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13 years later, these ‘Ship It’ Awards still evoke memories of the ‘esprit de corps’ on the original Xbox team.

[Editor’s Note: With Microsoft preparing to unveil the third generation of the Xbox on Tuesday, we asked GeekWire Chairman Jonathan Sposato to share his lessons learned while working on the original Xbox games effort, in this installment of his Startup Jedi column.]

xboxBefore Xbox was an entire division of hundreds, it started out as a ‘startup’ within Microsoft. I was merely a young gun in my early 30s at the time, but now in my forties, after having launched my own startups and worked on several other big company projects like Google+, I look back on the Xbox experience as truly an incredible, perfectly executed startup story within a software giant. It was a proof point of many counter-intuitive things. Chief among them: A company whose core competency was operating systems and business applications was capable of doing something incredibly ‘cool’ for a hard-to-please group of gamers. There were just a handful of people involved in this startup at the beginning, and I was lucky and honored to have witnessed them in action and to have worked among them.

To this day, I still look back at Xbox1 and our launch portfolio of games as one of the most exhilarating experiences I’ve had in working with others to create something very, very big out of nothing. Much has already been written by others about the earliest origins of the Xbox as a DirectX team project, and the ensuing drama of getting the project green-lit by Bill Gates and Steve Ballmer. My story starts at the point after the greenlight, when the Xbox needed to go from a spec to an actual product with games running on them. As a ‘group program manager’ in the games group during the late ’90’s and early 2000’s, I had three main roles with regard to Xbox1:

1) Manage a team of games savvy program managers (or ‘game producers’) in the development of great games for Microsoft. This is called ‘first party games’ because they are games that launch under the Microsoft label. They were games developed in-house at microsoft, or contracted out to some of the best independent developers (like Peter Molyneux’s Lionhead Studios, Lorne Lanning’s Oddworld Inhabitants, etc.). All of game development was under my boss, the highly smart VP of the games division, Ed Fries, who was also instrumental in giving life to the earliest DirectX team’s efforts by offering highly credible executive support.

2) Be the ‘liason’ between this game development, and Xbox platform development under VP of Xbox J Allard. This required me to be embedded with J Allard’s core team on a regular basis (working with Jeff Henshaw, Cameron Ferroni, Doug Hebenthal, Jon Thomason, Todd Holmdahl, Todd Roshak, Seamus Blackley, Drew Angeloff, Mike Abrash, and several other amazing handpicked rock stars) to drive spec feedback from my teams, be an advocate of game development issues that impacted hardware, and in turn publish back out key platform changes to the game teams. Incredibly, most of these super smart guys on J’s core Xbox team had never actually worked on a game before (they were mostly OS, systems, and hardware guys), and I felt at the time that my primary role was to provide the gut check to say, “Yeah that will fly with my guys.”

3) Be the dispenser of hundreds of early Xbox XDK’s (or Xbox Development Kits) to the very first game developers so they could start creating the games. This was actually the least favorite part of my job, and to this day I will occasionally have bad dreams of running out of XDK’s for the Halo, Munch’s Oddysee, or NFL Fever teams…. (with everyone admonishing me for causing a bottleneck). It’s my equivalent of the ‘being naked in class’ dream.

From this unique vantage point, I observed five key things that I felt were the key success factors of the entire Xbox1 effort. I believe these 5 things apply equally well to any startup’s success, and I have tried to apply them to my own companies in the ensuing years.

1. Be the leader that everyone wants

The aforementioned Ed Fries, along with hardware chief Rick Thompson and later senior vice president Robbie Bach had to be highly brave to support the initial Xbox concept amidst heavy criticism from others. But to really pull off something bold and radical, leadership at the execution level has to be bold and radical. And before the term ‘rock star’ became a household term for us internet entrepreneurs, J Allard defined it for us at Microsoft. Most Microsoft managers at the time were usually introverts who had to learn and work hard at being persuasive and compelling communicators. J Allard was the opposite. He was a natural. J, if you’re out there, my apologies. I am speaking from a place of love, man. From the get go, J infused every interaction with people at Microsoft with a charisma and energy that was different. He was not afraid to shock everyone with a different hair color on a weekly basis. He was dressed like a rock star, not a Microsoft VP. At my first meeting with him, he handed me a pair of special Xbox branded skateboard shoes (remember, we hadn’t even built the Xbox yet). You would hear his Ferrari 355 coupe screaming into the parking lot in the mornings. I mean, the man had Snoop Dog on his speed dial!

