried about all the people leaving for dot-coms.”
The founders of Westside.com–George Snelling, 36, Mark Igra, also 36, and Matthew Bellew, 32–are sitting in cheap plastic chairs around a makeshift table in a large, otherwise empty area they’ve designated as their conference room. Out the window, I can see water and boats; their two-story headquarters is located by the docks in a funky section of Seattle called Fremont. Westside.com, which is about a year old and has 35 employees, moved to this location a few months ago, and the building is being remodeled. The contractors have finished the obligatory kitchen-and-game area, and now they’re building small, private offices. Most dot-coms put employees in modular spaces out in the middle of a big floor, but the Westside founders didn’t want to do that. “One of the things we always liked about Microsoft was that everyone had a private office,” says Snelling–because Gates believed that software developers need privacy to write good code. That’s what they believe at Westside too.
It turns out that the company name also harks back to the founders’ Microsoft roots. Seattle, you see, is on the west side of Lake Washington, while Microsoft’s Redmond campus is on the east side. Snelling, Igra, and Bellew are Seattle residents who commuted to Redmond–a trip, says Snelling with a wry smile, “that requires you to cross a very wide lake over a very narrow bridge.” The company name refers to the commute they no longer have to make. “It’s an inside joke,” adds Snelling, though not that inside; anyone who’s ever worked at Microsoft will get it instantly.
Which is perhaps the point. The founders spent between six and ten years at Microsoft. A third of their employees are former Microsoft hands. Many of their advisors are ex-Microsoft folks (including, as it happens, David Risher). And their capital is Microsoft-related; though venture capitalists are banging down the door, the company hasn’t needed a dime of outside money. Thanks to their Microsoft stock, the founders and a handful of other employees have supplied all the capital themselves. This would turn out to be true of a number of the companies I visited.
Westside has adopted aspects of the Microsoft culture. Microsoft exalts developers, and so does Westside. “At Microsoft,” says Snelling, “people are allowed to say no if they think a wrong decision is about to be made.” Westside is trying to instill that same ethos. Westside compensates primarily with equity, just like Microsoft. Of course, every dot-com does this, but Microsoft people tend to view the practice as having been largely pioneered by Gates. “No big company in history has ever been as generous with equity as Microsoft,” one person told me.
Even Westside’s mission sounds vaguely Microsoftian. On its Website, Westside says it is “developing the world’s first hosted development platform for building dynamic Websites and Web applications.” Snelling tries to explain it in simpler language: “We make it easy for people to create very interactive, very hard-working Websites using our software and our servers.” In other words, like Microsoft, Westside hopes to create a technical foundation that software developers will build on.
As I would discover, this kind of deep respect for Microsoft is close to universal among the recently departed. “Microsoft is still a great company” is the sentence I heard more than any other while working on this story. What can be disconcerting is the urgency with which the message is conveyed; most ex-Microsoft execs seem terrified at being perceived as anti-Microsoft. The Westside founders, for instance, stress all the things Microsoft does right. “At Microsoft,” says Snelling, “you learn a framework for how an organization builds software, and that’s no small thing.” Bellew: “They are an incredible intellectual force in computer science. They will always be a force.” Igra: “They do a lot of corporate blocking and tackling really well.” When I ask Snelling whether he uses Microsoft server software, he looks at me like I’ve lost my mind. “Sure we do,” he replies. Bellew chimes in: “I still don’t like Apple.” They all laugh.
So why leave? If Microsoft is still so great, why not develop their “hosted development platform” within the company rather than outside it? “We didn’t see any advantage to doing it inside Microsoft,” replies Snelling. “It was like, ‘Why should we?’ ” At Microsoft, the founders go on to explain, there are all sorts of hurdles you have to overcome, starting with the need to prove to Gates and Ballmer that your idea will mesh with Microsoft’s strategic interests. What’s more, they add, while Microsoft is very good at tackling huge projects requiring thousands of people, it is not set up to create the on-the-fly software that drives the Web economy. “The Internet makes it possible for smaller companies to have a major impact,” says Snelling. Besides, adds Bellew, “with our own company, we can move much faster.” Snelling: “As much as possible, you want to shorten the distance between idea and execution. That distance is a lot shorter with a small company.”
