Barbarians Led By Bill Gates

by J.Edstrom & M. Eller, Pages 32-43  Buy this book.

Not long after Edstrom signed on, she was joined by Rowland Hanson, the former vice president of marketing for Neutrogena Corporation, a maker of soap and cosmetics. Good looking, well dressed, and a computer virgin, Hanson, a die-hard surfer and beach lover, came from a world of fragrant packaged goods where appearances-image and perception-were everything. He represented all that Microsoft, in the early 1980s, was not.

Until 1983, the computer industry was still so arrogant that it had no idea how truly bush league it was when it came to packaging and pitching products for consumers. Gates, in the early 1980s, was the epitome of this clueless arrogance, but he and Microsoft were about to receive a face-lift.

Hanson and Edstrom would spin a whole new image for Gates himself. They would tap the best and worst of Chairman Bill, changing his clothes, his voice, and his allegiances, driving him to become not just the boss, but essentially the company mascot-a sort of high-technology Colonel Sanders.

Hanson, who always longed to own his own business, had been getting ready to leave Neutrogena and launch a new line of pet care products. Just before getting the seed money he needed for his new venture, he took a call from a New York-based search firm responsible for recruiting executives for Microsoft.

“Here’s the type of guy I want,” Gates told the headhunters. “I don’t care if he knows anything about computers. I need a guy who really understands branding.”

If Hanson could create market differentiation for something as straightforward as hand lotion, Gates reasoned, then why not do the same with software?

Hanson didn’t fancy himself much in the nerdy world of computers, nor was he eager to trade in southern California sunshine for rain. Hanson agreed to fly up on a Sunday morning to meet with Gates.

Hanson got on the plane to Seattle with every intention of saying no. Microsoft’s Steve Ballmer, Gates’s dorm-mate at college and new chief confidant, who had earlier spent a brief stint at consumer-goods giant Procter and Gamble, picked up Hanson at the airport, and the two hit it off immediately, talking football on the drive to Bellevue. A husky six-feet-one, two hundred twenty-five pounds, Ballmer had once been student manager of the Harvard football team.

When they got to Gates’s office, the young chairman immediately launched into sales mode, rocking back and fourth with excitement as he explained his vision of computing.

It was all Greek to Hanson, but then a light went off in his head. In Microsoft he saw”marketing” Pygmalion…with Gates as Eliza Doolittle.

“I’m starting to get what you’re talking about here,” Hanson said. He was fascinated with the birth of new industries, a soldier of fortune always looking for a new marketing challenge. “But I have no idea why you’re interested in me?”

Gates looked puzzled.” I thought you understood, he said.

Hanson shook his head.

” What’s the difference between a dollar-per-ounce moisturizer and hundred dollar-an-ounce moisturizer?”

“Technically …there is no difference. Vaseline works as well as Clinique’s daily moisturizer. It may even be more effective.”

“So what’s the difference?” Gates asked.

“Well, it’s in the brand. The image you create around the brand.”

“That’s why I need you in this company,” Gates said. “Because nobody in this company or in this industry really understands that. And if we can have the perception, I can create the reality. With the combination of the reality and the perception, nobody will ever beat us.”

Hanson was sold. But it would take three months of negotiating to bring him to Microsoft. One of the stipulations, Hanson said, was that he would only stay at Microsoft a couple of years. After that, he would start his own business.

Sure, Gates agreed, confident that Hanson Pet Care Products would never see the light of day.

Hanson joined Microsoft in early 1983. As vice president of corporate communications, Hanson was responsible for advertising, public relations, and anything that had to do with retail promotions and the public. Hanson’s goal was to position the company as the industry leader in software. But to get there, they would need to establish fundamentals.

Microsoft was an environment in transition-sort of like Beirut is in a transition- a company with no checks and balances dominated entirely by developers. They did what they wanted when they wanted. Procedures didn’t exist. Hanson liked the challenge.

Hanson’s goal was to position Microsoft as the “safe buy, the quality buy,” i.e. the next IBM. Hanson not only began changing what Microsoft said, he began a make over in how the company appeared to corporate America. If Microsoft wanted to be the “safe buy,’ people had to see Microsoft the way they saw IBM-stable, hardworking, straight up and down.

IBM didn’t always make the best hardware-its PC Junior machine had been a disaster and eventually people would realize that. But for a long time, people bought IBM because of the perception of safety. Nobody purchasing computers in corporate America was going to stick his neck out by buying some jerk-off brand. You had to buy a brand you could defend to your nontechnical senior management, as well as to shareholders. Gates knew that victory meant people simply asking for the Microsoft brand.