But behind the flash was a whole lot of substance as well. J immersed himself in this new product segment and spoke with unexpectedly strong knowledge about the game business in a very short amount of time. He balanced speaking with authority, with always seeking the input of his chiefs with an open ear. He managed upwards and laterally incredibly well and gained needed leeway from other company execs so that we were left alone. In front of his own team, he also didn’t try to pretend that he knew it all. All this underscored a confidence and security that made him followable and likeable at the same time.

jspoxboxpullHerein was my first lesson in how your leadership “persona” can be aligned with your product persona to great benefit (to the extent that it’s still authentic to you). To pull off something radical, you need leadership that’s radical. And a radical confidence is highly palpable by your employees. Just being around J’s confidence made us all much more confident in ourselves. Hearing the urgency in his voice would leave you wanting to eschew bureaucracy and move super fast. When the rest of the world doubted that a bunch of nerds in Redmond could make something cool, J instilled a belief in all of us, “Why Not Us? We’re just crazy enough to pull this off. And if we don’t, well we had a blast trying!” He was the leader that everyone wanted to have for Xbox.

You need to do the same when leading startups. By definition you are doing something wholly new and radical. There’s been no proof that your new idea will work. Thus, you need to be the kind of leader who easily transfers confidence to others, and exude that you can actually help your team pull off something big. Whether your employees admit it or not, they want to be inspired. Be the guy or gal they look up to. Incidentally your customers also need to feel the same way about your brand. Do they look up to your company for being able to deliver on an incredible customer experience? Is your company keeping up a steady rhythm of delighting users with bold moves? Think about the people like J who immediately communicate those signals. Be like that.

2. Move with breakneck speed, even if that means putting an intern on a plane

After it was greenlit, the actual development and launch cycle for the Xbox was really very short, considering that Microsoft was not even a hardware company (if you didn’t count the Microsoft Mouse, or things like Active Mates ‘Barney’). It was a little over a year from start to finish, and the xbox needed to go from specs written in word docs, to an actual $299 piece of hardware sitting on shelves by thanksgiving shopping weekend. In order to make this happen on time, three conditions needed to be present:

A) the setting of highly aggressive goals, naturally.
B) throwing a lot of bodies onto the problem.
C) and having a completely radical and creative take on our daily work routines.

I will never forget a meeting where we discussed how to test an early build of the OS on the latest version of the hardware. The problem was that new software builds were in Redmond, while the hardware was in a manufacturing facility in Guadalajara Mexico. Simply using the tried and true of FedEx-ing the software CD, waiting for the Guadalajara folks to install and test, and then sending back any necessary feedback would have taken 3 full business days. One day J Allard asked Doug Hebenthal, “What if we put an intern on a flight out this afternoon. … Have him stay this evening to test the build on site, and then fly back with new hardware first thing tomorrow morning?” We all laughed when this was suggested, but then soon realized, “Holy crap, that might actually work and save us 2 whole days!” This later became a regular occurrence and in aggregate, probably shaved several weeks off of our 70-ish week development cycle. This was just one such example.

jonspoxboxpull2By the way, I don’t recall who this intern was (or perhaps it was a very junior full time staffer), but my hat’s off to you for being game. Being highly creative in how we looked at our daily work cycle over and over again helped to shave off many weeks off of a highly compressed schedule.