As I prepare to leave, Tom Williams, Westside’s marketing guy–and another Microsoft refugee–pulls me into his office to show me the company’s Website. One page catches my eye. It is a three-paragraph employment come-on, blatantly aimed at Microsofties. It begins: “Westside.com was founded by three ex-Microsoft employees who wanted to recreate the excitement, freedom, and innovation of the early Microsoft culture. They wanted to feel like they were driving the Internet revolution, not fighting against it. And most important, they never, ever, ever wanted to commute again.” I tell Williams that this strikes me as a stinging indictment of a company they all claim to admire. By the time I get back to my hotel, there is a long, tortured phone message from Williams explaining why the Web page should not be viewed as “anti-Microsoft.”
As I made my rounds over the next few weeks, people kept telling me the same thing: Microsoft has gotten too big. It was at the top of their list in explaining why they left. “When I joined in 1991 there were 8,000 employees,” says Raghav Kher, a seven-year veteran who quit in October 1998 to start Imandi.com, a “reverse marketplace” site. “Now,” continues Kher, “there are over 30,000. It has become a much different company.”
Some of this undoubtedly is nostalgia; Nathan Myhrvold fondly recalls “the swashbuckling days when ten of us would hole up to write the first version of Excel.” But it isn’t all nostalgia; there also seemed to be a pervasive feeling that Microsoft’s size is hurting it in important ways. First, Microsoft has grown to the point where process has become as important as outcome. Everyone complained about how bureaucratic the company has gotten, how difficult it is to push a decision through the system. Internal politics have become part of life at Microsoft, far more than even three or four years ago. “It just got so frustrating,” says Eric Engstrom, an eight-year veteran who recently co-founded Chromium Communications, a company that hopes to combine e-mail, browsing, and instant messaging. “You want to do innovative work, but you have to spend half your time defending your turf.”
Sam Jadallah, who spent 12 years at Microsoft–and who, at 31, was the company’s youngest vice president (he’s 35 now)–says that he’s proud of the fact that “Microsoft preserved its entrepreneurial culture longer than any large company I can think of. But,” he adds, “at some point running the ship becomes more important than plotting the path. The culture of risk taking was disappearing rapidly. And the amount of fun I was having was shrinking.”
Another problem with the company’s size, as the former Microsofties saw it, is that it has largely eliminated one of the best things about the “old Microsoft”–the ability to take the initiative. “You felt empowered,” says AskMe’s Parameswaran. Indeed, if you were one of the 200 people working on, say, an early launch of Office, you were empowered. There was an incredible amount to do, and anyone could grab responsibility. But when thousands of people work on the next iteration of Windows or Office, as is now the case, individual responsibilities are more narrowly defined. These days, grabbing extra responsibility is more likely to get you reprimanded than rewarded.
Then there’s the Internet itself, or more precisely, there’s the way it punishes big companies that lack agility. Again, the former Microsofties went out of their way to talk about how much nimbler the software giant is than other big companies. But in the next breath, they conceded that even Microsoft isn’t nimble enough for the Net. “Size is against them,” says Kher flatly.
“Take a startup like ours. We never wrote a detailed product spec. We had no marketing plan. We never even put together a formal business plan. We raised our money on 15 slides. If I was trying to do this at Microsoft, I would have needed to put together a detailed plan and sell it to a bunch of people. It would have taken forever.” Adds DigiMine’s Usama Fayyad: “When I was at Microsoft, I thought they were nimble. But now I completely understand what it means to be a small company with motivated employees.”
Fayyad, in fact, is a good example of someone who felt encumbered by Microsoft’s size, causing him to abandon what he calls his dream job. “Microsoft was too safe,” he says. “I wanted more risk.” He also wanted a chance to pursue a product that was always going to mean more to him than to Microsoft.
