"1-2-3" Creator Mitch Kapor

"1-2-3" Creator Mitch Kapor

Creator of Lotus 1-2-3 Software and Founder of Lotus Development Corp.

By Robert A. Mamis and Steven Pearlstein
Inc.

January 1, 1987

What Steve Jobs is to personal computers, Mitch Kapor is to the software that runs them. Youthful swagger, technical wizardry, and an unconventional marketing sense allowed both men to found companies that quickly came to dominate the personal-computer field. In those early days, no visitor to Apple Computer Inc. or Lotus Development Corp. failed to note the laid-back business culture or the charismatic quality of leadership that together yielded extraordinary dedication and cohesiveness. More recently, both companies have learned how difficult it is to come up with second acts as dramatic as the first--Apple with its Apple III and Lisa computers, Lotus with its Symphony and Jazz programs.

Today, both Mitchell D. Kapor and Steven P. Jobs have left the companies they founded. The lesson of Jobs's angry and not wholly involuntary departure from Apple in 1985 was not lost on Kapor as he considered his own future, and Lotus's. His resignation less than a year later still left him with a seat on the board of directors and 1.6 million shares of Lotus stock--just about one share for each copy of Lotus 1-2-3, Kapor's program of spreadsheet-cum-database-cum graphics, sold. Kapor now spends much of his time down the street from Lotus at the Massachusetts Institute of Technology, a student of cognitive science and possibly a born-again entrepreneur in the field of artificial intelligence.

Kapor is a former Yale University student of linguistics given to weighing his words, a onetime transcendental meditator given to candid introspection. He spoke with INC.'s Robert A. Mamis and Steven Pearlstein.

INC.: You founded a tremendously successful company in a growing industry and, after only five years, you decided to walk away from it. Why?

KAPOR: If you look at Lotus as it started and as it is today, I think you'll see more differences than similarities. In the beginning, it was classically entrepreneurial: a small group of people trying to break into a market with a new product around which they hoped to build a company and achieve market share for the company and financial success for themselves and their investors. Today, Lotus is a company of 1,350 people with diversified, worldwide operations, with the organizational structure and challenges of a $275-million company. And so the nature of the challenges facing the company, and facing the people in it--and, to your question, facing me--is radically different.

INC.: Different, yes. But in your case, different means less attractive.

KAPOR: To be very specific about it, I guess the kind of things that I enjoy most--and that I'm best at--have to do with the design of software, working with small groups of people in which the most leverage comes from the marriage of technical astuteness and the intuitive sense of the marketplace. That's what drove Lotus in the earliest days and what made it successful. Today at Lotus, innovation is certainly still important. But there are many other factors that are important, including taking care of those 2 million customers, many of them large corporations, for which having new features in their software represents about 5% of what they really care about.

INC.: And those other factors are not things that exactly turn you on.

KAPOR: If you're going to be responsible for running a business, you have to be responsive to the requirements of the business situation, not what you want to do as the founder or chief executive officer. The operative question is, "What do we have to do to continue to survive and to prosper?' Building long-term corporate relationships, diversifying products and services around the core offerings--I support those priorities at Lotus 100%. But it is a separate question whether Mitch Kapor is the best person to lead that effort or whether he wants to do it. And for a long time, the answer to both questions was pretty obvious. I couldn't say, "Hey, see you later.' But my ultimate departure was part of a conscious plan over a period of two years or more aimed at extricating myself from my own success.

INC.: That means you were thinking about leaving three years after you started.

KAPOR: Well, I would point to the rate of compression in which events transpired. If it had taken Lotus 10 or 12 years to go from zero to $250 million in sales, which would be a very respectable performance, and then I had left, I don't think anybody would blink. So I think you have to be sensitive to the time subjectively as well as objectively.

INC.: You seem to be focusing a great deal on company size as the determining variable in your own satisfaction level.

KAPOR: There is a fundamental conundrum, isn't there, which says that the larger the organization becomes, the more it requires a measure of control and coordination, because without them, you've got anarchy--you've got nothing. But those measures of control tend to mitigate and reduce the innovation and the quality of the process and the quality of the product, and I have trouble accepting that, at least emotionally. I'm not comfortable on a day-to-day basis with the basic assumptions that you have to make to be a citizen in that society.

INC.: Is that a problem with larger organizations, or is it a problem with Mitch Kapor?

KAPOR: I'm an agnostic on that question.

INC.: But let's oversimplify things for a moment. If running a company of almost any size is really just a matter of getting a group of people to work together efficiently, creatively, then why should it really matter whether you're talking about a start-up or something larger?

