Author: Curt Doolittle

http://www.forbes.com/sites/adamhartung/2013/01/20/sell-microsoft-now-game-over-ballmer-loses/LIKE I’VE BEEN SAYING FOR EIGHT YEARS : MSFT IS DEAD AND TAKING SEATTLE WITH IT.

-AN ENTREPRENEURIAL CATHARSIS. A MANAGERIAL CONTRAST. AND THE VALUE OF AUSTRIAN ECONOMICS AND PRAXEOLOGY-

Microsoft has created an absurd environment in seattle. It has given more of its profits to employees that any company in history.

Those employees have spent that money in the local market. It has created an affluent and educated community in King County. It’s a beautiful place to live.

I’ve been working with Microsoft since they intentionally recruited me along with other thought leaders from the Borland camp in 1992.

I’ve been instrumental or built four companies in the Microsoft space. With the most recent being the largest privately held firm servicing Microsoft customers.

I”ve tried to save two products for Microsoft from outside the company, and in practice I am pretty sure that I’ve saved one (time will tell), and we know that we significantly improved the life of another.

I spent half of 2005 working with senior people trying to implement change in how Microsoft marketed itself.

What I learned, was that the incentives in the company made it impossible to change without a CEO who understood the problem, and would force the change, and a board that would back him.

But interestingly enough. I had precisely the opposite problem. In our company we earned 40% of our revenues from Microsoft.

So, I knew. I knew it was exit that dependency on Microsoft or die.

My investor fought me. My management fought me.

They fought me on the downturn in the economy that was inevitable.

They fought me on the collapse of Microsoft spending that was inevitable.

I lost the arguments. Because I could not produce evidence of a future that they could not sense on their own.

That’s because there is no evidence of a future that they could sense on their own.

And I had too little power to enforce such a change.

I quit in May of 2009. They refused to accept it. And that was my mistake. Loyalty trumped wisdom.

But nothing changes. The board over-invested in both Microsoft and TMobile, further extending our dependency.

Microsoft constrained it spending. Then TMobile was ‘sold’. Business rapidly evaporated.

I argued that the government would never, under any circumstance, allow the merger.

That we should prepare campaigns for the duration of the dispute, and for the eventual failure.

It was a tremendous gift. TMobile has great customer service. Customers love them. If you’re merger is rejected you have the best marketing opportunity in the world.

With some significant gyrations, I saved the company in the fall of 2011 by a maneuver that is worthy of textbook inclusion.

Then, I resigned again. This time for good.

Am I happier today? Yes.

Am I still angry about halving the size of the 100M company I built? Isn’t that obvious? Well, who wouldn’t be. It’s like someone kidnapped your child and sold her into drug slavery.

Yes. I am happier today. I am also a little vindicated that the people who opposed me are humbled by it.

Austrian Economics Explains Everything. If you are in business and do not understand Austrian Economics you are operating from a position of ignorance.

Keynesian macro belongs to politicians and to investors who try to make money out of asymmetry of information in a complex economy.

Macro policy is the system of creating lies in the economy so that people act as if those lies are truth, thereby reducing unemployment.

Austrian economics is the system of understanding truths in the economy, despite the fact that the state creates systemic lies in order to reduce unemployment.

The source of my predictive ability is due almost entirely to my understanding of Austrian Economics.

Austrian Economics taught me to never be fooled by a trend. To look not at empirical evidence and extrapolate. That numbers describe the past but do not predict the future.

It taught me to look at the INCENTIVES within any organization. The INCENTIVES that encourage consumers to buy a good or service.

And the economic and social environment that enables the organization to serve the interests of consumers who REACT to that economic environment by changing their preferences in their signaling and purchasing.

But with those incentives, do you know what really killed Microsoft?

The US Government Killed Microsoft. They killed Bill Gates’ influence in the company. They killed his ability to execute in the company. The US Government killed Microsoft.

They did because the government ignores Austrian Economics. We Austrians know that few if any companies hold more than a decade of dominance. It’s almost impossible to do so.

We know that the only monopolies are created by government privilege and microsoft had no such privilege. It was vulnerable to the market. Which was precisely why it fought to win the browser war so hard.

Organizations calcify around an existing market opportunity, the market changes, the organization is indebted so falls into the Innovator’s Dilemma. The staff develops rent seeking behavior and the company loses it’s advantage.

Microsoft will change only when Ballmer leaves and one of the prior execs who understands the company and has experience working in the company under Bill Gates returns.

Microsoft would have to acquire Dell just to keep pace with Apple in quality. But I would bet that the government will block it, and therefore put additional bullets into the company.

But the culture at microsoft is ruined. internally it’s a government bureaucracy. The people are frustrated and disheartened by the bad management.

A question? What portion of the USA’s increase in productivity from 1980 to 2006, and what percentage of the stock market profits created during that period, were from Microsoft?

If you knew it would scare you.