JAVAMAN THE ADVENTURES OF SCOTT MCNEALY TODAY'S EPISODE HIS FIGHT TO SAVE THE WORLD WIDE WEB FROM THE EVIL EMPIRE
(FORTUNE Magazine) – It does sound like the plot of a comic book, except that there are billions of dollars at stake, not to mention maybe the future of business and consumer computing. Standing between all of us and utter subjugation to Bill Gates and Microsoft, there remains just one stubborn obstacle: an $8.6-billion-a-year maker of powerful server computers and software called Sun Microsystems. It's a face-off that pits Scott McNealy, Sun's pugnacious, shoot-from-the-lip CEO--who at times seems more like a trash-talking two-dimensional comic book figure than a real captain of industry--against the richest and still-getting-even-richer man in the world.
Bear with us for a moment; there's a business point here. McNealy is armed with computerdom's buzziest technology--an Internet-friendly computer language called Java--and he's backed by a rabble of computer and software heavyweights including IBM, Oracle, Netscape, and Apple, all of which share to some degree his fear and loathing of Microsoft. Their goal for Java: to render Microsoft's flagship Windows operating systems insignificant--or at least less almighty--with what they believe to be a software lingua franca. The much hyped Java digital language would enable all computerized devices, not just orthodox Wintel PCs, to share programs and commune over a network.
McNealy is best known for virulent, colorful, often highly ad hominem criticisms of what he calls "Bill Gates' centrally planned economy." At a recent public appearance, he snidely referred to the Microsoft founder and his chief lieutenant, senior vice president Steve Ballmer, as "Ballmer and Butt-head." For better or worse, the snottiness is not likely to change. "I cringe sometimes with the way he says things," sighs Bill Raduchel, Sun's chief information officer and McNealy's mentor since college. "But now he's trapped. If he makes a moderate statement, people expect more."
Still, McNealy has earned prominence through real accomplishments, not just hyping Java and bashing Bill Gates. Under his leadership, Sun has cashed in better perhaps than any other company on the business world's networking appetite. Sun's potent lineup of high-end computers for networks--"Unix servers" in nerdspeak--today delivers power that Intel PC servers outfitted with Microsoft's Windows NT are only beginning to approach. Indeed, McNealy, who has been CEO for all but two of Sun's 15 years, has built an efficient powerhouse that has more than held its own against larger, entrenched adversaries such as IBM, Hewlett-Packard, and Digital Equipment. Despite doomsayers' predictions, Sun also has so far nimbly sidestepped the Wintel PC juggernaut.
To learn where Sun stands in the industry, read the following story, "Meanwhile, Back at Headquarters." This story is about Javaman, the manager. There's more to him than his mouth. He's complex, smart, and fiercely ambitious--a 3-D character who is gunning to become as influential an industry leader as his nemeses, the Lords of Wintel.
THE FACTORY RAT
I love the factory. That's what business is all about. Making things. Not this Wall Street stuff, not this consulting stuff, not this lawyer stuff. None of that adds value. You gotta make something. --Scott McNealy
They don't call computers "boxes" for nothing. People are far more interested in the geeks who design them than in how they are actually made. Yet if there is a key to McNealy's success as an executive, it is his Rustbelt upbringing and his factory man's passion for getting product out the door. Says Eric Schmidt, Sun's former chief propeller-head who is now CEO of Novell: "Scott is not an intellectual. He's a driver who realizes that sometimes it's more important to execute well than to have the strategy right the first time. He gets that from his manufacturing background. I find myself trying to copy many of his methods."
McNealy got a feel for nuts and bolts at a very early age. His father was an up-and-coming manager for American Motors who made his mark revamping the parts-procurement systems at various plants. As a grade-schooler, Scott would sometimes abscond with his dad's briefcase at night and pore through its contents, trying to figure out what the elder McNealy actually did. On Saturdays Scott liked to tag along to the plant and snoop around while Dad caught up on paperwork.
