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Here’s your program.
Andrew: Hi, everyone. My name is Andrew Warner. I’m the founder of Mixergy.com, home of the ambitious upstart. Joining me is Scott McNealy, co-founder of Sun Microsystems. Sun launched in the early ’80s at a time when engineers had to stand in line to use their company’s mainframes. Its strategy was to sell a desktop workstation for every employee who needed a computer. In its 28-year history as an independent company, it generated $200 billion in revenues and broke into the Fortune 200. Earlier this year, it was acquired by Oracle for $7.4 billion. Scott, welcome to Mixergy.
Scott: Great to be here, thanks.
Andrew: So after 28 years of living, breathing Sun, of being Sun, what was it like after the sale was completed?
Scott: Well, actually, you know, it was a little more gradual than just all of a sudden changing control, because I stepped down as CEO about five and a half years ago, handed it off to Jonathan Schwartz. So I was chairman and I spent a lot of time traveling and being involved that way. But the bottom line was I wasn’t in the day-to-day operations. I wasn’t in charge of delivering the numbers. So it was a different feeling for me that way. And then it became pretty clear a couple years ago that people were starting to look at a combination with Sun, so I sort of knew that was going to happen. And then it was probably almost a full year, I can’t remember exactly the time frame, when we had an agreement with Oracle. And then the time it took for Oracle to actually change the control. So it wasn’t like an overnight thing, but it was kind of fun this summer to actually be able to get up and go do what I wanted to go do as opposed to worry about billions of dollars of shareholder value and hundreds of billions of dollars of installed base.
Andrew: I knew four, when I started college, that in four years I’d be out and I’d have free time to myself. I remember the day after graduation, it’s one of those moments where there’s a clear line between your past and your future and in that moment I felt different. I felt like there’s nobody guiding me anymore, there’s no clear road to go on anymore. Life did change. The day, afterwards when you had the ability to go do anything, what were you thinking of doing? What were you thinking would happen next?
Scott: Well, I had been very busy already with a project called Curriki, Curriki.org. It’s a dot org that we had started inside of Sun and was a pretty fulfilling and time consuming project. I also have four boys who are 9, 11, 13 and 15, so that certainly keeps me busy and I’m happily married so that always keeps you busy. And then I also decided to do some consulting work. So I found out that if, my goal or strategy is to fundamentally price at zero. Sorry, I’m working from my home office, so the phone might ring a little bit here and I don’t have a secretary. Or at least she’s having lunch with her girlfriend. So anyhow, the idea was I didn’t want to have the sense of duty of being an employee or a consultant and actually generating revenue. So what I did was I said I’ll work for you, but I’ll work for free and I won’t take a title, I won’t take health care, I won’t require anything other than you let me know what you want to go do and if I can’t make it, if I’ve got to go to my son’s hockey game or whatever, I’m going to go off and do that. But I’m working; it’s amazing when you charge free, there’s almost infinite amounts of demand out there in the marketplace for your services. And I tell people if after a while I’ve done some work for you for past services, go ahead and send me a check or send me some stock or whatever. I’ll give it to Curriki or I’ll buy the kids some new shoes or maybe buy myself a new driver or whatever. It’s actually been quite lucrative. People are willing to pay me after the fact, and I’m happy that way and had some nice donations to Curriki, and I’ve gotten some nice stock options and all the rest of it. So it’s a wonderful thing. I get to work with about 20 or 30 different companies, and it’s like going back to business school. I’ve got a new project to work on every hour if I want. So it’s a lot of fun.
Andrew: What have you learned now in this new business school that you’ve put together for yourself? Can you give me an example?
Scott: Well, the businesses are very, very different and they’re at very, very different stages. You know, the one Crazy In, I’m working with this mad inventor who instead of doing high speed rail at billions of dollars a linear foot, he said, “Why don’t we create an eight foot plastic extruded tube and use air pressure and 3 psi air pressure on the back and low on the front? We can make this thing go 200 miles an hour, and we can move people from L.A. to San Francisco at 200 miles an hour in a little plastic pneumatic capsule.” That’s fun. And so I don’t spend a ton of time on that one, but that’s on the one end. On the other end, I was working with Greenplum and helping them. And Greenplum got acquired recently by EMC. So they are now actually asking me to help them in the same kind of way that I was working with these little companies. So I’m helping Joe Tucci and Pat Gelsinger. And I don’t know what I’ve learned from all this other than there is life after being in the Fortune 200 piñata, which is really what it’s like. Especially in this day and age where the government hates you, the media hates you. The only people that seem to like us at Sun were our customers and our employees. With all the taxes, the IRS still hated you. It was an interesting environment. So it’s kind of fun now to be wanted, and people call me when I’m needed and I haven’t had any negative press for quite a while. So that’s kind of fun.
