Inside Microsoft - A 'Velvet Sweatshop' or a High-Tech Heaven?

Pacific

Inside Microsoft - A 'Velvet Sweatshop' or a High-Tech Heaven?

Paul Andrews
The Seattle Times

April 23, 1989

During last fall's United Way campaign at Microsoft, two vice presidents made a wager on whose division would generate the most contributions. The loser, it was agreed, would have to swim the length of ``Lake Bill,'' a small artificial lake at the Redmond corporate campus named after Bill Gates, co-founder and chairman of the world's No. 1 computer software company.

When the campaign wrapped up, however, there was disagreement about who had won. One division had pulled in more money, but the other had a higher percentage of giving. Statistically, both were claiming victory.

To settle the dispute, it was decided that both had ``lost'' and would be forced to swim the lake. At noontime on the eventful day, employees crowded around the oversized pond to witness the proceedings. Pranksters, concerned that the lake might be too comfortable despite the 38-degree late-fall chill, threw in chunks of ice to lower its temperature.

First up was the colorful Steve Ballmer, vice president for systems software, a great quipster who once called Intel's 80286 computer chip ``brain-damaged'' (an in-joke, folks). With dramatic flair, Ballmer slowly stripped down to red bikini shorts, dived in and splashed his way to the other side.

Following him was Mike Maples, vice president for applications who had come to Microsoft after 23 years with IBM and conducted a sweeping reorganization credited for improving efficiency and teamwork within the company. Maples removed his suit jacket, watch and shoes, emptied his pockets and, attired in a glistening wetsuit, jumped in amid the hoots, howls and cheers of onlookers.

The incident, which immediately assumed a select place in the pantheon of Microsoft legendry, illustrates one side of the company's carefully fostered corporate culture. People who work there, from division managers to marketers to programmers to free-lancers hired on a per-project basis, describe Microsoft as an exhilarating work environment fed by adrenaline, constant brainstorming and creative drive. Workers wear whatever they want to the office, set their own hours and, because of the corporate campus' innovative X-shaped buildings configuration, have windowed offices of their own. In warm weather people dine outdoors and are entertained by the multiple talents of their fellow workers - jugglers, unicyclists jousting with sticks and garbage-can lids and live music.

If hunger should threaten to interrupt an important project, each wing is supplied with a fast-food ``7-Eleven'' equipped with a variety of snacks and beverages, the latter provided free. For fitness buffs, membership in a sports/health club just five minutes away is a bennie. And no one wants for the latest techie toys: Nearly every office has at least two computers - an IBM or work-alike ``clone,'' and an Apple Macintosh - and many have more. It's not uncommon to see half a dozen or more video monitors sitting on shelves and desktops in a single office.

All of this is in addition to considerable rewards - professional and material - associated with employment at Microsoft. Many of those who guided the company through its formative years during the early '80s became instant millionaires when its stock went public in 1986. Even those who joined Microsoft as recently as two or three years ago now head entire divisions. Evidence of growth is everywhere, from bulldozers outdoors working on a new computer complex to workers asking for directions in one of eight sleek new buildings at the headquarters complex. The company, with $600 million in sales and $125 million in profits, nearly doubled in size last year to 2,000 workers at the corporate campus and 3,800 worldwide. Although Gates has cautioned that profit margins will narrow because of greater focusing on research and development, which don't show immediate results on ledger sheets, few analysts see the company reaching a plateau for some time.

Ask anyone who works there, and they'll tell you roughly the same thing. ``Microsoft is a great place to work,'' they will say, ``if you don't mind working a lot.''