Like Gates, McNealy got the best private education money can buy. When Bill McNealy was tapped for a senior management job at American Motors headquarters in Detroit (he eventually rose to vice chairman), the family settled in bucolic Bloomfield Hills, Mich. Scott attended the Cranbrook School, an elite academy on a campus designed by Eero Saarinen. A jock's jock, Scott threw himself into sports, paying just enough attention to academics to get mostly B's. (He still plays hockey in a geezer league--on two teams.) Only during his junior year, when he scored a perfect 800 in math on the SAT college test, did it dawn on McNealy that he might have some academic potential. His grades picked up, and he managed to get accepted at Harvard, his father's alma mater.
Thinking for some reason that he wanted to be a doctor, McNealy signed up for pre-med courses upon arriving in Cambridge in 1972. It didn't take long for Bill Raduchel, McNealy's freshman economics teacher, to persuade him to switch to economics. (McNealy overlapped with Gates, who enrolled at Harvard a year later only to drop out in 1975, but the two don't recall meeting. "At least I graduated," McNealy chortles.) He wrote a precociously libertarian senior thesis on an ill-fated U.S. government intervention in bus manufacturing in the 1950s. But studying was mostly a sideline; McNealy likes to say he majored in beer and golf. He captained Harvard's golf team and missed the cut for the 1976 NCAA championship by a single stroke.
After Harvard, McNealy set out to seek his fortune in the factory. He landed a job as a foreman at a Rockwell International plant in Centralia, Ill., that made body panels for semi tractors. Thus began a whirlwind two-year career in Rustbelt manufacturing management, during which McNealy ran an assembly line staffed by strike breakers, served as a reliability engineer fielding automakers' complaints, and traveled the region as a factory sales rep. In his spare time he masterminded a line of molded plastic saddlebags for motorcycles. That product enabled Rockwell to reactivate a mothballed plant.
Stanford University's business school rejected McNealy twice during those years; only on his third try did his work record win out over his mediocre Harvard transcript. He enrolled in 1978, one of only a handful of students with any interest in manufacturing. The microprocessor revolution was aborning, but while many of his classmates jumped at the chance to launch a Digital Age business, McNealy dreamed only of getting back into a plant. When he graduated in 1980, he signed on as a trainee for FMC Corp. It assigned him to a factory in Silicon Valley where it was building Bradley fighting vehicles for the U.S. Army.
You could say it was fate that kept Scott McNealy in the cradle of the computer revolution, but in fact it was golf and a girl. Delighted with Silicon Valley fairways, where he could play year-round, and sweet on a secretary at FMC, young McNealy settled into the military vehicle business. (The romance didn't pan out.)
Meanwhile, Apple Computer and other startups were beginning to shake corporate America with their machines. Showing better instincts than his student for the real action, McNealy's Harvard mentor Raduchel had moved to California and was doing business with a fledgling workstation company called Onyx. In 1981, Onyx ran into production delays and quality problems; it needed a manufacturing manager. Raduchel asked McNealy for help. "I didn't even know what a disk drive was, but I could see the actual process of manufacturing a computer wasn't all that complex," recalls McNealy.
McNealy had barely learned the ropes at Onyx before a call came from Vinod Khosla, a Stanford classmate. He and some pals from Stanford wanted to start a computer company, and they asked McNealy to put them in touch with a venture capitalist who had been Onyx's CEO. Their business plan called for commercializing a workstation that an electrical engineering whiz named Andy Bechtolsheim had built for Stanford's computer network. They called their box the SUN--for Stanford University Network--workstation. The investor was intrigued; within a month, Sun Microsystems was born.
McNealy, who started out as vice president for manufacturing and operations, was hardly a front-runner for CEO. Computers weren't his thing; he needed a night course in basic electronics just so he could communicate with his co-founders. When Khosla quit to become a venture capitalist, the board was reluctant to give McNealy the top job, even though he had by far the most real-world business experience. They named him CEO only after a search turned up nobody better.