Andrew: Yeah, now they all love you. I’m looking at your press in preparation for this interview, and I see that there’s a clear line where the press went from criticizing to suddenly loving and collecting and curating your quips.
Scott: Yeah. So the other thing that’s kind of interesting, you know, Mark Zuckerberg gave a commitment, he gave $100 million and he gave his commitment that he is going to give his fortune away. I had a buddy who sent me an e-mail and he said, “So why is that a good thing? Why isn’t he investing his billions into new companies, into new jobs, new companies, new startups, new products, new technologies? Why is he giving it away to people who don’t necessarily know what they’re going to do with the stuff?” And I thought that that was kind of an interesting attitude. If anything, I should be getting negative press for not being on the front lines, not hiring people, not managing people, not leading people given what I know, how I know how to do it, and the track record that I have. Why aren’t I investing what’s left after the government takes taxes? Why aren’t I investing that in new startups as opposed to giving it away or whatever, working on a non-profit? So everybody thinks non-profits are the right and necessary thing, but I’ll tell you what, the real economic heroes are all those folks who are out there earning a salary and paying taxes.
Andrew: Can’t it be both? I mean what about what Bill Gates said, that there’s certain charities, there’s certain people’s who needs can’t be met by the capitalist system. They just don’t have the money to pay for their mosquito netting. They don’t have the money to pay fair price for their medicine.
Scott: Yeah. There’s no one single answer. But certainly when you have a skill set to take investors’ money and turn that into products and services and jobs and training and taxes and goods and services that people actually want, that’s a fairly rare capability in this day and age. And to have folks focused on that I think is a very good thing. And rather than being castigated in the press as being greedy or whatever, I think the more important statement is hey, these are really, I call them national economic heroes or global economic heroes, the people who are creating these kinds of goods and services. And they’re certainly not treated that way.
So, I mean I have no ax to grind. I’m over that. I’ve been there and done that, but I just find it curious that we tend to monumentalize or put a monument up to people who are giving it away, and then we try to tear down those who are creating that value and that wealth. I just don’t think that’s right. I tend to . . . I mean there are two schools of thought. It takes a village to raise a child or it takes two biological parents. And I tend to be a little more focused on less government and other people’s help, and why doesn’t the family take responsibility and where is that personal responsibility and what’s the core of that and how did we get to where we are where there are people out there who aren’t being taken care of? How did that happen? And let’s figure that out and let’s motivate personal responsibility as opposed to hoping for a Bill Gates to parachute in, because quite honestly I think the world would be better off if people were taking care of their own business and then Bill Gates could go out and create value and businesses.
I admire Steve Jobs and Larry Ellison as much as any great philanthropist because they’re out there creating products and services and jobs and the whole deal.
Andrew: I see what you mean. I see what you mean. I’ve always thought, by the way, if I went on Thanksgiving to a soup kitchen and handed out soup, even if I wasn’t good at it, even if I was wasting people’s time there, I would be considered a hero. Meanwhile, if I go and bust my butt every day for a year in the office, people think that I’m selfish or I’m not contributing enough or not open minded or not caring enough, even though working at the office is probably going to employ more people, create more wealth for the country.
Scott: So anytime you feel like that, give me a call and I will bow down. You’re an economic hero, and I really appreciate all of that. The one hard part about me sitting here at home and helping all these companies for free is I am minimizing my tax bill. But, you know, with the current administration, I think that’s a good thing.
Andrew: Are you going to give away your wealth at the end?
Scott: Well, first of all, I’m not in the class of the Zuckerbergs and the Gates . . .
Andrew: But you’ve done pretty well for yourself.
Scott: I’ve done pretty well. I’ve got four little monsters I’ve got to, you know, after you get through all the taxes and all the rest of it that I pay, I suppose I have one extra vacation home that I don’t need but we certainly use. But if you look at, Larry Ellison was a very astute buyer, after Sun’s stock price had come way down, and I was kind of a knucklehead. I hung on to almost all of my stock through the ups and downs and ups and downs because I just felt very loyal to the company. But Larry bought our company the week the Dow hit the absolutely bottom, if you go look at the Dow Jones chart. So it wasn’t like we ran off with, and we were a hardware start up, so we tended to raise a lot of capital because hardware takes a lot of money as opposed to a social network or a software company. So, my percentage ownership of Sun was very, very tiny. I certainly never worked hard to maximize my revenue. I loved to share the revenue with everybody else. I did fine. I’m not going to miss any meals, and I think I’ll be able to get my kids through college, but I’m not in that range. I’ll tell you what. I have seen enough foundations veer from what I think the founders wanted that if I had to do it, I would probably want to give it away before I die.
