I think that what is really going on here is not that NCs are going to replace PCs. But rather, Silicon Graphics, Oracle, Sun, and IBM
are all worried about one thing. And it’s called Windows NT. And this is all just a smokescreen to try to distract the competitive issue that when Windows NT succeeds, it will do great detriment to the businesses of those four companies.
If you think about it, as you get Structural Dynamic Research and Parametric Technologies software on Windows NT dual-processor Pentium Pro workstations with 3D graphics, you’ve essentially gone right at the heart of SGI and Sun. When you have Windows NT
succeeding, you have SQL Server succeeding, which is 80 to 90 percent of the functionality of Oracle’s database at one-tenth the cost.
When Windows NT succeeds, multiprocessor scalable Pentium processor servers succeed, which goes right at the heart of IBM’s enterprise computing business.
I think that that’s the real issue here.
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What about the argument of simplicity, though? Americans really don’t want complicated machines, and right now, computers are really complicated. And a set top box is going to be a lot easier to use.
I think that the manageability aspect is a valid one, and that is something that the industry has to address, because PCs are more difficult to use and more difficult to manage than they should be. And that’s something we’re all working on. But, I think that’s the answer to this problem, not the NC.
What’s been the proudest moment in your career?
Hmm. Well, sort of every day is the proudest moment. Every period of time you look, we have set and broken our own records. One of the things that makes me personally proud, or perhaps more happy than proud, is when I go over to see Dell in Australia or Singapore or Malaysia or Thailand. And based on a fairly simple idea and a business model, some really creative guys have managed to put this business model into a whole new country and it’s thriving, all by itself.
That’s a very proud moment for me.
How do you think your role has changed as CEO from age 19 to now?
What have been the major shifts in responsibilities?
The first couple of years of the company’s life, I was directing tasks at a pretty detailed level, which is not unusual for a company that size.
As the company grew, my focus increasingly became hiring talented people, putting an organization in place. Eventually, that evolved into a role of driving the company’s strategy, helping to set the high bar in terms of what our performance objectives are. Helping to evolve the overall organization, who our partners are going to be outside, looking at the industry, understanding what customers are doing in an overall sense. But it’s gone from highly operational task focus, do everything yourself because there is nobody else there, to a lot more fun job, which is to set the strategy.
In some respects, my job is a lot easier than it has ever been because there are so many talented people. Ten years ago we were struggling to cope with our growth. It is a lot harder when you don’t have talented people, because you can’t rely on them. Now problems
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come up, and the talented people solve them. I don’t even have to get involved. It’s wonderful.
In terms of advice for younger people who want to start companies like yourself—the two of us included—what are the important things to think about?
I would say to really focus on hiring great people, and learn from them. One of the challenges of a new company is that you don’t really know what the right strategy is because you have to do a lot of testing and experimentation to really refine this, and get the right focus.
So, experiment actively, and once you’ve found something that works well, elaborate on it, and focus on it.
Balance your objectives with the ability to actually achieve them.
We found ourselves trying to do more things than we could do. Today, we still have significantly more opportunities than we could possibly pursue. And, we will get in a room, and we’ll say, “OK, what do we want to do this year that’s new and different?” And we’ll come up with a list of 25 things, and we’ll cross 22 things off the list, and save them for next year’s discussion. Because there is no way we could possibly do them.
And does this apply in a startup as well?
The challenge in a startup is that you almost have to spread your wings pretty far to see what will work. In our case, the 25 things would all give us a ROI of more than 30 percent and are all profit-generating, low risk, good ideas. We’ve already weeded out the things that won’t work. When you’re doing a startup, you don’t really know.
So the faster you do the experimentation and get rid of things that don’t work and keep doing things that do work, the faster you get to the winning business model.
9
CHARLES WANG
Computer Associates
MANAGIN’, NEW YAWK
STYLE
CA is not a car company. Nor is it an appliance manufacturer—or an airline.
CA is Computer Associates, the second largest software company in the world. So, why haven’t you, or many other digitheads for that matter, heard of them? Perhaps because CA is not located in trendy Silicon Valley, but in distant dreary Islandia, New York.
Or, perhaps because CA chiefly sells business applications: nonsexy programs used by businesses to network computers and crunch large numbers—programs that Joe Consumer never heard of, or never needed. But, CA software does sell.
CA software is used by almost 100 percent of Fortune 500
companies. And with revenues of more than $3 billion, and 9,000 employees worldwide, CA has evolved from a meager little startup into a global powerhouse.