It was the smartest move the directors could have made. Like many promising startups, Sun nearly strangled on its success. The company went public in 1986 and by 1988 zoomed to annual sales of $1 billion. But its array of products grew so broad so fast that Sun began having trouble churning them out. Then it outgrew the minicomputer it used to manage production, and the IBM mainframe it hurriedly installed worked poorly at first. The factories practically ground to a halt; Sun posted its first-ever quarterly loss.
With the computer on the fritz, McNealy knew there was no hope of solving problems from the executive suite. He moved his office to the floor of Sun's biggest factory and revamped the company's manufacturing.
That much you'd expect of a factory rat. But in the months after production was rolling again, McNealy showed skills nobody expected. He ruthlessly pruned the product line, sharpening Sun's focus to workstations built around a high-powered processor of its own design, the Sparc chip. And realizing that in a well-run company of Sun's size, fixing problems on the factory floor was no job for the CEO, McNealy launched a reorganization. It pushed profit-and-loss responsibility down to individual product organizations called "planets." After that, managers felt the heat whenever things went wrong, but the results were hard to argue with. In 1992, Sun passed the $3-billion-a-year mark.
McNealy does business the way he plays hockey. Although he's not that fast, he's got great lateral moves and gets in people's faces. He's great at stopping people coming down the ice, and he's also good at faking them out and getting through little holes. He gets ugly goals a lot of the time. He usually ends up with more snow on him than most people. --Curt Wozniak, CEO of Electroglas and former Sun executive
Cross an MBA jock with a factory rat and what do you get? Not your typical Silicon Valley techno-visionary. You get McNealy: an in-your-face playmaker who knows his business fundamentals, has good moves, always keeps score--and who, when frustrated, brawls.
In most businesses, a shakeup like the one McNealy enforced in 1990 and 1991 would be enough to pull a company out of the ditch and get it racing. But the computer industry was at a turning point, and it wasn't turning Sun's way. Despite the growing demand for network servers, Sun and its Unix rivals were shipping fewer than a million units each year. The Wintel alliance, meanwhile, had sales approaching ten million PCs a year and was beginning to cast its shadow far beyond PCs.
McNealy realized that Sun's ultimate adversary was Bill Gates, not other workstation makers. Gates was touting a future version of Windows called NT, for "New Technology," that would match much of the power of Unix. NT didn't even exist yet, but Gates, with his growing celebrity, had media access to say anything he wanted. The rules had changed: Sun would need more than good execution and technical superiority. To thwart the perception that his company was a dinosaur, McNealy had to create some buzz.
He began casting about for a compelling message, a quest that did little to improve his reputation. He'd been known for high-sticking hubris since the late 1980s, when he tried to badger IBM, HP, and others into accepting Sun's version of Unix as the industry standard.
Now he directed his trash talk at Microsoft, ridiculing its products as overly complex, unreliable "hairballs" and likening them to Trabants, the sputtering autos once made in East Germany. He trotted out a slogan--"The network is the computer"--to try to diminish the perceived importance of PCs, but it only made people scratch their heads. He got much the same reaction when he named his dog Network and made it the company mascot.
He played ugly too. In 1995, after Microsoft blitzed the world with the launch of Windows 95, he surreptitiously helped bankroll the efforts of a cabal of Silicon Valley companies to prod the federal government into taking antitrust action against Microsoft. The effort came up mostly empty. For all his noise, McNealy had failed utterly to slow the Wintel juggernaut.
I remember when we turned the reins over to Scott, I was worried about how strategic he would be. Here was a guy who got his start in Silicon Valley at an Army tank factory. To hear him tell it, he'd spent his college days drinking beer and playing golf. So I told him I was worried. His eyes got small, and he said, "Just watch." --John Doerr, venture capitalist
McNealy makes no pretense of being an intellectual or a visionary. He can't remember the last time he read a book, much less a novel, and he loves to ridicule highfalutin notions about what computers can do for humanity. He isn't the kind of guy you'd expect to devise startlingly original strategies that make the rest of his industry drop everything and pay attention.
