CC#11: Steve Ballmer on clubhouse: LA Clippers, Microsoft and Economic Mobility.
Former Microsoft CEO & current owner of the LA Clippers said "In basketball, the players are your engineers... and you see outcomes every 24 seconds, as opposed to every quarter."
Thursday evening on the GOOD TIME show on clubhouse, Steve Balmer shared his experiences about owning the LA Clippers, his philanthropy work and some stories from his Microsoft days—where he was employee #30. He started by sharing his experience with his first job out of college.
”I started my career as a brand manager at P&G and that taught me some things that really mattered. Everyone had to learn about writing a memo, or a tv commercial. It taught me how to get things down to short form—and it really shaped the way I write and think. It helped in marketing, sales, giving presentations and so many other areas.”
BASKETBALL VS TECH
The topic then shifted to his experience buying, owning and leading the LA Clippers. Steven Sinofsky asked, what was the most surprising thing you learned from that experience?
Ballmer replied “It was quite more complicated than I thought it would be. In software, you have an inexhaustible supply of your product. In a basketball team, you have a limited number of tickets per game. You have to think about what happens if you don’t sell them all—you can never recoup that lost revenue.” He then added that there were so many things he learned running the Clippers that would’ve made him a much better CEO at Microsoft—”not even the business side, I’m talking about the basketball side.”
”In business, we hold ourselves accountable, we measure revenue and track performance. Once per quarter you share your earnings and say ‘we’ll do better next quarter’. In basketball, you either win the game or you lose. It’s not recoverable. Every 24 seconds, you know if you won or lost (reference to the 24 second shot-clock), if you scored or not. People talk about accountability in business, but this is instant accountability. That kind of transparency, accountability and teamwork—you’ve got to be together on that floor. Those were good lessons for me.”
The conversation then steered to management: one of the hosts asked how did managing at Microsoft differ from managing at the Clippers.
”I’ve managed groups at Microsoft—we had engineering teams and business teams. In the Clippers, the business team are the people putting together the roster for the next season, the engineers are the players. As a leader of engineers, you want to get good people in the organization, trust them, ask good questions and replace those who are not up for the task. At Microsoft, I would micromanage a lot when it came to the business teams. I still give my input, but I ask a lot more questions.”
Steve Ballmer’s last thoughts on a comparison of basketball vs tech were as follows:
“In tech, everybody says they’ve got the best engineers. To win a championship in basketball, you have to have the elite of the elite. In sports, it’s unambiguous who the best of the best are, because you see them play every game. It’s a bit harder to tell who’s the best in tech because you don’t see outcomes as frequently.”
The topic then shifted to some of Ballmer’s philanthropic efforts with usafacts.org
”If you really want to understand what the government is doing, you need to follow the money. And as I began to search for the equivalent of a corporate 10-K report—except the outcomes I was looking for weren’t profits, it was improvements in 3rd grade reading scores, climate change, lower crime rates, etc.—I found it impossible to find. It started as my own exploration and I thought we could help inform the masses on what’s going on around them in our country. We published an annual report and we have the first good numbers by county for covid cases and vaccinations. We’re not going to give you causality, but we’ll give you the numbers and you can interpret it how you want. Last year, about 400,000-500,000 more people died than in the previous year.”
Ballmer added “I think everyone in America deserves to know the facts about what’s happening. The thing about numbers is that they’re non-partisan. I really wanted others to understand our country’s numbers and that’s what we’ve done with usafacts.org. I really like the quote ‘Everybody’s entitled to their own opinion, but not their own facts.’ It’s a tragedy that people are running around like chickens with their heads cut off [in reference to misinformation].”
Adding to Ballmer’s philanthropic efforts, was a common theme he brought up many times during the interview: economic mobility.
”With my wife Connie, we started with a fundamental concept that every kid should have the opportunity to achieve whatever they want in their life. That is not the case today in the US. If you look at the numbers, for African Americans, Native Americans, Hispanics—there’s not a lot of economic mobility, and it’s not ok.”
”There’s so many places where policy and law could be improved. We’re funders of a bill in California to try to get rid of cash bail. There are a lot of people who are bankrupted by cash bail. As an example, ‘I get a ticket, I can’t pay so I end up going to jail, which causes me to lose my job.’ The chain of events is so clear!”