A former scientist at NASA’s Jet Propulsion Laboratory, Fayyad had never considered working for Microsoft; he joined in 1995 only after he’d been heavily courted by the company. To his great surprise, he was impressed by what he found. “Microsoft’s research lab is the best in the world,” he gushes. Microsoft gave him tremendous freedom and encouraged him to continue editing an academic journal. In time, he convinced his superiors that data mining–that is, writing software to cull useful information from, say, a company’s customer records–could be an important area for Microsoft, and he started a research team to focus on that area. He roamed the company, trying to show others how data mining could be of value to customers. By 1998, the data-mining application that Fayyad’s team had created had found its way into Microsoft’s server software. But it was complicated to use, and Microsoft did not do a good job of explaining how it worked. Fayyad decided that because data mining was always going to be a tiny niche inside the giant company, it was never going to get the attention he thought it deserved. “Data mining is a service business, and Microsoft is a platform company,” he says. Besides, he adds with a laugh, “at Microsoft, an idea has to be able to generate revenues like ten to the sixth power”–his way of saying $1 billion–“for it to be interesting.”
At DigiMine, which Fayyad co-founded in March with two former Microsoft colleagues, data mining is all anyone thinks about. Fayyad and his colleagues have raised $5 million and are racing to build software that will be faster and easier to use than Microsoft’s. The DigiMine sales force preaches the data-mining gospel to potential customers. Its marketing staff dreams of new ways to mine Internet data. And on and on. Will it ever be a billion-dollar business? Maybe not. But DigiMine doesn’t need $1 billion in revenues to succeed.
Oh, and there’s one other thing, says Fayyad: It’s a lot easier to hire people at DigiMine. During his last month at Microsoft, he tried to fill three positions on his research team, but he couldn’t find them, either inside or outside the company. “When I left,” says Fayyad, “I told Ballmer that I’d have 40 developers in three months. He didn’t believe it. But we started on March 12, and by April 13 we had 30 developers.” By mid-June, DigiMine was up to 48 employees, mostly developers.
Microsoft’s size is one thing, the kind of issue every growing corporation must face some day. More distressing is a second issue that looms large in the eyes of those who have left. Throughout the PC era, Microsoft employees fervently believed that the software giant was the place to work if you wanted to matter in computing. They no longer think that. In the Internet era, Microsoft is not the red-hot center anymore. “You could feel the ground shifting under your feet,” says Shirish Nadkarni, a 12-year veteran who founded TeamOn.com, which provides Web services for small businesses. For the best and brightest at Microsoft, that sensation has not been pleasant.
“The minute these people feel that they’re no longer at the forefront of the revolution,” says Fayyad, “they want to bolt.”
Virtually everyone I spoke to for this story had a deep-seated need to be where the action is; it was practically part of their genetic makeup. (“They are like racehorses,” says a former executive, “and they have to be in the race.”) A surprising number of people left after casting about for a new project inside the company, and realizing–stunningly–that there was nothing at Microsoft that excited them. Suzan DelBene, whose husband, father, and mother all work at Microsoft, puts it in stark terms: “I couldn’t imagine what the next cool thing would be that I would do at Microsoft.” The Internet, on the other hand, offered thrilling opportunities. “When these people start looking outside the company,” says Chad Waite, a local venture capitalist who has helped fund four ex-Microsoft startups, “they say to themselves, ‘Holy shit! Look at all the things I could be doing.’ ” “Leaving Microsoft is like stepping out of a cocoon,” adds Nadkarni.
One of Waite’s companies is Loudeye Technologies, which digitizes audio and video content for the likes of Sony and Disney. It was started several years ago by a six-year Microsoft veteran named Martin Tobias, who–sure enough–was just coming off a three-year project. “I was looking for something else to do,” he shrugs, but no in-house opportunity grabbed him. He met Waite in the course of conducting some Microsoft business; a week later, the two men were having dinner at a Thai restaurant–and talking about a company Tobias wanted to start. “Eight or nine years ago,” says Waite, “you couldn’t pry anybody out of Microsoft.” Now they’re coming to him.
