Can ex-Microsoft employees make great entrepreneurs?

Guest commentary: I was casually talking with a partner at a local venture firm recently, and he lamented: “We don’t have much luck backing ex-Microsoft entrepreneurs.”

His comment irked me a bit. Not in a, well, I’ll-show-you kind of way. More like: Does this venture guy really think he can egg me on with that crap?

But it did make me think. How much did my six years in engineering program management at Microsoft prepare me to grow a successful business?

Shooting from the hip, it’s a tough call. Internally we’ve all heard: “Ah, this team is like a startup, except it’s at Microsoft.”

Newsflash. It’s not. Not even a little.

For whiteboards, Microsoft people send an email and one magically appears. Startup people head to Home Depot and build them, never mind having a wall to put the darn thing on. And that’s just the first week.

A Business “To Do” List

To start, let’s lay out what it means to build a successful software business. A real software business has basically three components:

  • Sell stuff  (The so called, “top line”)
  • Build and operate stuff (someone needs to want it AND pay for it)
  • Manage money (Make sure you charge more for #1 than you spend on #2)

If you strip away all the hype, that’s pretty much what you’ve got. So, without further ado, here’s the grade I’d assign to the lessons I learned from Microsoft that I am now using in my current startup.

Sell something? You mean charge actual money?

Aaron Goldfeder

A couple years ago, as a wantrapreneur, I had a panic attack when I realized that to lead a business you needed to be able to sell.  Sometimes I ask Microsoft folks if they’ve sold before. They usually mumble something about selling a vision internally or something. Another newsflash.

Selling a vision, a project plan, recruiting… all that soft stuff is totally different than signing up to delight a customer who trusts that your product will deliver the ROI that makes their money worth it.  And then you have to work with them to actually pay you. As in invoice. Money. Deposit to bank.

For the enterprise, this really translates to learning a tradecraft involving understanding a customers business needs, their business case, earning trust and following through–one client at a time. The so called “business guys” are woefully underappreciated in the product teams at Microsoft, and I left totally unschooled in the art of sales.

Selling Stuff: Microsoft Entrepreneurial Training Grade: D


Just Build It

Microsoft is probably still the world’s best company for getting real seasoning on such a wide variety of technologies. For good reason, no other company attempts so much.

To be fair, maybe Apple is now there too. If you’re lucky to get some good mentors and teams, you really can get super deep on a lot of technology, especially if you hack some stuff on the side.

But building stuff is one thing. Building stuff that people love AND will pay for is another. This means a whole other level of depth is required in understanding your varying users and your customers.

And at Microsoft you are rarely taught that users aren’t necessarily customers. I’ve found it humbling in how much I’ve had to learn quickly to fully deliver product at EnergySavvy. As my co-founder Leo Shklovskii likes to point out, sometimes 80 percent is only halfway done.

In fact, the whole business vs. product thing is often wildly conflated at Microsoft.

Product General Managers are regularly referred to as running a business or something similar. They aren’t. They are usually engineering managers.

Sales is something in a whole other organiation. Marketing’s another.

In fact how many people at Microsoft really own a P&L? Five? Ten? How often does a sales rep actually talk to a developer?

Building Stuff: Microsoft Entrepreneurial Training Grade: B+


Money. Money. Money.

It’s almost unfair to even give a letter grade in the category of managing money. Yes, I managed a multi-million dollar budget at Microsoft. Did that have much bearing whatsoever on my ability to manage money for our business? Nope.

Manage Money: Microsoft Entrepreneurial Training Grade: C+


It’s who you know

There are at least two additional key benefits that a solid Microsoft education can also give you: networking and management skills.

Networking: Folks outside of Microsoft love to point out that a good portion of Microsoft experience doesn’t matter outside of Microsoft (e.g. no one cares about ship-its, much less your ability to sit in meetings all day without offending anyone per your next promo goals).

That said, the pedigree is respected enough that you can often get people to take your call, which means you can build a great network. The extended Microsoft network has been an incredible asset to us for which we are exceptionally grateful.

Management: If it’s one thing Microsoft has in spades, it’s management positions and frankly some great managers. I was lucky enough to have both and as a result learned a lot about team management. Those skills are finally coming in handy now that we’re scaling up. It didn’t matter much at the very beginning though!

Continuing Education: Microsoft Entrepreneurial Training Grade: A+


So can ex-Microsoft employees make great entrepreneurs? The truth is I only care in as much as I’ll always have love for Microsoft.