It is the second part of the equation that casts the only shadow on Microsoft's corporate landscape. There is a difference between having fun and venting nervous energy, between riding an adrenaline high and running on empty, and insiders say the demanding pace and push of the high-tech fast lane eventually extract a heavy toll on workers' well-being. The company's awesome growth - it had just 200 employees as recently as 1983 - has produced an inevitable share of winners and losers, and competitiveness remains high as rising stars jockey for control of corporate fiefdoms. Stock options during the company's early growth produced numerous wealthy sub-30-year-olds, and for a while buttons showed up on lapels bearing the inscription FYIFV, standing for ``F--- You, I'm Fully Vested.'' Many of those associated with Microsoft's early success, in fact, have left the company - partly to explore other opportunities, partly because they are financially secure, but also because, they say, Microsoft simply expects too much in human terms from its employees. One former executive has even talked about forming a support group for ``recovering'' ex-Microsoft workers.

``They have a glamorous reputation and have done some innovative things involving partnerships,'' says Alene Moris, a Seattle career consultant. ``But they also stretch people to unbelievable limits. It's always push, push, push, and the stakes are constantly being raised.'' A former Microsoft higher-up says derisively, ``If Microsoft is a great place to work for a corporation, that speaks pretty badly for most corporations.'' And an editor who interviewed for a position there came away with the impression that although Microsoft ``has a lot of nice qualities to it and the company does many things to create a pleasant environment, work definitely comes first. It's a velvet sweatshop.''

The delicate balance between work and human potential at Microsoft is an issue that extends well beyond one company and its employees. Computers are playing an ever-expanding role as the work force changes to a service- and information-based economy. The presence of video-display terminals in the workplace is expected to more than double - to some 70 million - by the turn of the century.

The transition is proving to be a not altogether smooth one. Already the stresses of working at computers are taking a demanding physical toll, accounting for a third of all workers' compensation claims (expected to reach 50 percent by the year 2000) and losses of more than $27 billion annually to employers from lower back ailments, repetitive-strain injuries such as carpal-tunnel syndrome (a nerve disorder caused by keyboard work), eyestrain, headaches and other complaints. Less easily quantifiable, but equally as prevalent, are the psychological ``burnout'' effects associated with computers' ability to process vast and endless amounts of data. ``To survive in the workplace and even to function in society in general, we are forced to assimilate a body of knowledge that is expanding by the minute,'' writes author Richard Saul Wurman in his new book, ``Information Anxiety.'' ``We are growing apprehensive about our seeming inability to deal with, understand, manipulate or comprehend the epidemic of data.''

For the Pacific Northwest, long known as the laid-back quality-of-life capital of the U.S., the high-tech juggernaut holds additional cataclysmic implications. The Eastside's growing technology corridor has brought high-powered, single-minded new college graduates and industry wunderkinds here from California, New York and elsewhere for whom work is the elixir of life. Where that leaves the so-called Mount Rainier factor and the Northwest's other amenities is uncertain. ``There are programmers at Microsoft,'' says an editor there, ``who after two years have never even been to Seattle.''

``Working evenings and weekends is just expected of you here,'' says one Microsoft supervisor. ``Everyone else does it, so you have to as well, just to keep up.'' Asked about hobbies or outside interests, the typical response of a Microsoft employee is to name a certain activity such as painting, mountain climbing, sailing or whatever, followed by: ``But I don't have much time for it anymore.'' Sixty-hour work weeks without overtime are common. ``They tell you to take comp time, but hardly anyone does,'' says one worker. ``There's just too much to do.''

``There's something in the high-tech industry that forces you to work at a pace where you don't have another life,'' observes Posy Gering, manager of communications at nearby Microrim, a storybook success itself that produces the second-best-selling data base software in the world. ``I've known ex-Microsoft people here that were driven away by it, and the same people are driven away from here as well.''

The impact of this singular approach to life on the Northwest character is hard to quantify in absolute terms, but its presence is being felt in key socio-economic sectors. The fast lane is taking over: Cars are crowding the highways, housing prices are skyrocketing, production is booming. High-powered professionals are moving here from New York, Chicago and Los Angeles, bringing with them the infrastructural stresses of an expanding population but also the problem-solving skills, high expectations and leadership potential needed to address growth problems. ``When these people discover there's more to life than debugging code,''cq one pundit puts it, ``you're going to see great things from them.''