3. Focus on 1 customer, not all of them

What do you think happens at a company like Microsoft when making a game console is officially green-lit? Well, it becomes the breadbasket for every other product division’s agendas. The smart WebTV guys thinking about set-top boxes want it to be more like a TV cable box. The successful browser guys want it to run IE. Many thought it should ship with a keyboard and be usable as a PC-like device right out of the box. And even many in my own camp thought the games at launch should have been a more diverse offering for young and old, encroaching on both Nintendo and PlayStation’s positions.

The Xbox team got great at saying “no.” A lot.

In order to launch on time, the product had to focus on one key customer. In the case of the Xbox1, it was the ‘hardcore gamer’ who was between the ages of 18 and 25. It was not going to be an educational device for children. It was not going to run Microsoft Office for business users. It was going to do one thing really, really well: play action games, with realistic pixel shaders, running at 60+ fps.

This maniacal focus was actually highly unusual at Microsoft at the time. Prior to Xbox, all product team leads were fairly used to the concept of serving many user personas. As a result, most products did a lot of things: they were ‘swiss army knives.’ I would argue that this product breadth works best in the business and utility environment (operating systems and Office), but not at all well in the consumer entertainment segment. Having the discipline to focus on one key customer first, and patiently putting off until later the development of broader features was a major insight of Xbox1’s development.

Bill Gates unveiling the original Xbox.

We applied this lesson years later at Picnik, making it the most popular photo editor in part through deliberately paring it down to just the core features vs. trying to “boil the ocean.” And we focused on one customer, not several. This focused our product decisions and gave the product a stronger personality and brand. Once we decided to focus on the segment of highly photos-active women between the ages of 25 and 45, the product took on a much more appealing look and feel, and voice. The other customer segments will eventually follow, but you need the rabid first few to lead the way.

4. Don’t let people write you off early, and increase your ‘good luck surface area.’

One of my all time career low-lights was at the midway mark of the Xbox’s development cycle, when I tried to put together a big division meeting across all the teams working on Xbox, in order to show the early progress of the key games under development. The folks working on the hardware had been making amazing progress, and now everyone really wanted to know: are the games going to make it on time? Those of you who work in software development of any sort will know that there is such a thing as too early to demo. But I was a young optimist. And I had also gotten solid assurances from each of the product managers that their demos were going to rock. After all, I had personally seen each demo and of course everything work perfectly (when you’re on the developer’s own machine!). Noticeably absent was the current build of Halo, as the Bungie team decided they were going to pull out of this meeting. That should have been a signal to me.

The meeting was a complete disaster. Everything from builds crashing, to game controller APIs not working (I’ll never forget the harrowing feeling of seeing the same ‘Crimson Skies’ fighter plane crashing into the ground over and over again on the giant screen as the poor PM tried to sort out his controller and muttered, ‘Just let me reboot one more time.’), to awfully loud audio effects blowing out everyone’s ears, etc, etc. I think I actually saw our head of marketing Beth Featherstone bury her head in her hands. At the conclusion of this meeting most everyone, including myself, thought; ‘Oh gawd, the games will suck.”

Of course, 6 months later many of the games became hits.* But I remember learning a very valuable lesson here, which is how one must manage emotions and ignore all that negative energy post-meeting when everyone in the room writes you off. Of course I was upset about the outcome, but there’s nothing you can do about it after the fact. It’s unconstructive to keep thinking about ‘what if’s.’ And frankly this period of doubt and uncertainty for the 1st party games teams persisted for many months, and it was not a happy time. I took all the lumps from that experience: emails from pissed off colleagues in marketing who wondered ‘why?’, admonishment from my bosses that I had agreed to demo prematurely, and most importantly a sense that there was a loss of faith from the hardware guys about whether we could deliver. Personally I became tunnel-visioned and focused my energy helping my teams get to launch.

And as if that wasn’t enough, weeks later at that year’s E3, our first public showing of games to press and consumers would suffer a similar fate at the hands of the demo gods. Robbie Bach couldn’t even show the Xbox booting up. Now, the entire world thought we would fail.

But all the teams buckled down, as if the negativity crystallized the notion that we all had something to prove. It was a highly valuable lesson. And in the end, we all pulled it off.