But if Hanson was going to position Microsoft in a certain way, he first had to understand what people thought about the company. He proposed spending $50,000 on the first awareness and attitude study in the computer industry. He knew of a company called Griggs and Anderson, a Portland, Oregon-based research house that had been doing focus groups. The research would evaluate not only the general awareness perceptions of Microsoft, but also what features Microsoft should be including in its products.

Gates’ reaction to Hanson’s plan was: “This is insane.”

Gates and Hanson battled back and fourth. Then at one of their Monday-morning strategy meetings with Microsoft’s other top executives the bickering came to a head.

“We’re not going to do it,” Gates shouted.

Hanson pressed on. ” I need to proceed with this research,” he said. “We’re not going to get it done in time, and I have ad schedules to make. A lot of this is going to be used.”

Right then in front of everybody, Gates reversed his position.

“You’re right,” Gates said. “Let’s do it.”

“That’s why Gates was so successful,” Hanson would later reflect. ” His ability to turn on a dime, and to listen to the smart people he had surrounded himself with.”

The next item on Hanson’s agenda was to figure out the message Microsoft wanted to deliver.

 

Griggs and Anderson performed their focus groups, comparing Microsoft with other companies such as VisiCorp and IBM.

The survey results provided pretty compelling, if not damning evidence. People said they wouldn’t purchase Microsoft’s software because they couldn’t understand the packaging-pure techno-babble. People were also turned off by Microsoft’s own forest green logo, dubbed the “Blibbet,” that had the name Microsoft, with the letter O crisscrossed with horizontal lines, which to this day has defied interpretation.

The results told Hanson how people viewed each company and exactly what it would take for people to perceive Microsoft as the industry leader. He took that input and developed the necessary message. It was a very disciplined, systematic approach-something totally alien to the boys’ club of techies who relished their Animal House ways.

Hanson and his team knew the company had to have a sole spokesman to make sure the message to the public remained controlled and focused. Before Hanson arrived on the scene, the absence of formal Microsoft marketing procedures left developers calling the shots. They chose the awful names and wrote the impenetrable lingo on the back of the boxes. They talked freely to the press, improvising randomly, trying to evangelize the company, but instead spreading inconsistency and wild incoherence.

In Hanson and Edstrom’s view of the world, Gates should be Microsoft’s spokesman. Microsoft’s cofounder, Paul Allen, had resigned in 1983 after battling Hodgkin’s disease, and Gates fit the consummate developer image.

Hanson sent around a gag order-no talking to the media. This was, to say the least, not a popular decision with Microsoft’s developers.

Developers were also skeptical about Hanson’s decision to change the manuals and the packaging based on consumer feedback. Some developers thought if the consumer was too stupid to understand the manual, they probably shouldn’t be using the product in the first place.

Hanson ignored this arrogance. For him and for Microsoft, the Griggs and Anderson research was proving invaluable. As their study showed, other leading companies had the same problem of consumers not making the association between a company and its products. Almost everyone knew the premiere word processor at the time, WordStar, yet no one knew that MicroPro made the software. The company never appeared on the radar screen. Likewise, consumers participating in the study knew dBASE, the predominant database product, but no one had ever heard of its maker, Ashton-Tate.

The key to Hanson’s and Microsoft’s success was to have a naming strategy for Microsoft products, and for the company to enforce the brand. Instead of “Word” as a word processor, it would be called “Microsoft Word.” Multiplan, Microsoft’s spreadsheet, would be called “Microsoft Excel.”

Hanson knew that products and product versions would come and go, but that the Microsoft brand name would live on. Microsoft-and Bill Gates-would be the hero.

Not everyone shared Hanson’s affection for brand awareness. In fact, he ran into an uproar with the developers. Naming strategies, branding strategies, whatever those were-the developers didn’t know, and didn’t care. It all sounded like grandiose flackery to them.

The developers, as a whole, still wanted to call their new windowing system the Interface Manager. That was a name they had come up with and it was the flag they were carrying. In the developers minds, this was their product. They had built it-not Hanson.

But from a marketing standpoint the name sucked, big time, and that’s all Hanson cared about.

Knowing they wanted to keep Microsoft as the hero, Hanson, Edstrom, and the corporate communications team began brainstorming new names for I.M. No one, including Hanson, understood what a windowing environment was. There were different products from companies like VisCorp, and they all had hip names like “VisiOn,” but the names had nothing to do with the product itself.

To sort through the confusion, Hanson took all of the editorial clips and news stories on these windowing systems and looked to see what they had in common. Consistently, the press was calling this new thing a windowing shell, a windowing manager, or a windowing system. If Microsoft wanted to set a de facto standard in the industry, the logical generic name to call the new product was “Windows.”

