A Steve Ballmer Story That Helps Explain Microsoft

Steve Ballmer surprised the world when he resigned from Microsoft, and everyone wondered what he would do next. Well, he surprised everyone again when announcing his impending $2 billion purchase of the LA Clippers. Boom! What a way to get a second at-bat.

Editor's Note:
Jeffrey Yuwono is CEO and co-founder of Feecha, a hyperlocal news app for neighbourhoods. A Stanford MBA and Duke undergrad, Jeff writes insightful observations about technology once a day on his blog The Cornerplay and now on this weekly column on TechSpot.

For those of you living in the figurative sports cave, the LA Clippers were for sale because its previous owner, Donald Sterling, said some pretty bad racist stuff. That resulted in Sterling getting banned from the NBA for life and a forced sale of the team. It's a big story.

That's how Ballmer came to acquire the team. Anyway, I'm not writing about the LA Clippers or about racism. I'm writing to share a Steve Ballmer story.

I'm not buddies with Ballmer or anything. I've spoken with him just a couple of times, and attended a handful of his talks and speeches.

The big thing most people misunderstand about Ballmer is that he's unbelievably smart. They see him going crazy on the stage and assume the man is a joke.

I can assure you he's anything but. Ballmer is razor sharp. Every questionable decision you think he made, he will have insights and considerations you never thought of that explain it. The man grew Microsoft from $8 million to $78 billion in annual revenue, from 30 people to almost 100,000. That is an incredible feat; you don't do that by being a joke.

What you see on the surface is a ton of passion for Microsoft. Underneath that is a fearsome amount of intellect. When it comes to the business of technology, he is simply more well informed than you. He is one of the smartest people I've ever had the honor to shake hands with.

I hope all the above illustrates how much I respect the man.

But I will share a story that also demonstrates his flaw as a leader of what was at one time technology's most influential company.

This was in 2006 and Windows Mobile was growing quickly and closing the gap with Blackberry. He was giving an internal talk at Microsoft which I was privileged to attend. He spoke of how well Windows Mobile was doing, but also added that its hundred-plus million revenue was "practically rounding error" to Microsoft's bottom line. How much attention can they really give it? They needed billions of dollars to move the needle, and mobile did not move the needle.

Yikes. I bet he wished he could take that back.

That's the drawback of a business guy at the helm of a technology company in a period of rapid change; no matter how freaking smart he may be. Without a vision for the future, of how technology will change lives, it's hard to know where to allocate resources. Should Ballmer invest big dollars in this small business called mobile; or should he invest big dollars in a proven, billion dollar business like search?

Ballmer ended up choosing the latter, and today Windows Mobile is dead. It's replacement, Windows Phone, has under 4% global share while Android is the new Windows of the mobile world. Rival Apple, who Microsoft handily defeated in PCs, is the world's most valuable tech company thanks largely to mobile.

How would things have turned out if Windows Phone arrived a year or two earlier?

Of course, it's really easy to say, "then give control to a product guy." Microsoft had product guys: J Allard, Ray Ozzie, Steven Sinofsky, among others. Sinofsky is an especially interesting example because Ballmer basically gave Sinofsky control over Microsoft's then most valuable product: Windows.

The result? Windows 8, a vision Sinofsky pushed despite internal opposition and despite negative feedback from testing.

Ballmer was stuck in a catch 22. He was not a product visionary and that cost him in mobile. And then they were on the verge of losing in tablets, too. So let the proven product guy do his thing, right, and get out of the way? Trust Sinofsky to realize his vision for Windows 8 despite negative feedback, because great things aren't made by asking what customers think they want, but by what visionaries know is best? Apple-style?

Except, not every visionary will have the right vision.

Business guys are more reliable in delivering consistent returns; but they are unlikely to produce the "moonshot" that can provide 10x returns.

Product guys are higher beta. They may have the vision that can get you to the moon; but that same vision can also kick you to the ditch.

Unfortunately, Sinofsky made the wrong call on too many things. And that's probably why he's no longer at Microsoft. Ballmer made the wrong call on Sinofsky, and that's also probably why he's no longer at Microsoft.

Being CEO of Microsoft is a tough job. I don't know if I can do better, though I could've probably done Windows 8 better. :) Maybe.