So don’t let others write you off early, even after a major loss of credibility. If you know you’ve got a strong hand, a certain resolve to ignore negativity can be your only option, and essential to pulling through.

*Historians of the first round of Xbox launch games might claim that in the end, we simply got lucky with a few titles. That if it had not been for the acquisition of outsiders like Bungie which brought us Halo, or some last minute deal-making to win over the Oddworld Inhabitants team from the Playstation, or the unexpected popularity of the Amped snowboarding game, that the launch portfolio would not have been as successful. If that’s the case, I’d argue that we had to make that luck happen. One of my favorite sayings of late is from Yabbly’s CEO Tom Leung who says, “You have to manufacture more good luck surface area.” I think that’s what we did: we increased our luck surface area.

After discussing the need for a 1st person shooter, we singled out Bungie as an acquisition target (props to Jon Kimmich, Stuart Moulder and Ed Fries). We personally went and charmed Bungie’s founders over drinks and games of pickleball, and we had to perform all the due diligence in record time to seal the deal to onboard the team. Once acquired, we had to double the size of the Halo team with more Microsoft engineers, pm’s, game designers, testers, in order for the game to finish on time. And then on a completely separate front, we had to wine and dine with Lorne Lanning and Sherry McKenna of Oddworld Inhabitants to convince them that this new Xbox thing was really going to be big (remember we hadn’t built much of it yet). We even sent Microsoft personnel to work and live with them onsite in San Luis Obispo for months at a time to co-develop game play and shorten approval cycles. We absolutely increased our luck surface area so that we could, well, get more lucky. And it was a good thing we did.

5. The power of ‘esprit de corps’

I want to focus back on some of the core team members I mentioned at the beginning of the post. There was something magical about watching this highly functioning Xbox team work. ‘Esprit de corps’ is defined as “the common spirit existing in the members of a group and inspiring enthusiasm, devotion, and strong regard for the honor of the group.” And to this end I don’t think it’s merely enough for individuals to be just excellent at what they do. I think that’s just a ticket to entry. I believe what truly creates an ‘esprit de corps’ that can help weather all manner of storms in order to ship amazing products, is an utter lack of fear. There’s that famous line from Yoda that goes something like, “Fear is the path to the dark side. Fear leads to anger. Anger leads to hate. Hate leads to suffering.”


I think this applies to the workplace. I don’t think I ever once saw any of the original Xbox-ers exhibit fear, whether it was fear of the competition, fear of personal failure, or fear of someone else doing better and making them look bad. Everyone brought an internal self-confidence to the table that made them not ever feel threatened by others. When I first walked into their room, J’s intro was, “This is Jon. He’s shipped cool games. Work with him.” No one bragged about how many more successful products they had launched than me, or tried to test me on my knowledge of the Windows kernel. That immediately made this Microsoft team feel different, and endeared these guys to me. They could easily accept the fact that everyone is awesome at what they do (until proven otherwise), and move quickly to just getting sh*t done. It formed an ‘esprit de corps’ that endured for the entire experience, and that you still hear people reminiscing about. This feeling of ‘esprit de corps’ is immediately evoked when i look at my ‘Ship It!’ award 13 years after.

And similarly with startups, it is absolutely crucial that you not only hire for talent, but seek out this internal confidence and fearlessness in your c-level or core team hires. While the Xbox team had a ‘startup like’ experience, they at least knew that their paychecks were guaranteed, material or human resources could always be garnered, and that 401k’s and health insurance would never disappear. But with independent startups, the types of stressful situations faced can be even much more distracting and deeply impactful on the psyche. It is vital that these stressors not detract from team members being fearless in their support of each other, and the overall mission. You have no room for politics, infighting, or one-upmanship behavior. Instead, cultivate ‘esprit de corps’.

Good luck, Jedi!

Startup Jedi is a regular column by GeekWire Chairman Jonathan Sposato. A Microsoft veteran, he served as CEO of Picnik and Phatbits, both of which were acquired by Google. 

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