Andrew: Are you planning to do that, or are you saying no, my kids will inherit it?
Scott: Well, honestly, I would probably at this point, and I’ve changed several times in my career, but at this point I certainly don’t want any of it to go to the government. I can’t imagine any more misspending and basically corrupt way to handle money. It goes to pork, it goes to appropriations, it goes to redistribution and a whole bunch of other things that are all handled enormously ineffectively in the government. And so call me a raging capitalist libertarian. Guilty as charged. But I actually am working very, very hard to raise four young men that I think will be outstanding contributors, national economic heroes and very wise investors of capital. So the more I can transfer to them, and I’m not really worried at this stage of them turning into kids sitting on third base and thinking they hit a triple, but rather kids who feel a sense of urgency and responsibility and duty to go do good things with that capital, I trust those four boys and I trust my 8 year old right now more than I trust Congress with my cash.
Andrew: I see. So you’re saying money in the hands of four great capitalists is better than in the hands of one bad charity, and even a good charity could go bad.
Scott: Well, I’m not saying charities are bad. I think charities can veer into self-preservation, lots of bureaucracy, lots of overhead and can veer into the fad of the day.
Andrew: Here’s what I’m curious about. It’s great that they’re giving away their wealth. What I’d be curious about is the knowledge, because if they and you can pass on what you’ve learned over the years to other entrepreneurs, think of how many entrepreneurs you’ll improve, you’ll breed, you’ll grow. What are some of the best, what advice do you have? What lessons have you learned that you can pass onto others the way that some people might pass on money?
Scott: Well, that’s hard to do. And by the way, I’m not the world’s greatest capitalist, because right now, what am I doing? I’m spending an enormous amount of my time working on Curriki.org, a non-profit trying to solve a big education problem of K-12 educational materials. So, you know, I talk a big game, but then what do I do? I get all soft and mushy and I go spend and I’ve donated millions and millions of my own cash, after tax cash to Curriki. So, I’m not walking the game, I’m just talking it. So I really am doing that mushy gushy, go off and be charitable in my old age. But what advice would I give people? I’m doing that all day long and I’m doing it for free. Now, how charitable . . .
Andrew: One at a time. I’d like to see though a book from you that’s open and honest, not the kind of entrepreneurial book, autobiography that’s left behind by guys who are trying to build a personal brand off it, but one . . .
Scott: You sound like my wife. She’s bugging me all the time, because I’ll say things all day long that I basically couldn’t say when I was CEO because it would offend somebody.
Andrew: Like what?
Scott: And this book, I’ve saved a million notes and I could write it in about a week. And it would basically skewer about 98 percent of humans walking on this earth and certainly many organizations. I just don’t know what that does. I mean maybe that gets people to think all the rest of it, but I’d love to do that. And I always promised that I would never write a book until I didn’t have anything to go do. But you know what? What if nobody read it? I thought of doing a blog, because I tend to be one-liners, you know, goals only limit you or something like that. Or have lunch, be lunch, or do lunch and become a tenured professor. Those are some of the things that I, you know, and what is Wall Street? Too big to fail, that’s a monopoly. So, you know, so the administration, if they’re too big fail, you’ve got an antitrust issue. If there’s not an antitrust issue, they’re not too big to fail. So, there’s so many things that I look at and I could give you 2,000 of those little nuggets of what’s going on in government, what’s going on in education . . .
Andrew: I’d be more interested in the stuff that would skewer 90 percent of humans, because that’s the kind of honesty that you don’t get, that gets handed from one person to the other but never gets widely distributed. I’d encourage you to put that together, to write that book that your wife’s been talking to you about and say, “You know what? I’ve been a risk taker my whole life. I’m going to put this out there, and if it doesn’t go over well, who cares? My investment is in the four kids that I have and the future that they’re going to create.”
Scott: Yeah, they’ll never get into a college.
Andrew: You’ll never get into a college? Oh, they’ll never get into a college.
Scott: They won’t after I get through taking care of the universities. One of my favorite quotes is, “How can a tenured professor teach anybody about capitalism?”
Andrew: There you go.
Scott: They can’t.
Andrew: How can a school, actually you went to business school. You seemed to have done well because of it. I was going to say how could a business school even teach capitalism better than action, than actually being on the job?
