Much has been made recently of the exodus of executives from Microsoft Corp. For love of money, family, power or new horizons, at least a dozen high-level individuals stepped away from the software giant in 1999.
But calling this a "brain drain" misses the mark. There are plenty of good brains in Redmond to replace those who go. More worrisome is the fact that the people leaving Microsoft could become its future competitors. They know how the company thinks and moves, and now they're free to do both more quickly.
What's more, Microsoft's traditional advantage -- unlimited resources -- is diminished in this era of instant IPOs and boundless venture capital. "The Net is definitely empowering the smaller companies," says Sam Jadallah, who left a top-ranking sales position last July for Internet Capital Group, a backer of e-commerce startups.
To better assess the changes on Microsoft's campus, The Standard profiles five people who may soon bite the company that fed them.
CEO, TeamOn.com Shirish Nadkarni, 39, who left last February after leading product planning for the Microsoft Network, is eager to jump into the ring against his old employer. TeamOn.com is expected to launch next month into a market that includes Microsoft and several other competitors that look to offer online office services to small and midsize businesses.
The Bombay, India-born Nadkarni says Microsoft is at a disadvantage because it has been reluctant to move its business quickly to the Web.
"When there's a new platform, you have to be first. Start from scratch," he says. "That was drilled into my head during my Microsoft orientation 12 years ago."
He feels he has another advantage Microsoft doesn't: open source. Until further notice, his service will run on Linux, not Windows. It's not only cheaper to use (read: free), Nadkarni notes, but it's also "great for recruiting people," a nod to the problems Microsoft has had in attracting and retaining next-generation techies.
But Nadkarni isn't severing all connections. Three prominent Microsoft alumni are among his investors: Frank "Pete" Higgins, the former new-media boss who left late last year to mentor startups; Sabeer Bhatia, Hotmail's founder; and Mike Slade, who ran Starwave after marketing some of Microsoft's early Macintosh products.
CEO, Worldwide Fiber It was Greg Maffei in a nutshell: At a conference last summer, Microsoft's CFO sat in the press room, checking his e-mail and bantering with analysts and reporters with the understanding it was all off the record. It was an edgy, and even a little off-color, moment of relative intimacy that the guarded Microsoft rarely affords outsiders.
Finding the edge and riding it is Maffei's negotiating style. More dealmaker than bookkeeper, Maffei, 39, was a prime force behind Microsoft's aggressive telecommunications investments, the whopper being May's $5 billion deal with AT&T that guaranteed placement of Windows in millions of AT&T digital cable set-top boxes.
"He's a firebrand with a confrontational style," says one former Microsoft executive who worked with Maffei. "He took it to the limit, but it was fun to watch him in action."
But handling finances and cutting deals for the world's richest company wasn't enough. It was well-known that Maffei wanted to run his own show. Cable-modem service Road Runner courted him, and he came close to running Microsoft's new-media arm, sources say, but instead the job went to Hewlett-Packard veteran Rick Belluzzo.
This month, he starts his new job at the helm of Worldwide Fiber, a little-known backbone provider based in Vancouver, British Columbia. There, he'll not only have his own company to run, but he's also likely to sit at the head of the negotiating table.
On leave "My background's in startups," says Matt Kursh. "I'm used to the ups and downs." There were plenty of each in Kursh's three years at MSN, where he first ran Home Advisor, then the Sidewalk city guides and finally for a brief time all of MSN.com.
Kursh, 35, dropped out of college to start his first company, which he sold to Macintosh software maker Claris four years later. After two more companies, he sold his eShop to Microsoft in 1996. Many at MSN saw Kursh as an up-and-comer.
But he says he was in fact ready to leave almost a year ago. Incoming consumer group chief Rick Belluzzo persuaded him to stay until last month's reorganization, but Kursh says the new structure wasn't "magical" enough to stop him from leaving.
He hasn't officially left yet, but the leave Kursh started in December -- in time for the birth of his first child -- doesn't seem like the typical sabbatical. "There's a pretty good chance I'll leave Microsoft," notes Kursh.
"I have no feeling for what I'll do. Once we have the baby, things will surely be different."
The challenges Kursh would like to face in the future are the evolution of home appliances and playing more piano (he was a music major), but for now there's the brave new world of fatherhood.
Independent investor and director, Tellme Networks If one person best symbolizes Microsoft's rise to Net prominence, it's Brad Silverberg. The leader of the Windows 95 and Internet Explorer projects, Silverberg went on leave in 1997 to ride his bicycle through the Rocky Mountains. He returned as a part-time consultant and then called it quits in November to invest in and advise startups.
He argued before his leave that the Internet, not Windows, should serve as the foundation for Microsoft's software development. Silverberg, 45, lost that argument but eventually won the war. Microsoft is now exploring ways to move its core businesses to the Web.
"I hope that I can provide advice and counsel to other folks who are in their own personal crusades to change the world," Silverberg says.
Of particular interest to him are companies that bring the Internet and telecommunications together, such as Mountain View, Calif.-based Tellme Networks, founded by Microsoft and Netscape alumni. Despite his work with Tellme, he says he'd prefer to focus on Seattle-area startups and keep the life he reclaimed when he went on leave in 1997.
Manager of West Coast Operations,Internet Capital Group Internet Capital Group, a self-described "holding company" that funds and nurtures business-to-business e-commerce startups, was full of surprises in 1999, including an IPO that led to a multibillion-dollar market cap. Amid the financial fuss, ICG lured Sam Jadallah, a 12-year Microsoft veteran and top sales VP, to its fledgling operation.
At Microsoft, Jadallah ran large -- no, huge -- operations. He built the programs that train and certify third-party tech consultants on Microsoft software. He also led the company's efforts to sell to government agencies and enterprise customers. His "thinking big" approach is crucial as ICG nurtures a portfolio of companies.
"He brings a degree of professionalism and expertise these companies don't have access to," says Kenneth Fox, ICG's managing director.
Six months into the job, Jadallah, 35, says he spends most of his time working with companies already under the ICG umbrella, refining business models and grooming management. His latest project is Seattle-based Onvia.com, which filed its S-1 last month. ICG's long-term investment approach -- its unofficial motto is "We don't have an exit strategy" -- appealed to Jadallah. "The long-term approach was a luxury we always had at Microsoft," he says.
When Microsoft wanted to win a U.S. Department of Defense contract, Jadallah was the envoy. He told company brass not to expect a payoff for three years:
"We have be able to hold our breath longer than anyone else."