Of all the companies I visited, Loudeye is in the most sensitive position vis-a-vis Microsoft. As a digitizer of content, Loudeye is right in the middle of the war between RealNetworks and Microsoft over whose video and audio player will become the Web standard. On the one hand, Tobias says, he’s a friend of Rob Glaser, the Microsoft alum who founded RealNetworks, and he likes the freedom of being able to use non-Microsoft technologies. Indeed, a number of ex-Microsofties mentioned how liberating it was to be able to make technology decisions based on their customers’ best interest rather than Microsoft’s. On the other hand, Microsoft is an investor in Loudeye. And though RealNetworks currently has roughly 85% of the market, Tobias is not about to count Microsoft out. “You don’t want to get in a fight with Microsoft,” he says. Both companies have pressured him to adopt their technology exclusively, but he’s resisted. “We are Switzerland in the middle of this war,” he laughs.
Tobias is an interesting character. He is a motorcycle enthusiast. His business card reads: “Minister of Order and Reason.” (He explains that when he started Loudeye, he wanted its executives to come up with titles that described what they actually did at the company.) His offices in downtown Seattle should by all rights be in San Francisco; he had the place retrofitted to look like one of those giant loft spaces in the South of Market area. His taste in furniture is wild.
What is most striking about Tobias, though, is his acerbic tongue. A number of the Microsoft alums I met were friendly but a little bland and cautious. Tobias is more what one imagines a Microsoft executive to be like–sharp-witted and opinionated, someone who doesn’t suffer fools. At one point he mentioned the famous memo Bill Gates wrote in 1995 that refocused Microsoft on the Internet. He called it Gates’ “oops-I-almost-missed-it memo.”
Tobias’ outspokenness even extends to the antitrust suit. For most of the people I met, Judge Thomas Penfield Jackson’s ruling against the company was a painful subject; after all, many had been deeply involved in the browser wars, and it was hard for them to believe that they had done anything wrong. “We always thought we were doing the right thing,” insisted AskMe.com’s Parameswaran, who had been a key lieutenant in the browser wars. “I still think what we did made sense.” Others expressed bewilderment. “Nobody ever told us that the monopoly switch had been turned on, that we were supposed to change the way we did things,” said Russ Arun, who recently left to become the CTO of InfoSpace. “Now if you’re at Microsoft, you don’t know what to do.” But nobody was as unrepentant as Tobias. “I’m an ardent capitalist,” he said. “If you are smarter than the other guy, you should be able to have any market share you can get.” He was incensed that the feds want to limit what Microsoft can put into Windows. “What if the government had come along five years ago and said you can’t add spell checker? How much sense would that have made?”
It’s an amazing thing to see; in an era when there is precious little loyalty between employee and employer, Microsoft refugees are fiercely loyal to a company they no longer work for. They criticize Microsoft with a heavy heart and make it clear they’re still rooting for the company. “Microsoft can still win if they bring back some of the risk-taking culture and a grand vision,” says Sam Jadallah; indeed, he’s sent Ballmer encouraging e-mails detailing the challenges he feels Microsoft faces, now that he has an outsider’s perspective. Many feel guilt at having left during Microsoft’s time of trouble.
Usama Fayyad says that it “hurts” him that so many smart people have departed–even though he’s among them. Some insist on going off the record before they’ll concede that Microsoft has morale problems. Others are so loyal that even now they bristle at the idea that anything’s wrong.
Nathan Myhrvold is like that. The 40-year-old former chief technology officer was once one of Gates’ closest advisors, before he took a sabbatical last year. When it was over, he decided not to return. After 13 years at Microsoft, he said, he wanted more time to pursue his other passions, which include photography, fly-fishing, cooking, and dinosaur research. (He is currently underwriting a dinosaur dig in Montana.) But when asked whether he had been worn down by the grueling pace, his answer was curt. “All of the pressure I felt at Microsoft came from me. Nobody ever forced me to work hard. I pushed myself.” As for the notion that Microsoft is suffering an exodus of talented young execs, Myhrvold was scornful. “Overall, Microsoft has a lower attrition rate than any company that I have firsthand knowledge of,” he said, parroting the party line. Besides, he added, “the two most important people, Bill and Steve, are still there.”