KAPOR: Because as organizations grow larger, what one has to do to get them to work together changes. And what I found was that my skills are not very evenly distributed across that spectrum. At Lotus, I was really good at working one-to-one with people--or maybe two- or three-to-one--because it had an intimacy and directness of conversation. And I also tended to be really good at giving speeches to a hundred or a thousand people at a staff meeting. But in the intermediate stage, where you're attempting to run an organization that consists of a mass of people, with an internal structure in which authority is delegated, where other people are really carrying the ball and where one is sort of leading by coordinating --well, I'm just not very good at that. I don't have the patience for it. I'm too proactive to just let other people work stuff out for themselves and just give a little nudge here and a little shove there.

INC.: Was there some incident that best illustrates that frustration?

KAPOR: I'm not sure there was an incident so much as something that really got to me several times, and that is the effect of organizational inertia. What happens is that a bunch of people are hired over a period of time in some part of the company that is supposed to be doing something to support the company, and you discover through the management process that things aren't going as expected. Because it's been delegated to somebody else, it's not under your direct control, and now you find out it's been screwed up. And every time that happens, you get a sinking feeling. And you think to yourself, "I could do it better.'

Maybe somebody didn't hire the right people, or didn't use the resources effectively, or didn't set the agenda properly. Whichever--the result was that you had a big mess. And it was almost an unfixable mess--it would take more time to fix it than the elapsed time during which the damage occurred. First you'd have to undo the damage and then start over again. And that means you'd probably have to realign the personnel properly and spend a lot of time in meetings explaining what was going on and making sure that the process was being fair to people. You had to take the time to try to reduce the pain level, and rebuild the team, and let the new team get up to speed. And to put it bluntly, I hated that.

INC.: But you did it.

KAPOR: Not very well. Other people did it much better. I'm too much of a perfectionist --and in a big company, that's not a great thing to be.

INC.: Is it great in a small one?

KAPOR: In a small one, if you pick your spots carefully, you can be a perfectionist.

INC.: Do you think it's possible to somehow build a company, a large company, that avoids the frustrations that you encountered as a CEO?

KAPOR: Let's put it this way: I'm not convinced that it can't be done. It's in the large category of open questions, like "Is there life after death?' But I do know that if it could be done, it would be new and radically different. Certainly, it would be a harder thing to do than starting a company. I mean, before Lotus there was Apple and before Apple there was Intel--all high-growth, good-culture, successful start-ups. But how many really, really first-rate, highly innovative large companies are there? You know, there really aren't any. There aren't even any role models for what I'm talking about.

INC.: Presumably, you saw your own company lose a bit of its innovative edge. What did you think as you saw that happening?

KAPOR: Well, the thing that I wound up spending a lot of time thinking about was the split between the senior-management people on one hand and the technical people on the other. And emotionally, I would line up with the technical people, not the senior managers, even though I knew, intellectually, that I couldn't do that. I mean, we had 2 million users and a huge investment in our current technology. And just because somebody has come up with a better wizzy in the lab doesn't mean that you can go out and try to get all 2 million people to use the wizzy. It's nuts--and we learned that lesson.

But the technical people, at some fundamental level, don't understand that because they're thinking only in terms of how they can make the product better-- not in terms of the overall system of customers and the costs of training and future plans for capital investment. And so you get differences of opinion--differences that are not simple to sort out. And the technical people--or some of them, anyway--say, "Management has no room for good ideas anymore. I'll go off and start my own company.' And management goes around saying, "Those technical people are such babies, they are so unrealistic.' That kind of debate is very senseless, and I think at Lotus there was an absolute minimum of it. Yet the dynamic was still there, because it is fundamental to almost any company--and not a simple thing to sort out.

INC.: It sounds, in part, as if you are referring to Lotus's slow start with its Symphony program, which never quite reached the success of 1-2-3.

KAPOR: I'd say about Symphony that I had a very different reaction to it as an executive than as a designer. As an executive, I could be much happier with what happened with Symphony: the big expectation followed by the big disappointment, then a year of repositioning the product and bringing it back to the point where we were able to come out with a second release that had its place and grossed some $60 million. As an executive, that was something to be proud of--absolutely. As a designer, however, I had a different reaction, which was to focus on flaws in the program that I wished weren't there. And it was that tension that became a fundamental source of ambivalence and frustration for me.

INC.: Were you chastened by that experience with Symphony in terms of what people expect for "second acts'?

KAPOR: Well, expectations are higher the second time.