And, I do think it’s probably one of the best places in the world to get foundational experience.

For myself though, I can only look at what I learned, the folks I met via the Microsoft network and how I need to respond to offset my own shortcomings and amplify my strengths.

As I explained to the venture firm partner when he made that comment, we’re not out to prove anything to anybody. We’re here to grow a great business and that’s pretty much it.

Summary Score: Solid B

Aaron Goldfeder is the CEO of Seattle startup EnergySavvy. He is a former Principal Group Program Manager at Microsoft where he was a key leader on Internet Explorer, Windows XP, Local Search and a Microsoft Internal Cloud Services Platform.

Previously on GeekWire: Does working at Microsoft really turn your brain numb?

  • Guest

    The experience you get from MS depends on where you worked. Had you been closer to sales for example, your experience would have been vastly different. I’m also not sure what to make of some of your statements. 5 or 10 people owning P&L? You mean ultimately, right? And even that’s a stretch. There are hundreds of people at MS, maybe even > 1000, with direct P&L responsibility, including every single foreign subsidiary manager and numerous groups within those subs as well as in the US field.

    All of that aside, MS doesn’t set employees up for entrepreneurship any better than most other large tech companies. It may even be a little worse since politics plays such a strong role compared to other companies where results tend to take center stage.

    • http://blog.findwell.com Kevin Lisota

      Other larger tech companies focus on results more than politics? Yes, Microsoft is political, but I think it’s naive to think that other large companies are magically less so.

      • Guest

        Yes. In most other large tech companies politics are present but not central. And I’m speaking from direct experience.  

    • Lovmac

      I’m not sure I buy your argument that 1000+ have P&L responsibility. Most people I met there had either budget to spend or were on the hook for revenue numbers. But both? Rarely.

      • Guest

        I said hundreds and possibly even 1000+. It’s several hundred at a minimum. Certainly not 5-10.

    • Mike Mathieu

      Most of these hundreds of P&L’s are not P&L’s like you’d have at a startup, in that if you’re in a subsidiary you have huge expense allocations from corporate for product and localization costs. If you’re in a US product group, all but a handful of gorups have allocation for salesforces that they don’t manage, gobs of corporate overhead, etc.

      As a result, few people at Microsoft get experience pulling all of the levers you have the ability to pull in a startup environment.

      • Guest

        Nobody said they were interchangeable.

    • Belle view

      I think the difference is between those MSFTies who like to view themselves as having P&L responsibility vs. those who actually do.

      I had one GM-type at MSFT who loved that “like a startup” talk and took it one step further – he’d call the team together quarterly to illustrate how much “profit” was being made in the “business” under his leadership, which was all true so long as you didn’t count expenses for rent, benefits, taxes, technology, content – small stuff like that. Then he’d throw in a few digs at the broader company for good measure.

      The whole “let’s play entrepreneur” act became a running joke on the team. Sorry, but if you want to run an actual business that badly, you gotta leave the nest.

      • Guest

        Sure. I saw lots of that too. But that wasn’t really the topic.

  • http://www.rescuetime.com Anonymous

    BigCo can prepare you for a lot of challenges, but not for the “first order” challenges.  I think you’re dead on that it makes you smarter about large team management and gives you networking chops.

    But before you get to the point where large team management and networking matters AT ALL, you need to build a product.  You need to do rocket-fast customer development, figure out how to build a minimum viable product, and craft a go-to-market and ongoing distribution plan that can be accomplished with pennies rather than the fat bags of cash that BigCo can bring to bear.  95% of startups fail here.

    If I were an investor, I’d try to find people who were smart about the early stages, because that’s what you need to do FIRST.  If you can clear that hurdle, you can always hire folks with deep management experience and a great network.

    • http://hark.com David Aronchick

      Totally agree Tony – I’m always stunned the number of non-bigco people who still have that bigco mentality. First order – get it out the door!

    • Aaron Goldfeder

      I totally disagree with Tony Wright guy… And I don’t know what qualifies him to comment on what startups need to do anyway ;) 

      Jokes aside, I agree that early product is key. But that’s true even for internal new projects at MSFT. Code just often plain wins. But as you remark about customer development, it’s not enough at all. As many companies probably die because they scratch a technical product itch but find themselves without a market. 