The developers held onto Interface Manager. Gates didn’t want to get involved. He insisted that Hanson convince the others that the name should be Windows. But Hanson was stonewalled. To the developers, Hanson was the “cosmetics guy,” the guy who knew nothing about computers or software and sure as hell wasn’t in a position to name their product.

Frustrated, Hanson went back to Gates.

“I’ve given everybody the logic on this and nobody is buying it,” he said. ” You have to make the decision. I can’t convince them. We’ve got a naming strategy, which is based on our branding strategy. Our branding strategy is based on how we want to position Microsoft. Now we’ve got this ‘thing’ that fits within our naming strategy, and the only logical thing to call it, if we believe in all this crap we’ve been talking about, is ‘Windows.’ There is no other name.

Just before the Windows documentation was to be printed, Gates the oracle spoke. Then the developers lined up behind him with their support.

So now they had a name, but Hanson and Edstrom still weren’t sure whether Microsoft was ready to make an announcement. A technical neophyte, Hanson had no idea what was realistic timing on the product side. In his experience in the food and cosmetics industries, when someone promised a product would be delivered on a particular date, the schedule was simply a function of safety testing. It was guaranteed. Hanson’s job was never to question the date, but to line up behind it and salute.

Edstrom, coming out of Tektronix, was technically more savvy, and she provided Hanson with wisdom born of experience. Hanson would walk out of a meeting with developers thinking everything was “golden.” Edstrom would look at Hanson and shake her head.

“Big problem,” she’d explain. “This stuff isn’t going to be ready.”

Hanson remained unconcerned. From a communications standpoint, everything seemed to be in order. But Edstrom knew better. Sure she told him, if nothing went wrong, if there were no bugs in the software, if the gods smiled, if the Red Sox won the World Series…the developers might make the date. But in the software industry…dream on.

Gates, who should have known better, gave the go-ahead for Windows’s launch, and he sanctioned not one, but two announcements, a spectacular coming-out party for Microsoft as well as for Windows.

The first would take place on November 10, in New York. Microsoft had successfully romanced twenty-four different computer manufacturers who would publicly pledge their support for Windows. Noticeably absent, however, was IBM. Big Blue didn’t care about graphics, and it wasn’t buying Windows.

Despite IBM’s wariness, Microsoft was able to show that Windows would run on a slew of different machines. The beautiful part of the New York event was the twenty-four original equipment manufacturers, OEM’s, which Microsoft had recruited to the Windows bandwagon, assembled together. Many of these companies were blood rivals who normally wouldn’t be within spitting distance of each other. Yet Microsoft, in the name of what must be one helluva new product, was able to pull them all together.

As Edstrom, Hanson, and Gates saw it, this was the shape of things to come-Microsoft became “the” company to watch!!!

The second phase-the pièce de résistance-would be Las Vegas, the computer industry’s biggest trade show, COMDEX.

 

Begun in 1979, COMDEX, the computer distributors exhibition, had become the scene, where industry go-getters had to be, and where opinion makers and trendsetters gathered in full force to see and be seen. By 1983, it was a huge phenomenon, and with all that ballyhoo, it was very difficult for any company, much less a small upstart like Microsoft, to be noticed at all.

Once Hanson knew that Microsoft would launch Windows at COMDEX, the entire communications department embarked on a mad frenzy. Gates had made it perfectly clear that the launch of Windows was the Super Bowl, and Gate didn’t want to play… he wanted to win. Knowing that, Hanson’s goal was two-fold: to make Windows a Phenomenon, and to create the buzz in the industry with Microsoft. Immediately, they faced huge obstacles.

For starters, all of Las Vegas was booked solid.

Hanson called Bob Lorsch, a marketing mastermind, with a Los Angeles-based sales promotion agency whom Hanson had used in crisis mode at Neutrogena.

Hanson said, ” I need to own Las Vegas during this event. I don’t care what the rules are. We need to rise above the clutter.”

Then Hanson warned his team, “We’re never going to get this done working through the normal channels. The normal channels are all taken. I mean this is an insane launch plan. I need to bring in somebody who can make the impossible happen. And you need to trust me. This guy is going to scare you because he is a little off the wall.”

When people showed up in Las Vegas, they were awe struck. There wasn’t a taxi on the Strip not promoting Windows. Stickers were all over the back seats of cabs; the drivers wore Windows buttons.

These same buttons were handed out at the booths of every hardware manufacturer that supported Windows. Each button had a number on it. If people could find someone else with a number that matched theirs, they could go to the Microsoft booth together and receive software, gifts and a bombast of Windows hype. In a Disnyesque mode, Lorsch also created wuppies-little fuzzy mice holding Windows flags-to promote Microsoft’s new mouse.