I got an even stronger reaction from Jon Roberts, a principal at Brad Silverberg’s Ignition, a new incubator of wireless startups in Bellevue. Seven of Ignition’s nine partners are from Microsoft, and all had been high-ranking executives, including Chris Peters, John Ludwig, and Cameron Myhrvold, Nathan’s brother. But only Roberts would consent to an interview–and that, he strongly implied, was only because he was the designated press spokesman for the group. When I tried to draw him out about what one might reasonably infer from their collective departure, he gave me a withering response. “This is why none of the others wanted to be interviewed. We each had our own personal reasons for leaving. We’re just not going to generalize from our own experiences. We’re not comfortable with that.” End of interview.
All this raises the question: Why are people so loyal to Microsoft? With Myhrvold and Roberts, you could understand it; they were part of the old guard who had helped build the company, and they had long-standing relationships with Gates and Ballmer. They had pride of ownership. But what about the younger, midlevel execs who hadn’t been there as long and didn’t have the same strong ties?
Chad Waite thought it had to do with the fact that working at Microsoft was such an intense, formative experience. These people had spent a tremendous number of hours at the Microsoft campus, had met most of their post-college friends there–and quite often their spouses as well. “It really is a lot like college for most of them,” he said. “It was just a great part of their lives.” Also, there was the work itself, which had been so exhilarating for so long. “The Windows 95 launch was such an incredible experience,” said Suzan DelBene, emitting a small, happy sigh. Everybody I talked to had similar memories.
But I wound up thinking that there was another factor just as important. Most middle managers leave companies believing that they’ve given the corporation more than they’ve gotten in return. The people who leave Microsoft feel just the opposite. For all the hours they put in, they receive an incredible amount in return. For starters they get stock–stock that not only has made them rich but also has made their exciting post-Microsoft lives possible. “It’s a miracle,” Martin Tobias says of the wealth he accumulated in just six years at Microsoft. “That’s the only way you can describe it. Think of someone who’s worked 20 years at Boeing. They don’t have $5 million in options. They can’t just leave if they want. How many companies give you the resources to quit and start your own company after so short a time?”
Microsoft has also given them incredible contacts. TeamOn’s Shirish Nadkarni helped orchestrate Microsoft’s purchase of Hotmail. Who was the first person he went to see when he wanted to start his company? Hotmail founder Sabir Bhatia–who decided on the spot to become an investor.
And, they all firmly believe, Microsoft has given them unmatchable skills. They learned business and financial discipline. They learned how to turn research into products and how to build software-development teams. They sat in awe as Bill Gates grilled their team about an upcoming product–and learned from that experience. Ultimately, they have come out of Microsoft with the absolute belief that they’re prepared to be CEO. “I couldn’t be better equipped to run a company,” says Alex St. John, who has founded a company called WildTangent (see box). “Being a CEO is a walk in the park after Microsoft.”
The venture capital community also buys into this idea, which is why the Seattle-area VCs are so eager to throw money at startups run by Microsoft alumni. “They have been challenged and tested,” says Waite. “You know they haven’t just been lucky.”
But is that really true? Is Microsoft really a CEO finishing school? To my mind, the jury is still out. Most of the companies I visited were too new for anyone to make an informed judgment–and in the case of one with a very high profile, Drugstore.com, the lessons to be drawn are mixed, at best.
Founded in the summer of 1998, Drugstore.com is a Kleiner Perkins company. Its CEO is Peter Neupert, 44, another member of the old guard at Microsoft, who was recruited by John Doerr himself. (“If he had called five years before,” says Neupert, “I would never have gone.”) Indeed, the main reason Neupert left Microsoft, he says, was that Doerr offered him the opportunity to be CEO–something he would never experience at Microsoft.
As is typically the case in consumer e-commerce, the “drugstore space” rapidly became a crowded place, and Neupert found himself in a competitive war. Coming from Microsoft, he was used to that. He ramped up quickly, had the site online by early 1999, and took the company public in July. On Drugstore’s first day as a public company, the stock went from $18 to $70 before closing at $50.25.