One of the hosts asked Steve Ballmer to explain what it was like to lead these annual meetings of 40,000-50,000 sales people in a room.
”There’s always going to be a lot of questions about how you galvanize organizations around missions. It’s hard when there’s 20-30 people, harder when you have 200-300 people and as you can imagine, incredibly difficult when you have over 40,000. At that level, you’ve gotta make things extremely simple. That’s where the phrase: ‘DEVELOPERS, DEVELOPERS, DEVELOPERS.’ came from. We needed more applications created by developers—and this is what made Windows a huge success. The other thing I realized at that level, was that the best way to communicate with your employees was to communicate with the press. Because they were very likely to read and believe that.”
He then got into the specifics of giving his speeches:
”Let me make a general business observation. Here it is: When a business leader speaks, who cares the most about what they say? The customers? Nah, they can leave you whenever they want. Share-holders? Most trading is done by mutual funds, and they can buy/sell when they want—so they’re not in the game. Who cares the most? Employees. Whether it’s a product launch or a sales meeting, you have to make sure you can instill confidence in your people.”
In preparation, for these speeches Ballmer said “I would spend days in advance preparing what I was going to say. And if I was going to speak at 5pm, I would spend every minute of the day, repeating it over and over again. I also do my thinking when I’m talking, so I would sometimes get a thought and just blurt it out. And I think that’s important. We went through some tough times—we were sued by the government for trust violations, the stock market bubble burst in 2008—during these times, it’s incredibly important to build confidence in your people.”
He was then asked about a topic that is popular amongst most entrepreneurs and incredibly important: listening to your customers vs taking a bold, audacious risk on a product you believe in. Ballmer had given a speech early on talking about how Microsoft was “all in” on cloud technology, and he received a lot of critique from industry analysts.
”You gotta listen to your customers, but you need to also be thinking about what your customers may need but don’t know of yet. What are the pain points they’re expressing? You don’t just want to be thinking about how we can patch the pain-point, but you want to be thinking—how can we re-create the product to eliminate the pain-point. We had a similar thing happen once earlier. We thought PCs and PC servers were gonna power enterprise. It took us years to establish this was a credible enterprise proposition. Then Microsoft seemed to be known as an enterprise company. The cloud had so many value propositions, it could add agility to teams and so on. We started with platform as a service, instead of infrastructure as a service. It cost us a good bit when you look at AWS. At first, you see a set of pain points and then you begin to see it all coming to fruition. We didn’t really have a model of what was the right thing to do up front.”
He was then asked “When does keeping an existing customer become more of a burden to which you decide to let them go and focus on another product or area?”
He replied “If you’re a big company, you have to avoid getting caught in that trap. It doesn’t mean it’s easy. Apple has navigated that well—they continue to push their products forward without abandoning their previous customers; they take big leaps. So I think there are a lot of ways to get there. It all comes down to how you see yourself. If Microsoft didn’t choose to see itself as a cloud company, it wouldn’t exist the way it does today. Amazon chose to view itself as a full-service delivery company, when they could’ve simply viewed themselves as an e-commerce company. If you get preconceived notions about what your company does, and that gets engrained in the culture, that’s where you get into trouble. A lot of the companies that were big in the computer space when I started, Oracle for example, are no longer big in this space. When you compare them to AWS and Microsoft, they’ve stagnated.”
CODE.ORG AND FINAL THOUGHTS
Steve was asked about code.org and his support of the organization. He said the focus was not just to get more engineers in this country “We need to make sure we’re getting to the kids who are less fortunate. There are many economic opportunities that come to people who develop software, so we have to equip people with the tools. One incredible experience I had, was when I went to speak at a high-school in east LA. We visited a couple classrooms, and 1 woman was teaching computer science. She said they were using a lot of the tools that code.org provides and that they were so valuable! It was such a good feeling to hear this.”
The final question of the interview was: What are your thoughts on clubhouse
Ballmer replied: "This is kind of fun. One of the great things is you don’t have to be in front of a screen for the conversation. I’ve been in a hot tub for the entire conversation and it’s a pretty good way to have this discussion.”
“I get 1 plug for this session. On the count of 3: 1… 2… 3… GO CLIPPERS!!”
*Queue: Eye of the Tiger*