The Steve Ballmer Interview - Acquired  ## Metadata - Author: **Acquired** - Full Title: The Steve Ballmer Interview - Category: #podcasts - URL: https://share.snipd.com/episode/e4dee95e-a18f-4d02-ac8a-1cad670afe80 ## Highlights - **Microsoft's Consumer Business** - Steve Ballmer feels both good and bad about being the 'father' of Microsoft's enterprise business. - Microsoft started as a consumer company, and he regrets losing that muscle, as having both would make the company ultra successful. Transcript: Steve Ballmer And I feel both good and bad about it. Because the truth is, Microsoft started out as a consumer company. And we built a very important consumer business. That success translated into the opening to go build an enterprise business. And one of my ([Time 0:05:58](https://share.snipd.com/snip/4ba01a64-5000-414d-bb65-8ee5cb24d04e)) - **IBM's Dominance** - Microsoft didn't feel strong in the mid to late 80s because IBM was still the dominant force. Microsoft felt the need to stay close to IBM, fearing they could be trampled if they let go. - They referred to IBM as 'the bear' and felt the need to always stay connected to them. Transcript: Steve Ballmer Think by the mid to late 80s, I mean, you make it sound very strong. No, we didn't feel very strong. There was IBM, man. IBM was still the sun, the moon, and the stars. That didn't change. I would say we didn't drop that theory well into the 2000s. Into the 2000s, Lotus Notes was coming for us, and that was mid-90s and beyond. But maybe you could say late, but we weren't an enterprise company. If you looked at the enterprise, the enterprise was still IBM. We used to say we had to hang on to IBM that if we ever let go, they might trample us. We called them the bear. You had to stay on. Then of course, graphical user interface, it's kind of coming out of Xerox PARC at the time. And, you know, Apple's doing their thing. And we start, that's another disruption. Could blow everything up. So I would say no sense of confidence about controlling the ecosystem well into the 90s before I think any of that, or at least for me. Ben Gilbert When did you start to feel like we're getting out from under the thumb of IBM? And maybe walk us through a little bit the OS2 Windows world. Steve Ballmer So we've been staying with IBM. They decided they wanted to build something that was sort of their operating system and sort of not. This is 82, 83. We and they would collectively build part of it. We would be able to license it to others. They would build a value-add layer that was a database and a 3270 emulator. Crazy to now. We were going to work on the operating ([Time 0:20:08](https://share.snipd.com/snip/29fd5ebb-1a88-41c4-8cf3-ecf79dcca7d8)) - **Early Windows Adoption** - Windows initially gained traction through individual users buying PCs and software at retailers like Egghead, bypassing IT departments. - IT later became concerned as they noticed many copies of Windows and Excel were being used within businesses. Transcript: Steve Ballmer So who's using Windows and how are you selling to them at this point? Interesting. Single copies, some hobbyists and end users, somebody who says, hey, I really want to use a spreadsheet. And a lot of users in enterprises. So it wasn't going through IT. You'd have a user that would buy a PC on the expense account, probably for the department, buy a copy of Windows, buy a copy of Excel, like at an egghead software, it was a software retailer At the time, and bring them in and use them. And then IT started to get nervous about that. We knew most of the copies, not most, but many of the copies were winding up in businesses. What the hell? IBM's going to stomp us like a bug. David Rosenthal You just took as a given assumption that if IBM wants to stamp out this happening, it's going to happen. So if we want a future, we got to play with them. Yeah. Steve Ballmer That's why we were, quote, riding the bear the whole time because they'd stomp us out and they'd divorce us in 90. And then we say, oh my God. Okay. David Rosenthal So at this point, your business, even though it's billion plus scale, it's selling to retailers to sell software, copies of software, DOS, Windows, languages, apps. Not DOS. Steve Ballmer DOS was always sold to... OEM. Yeah, not always. But so much of the lion's share, it's worth saying, was only sold because you needed a BIOS. Remember? You needed a BIOS. So you had to have the hardware vendor build the BIOS into the machine, basically. So you've got that. The OEM business, which was already going strong. The OEM business was the biggest part of the business. Yep. And then we had this retail business, and there was no notion of enterprise licensing. Yeah, you've got no CIO relationships, no enterprise agreement, no... We had a couple CIO relationships. The Air Force ([Time 0:30:33](https://share.snipd.com/snip/6d3f04a1-a7b8-468d-955a-3a15635a987d)) - **Paul Allen's Vision** - Paul Allen's vision was to write all the software that microprocessors would ever need. - This push from Paul Allen led Microsoft to develop both systems and applications. Transcript: Steve Ballmer Well, Paul Allen, I mean, Paul is the key. Paul is the one who said, Bill said, we're never going to be a hardware company. And when the Altair came out, the first real sort of microprocessor-based computer, Paul says, okay, let's write all the software that these things will ever need. So Bill and I had a lot of the execution around that, but that was the push. And Paul was ([Time 0:35:43](https://share.snipd.com/snip/e0b0cc5c-f33c-454f-a1a2-cb7c1cdd9a95))