Today, Drugstore.com is by any measure the leading Internet drugstore. It has the most revenues ($35 million last year) and the most customers (more than one million). It employs 700 people. But like many consumer dot-coms, Drugstore.com is struggling. Last year it lost $115 million, and its stock now hovers around $8 a share. Employees are leaving.
If you ask those who have quit, they’ll tell you that Neupert deserves the lion’s share of credit for Drugstore.com’s position in the marketplace–in no small part because he brought to the company that relentless focus and discipline he learned at Microsoft. But they’ll also say that Drugstore has been a difficult place to work. Neupert is a stern taskmaster rather than an inspiring leader. People are expected to work ungodly hours and are criticized if they’re seen going home “early” too often. Employees are rarely praised for meeting impossible goals–another Microsoft trait. Drugstore’s culture is argumentative, just like Microsoft’s. “It just wasn’t a fun place,” recalls an ex-employee. It’s not just those underwater options that are causing people to head for the exits.
One woman who’s no longer at Drugstore.com is Suzan DelBene, its original vice president of marketing and store development. A nine-year Microsoft veteran, she spent just 14 months at the startup, departing shortly after the IPO. Like all the other Drugstore.com people I spoke to, she was quick to laud its market position and its prospects. She was proud of having helped Drugstore.com go from a standing start to an IPO in less than a year. That had been energizing, she said, a little like the great Windows 95 launch. But she had never liked the harshness of the Microsoft culture–the brutal way criticism was doled out–and while she wouldn’t criticize Neupert directly, she made it clear that she hadn’t liked that aspect of Drugstore’s culture either. It seems obvious that that had a lot to do with her departure.
Now DelBene is CEO of a startup called Nimble Technology, a data-integration company founded by a pair of University of Washington professors. Will she do better than Neupert? It is impossible to say; she’s only had the job since January. But one thing she’s doing, she said, is trying to instill an ethos that work is fun. “Here,” she said, “when people stay late, it’s because they want to, not because somebody is cracking a whip over their heads.”
One of the last people I interviewed for this story was Ramesh Parameswaran, the co-founder and CEO of AskMe.com, an online advice site. It was fitting, somehow, that I met him so late in the game, because he struck me as the embodiment of all the ex-Microsoft executives I’d met before him. He’s young–only 30. Having put in seven years at Microsoft, he’s undoubtedly rich. He’s smart; Paul Stanton, another ex-Microsoftie now at AskMe.com, says that part of the attraction for him was that “Ramesh is one of the smartest people I know.”
Parameswaran was critical of Microsoft (“You cannot innovate on the Internet at Microsoft”) and yet protective (“I told the people here to tell you the truth, but not to say bad things about Microsoft”). Though he claimed not to be actively recruiting from Microsoft, nearly half of the company’s 90 employees were Microsoft alums.
One of Parameswaran’s favorite words is “jihad”–which of course was a favorite word at Microsoft once upon a time. Being involved in the browser wars, he said, “was an awesome experience.” “The last big battle,” he called it with great fondness. A key reason he left Microsoft was that “we were fighting forest fires instead of epic battles.”
With some 80 companies competing in the “advice” space, AskMe.com is clearly conducting its own jihad. That’s one aspect of his Microsoft life that Parameswaran has brought to his new venture. On the company’s front door is a sign that reads ENTERING THE WAR ZONE. Inside I saw another sign on a wall: IN WAR, HE WHO IS READY TO DIE, WINS.
And yet, and yet. For someone who liked jihads so much, Parameswaran was friendly and soft-spoken and polite. He said that one thing he wants to instill at AskMe.com is “the human element”–which he believed Microsoft lacked. “We want to be super-understanding of our employees,” he said. “We want to reward people without their having to ask for it. We’re going to tell people to take a break if we think they need it.” As you walk the halls of AskMe.com, you get the sense that somehow or other he’s achieved this balance of sensitivity and intensity.
“We want,” he said finally, “to be a kinder, gentler Microsoft.” Well, yes. So do they all.
By: Joseph Nocera Reporter Associate Alynda Wheat