Scott: So you’re asking me about little nuggets, but let me give you my view on business schools. Every other graduate school you do something. If you’re a chemist, a graduate in chemistry, you go in and you do doctor beaker stuff and you make chemicals. If you’re a physicist, you smash atoms. If you’re a doctor, you get the rubber glove on and you cut and poke and prod in med school. If you’re an English major, you read English and write English. And every other profession that you’re going to go study graduate, when you go to graduate school of business, you don’t buy anything, you don’t sell anything, you don’t make anything, you don’t hire anybody, you don’t review anybody, you don’t fire anybody, you don’t do anything that you do when you get into the real world. It’s sort of like learning golf by reading some books and going out and watching Jack Nicklaus and Tiger Woods hit golf balls and lecture you about hitting golf balls. And then at the end of your two-year degree, what do you do after reading all these case studies? You walk up on the first tee, tee the ball up, and swing and hit the ball for the first time in two years. You’re rusty and you’re probably going to hozzle a whistler right into the crowd and knock some guy out, which is what young MBAs often do in their little model of having never hit a golf ball in their two years of their MBA school. So, there’s something very, very wrong about that whole process.
Andrew: So what’s a better alternative?
Scott: Better alternative, well, again, you’re asking me to write the book on education. But the whole education system needs to be turned upside down, and we need lifelong learning that starts at about the age of 13 or 14. And kids at that age ought to start working a little bit and start earning a paycheck and start paying taxes. And they ought to start and, you know, maybe public sector unions are a bad thing. Maybe public sector unions are being paid by elected officials and there’s a natural corruption there. The real problem with a public school, if I can’t afford private school, is I have no choice. I have nowhere else to go. So a unionized supplier of education against a consumer with nowhere else to go is an unfair battle. And maybe that’s some of the sclerosis. I’m not the first one to see that. If you haven’t seen, what’s it called, “Waiting For Superman,” it’s one of the best movies of all time in the sense that it really lays out the challenge we’re all facing here.
So, again, there’s a lot of things going on here that I suppose I could write about and thanks for, I’ll think about that. I’ve also talked to people who have written books and said it’s the hardest thing they’ve ever done. Maybe I’ll just do it blog by blog and see if anybody checks in on my blog.
Andrew: I’m sure they will, and let me know when you do, so that I can promote it and I can read it too.
Scott: Great.
Andrew: I’ve got some more questions here. I haven’t even gone into my list of questions. I was curious about the Data Dump. I read that you started a company called the Data Dump before Sun . . .
Scott: Oh, now you had to dredge that up.
Andrew: I’m sorry?
Scott: You have to dredge up the Data Dump, right?
Andrew: I did. I can’t find anything online. I want to be the first person that Googled indexes that has some information on it. What was the Data Dump?
Scott: All right. So . . .
Andrew: What was this business?
Scott: So, when I was working in Silicon Valley, Vinod Khosla was my buddy, and he and I decided that we would start a company. We thought why not allow . . . this was back when everybody had IBM Selectric typewriters, and Vinod and I decided well people maybe would like to have access to a word processor. And this was before the PC hit big. So we said why don’t we set up a four phased, multi-user word processing machine by all of the major campuses in the United States? Well, what a dumb idea because pretty soon everybody had a PC. But we started it. We lost our investor’s money and he got really mad at me. Except the good news was he also invested in Sun Microsystems, so we made millions on that and lost $100,000 on the Data Dump. So, in general, he was pretty happy.
Andrew: How long were you running that company?
Scott: We didn’t run it. We were smart enough to hire somebody go run it so we could focus on Sun Microsystems. The thing lasted about nine months, lost all the guy’s money, and then did the beautiful swan dive and went belly up.
Andrew: And so you were running both companies, or you launched both companies at the same time?
Scott: Yes, we did.
Andrew: I see, okay. Now, in nine months, the world doesn’t change that much, even in the computer industry. So the world that existed when you launched, wasn’t it the same as the one that existed as the company was developing?
Scott: Do you need to ask all these embarrassing questions? I was 26 years old. What did I know?
Andrew: I see.
Scott: We were giving it a try, and I actually thought it was a pretty good idea. So did Vinod. Vinod’s gone on to have a pretty reasonable career. I think I went on and had a pretty reasonable career, and I guess the big message to people is try it and try it with other people’s money.
Andrew: You’ve said that a lot, always launch a business with other people’s money.
Scott: Yep.
Andrew: Why? What about independence? You value independence. Now you say that you don’t want to own a company unless you have majority voting rights. What about independence?
Scott: I’ll invest in other companies, and I invest a lot in other funds, in other companies, in the market, all the rest of it. So I will do that. But I will, the statement I make is I don’t want to be CEO with outside investors. If I’m going to be CEO, I want to run and own the place and it’s going to be one that I can run privately, under the radar, and away from the scrutiny of people who think that making money is a bad thing. I think it’s pretty clear that capitalism is the engine combined with democracy that has proven to drive standard of living very aggressively across the planet. I want to be a part of that, but I’m a little too old to deal with all of the pot shots from folks who aren’t there and haven’t been in the saddle.