Part of the high-tech work ethic stems from the ``Silicon Valley mentality,'' spawned by the birth of the Apple computer a little more than a decade ago in a fabled San Jose, Calif., basement. From the start the slogan was, ``No Limits.'' If you thought big and pushed hard enough, you could turn a little box of circuit boards and disk drives into a machine powerful enough to drive the very future of the human race. Not incidentally, you could become rich and famous along the way as well. Today there are virtually thousands of start-up companies around the U.S. and the world dreaming the same dream - including some 650 software ``offspring'' of Microsoft in the Puget Sound area, making this region the third-largest in the country behind California's Silicon Valley and Massachusetts, home of Microsoft's primary competitor, the Lotus Development Corp.

But Microsoft's work ethic also is very much a product of its co-founder and CEO, Gates, a hands-on, proactive executive referred to as ``Chairman Bill'' in alternately respectful and irreverent terms. The youngest self-made billionaire in history, Gates, 33, keeps a tight rein on productivity by setting a manically driven example himself and intermittently cheerleading, cajoling and upbraiding his inner circle of managers to maximize performance. ``Bill almost always is there on weekends,'' says a Gates associate, ``and he keeps track of who's there and who isn't. If any of the 40 or 50 key people are missing, he'll call them up and ask, `What's the matter? Why haven't I seen you around?' '' Much of the corporate campus is lit up and bustling around the clock. Microsoft President Jon Shirley says that Gates ``will work till 9 or 10 at night, then go out for some dinner, and will be back on his computer at home answering electronic mail past midnight.''

It was Gates' idea to leave parking slots unassigned at Microsoft - a subtle but ingenious device to reward early comers. There are no wall clocks at Microsoft - a phenomenon the company denies has any significance, but one which discourages a punch-clock mentality. ``It's like time is irrelevant,'' observes a recent visitor from Silicon Valley. ``What better way to get people to concentrate on their work?''

If ``techaholism'' sounds like the demonic work of invading space aliens in the bucolic Northwest, they are more E.T. than Darth Vader. Partly because companies see themselves as pioneers on the technological landscape, partly because the word ``unions'' makes the blood drain from their face, they offer an entire supermarket of carrots to workers who in their own right are high-achievement, self-driven personalities. For anyone interested in being on the cutting edge of the industry, Microsoft is high-tech heaven.

It starts with the woodsy corporate headquarters on the outskirts of Redmond - a relaxed, genial setting evocative of the quiet intellectual industry of a college campus. Informality is the rule: Suits or ties are rare, and everyone, even Gates and Shirley, is referred to by his or her first name. Workers stroll through corridors chatting softly but intently, occasionally in a foreign language (a result of the company's overseas intern program). Groups of two or three will gather in a co-worker's office or in a hallway to engage in a ``collective brain dump,'' high-tech jargon for brainstorming. Offices are decorated with posters, dart boards, inflatable toys, streamers and quirky personal impedimentia, from fish tanks to motorized mice (a play on the Microsoft mouse, a pointing device for PCs). Until the company grew too big, each terminal was named after a character in ``Our Gang'' or ``Sesame Street.''

Another key component of Microsoft's informality is its seductive E-mail (electronic messaging) system, which Shirley says epitomizes the corporate culture at Microsoft. Workers can message each other - even Gates and Shirley - day and night, to and from home or office computers, in an instant communications network that, Shirley notes, ``flattens the corporate hierarchy considerably.'' The sophisticated system displays a queue showing the time and date and sender's ``log-on,'' or nickname, for each message and a brief description of its contents. If there's a drawback, it comes under the heading of too much of a good thing: Nathan Myhrvold, director of advanced development, typically receives 200 messages a day, and is still plowing through a backup queue of some 1,600 messages left over from a three-week hiatus when his wife had twins in January.

``For me the essence of Microsoft is the hallway, where people get together to talk about anything,'' says Pete Higgins, general manager of the analysis business unit who, dressed in an open-collar shirt and slacks, looks like a summer-camp director. ``Business gets done, but it's all in a very casual atmosphere. Sometimes I'll go out to lunch and people will say, `Aren't you working today?' I tell them this is what I wear to the office.''