And to hear McNealy tell it, most of the high-concept strategies that he's actually hatched are borrowed from other, more mundane industries. Says he: "Our whole concept of the computer as a network device is grounded in a business model that was stolen from every other large utility on the planet. You don't have a power-generating plant in your home; you're connected to a power grid."
The model of computing as a utility network--most techies call it the "client-server model"--served Sun well in the early 1990s as corporations began to take data networking seriously. The rise of the Internet after 1994 supercharged the business, because Sun's computers make ideal Web servers.
But neither phenomenon was enough to forestall the prevailing notion that the incredible, inexorable Wintel empire would eventually swallow Sun's larger network servers too. To thwart Gates' grand designs and survive the decade, McNealy knew he needed a much more dramatic strategy--a downright visionary one that could redefine how people thought of computers. To cast his dilemma in comic-book terms, he needed a magic ring.
It turned out that he had the makings of one right under his nose. Since 1990, a team of crack programmers had been working on a new kind of programming language--code-named Oak--that would enable all manner of computerized devices to run simple programs distributed to them over a network. At one point Oak was part of an effort to develop a two-way interactive cable TV system. (Sun offered it to Time Warner for its ill-fated Full Service Network field test in Orlando, but lost out to Silicon Graphics.)
By late 1994, Oak seemed to be going nowhere, and the programmers were demoralized. Many, including their leader, James Gosling, were ready to quit and move on to one of the hot Internet-related startup companies that were sprouting all over Silicon Valley. Eric Schmidt, then Sun's chief technical officer, dreaded losing such a talented bunch, and told them to pull together one last presentation of their work, putting special emphasis on how it might be used to exploit the burgeoning Internet in interesting new ways. Do that, and he'd take it to Scott.
Recalls Schmidt: "We showed Scott the technology and described how we might want to work with partners to give it broader appeal. He saw it as much more, as a destination for the whole company, and even for the whole industry to pursue. It was like a switch went on. The moment he could map it to his problem--namely, how to harness the Internet to stop Microsoft from swallowing us all--he became its biggest supporter."
McNealy had found his magic ring--a blob of computer code soon to be renamed Java. Thus, too, Javaman was born. Within months--in May 1995--McNealy unveiled Java to the public. The concept was so novel that nobody in the computer or business press knew what to make of it.
Meanwhile, McNealy sent emissaries to show Java to Netscape, the upstart company whose Navigator browser had unleashed the Internet phenomenon. Gosling demonstrated how Java applets, or miniprograms, could add jazzy motion to pages on the World Wide Web and described how full-blown Java applications on servers could be used to handle business tasks. The Netscape guys liked what they heard and took out a license. By fall millions of copies of the first rough cut were landing on computers all over the world when users downloaded Navigator.
The more they showed Java to other companies, the more the folks at Sun knew they were on to something really big. Java held out the promise that a code cutter could write a program once, and it would theoretically run without modification on any kind of computer, regardless of the underlying microprocessor or architecture, as long as the machine was equipped with a Java interpreter program. IBM and Oracle became big supporters, as did dozens of smaller outfits. Kleiner Perkins, Silicon Valley's premier venture capital firm and one of Sun's original backers, hastily pulled together a $100 million fund to invest solely in Java startups.
With typical insouciance, McNealy claims that the Java strategy was obvious and as old as the hills: "The concept that every computer should be able to speak and understand one universal language that nobody owned was stolen from cavemen who wrote on walls."
There was just one hitch: Most of the computers in the world are Wintel PCs. To guarantee Java's ubiquity, Java had to somehow be present on most of them too. The easiest way was to embed a Java interpreter in a program, say, a browser like Netscape Navigator. Another, better way would be to persuade Microsoft to incorporate a Java interpreter right into the Windows operating system.