Andrew: It wasn’t all pot shots though. I mean you were one of the hero entrepreneurs, the ones who made it to the cover of magazines where people admire entrepreneurs. Sure they took shots at you too, but it wasn’t all an insult, it wasn’t all kicks.
Scott: Well, yeah, you know, I really enjoyed my employees and I really enjoyed my customers.
Andrew: And the limelight.
Scott: Oh, I didn’t enjoy that.
Andrew: You didn’t? You seemed to enjoy it so much, have fun, kick butt.
Scott: You know, there’s a great saying that a buddy of mine once said, “If you’re going to be married, you might as well be in love.” But I think this might be my second or third interview in the last four or five years. So it’s not like I’m seeking that out. It’s not like I’m looking to go write a book. It’s not like I want to go do this. I’m doing this for a good buddy of mine, Rikard, who has started a very cool little company called IngBoo, I-N-G-B-O-O, and he put me in touch with you. I’m coaching him for free. He hasn’t paid me a penny but I like him, I like his business, and I wanted to help him out and he wanted to help you out. So he said go do this. So that’s why . . .
Andrew: What do you like about his business? Why’d you decide to put your time in his company?
Scott: Well, first of all, he called me and asked me. Now I’m going to get a lot of calls and e-mails, but there’s a long list. I can’t get to all the companies that want me to help. But it’s fun. I think he’s got an interesting business. He’s in an interesting intersection of social networking and what’s going on in the Facebook like worlds, and he’s got a very interesting technology to help marry consumers with websites and technologies and products that they’re interested in. And he automates that and simplifies the Web for people who don’t want to have to necessarily navigate it in a manual way. So I like his business, I like his style, his integrity, his personality. He’s fun to work with. And so when he calls, I try to help him out.
Andrew: And he just reached out to you out of the blue and said, “I’m an entrepreneur working on this cool project. Do you want to take a look at it?”
Scott: Sure.
Andrew: I didn’t know that. That’s very impressive that he would do that.
Scott: Well, there’s a lot of them who have kind of figured that out, and it’s a lot of fun. I mean I wish I had more time to go do all of it, because it’s all interesting and all fun and, you know, over time I’ll probably be less useful because my black book tends to deteriorate as CEOs leave and my contacts in the industry deteriorate. But it’s still fun and I can still add some wisdom, because I’ve been there and done that and seen the movie so many times.
Andrew: I kept reading people say that you have no technical skills but you’re incredible with people. Getting past that insult to your tech chops, what makes you so good? There’s no denying that you’re good with people.
Scott: Well, I wouldn’t say that I’m . . . let me, I’m not defensive and I’m not bragging but, you know, if you get an 800 on your math SATs, I don’t think that qualifies you as being completely non-technical. I don’t have an engineering degree, but I’ve probably sat in more engineering meetings than most humans and delved into and I do remember when we started Sun Microsystems, actually before that, when I went to work for Onyx. I went over to Mission College and I started taking electrical engineering classes for fun, just so I could get caught up. So I’m not zero trained, but I’m not highly trained and I don’t write code. My sons all write better code than I do right now. But . . .
Andrew: I’m sorry to interrupt. But here’s the quote and it’s attributed to you and I don’t believe that, well you tell me if this is something you said: “I couldn’t program anything. I still can’t program anything. I wasn’t the technical guru. I wasn’t the visionary. I was kind of the glue that kept everybody together and helped enunciate what our goals were, how we were going to get there, and kind of cleaned up after the engineers.” So is that your quote?
Scott: That’s accurate.
Andrew: That is something that you’ve said. Okay.
Scott: That’s very accurate and that was my job. I don’t believe the CEO’s job is to engineer product or to pick colors or to pick marketing programs or whatever. My job was to pick the best people to go do those particular jobs. Now Sun at one time was one of the top 40 R&D companies in the world, and so we were, and that’s all technologies, all markets, all industries, aerospace, bio, and all the rest of it. So it’s pretty impressive to actually have to manage a couple of billion dollar R&D budget. I don’t think you can be completely non-technical to pick the right people to go and run R&D and to pick where the investments ought to be made, that sort of thing. So, that’s why I say I had to have some level of acumen to understand the technology and be able to handle big decisions, big strategic decisions in that arena. That quote is exactly right, and I think far too many CEOs, unless you’re Steve Jobs or a Mark Zuckerberg, right, that’s a different kind of a way to manage a company. But that was not my style. It was not to be the technical guru. It was to basically be the guy who decides who gets to decide.
Andrew: And how do you do that? How did you know who the right people were, and how did you bring them in?