``There's lots of computer companies you can go to work for, but there's no company like Microsoft anywhere in this industry,'' adds John Neilson, product manager for applications marketing. ``You get to work with some of the smartest people around, and everywhere there are great ideas bubbling to the surface. That's what Microsoft is - a company of ideas.'' As an example he points to Microsoft's innovative in-house press, which has produced a distinctive line of appealingly designed manuals and how-to books as well as, through its Tempus imprint, revived leading out-of-print works on science and technology: ``You won't find anything like Microsoft press anywhere else in the industry.''

The strawberry-blond Neilson, a lightning-tongued college English major from Connecticut who joined the company two years ago after graduate school in marketing, is representative of the somewhat eclectic career path many recruits have followed to Microsoft. A computer hobbyist who formerly worked as an editor for The Paris Review, a leading literary magazine in New York, Neilson decided to turn his avocation into his vocation and vice versa.

``I would've gone to work for Microsoft even if it was in Dallas,'' he says, although his wife prohibited him from interviewing ``anywhere west of the Mississippi.'' After he talked her into giving the Northwest a try, ``within six months of our arrival she was telling me, `I want to stay here forever.' '' Although he hasn't abandoned his literary interests, Neilson recites the familiar refrain: ``I don't have much time for writing anymore.''

However much pride Microsoft takes in its workplace innovations and gung-ho atmosphere, the company is considerably less forthcoming about the pressures of breakneck deadlines and constant growth. Workers quick to extol the multiple charms of their employer prefaced all negative comments with a request for anonymity, and even ex-Microsoft employees expressed concern about repercussions, since many still have affiliations with Microsoft or the high-tech industry. Halfway through the research for this article, sources began calling back frantic, demanding to know which parts of their statements would be used - the result of a memo from Shirley requesting that any contacts with outside media be sanctioned first by corporate communications. In some cases sources were asked to check with the reporter about what would be printed, and report back to the company their findings.

While this strategy had its Orwellian aspects, it is not surprising for a company so prominent in the high-tech fishbowl as Microsoft. Since the Wild West days of backroom bargaining and intellectual thievery during Silicon Valley's teeth-cutting, where widespread chip thefts led to strip searches and program code took on the aura of crown jewels, the high-tech industry has nurtured a fetish for secrecy and information management. In Microsoft's case, Gates is known as a thin-skinned albeit voracious reader of mass media (as well as biographies and history). ``If he sees something he doesn't like in print, he'll call people on the carpet,'' says one source. Gates has granted selective interviews but was traveling over a two-month period and said to be doing ``very little media work'' during the preparation of this story. Repeated requests for an interview were denied.

Whether the subject is corporate culture, media sensitivity or market position, much of the Microsoft persona can be attributed to simple growing pains. Just 14 years old, if the company were a basketball player, it would be able to look down at the rim. Whatever else can be said about Gates, as a pure businessman he has the Midas touch, and that doesn't mean mufflers. At each juncture of the burgeoning PC industry, Microsoft has made savvy, far-reaching decisions guaranteed to expand profitability and market position. In a make-or-break industry with more losers than an $8 million Lotto, Microsoft's record has been impeccable.

Nevertheless, as industries go, both Microsoft and personal computing are in their infancy. Change happens so apocalyptically that stars incinerate like meteors and millions can be lost on a seemingly minor decision. The flip side of suddenly having it all is knowing you could lose it just as fast.

Perhaps that factor, more than any singular work ethic or corporate policy, explains the state of constant liftoff at companies like Microsoft. ``They know that they're not producing something that will be needed in 10 years - in fact, by the time they finish producing something it may be obsolete,'' says a leading financial adviser to high-tech investors, including several at Microsoft. Partly because of that, and the realization they may not be able to keep up their current pace forever, they tend to be conservative investors ``more comfortable in traditional programs of bonds, CDs and tax-free issues,'' the adviser says.

