Don't Cry for Us, Microsoft

SEATTLE (06/05/2000) - Deepak Amin spent 6 years at Microsoft Corp. in the '90s. As a lead engineer on Windows 95 and first senior engineer on the team that developed the Internet Explorer browser, he was at the epicenter of the competition to beat Netscape, the battle at the heart of the Department of Justice's successful antitrust case.

Now CEO of vJungle.com, a startup application service provider headquartered not far from Microsoft's Redmond, Wash., campus, Amin dismisses the government's call for a breakup of the software giant as misguided and expresses faith in Microsoft's ability to survive and prosper. For Amin, as for dozens of other Microsoft alumni in the Puget Sound area, Microsoft's development of the Internet Explorer browser and its overwhelming dominance of PC operating software was "a natural progression" in computing. "It was bound to happen," he says.

As U.S. District Court Judge Thomas Penfield Jackson ponders his decision on remedies in the case, the view from Seattle is strangely calm. Within Microsoft, a kind of blind faith in the company reigns - despite the fact that the case has already damaged the company, as Chairman Bill Gates acknowledged in recent legal filings. A breakup, as proposed by the government, Gates said, would harm consumers and effectively deep-six the software giant's latest Internet strategy.

The announcement of that strategy, dubbed Next Generation Windows Services, has been postponed for three weeks because of the expected publicity surrounding a ruling in the trial. In a May 24 court filing, Gates stated that "the NGWS project will be doomed to failure at the outset" if Microsoft is split. He added that the government's proposed interim behavioral restrictions would be "almost as devastating." Despite claims of business as usual, the long legal nightmare has certainly affected morale in Redmond. "Internally, it's taken its toll," says Jon Staenberg, a former Microsoft executive who now runs Staenberg Private Capital, a Seattle venture capital company. "At the higher levels, [executives] are just tired."

In recent weeks, Microsoft has suffered the embarrassment of seeing its dirty laundry on display, with the publication by the court of internal e-mail messages in 1999 between former executives Brad Silverberg and Ben Slivka, which expressed disenchantment with the company's direction. "I simply do not believe in the path the company is pursuing right now," Silverberg wrote.

Although one program manager described the legal case as "a white-knuckle ride for someone who's an employee," he nevertheless expressed continued unqualified confidence in the leadership of Bill Gates and CEO Steve Ballmer, both of whom have flatly refused to admit that Microsoft has done anything wrong. In part, this confidence is a function of the company's legendary "focus."

Within Microsoft, which is organized in discrete cells, with one group often unaware of what other units are doing, employees tend to narrow their focus on finding solutions to the problems faced in their specific area. "The way we look at it," explains a general manager for the company, "we have a lot of Type A personalities. We trust the people that do that task, whether writing code or selling ads or whatever. We're not lawyers." Outside the company, the Microsoft-spawned wealth of the Seattle region has suffered lately, hit by both the general decline in tech stocks and the almost 50 percent slide in Microsoft's value. Ex-Microsofties are thick on the ground, many running high-tech startups. While they are open about Microsoft's anticompetitive tactics and ready to criticize Microsoft's handling of the antitrust case, they tend to react to the proposed breakup with contempt and head-shaking. "Maybe they went overboard on a couple of things," admits one ex-employee.

"You don't go out and be arrogant with the government." But most still support the company that brought them their initial success. "It was invaluable. The best thing I ever did," says Brian McGarvey, of his six years at Microsoft.

McGarvey, who worked in various Microsoft sales groups and is now CEO of MyLackey.com, a Seattle-based startup that offers online access to personal services such as errands and housecleaning, says, "There's nothing I could have done that would have better prepared me for where I am now." At Microsoft, McGarvey experienced firsthand the zeal that got the company in trouble. In the late '80s and early '90s, the targets were WordPerfect and Lotus 123, which Microsoft eventually displaced with Word and Excel.

The company's intent, said McGarvey, was unequivocal: "to kill the competition." Although he can see that some of the behavior cited by the government "may not be fair to competitors," McGarvey rejects the notion that consumers were harmed as a result of it. Microsoft's integration of its products, in the view of McGarvey and most of his peers, only made things easier and cheaper for end-users. For Redmond alumni like McGarvey and Amin, Microsoft is the past, and the future is their new companies. This means that declines in local investors' wealth is relevant to them. Seattle companies are arguably more dependent on angel investors than their Silicon Valley counterparts, and a hit to the wealth of those with big portfolios of Microsoft stock could translate into a drop in local high-tech investment. That anxiety is evident to Amin. "As soon as the stock dropped, the investment community was hit immediately," he observes. "VCs are all jittery now."

Nevertheless, the high-tech community in Seattle voices an optimistic message:

Seattle has already moved beyond Microsoft. The town that used to depend so totally on Boeing - and suffered grievously for it in the 1970s - will not repeat that dependence on one high-tech company, even if the company is Microsoft. "There is a very broad-based high-tech infrastructure that's been built out," says Staenberg, citing a list of venture companies, specialist legal firms, headhunting agencies and angel investor groups that have formed or opened offices in the city in the past decade.

"The software industry will continue to thrive," agrees Stuart Miner, of the Washington Software Alliance, points out that Microsoft, with its 19,500 local employees plus some 5,000 contractors on campus, makes up less than 40 percent of employment in technology-based companies in the state. "The industry is huge here," says Miner. "We have continued funding, and we don't expect that to go away. The talent will not go away and will continue to grow and spawn new companies and new ideas." "The interesting thing is if Microsoft can reinvent itself again," says David Brewster, Seattle Times columnist and cofounder of Seattle Weekly.

"It's a remarkable company in terms of resisting middle age." Also director of Town Hall, a Seattle cultural center, Brewster represents Seattle's old guard, which set the sober, quietly elitist tone of the city for many years. That was before Gates led a vanguard of computer geeks who would transform the civic culture and reshape the cityscape with showy lakeside mansions, lavish sports stadiums and Paul Allen's fanciful rock 'n' roll museum, the Experience Music Project. Like many here, Brewster remains optimistic about the region's prospects. "I think there's a sigh of relief going on," he says. "It'll take the craziness out of the stock valuations and induce some realism. It'll give people time to catch their breath."

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