Scott: I’ll tell you my interview style. I interview people, I talked to them, and I don’t ask them how many gas stations in North America. I just talk to them, talk about the business, ask what they think of Sun, what do they think are the big challenges, what’s their background, and I get to know them. And asking, you know, where are you from, where’d you go to school, what’s your family like, and all of those sorts of questions. Then the best way to decide whether or not to hire them is I wake up the next morning, and if I don’t think about them and I go through two days and I don’t even remember, it never pops into my consciousness, I don’t hire them. But if I wake up the next morning and go holy mackerel I could throw this problem at that person, this problem at that person and this problem at that person, then I tell our folks, “Let’s go hire them. That person can help.” And it’s funny, just sleeping on it and letting my inner whatever, my subconscious or whatever kind of decide whether or not that’s a value added person in the company, that turned out to be far more valuable. The other thing I would do very carefully is check references. And I do get faked out. There are people who are very charming and the kind of people who can walk across the beach and not make any footprints, or they’re yes men or they’re empty suits, or they just have a dark side that they just don’t show. And so you do make mistakes. So the bigger deal is not making a bad decision, it’s just, and probably the thing I was the weakest at was not moving quickly enough on people who just weren’t right.
Andrew: You also told Fortune magazine that as a CEO you can’t break character. Do you feel you were in character as CEO of Sun?
Scott: Yeah, I was in character. I was in CEO character, so I was far more ethical, far more politically correct, far more open and transparent, far more honest, far more everything at all times, including weekends, at parties, wherever. Just, you know, I would just, I would not go places if I thought I was going to put the company in a bad light. I would not hang out with people. What I used to tell people is even if you think a bad thought, people are going to know it and they’re going to be at the water cooler on Monday morning kind of thinking well you know what he’s really thinking. And so you really had, it’s a hard job that way. It’s 7 by 24. As leader, you’re not allowed to go out and have beers on Friday night and break character, because people will know it. If you say something Saturday night at a party that is different from the party line at the office, it will be to every employee in the company by the time you get into work Monday morning. So, yeah, you have to live a very . . . I just don’t know how presidents and senators and congressmen don’t feel that sense of duty to not break character. Maybe that is their character. I mean, you look at the rap sheet on our elected officials and it’s disgusting. I just felt a duty to my employees, to my customers, to my shareholders, to my partners, to my vendors, I just felt a sense of duty to not tarnish the Sun brand and everybody involved in it. I don’t know maybe that’s that bad Midwestern upbringing of being a capitalist. And it doesn’t take a village to raise a child. It takes biological parents and a close knit family. It takes responsibility for building the character and the integrity that I think people need to have in leadership roles.
I have another little anecdote that would go in the book. I said if you want to identify a leader, and I’m sort of in the Jack Welch model of where you can’t create leaders, you can only identify them. And so I learned a lot from Jack while I was on the board at GE about the process he used to identify and then build experience among the great leaders. But another kind of anecdote that I would use is if you wanted to hire somebody in a leadership position, bring all the qualified candidates in a room and sit them down, explain the job, explain the gravity, the depth, the responsibility and the piñata you’re going to put them in. And then say, “Who wants to do this job? Please stand up.” And then wait until everybody stands up, or whoever stands up and then ask all of those people who are standing up leave the room. And then pick your leader from the people who are still sitting down.
I firmly believe anybody who has a strong grasp of the challenges, the responsibility and the you can’t break character . . . I always tell people the higher up you get in the organization the less fun it is but the more satisfying it is. Being a sales rep is fun. You get to go to the ballgame, have a beer, you know, you get to be a sales rep. But, you know, being a CEO, it’s not fun. Anybody who thinks flying on a private airplane is fun hasn’t done it three times overnight in one week. Then tell me how much fun that, while your kid’s learning to walk. So, I think that choosing leaders is a very, very tough task and one that requires an enormous amount of thought. Anybody who said I want to be president of the United States from the time they were 12 is probably the last guy you want to have be president.
Andrew: But you said it’s satisfying to be a leader. Where does the satisfaction come from for you? Or where did it come from for you?
Scott: Well, often it came from customers where I would sit down with them and I’d say, “How are we doing?” And you know what they’d say in front of my technical folks and my sales? They’d say, “You guys are doing great. You’re our top one or top two technology vendors.” I spent the last couple of years at Sun talking to customers, and I had a phrase for it with my staff. I’d say, “I’m desperately seeking an unhappy Sun customer.” They were very, very happy with us. Our financial performance wasn’t where we were and we had a lot of execution issues, but one of the things that we always did was we made sure we had happy customers. And I think if you go do a survey of people over the last 20 years, who’s been one of their favorite vendors of all time, and they will tell you Sun before it got acquired by Oracle. I don’t know what’s happened since. You’ll have to go ask the customers after Oracle.