This sense of stewardship may also explain, to a certain degree, Microsoft's limited community involvement. Although a leading contributor to United Way - Gates sits on the governors' board of United Way of America, from which Microsoft recently received a prestigious ``Trail Blazer'' award - and the Northwest AIDS Foundation, the company has yet to assume prominence in charity and arts circles, despite having several talented in-house artists and offering occasional mini-gallery openings at corporate headquarters. One arts activist blames this on their ``essentially nerdy personalities - they don't have a lot of social skills or a very balanced view of life. One might assume with the incredible wealth they have, much of it through good luck, they would feel a compunction to give some back to the community. Yet it hasn't happened.''

But Microsoft, noting its budget for corporate donations has doubled annually since its inception three years ago, responds that it has an intentional ``go slow'' approach aimed at steady expansion. Says Bonnie Tabb, corporate affairs assistant who previously was Gates' personal assistant: ``The company doesn't want to be in the position of the Bank of America, which cut its (corporate giving) budget from $50 million to $5 million in just one year.'' Arts and charity support will come as the work force matures, she says: ``Microsoft draws a lot of people from cultural centers like New York, and they have very high expectations of the symphony, theater and arts.''

If workplace progressivism and corporate philanthropy seem a lot to ask of a youthful industry, they are not ideals inconsistent with Microsoft's vision of itself. Over and over, comparisons between it and the Northwest's other leader in American industry - The Boeing Co. - pop up in conversations. Both companies achieved early and prominent success, and both are net exporters. Of all major software companies, Microsoft is in the best position to eventually achieve the kind of hegemony in its field that Boeing enjoys in commercial aircraft.

``What you have here in the Northwest as we head into the Information Age are the nation's premier companies at what the U.S. does best - commercial aviation and software,'' says Peter Rinearson, a writer and software developer who recently issued an add-on program for Microsoft Word, for which he also wrote a best-selling guide. Rinearson has seen both companies from the inside: A 1984 series he wrote for The Seattle Times on development of the Boeing 767 won a Pulitzer Prize.

``Obviously, Microsoft still is much smaller than Boeing,'' Rinearson points out, ``but it's getting bigger very rapidly. Boeing culture has left a huge imprint on the Seattle area over the years, and I think Microsoft might leave a pretty big imprint, too, over time.''

To do so, however, the company will have to keep attracting the best and brightest of its profession, and hang on to them. As its work force matures - the median age is just 30, partly because Microsoft hires so many recent college graduates - the company will be forced to address career issues with the same innovative, problem-solving approach that led it to the pinnacle of its industry. Already it has experimented with alternatives: Jeff Harbers, a 36-year-old manager of data-access business units who's been with the company since 1981, is in the middle of an open-ended leave of absence; another manager served a sort of ``in-house fellowship,'' meeting with software users and vendors to plumb marketing suggestions, after the arrival of a new baby in his household.

Shirley, 51, and Maples, 46, both industry veterans before joining Microsoft, are credited with bringing a leavening influence to the company. After joining Microsoft last summer, Maples quickly saw that its ``functional'' organization - a conventional approach where staff are assigned by a general responsibility such as marketing, editing, etc. - was dragging down productivity and communication. Maples reorganized the company into product units, giving individuals responsibility for a specific program such as Word or Excel to re-create the sense of enfranchisement and ``ownership'' that was the key to much of its earlier success as a small company.

``Programs are getting tremendously more complex, forcing the product development cycle to lengthen,'' Harbers notes. ``We're going to have to set expectations so people don't feel way behind all the time. And if you're planning on being around for 40 years, you have to give people more in life than just their work.''

In a larger context, Microsoft's work-force issues are the same as those for many of the achievement-oriented, high-pressure Baby Boom professionals who during the '80s embraced work as their badge of identity but are now having to re-evaluate its impact on their personal lives, friendships and family, and life goals. Companies where employees typically work 10- or 12-hour days are experimenting with four-day work weeks, mental-health days and work-at-home options, simply so workers have time to look after personal affairs.