According to Sun cofounder Bill Joy, it was McNealy's idea that Sun pitch Java to Microsoft. "We all thought that was heresy. We also thought Microsoft wouldn't touch it. But Scott was right," he says. That's because, for once, McNealy had Microsoft's number. By the time the companies started dickering, the software giant had no choice but to license Java. In December 1995, Microsoft had decided to go after the Internet browser market pioneered and dominated by Netscape, and the only way to succeed was to match Navigator feature for feature. Java was a key feature. Microsoft paid an undisclosed sum for the license.
So suddenly Sun and Microsoft were on the same side, right? Wrong. Constitutionally unable to simply adopt the technology of another company, Microsoft has tinkered with Java for two years now, even as Gates and his lieutenants pooh-pooh it at every opportunity. They call it merely "a moderately interesting programming language" so often that the phrase has practically become a Microsoft mantra. They argue that it doesn't make sense for important programs to be able to run on all computers because such software couldn't take advantage of unique capabilities of specific machines.
At the same time, the programmers Gates assigned to Java have busied themselves "extending" it in ways that will benefit only users of Wintel machines. If they can establish a Windows-only variant as a competing standard, it would block Sun from creating a uniform Java that can run equally well on any type of computer. (Sun claims that Microsoft, through its licensing agreement, is contractually obligated to support whatever Sun decrees to constitute Java.)
McNealy has countered by raising his sights. He's pitching Java now as a "platform" for full-blown business applications--not just dancing Web pages or word processors, but programs that manage business processes across an entire enterprise. Such applications would let companies wean themselves from Windows. As a hardware guy, McNealy became a chief proponent of network computers, stripped-down desktop computers that rely on servers to feed them Java programs so users can do their work.
Javaman being Javaman, even that wasn't enough. McNealy noisily and gleefully banned the use on Sun premises of Microsoft PowerPoint, an application that lets users create fancy slide presentations. He claimed it wasted employees' time. He also stepped up his public attacks on his nemesis, punctuating speeches with quips like, "In a world without fences, who needs Gates?"
Gates professes not to want to dignify McNealy's wisecracks with a response, other than to say: "Scott calls himself a quote machine, and he is. But you'll notice his quotes are not about what Sun does well but instead ridicule PCs and all the successful companies that have grown up around PCs."
So shrill has the rivalry between the two companies become that Aaron Goldberg, of Computer Intelligence in La Jolla, Cal., calls it a "urinary Olympics." The question is, who's got whom playing the other's game?
If there's a lesson to draw from Microsoft's growing hegemony, it is that anyone who thinks he can take the company down, even when armed with better technology, is probably foolish. IBM couldn't, Apple couldn't, Netscape won't, and McNealy probably can't. Microsoft is just too well entrenched, too nimble in parrying threats, and too rich. The best one can hope for is to nudge Microsoft in a new direction and then try to make hay while the behemoth shifts.
By the same token, it's smart to be perceived as having a shot at derailing Gates. Customers always like to apply pressure to the big guy in hopes of driving down prices. And there's a reservoir of willingness and money in the industry to aid anyone who might loosen Gates' control over the way things will be. That's why there's so much support for Java--more than even McNealy expected.
In that sense, the game is going his way. He has forced Microsoft to rethink basic aspects of its business and play a little catch-up. When Gates counterpunches, he seems to be playing by Scott's rules. So McNealy isn't about to back down.
But here's the flip side: When you get past the rhetoric, you can see that Gates is really playing a game of attrition. That's how he's always brought his weight and wiles into play. To slow Scott down further, he'll do whatever he can to convolute Sun's efforts to get Java endorsed by industry standards bodies, his army of lawyers will reinterpret and challenge the Java licensing agreement, and his minions will bad-mouth the technology to anyone who will listen. Meanwhile, his legions of programmers will churn out one new product after another incorporating more and more Java-like features, until, in fact, it does become just another moderately interesting programming language.
Will this be curtains for Javaman? Will nothing stand between the Evil Empire and global dominion? Only time will tell.