So, the other one that gave me huge satisfaction, and I think if you go ask people today there were about 235,000 employees who cycled through Sun Microsystems at one point in their career. That was the last employee number was 235,000 something I think was the last number before it changed control. And I think if you go ask them, I’m guessing 90 plus percent of them will tell you Sun was their favorite if not one of their top three favorite places to work in their entire career. That gives me a massive amount of satisfaction that the employees really enjoyed it, loved the responsibility, loved the delegation, loved the lifestyle. And by the way, they worked their butts off. They all worked very, very hard. So it wasn’t like they got special chef’s food in a free cafeteria or 18 weeks of vacation. Some of them, we didn’t give them an office, but that was some of what they liked about it.
So, those two things, employees and customers. And by the way if you invested early on at Sun and held your stock and got rid of it when we were selling it at ten times revenues, which there’s no reason to value a company at ten times revenue, especially a hardware company, then you can make a lot of money. Now, you can lose a lot of money if you bought high and sold low, but that was true of just about every technology company out there today, including Google.
Andrew: I’m trying to get as much as possible into this interview in the time that we have. I’m curious about competition. You were very aggressive with your competitors, but I hear from a lot of entrepreneurs that you just shouldn’t pay attention to your competitors at all. You should focus on your customers. What do you think now, looking back?
Scott: Well, we focused very much on our customers and I think that was very clear, and I put on hundreds of thousands of miles, millions of miles actually flying around talking to customers and getting firsthand input from them to make sure that we were on track. So, I don’t think, go talk to my customers and they will tell you, you know, never saw the IBM CEO in here, never saw the HP CEO but we were in there all the time. And I got a lot of complaints from the other CEOs that I, you know, “Stop traveling. You’re making us look bad.”
So we spent a lot of time with customers. But I said that to every press person in the world. All of this competitive stuff, it really does two things. One is it gets your employees focused on who the enemy is. And that’s a good thing, because I don’t want them fighting each other. I want them getting together and banding together. It’s like a hockey team. You don’t want them fighting each other. You want them beating up on the other guys, right? And then secondly, it was really good stunt marketing that didn’t cost us anything. So we used PR, we used, and I would explain to the media before, at the end of the interview. I said, “I’ve certainly been quotable here. Don’t mistreat me. I gave you a lot of good material. Come on back when you need more, but just put us on the front page and spell Sun Microsystems correctly, please.” Those were my big requests. So they all knew, they all understood it was all theater. In fact, I’m not railing against anybody right now. It was a lot of fun. It was enjoyable, and I guess I was always surprised that people would ever take it personally.
Andrew: You said you were very quotable. How much work did you put into those quotes that ended up in the media? Were you thinking about them beforehand, or were they just lines that came to you in the conversation?
Scott: Unfortunately, they were all, my most famous one, I remember I said, “You have no privacy. Get over it.” And it was at a security conference, and I could see my Chief Security Officer just. She put her face in her hands and she went, “Oh, no, I can’t believe you just said that.” It really was a fun quote that just kind of jumped out, and by the way it’s probably proven to be my most prescient and accurate quote. None of them were premeditated. They all just happened on stage or in the middle of an interview, and I just blurted it out. The press was good at pushing my buttons. I was willing to let them. I had exposed the buttons, and they’d get me all amped up and I’d launch one and I’d give a big smile. I’d go, “Oh, I know that one’s going to show up tomorrow and so what?” It was, that was part of the deal. We could not afford the ad campaign that a Microsoft or an IBM or a Hewlett Packard or an Oracle or anybody else could afford, so this was a nice way to get into the media. And I also thought that the media, if you let your competitor’s position you as opposed to you positioning your company, then you got in a lot of trouble with your customers. You spend a lot of time, the first part of the meeting trying to explain who you were.
We didn’t have to do that. People knew what we were about and where we were headed and what we were doing because we were on CNBC, “Squawk Box” and all the rest of it, and I got a chance to go directly to our customers. Getting on “Squawk Box” was very valuable. It was a great way to go sell computers.
Andrew: But how do you get that good at it? There aren’t a lot of CEOs who can stand in front of a camera and be on and be interesting and provocative. Frankly, I’m pretty new here at doing interviews in front of the camera, you can see at times I have some difficulty with it and I certainly know of the hundreds of entrepreneurs that I have interviewed here, many of them have trouble with it. How do you get so good at it?
Actually it looks like we might’ve just lost the connection there. If we did we’ll just fix it. There it is. So we lost the connection there for a moment.
Scott: So you’re doing just fine.
Andrew: Thank you, I appreciate that.