INC.: Was that something that hung over you? Do you worry about being 36 and known as the former Mitch Kapor?

KAPOR: But see, that's an attribution of someone else's. As for me, I've been working for some time now on a product with a couple of other people at Lotus, which should come out sometime in 1987. I have fond hopes that it will be a major success and moot this whole issue--that I might be moved into the category of those who have, individually, in some sense, done it twice. If that happens, great. And if it doesn't, then I'll have to think about why it didn't. I can't control the judgment of history, and I'm not looking to history as a source of self-esteem.

INC.: Were there other impacts that your initial success had on the psychology of the company?

KAPOR: By any reasonable standard you may care to choose, Lotus has been remarkably successful, and the people who work there should all be immensely proud of it. But not so proud that it leads to arrogance. That's a big problem in any successful company, one that requires very conscious efforts so that you remain permeable to the environment and open to criticism that can be taken in and understood --and corrective actions can then be taken. I don't think we did as good a job at that as we could have. And if there is a next time, I'm going to think about that more.

INC.: What is it about an organization that makes itself impermeable, arrogant?

KAPOR: Insecurity. Thinking, "Here we are, we're number one. But did we really work to deserve this? Maybe we were just lucky. Well, we can't afford to entertain doubts about this, so we'll just shut it off.' It's that kind of insecurity, the kind that comes with inexperience. And I think the answer is to feel confident enough that the degree of success is merited but has to continue to be earned--that's a clich\e, but I think it's true. Success has a short half-life. If customers aren't happy, they're not complaining just to eat you up. They're doing it because they're not happy. And it is really worthwhile understanding what it's about, even if you don't agree with it. The worst thing you could do is to write it off.

INC.: You've run through a number of very common, understandable frustrations that you encountered as Lotus grew and that preceded your decision to leave. I think most people listening to you-- most entrepreneurs, anyway--would think it unusual that you would actually act on those frustrations by leaving the company you started.

KAPOR: In one sense, I'm not surprised that people don't understand it. It was very difficult. I spent several days at one point in pure agony about the issue personally, about the fundamental separation of identity between myself and the company. But, having done that, it was done.

INC.: Can you describe those days?

KAPOR: It was over a long weekend, so I had a lot of time to think about it. And it felt like it feels when you're breaking up with somebody. It's a sense of loss, emptiness, anger, helplessness.

INC.: Was there something specific that prompted it?

KAPOR: It was about the time that Jim Manzi {Lotus's president} was named the CEO. That was the proximate cause of it.

INC.: That appointment led some people to wonder, "Did he jump, or was he pushed?'

KAPOR: I suppose it is one of the manifestations of a company's growth that people begin to ask questions like "Did he jump, or was he pushed?' The question implies that those are the only two alternatives. But from where I sit, real life is not that simple. I don't know what it is that you particularly care about, but whatever it is, I bet that you don't see it as a simple black-and-white kind of thing. It has nuance to it, texture. And the subject here is me and my life and I'm passionate about it. I care about it. I suppose it's the function of journalists or industry analysts to reduce things to black and white. But the danger is that, even using my own words, you'll produce a much more simplistic rendition of reality than I'd like. I don't want my life--my work--turned into a cartoon.

Now let me try to answer the question: I did not jump, nor was I pushed. Fundamentally, my leaving was a function of the company's growth, of my own growth. I will always be somebody who is highly motivated by things I regard as challenges, and I tend to be terribly unmotivated by--if not outright resistant to-- anything else. And because Lotus grew so large so fast, it rapidly ceased to play that central role in helping me give meaning to my life. And therefore, the honorable and responsible thing for me to do--and the best thing for me and for 1,350 employees and for several million customers and all of that--was to remove myself from the company sooner rather than later.

INC.: As you were saying that, I was struck by how unusual a statement that is for a corporate executive. Can you imagine Roger Smith saying he was leaving General Motors because it no longer helped give meaning to his life?

KAPOR: I can't imagine him saying that in public.

INC.: Do you think he might say it in private?

KAPOR. I don't know. Perhaps it's the kind of thing he would say to his wife or to a shrink, but never in public--in which case it's really a generational difference more than anything else. It would be considered somewhat inappropriate when one is holding the reins of power, when there are employees and customers and shareholders to consider.

INC.: Are you--were you--uncomfortable with that image of yourself as somebody who holds the reins of power? Did you ever think of yourself as a boss?

