Podcast: Revisiting Microsoft’s startup years, in search of new insights

The extraordinary pace of Microsoft’s ascent is what stands out in retrospect.

The company, which is marking its 50th anniversary next year, was well on its way to dominating its industry by the time it arrived in the Seattle region from Albuquerque in 1979. Seven years later, in March 1986, the company made its debut on the New York Stock Exchange, at a market value of more than $500 million.

So what can be learned from a fresh look at Microsoft’s startup years?

That’s the question at the heart of the second chapter in our Microsoft @ 50 series. Our research and interviews with key players show how the company’s bet on a market that didn’t really exist at the time — personal computer software — paid off in ways that its founders Bill Gates and Paul Allen never imagined.

One of the experts who put this story in context for us was historian Margaret O’Mara of the University of Washington, whose book, The Code: Silicon Valley and the Remaking of America, chronicles the rise of the modern tech industry. This special GeekWire Podcast episode features highlights from my conversation with O’Mara, in addition to a first-hand account from the company’s first outside investor and longtime board member, David Marquardt.

Listen below, read the full story here, and continue reading for highlights from O’Mara’s comments, edited for context and clarity.

Microsoft’s decision to focus on software: Software was not an industry. Desktop computing didn’t even exist at the start of the ’70s. They were able to latch onto this nascent industry, when it isn’t even an industry. … But they also were charging for something that in the hobbyist community was being given away for free. And that was novel — they were, again, on the ground floor, one of the very, very first enterprises doing that.

The early approach: On the one hand, it’s getting on the launchpad as the rocket ship’s about to go off, but also being pretty aggressive and elbowing competitors aside, and being quite aggressive and making sure that you’re first to it. And then famously striking a deal with IBM that not only gets the IBM PC business, but also is a platform that can be cloned and it isn’t a closed ecosystem, so it just creates this market that turns out to be globally dominant.

The advantage of their upbringing: They’re different than some of the other startup founders who are really coming with few connections and just a brash attitude and a willingness to do what it takes. … I don’t think that detracts from what they accomplished. There are plenty of people who had plenty of privilege and didn’t do it. [Their privilege] didn’t build what they built, but that does set them apart. … This is a useful lesson for founders, then and now: success does come with support of more mainline institutions, and the new economy grows on old-economy foundations.

The importance of the team: Microsoft is Paul and it’s Bill and it’s Steve [Ballmer], but it’s also so many other people who were there at the ground floor and were there in the early years who built it. The technical people and non-technical people, and an ecosystem, a Seattle ecosystem, a broader tech industry ecosystem, that enabled them to do what they did. And that’s a super-important lesson for any founder, any startup leader, to remember that it’s about much more than just you. Having your cast of thousands both in and outside the company is really important.

The move to Seattle: Moving up here was choice not only to come home, but also to get something of a competitive advantage in the job market for programmers. If they had been down in California, they would’ve been competing with a lot of other startup companies. And up here, there were some startup companies, but not quite as many. And there was obviously the engineering workforce around the University of Washington.

The roots of gender bias: Very quickly, as it starts growing — and it grows fast in those early years here in Seattle — there’s a certain work culture that is very hard-charging. … There was not a big emphasis on work-life balance. Historically, that’s one of the things that has driven a lot of women out of technical roles in the tech industry over time, where you have this relentless and very male-coded and male-dominated culture that is all about work and doesn’t give a lot of flexibility for caregiving or other things outside of work.

Long-term role in the region: Greater Seattle has always been a company town. First it was timber, then it was Boeing, and then it’s Microsoft and tech, but really Microsoft. It was Microsoft’s town for a very long time, even after Amazon was established and was growing. It’s only in the last decade and change that it’s been Microsoft and Amazon’s town, that Amazon’s taken such a central role in our political economy and our regional conversation. But Microsoft has done so much to define what this place is for 50 years.

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Podcast edited by Curt Milton. Music by Daniel L.K. Caldwell.