Scott: And I’ve seen a lot of people on the other side of the camera. Actually that’s what actually got me started. I spent a lot of time going to lecture halls and just getting numbingly bored by the professor who had zero ability to share their intellect or to get their point across in an interesting way. I just, oh, it would just kill me to have to sit through that stuff. And so I said to myself I never want to inflict that kind of pain, you know, the emotional and whatever pain of sitting and having to listen to somebody be boring. And I remember when I first became CEO, they let the Chairman and the President go, and two days later I had to give the shareholders’ pitch. I spent the whole time looking at the screen with the slides with my back to the audience reading the slides. I remember John Brewer and I think it was Dave Marquardt, another board member, took me to the back of the room right after the talk and said we need some work on your ability to give talks. We’re sending you to New York, and they sent me to New York for a one and a half day presentation, one and a half day, what do you call it? A conference or a . . .
Andrew: Coaching?
Scott: Yeah, coaching session. I don’t remember the lady’s name, but they taught me how to go do it and how to take notes and all this. Ultimately I developed my own style just by practicing and doing it. The big answer is people want to hear you think. They want to see how your mind works on stage. They don’t want to see you read cards. They don’t want to see you read a speech. The thing that kills me is when people get up there and read their speech. I can read your speech in half the time you can read it out loud. Just send it to me online. I want you to get up and I want to see your mind go and I want to see you digress, I want to see you come back, I want to see you weave a story, I want to see you pace, I want to see the emotion, I want to see you lean forward, I want to see you stand back, throw your arms up. I want to see what makes you tick. I want to see how you think, and that’s what I tended to do. And they want to see a sense of humor. So I worked hard. The only parts I really worked hard on because I knew my business, is I worked hard on the humor. So I did top ten lists and I spent a lot of time on those. And, you know, I got good at it. The first few top ten lists I did, I wasn’t so good at, but I’d watch Letterman and I’d learn. You watch Leno and you kind of pick up on how to deliver the punch line. And after a while, I just get up there and I would do improvisation. I used to get nervous. I used to sweat and I used to pace. Then it got to the point where I could get up at Comdex or Oracle Open World or Gartner in front of 15,000 people and I’d sit down and write my notes five minutes before I went up on stage and boom, I’d deliver, I’d launch, and away we’d go.
Andrew: But so you do improv classes to be, to get yourself comfortable with just free flowing?
Scott: No, I just watched TV. I would, at this point now, I can just, you know, give me a microphone, it takes me about four or five minutes to get the engine going in front of the mic and pretty soon I’m launched and I’m one with the microphone. But that’s because I’ve done speaking in front of small and large groups for the last 30 years. That’s what I do. I’m a communicator. What does a CEO do? CEO is not allowed to do much. They’re only allowed to communicate and to be people who talk like that. That’s what we do.
Andrew: Well, I’d like to see you communicate more. What’s it going to take to get you to start blogging and ideally to write a book?
Scott: You want to be my co-author?
Andrew: I will be whatever you need, absolutely. Do you need, I don’t even feel like you need a co-author, but I’d be happy to co author it with you or do a video Skype with you and have it transcribed.
Scott: Well, stay in touch and the next 60 to 90 days, I’m working on a new stealth startup and we’ve got the CEO hired, he’s a wonderful guy I’ve known for 30 years and a couple of ex-Sun people are involved. I’m going to actually invest some money. This might be a very interesting platform from which I might be able to get back in the game of sharing my thoughts and ideas. So it’s . . .
Andrew: You mean the business or a blog?
Scott: It’s in stealth mode right now, and the insights that we get from this thing might give me a chance to share some more information.
Andrew: What kind of business are you getting into? I know you’re not going to say because it’s stealth, but we aren’t going to say specifically what it is. Is it going to be software? Is it going to be online? Is it going to be mobile?
Scott: It’ll be everything and it’ll cut across media. I was down in L.A. meeting the media gang there. It’s big with the telcos. I’m trying to set up a meeting with some folks in Washington D.C. and the administration and some of the agencies. And it’s a consumer play, an enterprise play. It’s not a little idea. I don’t know how to do little ideas. So stay tuned. We’re in stealth mode and we’ll come out and I’ll do some stunt marketing maybe in a raincoat on a Highway 101 overpass or something like that.
Andrew: I like the way you think. That sounds like a lot of fun. Well, thank you for doing the interview. It’s great to meet you.
Scott: All right. Everybody check out Curriki.org and IngBoo.com. Check those two out. They’re two projects I’m working on and they’re good stuff. Thanks everybody.
Andrew: Thank you. I’m incredibly grateful. You’re right. IngBoo is the company that introduced me to you. I’m incredibly grateful to them for making this introduction and making this interview happen.
Scott: Thank you.
Andrew: Well, thank you. Bye everyone.
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