KAPOR: Sure--I mean I was. But I think that is something I had to learn--that I couldn't pretend that I didn't have the upper hand, the ability to fire people, the power to decide which projects went forward and which ones did not. To pretend otherwise is to commit a grave injustice toward your employees. If you have that power over them, you have to exercise it responsibility--not pretend that it doesn't exist and act all chummy. My human-resource manager taught me that. She made me understand that these are essentially power relationships, and even in a company with the kind of enlightened management that we tried to practice, power is distributed very unevenly.

INC.: Did you like being a boss? Did you prefer it?

KAPOR: No, I would prefer not being a boss.

INC.: Then why, as the founder, as the boss, didn't you set things up so that you wouldn't have to play the role--so that you could sit at your terminal, work with the techies, and just help produce good software? Why couldn't you have found some arrangement that would have allowed you to stay at Lotus?

KAPOR: Actually, that option was offered to me, but it did not feel emotionally genuine. I really can't tell you why. Possibly it is due to some failing on my part. But possibly not. Think about it: I go off into a room somewhere and come back with a product I think is great. And the sales manager says, "Wonderful, but how am I going to sell it? And isn't it going to cannibalize the current product?' And, by george, it will--he's not lying. And then the vice-president of corporate marketing says, "Well, how does that fit in with our long-term strategy? Is this a commitment that is going to cost us $4 million to launch and support this thing?' And that's a good question to ask, too.

INC.: You'd be in the situation of not wanting to hear all that.

KAPOR: Exactly. And what some entrepreneurs do is attempt to force it through, to dominate the company without really running the whole thing. And that's a very bad mistake. It can do great harm.

INC.: How do you know that?

KAPOR: I've watched what's happened on the West Coast. And it's happened more than once.

INC.: Any examples?

KAPOR: I think there is a reading of what happened at Apple Computer that speaks to that.

INC.: Apple under Steve Jobs. Lotus under Mitch Kapor. One thread there is the charismatic quality to entrepreneurial leadership.

KAPOR: I fundamentally don't like charisma, no matter who has it. To me, having charisma means that I can get you to do things that violate your own self-interest. And that triggers a struggle I have with myself about charisma, because I like to be in environments where everybody is at a peer level and people get to make up their own minds about whatever is at hand.

The other down side of charisma is that people will more happily follow whichever direction you are heading off in, whether it's a good direction or not. And that's very dangerous. I never liked the fact that, at Lotus, people might take temporary leave of their senses because they wanted to agree with me. Or sometimes it would happen that people would interpret a little twitch that I had as some sort of royal command--and before you know it, they were going off and reorienting an entire department because of something that I didn't actually say.

INC.: Can you give us an example of when that sort of thing happened at Lotus?

KAPOR: I don't store examples of these things.

INC.: Are there any businesspeople who are models or heroes for you?

KAPOR: Not really. You know, there is a certain simplicity to the phenomenon these days of businessman as hero. I don't like it, but I'm pretty confident it's going to go away. It won't have to be pushed--it'll jump.

INC.: To some so-called new-age managers, you're already something of a model, a hero. And to them, your coming to the realization that you really did have to leave Lotus--for business and personal reasons--is likely only to enhance that reputation.

KAPOR: You know, I'm not really sure that I had to leave. It was a choice; no one was forcing it on me. But I have a willfullness --I knew what I was going to do, and I did it. It reminds me of when I felt that I had to start a company because, for a variety of reasons, there was no software publisher at the time I thought I could do business with. Back then, I felt I didn't have any choice but to start a company. Similarly, given the way I assessed the current situation, I felt that I didn't have any choice but to leave. I'm a bit suspicious about that--suspicious that I may discover that that's really masking some other motivation.

But look, you could go on forever and introspect about this kind of stuff. One of the things I've learned is that you've got to get up and make your coffee, go to work, and do what you've got to do. To go down the rat-hole of introspection is very unproductive.

INC.: I wonder if we could at least look down the rat-hole for one more moment, however, and ask if your decision to leave Lotus wasn't, in fact, a luxury that came with knowing that you could walk away with $50 or $60 million in stock.

KAPOR: Let me point out that when I started Lotus I had just made about $600,000 on two programs, after taxes, which I could have easily lived on for several years, if not longer--depending on what kind of lifestyle I wanted to have. But I didn't. I went back and started a company and put half of that money into Lotus. So there's a data point that says that the choices people make are not necessarily purely financial. I would like to think that my core values are, to a significant degree, independent of money--that I would make the same kinds of choices regardless of the financial situation.

We'll never know, though, will we?

ILLUSTRATION: portrait CAPTION: Mitch Kapor.