      So, the point about a great network…  Especially if you’re a bigco alumni is access to great mentors. A lot of the success at EnergySavvy is because we’ve hired and surrounded ourselves with folks that deeply get the earliest phases of starting up plus all the ups and downs along the way. This has really helped us grow from our make-a-whiteboard days and bust some thought bubbles. 

    • http://twitter.com/chrisamccoy Chris McCoy

      Early-stage as a management science is what b-schools and entrepreneurship programs should be teaching nationwide. Happens at Stanford, should be happening at the UW….agree with everything you say here. 

  • JH

    This is a pretty reasonable assessment but given the size and complexity of the organization, it is not as simple as one person’s experience. 

    One other thing that Microsoft does offer is the ability to move between disciplines and roles.  In my time there, I worked in customer support, services, engineering management, and sales moving into strategic BD.  You can’t buy an education like that.

  • JH

    This is a pretty reasonable assessment but given the size and complexity of the organization, it is not as simple as one person’s experience. 

    One other thing that Microsoft does offer is the ability to move between disciplines and roles.  In my time there, I worked in customer support, services, engineering management, and sales moving into strategic BD.  You can’t buy an education like that.

  • Made the leap

    Only if they haven’t soaked up too much of the numbing Kool Aid. I’ve seen bright-eyed wantrapreneurs go in (you know, “just until they can get their own thing started”), get sucked in, get beaten down, get obsessed with Microsoft measures of value (levels, headcount, ownership of some abstract internal process with a TLA), get used to the cushy schedule and benefits, and eventually lose the drive. It’s tragic really.

  • http://www.thoughtful.co Chris Lynch

    There’s no doubt that working at a large company can help you tremendously in becoming an entrepreneur. But the reason there’s a faint anti-Microsoft startup bias rarely has less to do with Microsoft and more to do with the culture.

    I break this down in a blog post I did recently about Microsoft and Startups: http://www.lynchseattle.com/post/7342210065/startup-culture-warrior

    Here are some other areas I didn’t mention:

    Microsoft has traditionally rewarded careers inside of the company. They like to see employees who have a strong loyalty to their brand, which is understandable, and there are a lot of career Microsoft folks. Unfortunately what happens with this is you don’t branch out and experience other technologies, cultures, and have traditionally been isolated to all things Microsoft. Microsoft tends to have a not built here attitude that is a disservice to those looking to become an entrepreneur, because you simply can’t build everything from scratch in a startup. Microsoft should send their children to grow and then reward them returning to the home town with new vision and variety under their experience belt. 

    In a startup it’s all about iteration, agility, and failing quickly. Microsoft is long known to enter a market for the long run. This breeds a culture of “make a first pass, see the results, and then invest accordingly”. This doesn’t work in a startup – you will go out of business. You have to be quick and iterate based off of response immediately – not every 24 months.

    Your white board example is a good one: I always tell people that in a startup, eventually you go and buy a stapler.

    Another challenge is that Microsoft generally crafts teams of specialists to attack a problem. As an example, I sat next to a woman on a flight who was in charge of the new file attachment changes for emails in Outlook. In a startup you are more than likely in charge of Office; not just Outlook, and certainly not the file attachment. Sure the scopes are different, but you get the idea.

    I’d like to see Microsoft push for a stronger entrepreneurial spirit, but it requires change. That change will significantly benefit the Seattle area, the employees inside Microsoft who dream of starting up a company, and the investment in startups here. Perhaps they should even make it easier to help fund them.

    • Aaron Goldfeder

      Chris, 

      I was one of the dozens (100′s?) of folks over the years that wrote think week papers, did presentations, research, incubations, etc on the theme of ‘internal startups’ at Microsoft. It’s a well worn road with a lot of bodies on it, though I’m still a believer. In some ways the potential for incubations and projects with start-up elements at MSFT has never been better. But it would take a bunch of work… especially on how the comp plan works for participants. 

      • Guest

        Actually it’s be pretty easy. You make 40% of every divisional president’s bonus contingent on *profit* arising from *net new products* (i.e. that didn’t exist three years earlier, not new versions of existing products) Then sit back and watch how quickly they suddenly get entrepreneurial.

