Buy this book.
Barbarians Led By Bill Gates by J.Edstrom & M. Eller, Pages 32-43
Not long after Edstrom signed on, she was joined by Rowland Hanson, the former vice president of marketing for Neutrogena Corporation, a maker of soap and cosmetics. Good looking, well dressed, and a computer virgin, Hanson, a die-hard surfer and beach lover, came from a world of fragrant packaged goods where appearances-image and perception-were everything. He represented all that Microsoft, in the early 1980s, was not.
Until 1983, the computer industry was still so arrogant that it had no idea how truly bush league it was when it came to packaging and pitching products for consumers. Gates, in the early 1980s, was the epitome of this clueless arrogance, but he and Microsoft were about to receive a face-lift.
Hanson and Edstrom would spin a whole new image for Gates himself. They would tap the best and worst of Chairman Bill, changing his clothes, his voice, and his allegiances, driving him to become not just the boss, but essentially the company mascot-a sort of high-technology Colonel Sanders.
Hanson, who always longed to own his own business, had been getting ready to leave Neutrogena and launch a new line of pet care products. Just before getting the seed money he needed for his new venture, he took a call from a New York-based search firm responsible for recruiting executives for Microsoft.
"Here's the type of guy I want," Gates told the headhunters. "I don't care if he knows anything about computers. I need a guy who really understands branding."
If Hanson could create market differentiation for something as straightforward as hand lotion, Gates reasoned, then why not do the same with software?
Hanson didn't fancy himself much in the nerdy world of computers, nor was he eager to trade in southern California sunshine for rain. Hanson agreed to fly up on a Sunday morning to meet with Gates.
Hanson got on the plane to Seattle with every intention of saying no. Microsoft's Steve Ballmer, Gates's dorm-mate at college and new chief confidant, who had earlier spent a brief stint at consumer-goods giant Procter and Gamble, picked up Hanson at the airport, and the two hit it off immediately, talking football on the drive to Bellevue. A husky six-feet-one, two hundred twenty-five pounds, Ballmer had once been student manager of the Harvard football team.
When they got to Gates's office, the young chairman immediately launched into sales mode, rocking back and fourth with excitement as he explained his vision of computing.
It was all Greek to Hanson, but then a light went off in his head. In Microsoft he saw"marketing" Pygmalion…with Gates as Eliza Doolittle.
"I'm starting to get what you're talking about here," Hanson said. He was fascinated with the birth of new industries, a soldier of fortune always looking for a new marketing challenge. "But I have no idea why you're interested in me?"
Gates looked puzzled." I thought you understood, he said.
Hanson shook his head.
" What's the difference between a dollar-per-ounce moisturizer and hundred dollar-an-ounce moisturizer?"
"Technically …there is no difference. Vaseline works as well as Clinique's daily moisturizer. It may even be more effective."
"So what's the difference?" Gates asked.
"Well, it's in the brand. The image you create around the brand."
"That's why I need you in this company," Gates said. "Because nobody in this company or in this industry really understands that. And if we can have the perception, I can create the reality. With the combination of the reality and the perception, nobody will ever beat us."
Hanson was sold. But it would take three months of negotiating to bring him to Microsoft. One of the stipulations, Hanson said, was that he would only stay at Microsoft a couple of years. After that, he would start his own business.
Sure, Gates agreed, confident that Hanson Pet Care Products would never see the light of day.
Hanson joined Microsoft in early 1983. As vice president of corporate communications, Hanson was responsible for advertising, public relations, and anything that had to do with retail promotions and the public. Hanson's goal was to position the company as the industry leader in software. But to get there, they would need to establish fundamentals.
Microsoft was an environment in transition-sort of like Beirut is in a transition- a company with no checks and balances dominated entirely by developers. They did what they wanted when they wanted. Procedures didn't exist. Hanson liked the challenge.
Hanson's goal was to position Microsoft as the "safe buy, the quality buy," i.e. the next IBM. Hanson not only began changing what Microsoft said, he began a make over in how the company appeared to corporate America. If Microsoft wanted to be the "safe buy,' people had to see Microsoft the way they saw IBM-stable, hardworking, straight up and down.
IBM didn't always make the best hardware-its PC Junior machine had been a disaster and eventually people would realize that. But for a long time, people bought IBM because of the perception of safety. Nobody purchasing computers in corporate America was going to stick his neck out by buying some jerk-off brand. You had to buy a brand you could defend to your nontechnical senior management, as well as to shareholders. Gates knew that victory meant people simply asking for the Microsoft brand.
But if Hanson was going to position Microsoft in a certain way, he first had to understand what people thought about the company. He proposed spending $50,000 on the first awareness and attitude study in the computer industry. He knew of a company called Griggs and Anderson, a Portland, Oregon-based research house that had been doing focus groups. The research would evaluate not only the general awareness perceptions of Microsoft, but also what features Microsoft should be including in its products.
Gates' reaction to Hanson's plan was: "This is insane."
Gates and Hanson battled back and fourth. Then at one of their Monday-morning strategy meetings with Microsoft's other top executives the bickering came to a head.
"We're not going to do it," Gates shouted.
Hanson pressed on. " I need to proceed with this research," he said. "We're not going to get it done in time, and I have ad schedules to make. A lot of this is going to be used."
Right then in front of everybody, Gates reversed his position.
"You're right," Gates said. "Let's do it."
"That's why Gates was so successful," Hanson would later reflect. " His ability to turn on a dime, and to listen to the smart people he had surrounded himself with."
The next item on Hanson's agenda was to figure out the message Microsoft wanted to deliver.
Go to Page Two