``There's so much excitement at companies like Microsoft, it's addictive - the workers become hooked,'' says Alene Moris. ``It isn't until they get sick or make a big mistake on the job or are confronted by an angry or neglected spouse or romantic partner that they finally can step back and evaluate. In a way they need to recognize the fact that growing this fast is not wise, but I don't know how you can teach any American that.''

It's a ticklish proposition for any fast-moving company: Keeping workers motivated, creative and energized while still offering them the chance for a balanced, self-nurturing existence. As big as its corporate map has grown and promises to keep growing, all roads at Microsoft still lead back to one source. An insider puts it this way: ``If Bill Gates would just get married,'' she says with a sigh, ``then I think you'd see a big change.''

CUTLINE: TOM REESE: A SUNNY DAY CAN PULL EMPLOYEES AWAY FROM THEIR TERMINALS AND INTO THE COURTYARD FOR LUNCH AND JUGGLING. SENIOR PROGRAM ANALYST CHRIS BAER, LEFT, AND SENIOR SOFTWARE ENGINEER DAVE PELLERIN PRACTICE AN ART MANY EARLY PROGRAMMERS TOOK UP TO PASS TIME WHILE THEIR COMPUTERS COMPILED CODE.

CUTLINE: TOM REESE: ABOVE - DEVELOPER THOMAS FENWICK WORKS AT ONE OF HIS SIX TERMINALS DURING PREPARATIONS TO MOVE TO ANOTHER OFFICE - A FREQUENT OCCURRENCE AT THE COMPANY, WHICH NEARLY DOUBLED IN SIZE LAST YEAR.

CUTLINE: TOM REESE: RIGHT - IT'S HARD TO TELL SOMETIMES, BUT MUCH BUSINESS GETS DONE IN HALLWAY AND DOORWAY MEETINGS. PRODUCT-LOCALIZATION ASSOCIATES, FROM LEFT, CHRISTINE BEYLAT, LARS OSTLUND, STEFANO CAVINATO AND AUGUSTO FAZIOLI TAILOR MICROSOFT PRODUCTS TO INTERNATIONAL MARKETS.

CUTLINE: TOM REESE: WITH AN AVERAGE AGE OF 30, EMPLOYEES HAVE AN EASY TIME RAISING INTEREST IN AFTERNOON GAMES OF ULTIMATE FRISBEE, GIVING THE COMPANY'S REDMOND HEADQUARTERS MORE THE AIR OF A COLLEGE CAMPUS THAN A WORLD-RENOWNED COMPUTER SOFTWARE GIANT.

CUTLINE: TOM REESE: FLEX-TIME AND LONG WORKING HOURS KEEP OFFICE LIGHTS AND TERMINAL SCREENS GLOWING LATE INTO THE NIGHT. MIKE KOSS, IN THE OFFICE AT LEFT, ED WRIES, SEATED AT RIGHT, AND RICK POWELL ARE SOFTWARE ENGINEERS.

PHOTO; Caption: CUTLINE: TOM REESE: TAKING FULL ADVANTAGE OF MICROSOFT'S COME-AS-YOU-ARE DRESS CODE, TECHNICAL LEAD ANDY HELD, RIGHT, REVIEWS COMPUTER CODE WRITTEN BY KEVIN SCHOFIELD, A SOFTWARE DEVELOPMENT ENGINEER. THE; Caption: DECEPTIVELY RELAXED STYLE BELIES THE INTENSIVE DEDICATION AND LONG HOURS REQUIRED OF PROGRAMMERS.; Caption: SEE END OF TEXT FOR ADDITIONAL CUTLINES.

PUBLISHED CORRECTION DATE: 89/04/23 - FORMER SEATTLE TIMES REPORTER PETER RINEARSON WON A PULITZER PRIZE FOR HIS SERIES ON THE BOEING 757, NOT THE 767, AS STATED IN THIS STORY ON MICROSOFT.