  • http://www.facebook.com/people/Jonathan-Sposato/786250122 Jonathan Sposato

    this is a great post aaron, the likes of which i’ve often thought about writing myself (i was at msft 12 yrs ’92-’04).  in addition to the other comments, i think the epoch during when you worked at msft is also influencing of entrepreneurial success.   anecdotally, i see two distinct epochs as it relates to ex-msft entrepreneurialism; 
    1) pre- ’97/’98
    2) post- ’97/’98

    for example, microsofties from the first era tend to display a tendency to staff big and mirror msft-like functional areas in addition to core eng’s right off the bat (pm’s, Q/A, marketing, product support).  they also favor having to know with a high level of certainty the ‘right answer’ before moving forward.  decisions are much more researched.  and sometimes unfortunately, microsofties from this era exhibit a bit of entitlement wrt partnerships or deal making. in other words, msft itself is the template for success.

    microsofties who do startups from the second era seem a little closer to the avg lean/hungry startup.  they seem to move forward with fewer functional leads, raise less money to start, and don’t expect potential partners to bend over backwards for them.  there is also a different time-value-of-money perception than the first group.  again this is anecdotal, but i believe strongly corroborated by others in the startup and VC communities.

    one early msft cultural tenet from the first era that is helpful to entrepreneurial success is the ‘running scared’ work ethic.   the sense that one can’t rest on your laurels despite healthy traffic growth and large market share is a fine entrepreneurial value.  

    i too, loved and enjoyed most of my time that i was at msft (its where i came of age and met some great people).    but similar to most ‘big co’s’, msft does not necessarily set up the avg middle manager and above for particular success in the entrepreneurial space.  i think similarly of google (different blending of issues there entirely), despite its many many positives.   i think entrepreneurialism sets up for success in entrepreneurialism.   there is no better schooling than doing.  

    • Aaron Goldfeder

      Thanks for the insightful additions Jonathan! 

    • Mike Mathieu

      I’m ex-MSFT (’90-’99) and have done a number of startups including All Star Directories and Walk Score. The most common advice I end up giving ex-Microsoft entrepreneurs is don’t start out by building a “platform”. Platform is the lovely gift your customers give you when you established yourself as a leader, not the thing that 3rd parties stake their own futures on when you first launch your product. Extensibility is fine. Platform is a different beast.

      The startup ecosystem is more developed now than it was 10 years ago, but one of the things I found difficult when I started out was the connections piece. MSFT had done such a good job keeping me happy while focusing inwardly or within my specific industry, that I rarely connected with non-MS people in the Seattle tech community.

      • Aaron Goldfeder

        Hey Mike, Funny how it all comes full circle. You are a perfect example of someone who was willing to take a meeting with me and someone I could look to as a role model. 

  • http://twitter.com/healthyurbanite Lauren Bernstein

    Very interesting analysis, Aaron. Great article!

  • http://twitter.com/cliffrudolph Cliff Rudolph

    Aaron, Great article.  I started my career at GE, in the Semiconductor Industry down in Silicon Valley.  In late ’98 I attended a mid-manager meeting in which Jack Welch spoke.  He encouraged the entrepreneurial spirit, explaining, that GE employees would never understand what it was like to struggle to make payroll, to not have an “expense account” or marketing budget.   What would we do without our six sigma quality control program and buckets of cash to buy our competitor if we couldn’t beat them?

    I think it takes a lot of guts to leave the confines of a Fortune 500 company.   I think that’s the only performance metric you missed.  Ambition. 

  • http://twitter.com/michaelbkim Michael Kim

    Aaron, maybe the next time you see this venture capitalist you could bring up this list:

    “Expedia, Zappos, Tellme, iLike, Zillow, Valve, Stack Overflow, QPass, Scout Networks, Zillow, AllStarDirectories, Talentspring, Smilebox, Cranium, Jott Networks, RealNetworks, Z2Live, Fourth Wall Studios, Inrix, Pi Corp., Gist, Mixpo, Delve Networks, Cozi, Picnik, Docverse, Symform, Pure Networks, Wavii, Crossgain, Sourcelabs, Avogadro, UIEvolution, Wildseed, Onyx, Aditi, Positronic, Telligent,… just to name a few”

    and then say…

    “Based on what these all have in common, you certainly have had bad luck, haven’t you?” :-)

    • Aaron Goldfeder

      Michael where were you when I needed you?!

      • http://twitter.com/michaelbkim Michael Kim

        Workin’ our asses off to make that list!

        Sending much love to ya brotha’!  ;-)

        • Aaron Goldfeder

          :) Cheers to that.