Lorsch was a magician who believed anything was possible and simply wouldn’t take no for an answer. He managed to get Windows 1.0 pillowcases placed in 20,000 Las Vegas hotel rooms. When half-asleep COMDEX attendees turned down their beds at night, they were astonished to find their pillows instructing them to stop by Microsoft’s booth. Windows 1.0 marketing materials were subversively slipped under hotel doors. Every day, during the entire week of COMDEX, Microsoft had new and different promotional materials delivered to the hotel rooms.

Microsoft’s competitors were crazed, but Gates and his marketing crew were ecstatic. People couldn’t go to bed without Windows. Microsoft had a Windows sign right outside the front lobby of the Las Vegas Convention Center. Microsoft was dancing in the end zone.

As for Hanson himself, he was accustomed to trade shows in Las Vegas, but not to computer conventions. He was used to walking down the strip talking to beauty editors and fashion models from Vogue and Vanity Fair. Now he was staring at programmers with pocket protectors.

Microsoft’s colossal party at Caesar’s Palace-suits and ties were the order of the day-brought Hanson somewhat closer to his own element. Naturally, it was Hanson who had demanded that the Windows developers show up for the party looking like IBMers, or not showing up at all.

Only a handful of the Windows 1.0 developers toed the line. Most boycotted the party to protest the dress code-many didn’t even own a suit. Still, it was a roaring success.

Microsoft arranged for country singer Glen Campbell to show up for the soiree and give a speech. Dressed in cowboy boots, the “Rhinestone Cowboy” stood incongruously next to the world’s soon-to-be-most-famous computer geek.

“I just wanted to welcome y’all here for the Microsoft party,” Campbell said in his Arkansas drawl. “And I just wanted to let you know this is my good buddy Bill gates.”

The crowd laughed till it hurt.

But the buzz was no joke. Because of this Hanson-inspired blitz, Microsoft went from being a player to being the player. Nobody had ever owned COMDEX this way before, and no company ever would again. Microsoft had reinvented and redefined the idea of “promotion,” with tens of thousands of dollars in tips for hotel bell clerks and housekeeping staffs alone. (All those pillowcases didn’t come cheap.) Microsoft had greased the palms of certain shift managers; other times it was a worker with a little entrepreneurial chutzpah.

“You’d be amazed by the power held by doormen, head maids, housekeepers, and security guards.” Hanson said. “As well as the leads limo drivers can give you.”

In total, Microsoft would spend $450,000. After that, COMDEX put policies in place requiring that companies go through the proper channels if they wanted paraphernalia in hotel rooms.

From that point on, Gates did all of the announcements related to Windows, which seemed fitting, inasmuch as, by PR edict, he would personally get all the credit.

At Gates keynote speech, the lights dimmed, and a spotlight followed him to center stage in front of a standing-room-only audience. His fingerprint-smudged glasses reflected the light. Dandruff dusted his collar. He looked like central casting’s idea of a technical genius, which was, of coarse, all part of the image being marketed.

So when Gates stood there and promised that Microsoft would ship Windows in the spring of 1984, people believed him. The company had just spent hundreds of thousands of dollars to launch it, so of coarse it would ship.

However, the developers actually doing the work back in Bellevue knew the truth was something quite different. Eller, Wood, and Remala, especially, knew the product would never ship by April 1984, because of coarse, Windows was “vaporware.” Gates’s COMDEX demo was little more than a videotape that flashed graphics on the screen in different windows. It barely contained any code, and what little code it did contain was riddled with bugs, but it looked better that VisiOn’s demo, and in this age of image, that’s what counted.

In Microsoft’s initial surveys of COMDEX attendees arriving at the Las Vegas airport, only 10 percent of those polled had even heard of Windows, and no one understood what it was or why it was important. When Hanson’s team conducted their exit polls, public perception and awareness for Microsoft and Windows had grown to 90 percent-in one week.

The company received its first television coverage, and people held off on VisiOn, waiting instead for Windows 1.0-the safe, quality buy. Developers stared calling VisiCorp, “VisiCorpse.”

Microsoft crushed VisiOn and built infallible momentum for Windows. The Soft would emerge as a completely different company, not based on its technical merit, but on its marketing prowess.

Gates would emerge a different person as well. He was on his way to pop-icon status. But a casualty of this change would be the attention he could pay to his technical people and to the actual development of Windows. Ironically, never had the programmer-CEO been less involved in his companies programming.

This lack of involvement would wreck havoc during the entire two-year period it would take to get Windows out the door.