In 1976, Charles Wang and Russ Artzt—two buddies who met at Queens College—founded Computer Associates. Its first major product was CA Sort, software that sorted data 127
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faster on IBM’s computers than IBM’s own software. But Wang and Artzt didn’t write the code for CA Sort—they acquired the rights to sell it in 1974 from a Swiss software company, also called CA. Wang sold so much of CA Sort, that he was able to buy the Swiss parent within two years.
Wang, however, isn’t exactly what you’d call a smooth salesman. He is known for being abrupt, impatient, and very aggressive. Under Wang’s leadership, CA has adopted a cookie monster strategy: it has acquired over sixty companies in its 20-year history. CA is also known throughout the industry for being very “objective”—i.e., brutal—about newly acquired employees. Wang and CA have laid off thousands of employees from acquired companies, and consequently have received strong criticism from the media.
Yet, in spite of his critics, Wang still impresses—not only because of what he has achieved, but also because of where he started.
Charles Wang grew up in Shanghai, China. His father was a prominent judge. But after the Communist revolution, his family fled to the United States and settled in Queens, New York. Although free, they were no longer affluent. Charles was eight years old at the time, and didn’t know a word of English.
And while growing up, he—like many immigrants who come to America—went through discrimination. Wang’s Chinese ancestry can partially explain this.
So could his accent. Having lived on the West Coast for a couple of years, the first thing we noticed when we spoke with Charles Wang was a heavy New York accent blended with a mild Chinese twang. But, soon after we spoke about “goin’
hungry” and “managin’ people” and “leadin’ the industry,” we realized we were in the presence of a shrewd, frank New York businessman who deserves the highest accolade for his achievements.
We met with Charles Wang at CA’s world headquarters in Islandia, New York.
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“Man
aging is not just telling people what to do,
but it is leading by doing.”
Tell us about CA’s startup process. Besides using credit cards instead of venture capital, what are the most vivid incidents in your mind?
There’s nothing that really stands out in that way. It’s sort of a process. Russ and I got together and wanted to do something. Every time we thought there was a better way to do something, we just started doing it.
There was no master business plan. We just lived hand to mouth.
Hand to mouth. Once we had a little breathing room, then we thought about the future—but there’s no future if you can’t get through today.
People often ask us, “In the beginning, what was your vision?”
Our vision? Meet payroll next week. That was our big vision. We took it a week at a time. And you do whatever is necessary. That may not be the best advice to MBA students who say, “Oh my god, you didn’t have a business plan?!”
No, we didn’t. We just thought that we could do something different, and we could do it on our own, and we could do it better.
That’s it. And that’s part of the beauty of not having venture capital because—
You don’t have to answer to anybody but yourself.
Right.
When you first started out, you acquired the rights to sell CA Sort from the then-called Computer Associates based in Switzerland. Tell us about that process. Were you sure that this was a dynamite product that was going to sell, and if so, how did you know?
We thought through the criteria needed to allow our startup company to make and sell a major product. I really didn’t want to be in consulting because, you know, they’re whores—lawyers are the same way, you know. They sell their time.
I wanted to have a major product. We had some products at the time that we basically wrote for a very different operating system called VM. The problem was that the VM users were a very small community.
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So we realized that we wanted something that could be used by everybody. Second, we wanted something that we didn’t have to convince a user to use. I didn’t want to be a missionary selling religion first and then selling my brand of bibles. Third, we wanted something that could be sold by telephone because none of us could afford to travel at the time.
So, we thought about what kind of product line would fulfill these criteria, and we landed upon system utilities. System utilities—
tape libraries and disk managers—all enhance the operating system.
However, most of them did things that users weren’t sure if they needed or not—except for sorting. At the time, 25 percent of computing time was spent sorting, and users knew this.
There was one sorting product called CA Sort that was very successful in Europe. At the time, it was marketed by a Swiss company that didn’t know anything about system utilities because they were in a market different from the system utilities market. And, we really wanted to get CA Sort.
We took a roundabout way of getting it. We first took the rights to sell another product from CA [the Swiss parent] called CA Earl which was a product that competed directly against Easytrieve, a strong software package. We knew that we’d never sell CA Earl because you just couldn’t go out and compete against Easytrieve.
They had a huge sales force, and we had nobody except me. So we just rewrote the manuals for CA Earl exceedingly well and packaged it really well.
And, CA in Europe was really impressed. They said, “Ah! Here is somebody who really knows how to market software products. Why don’t we look at doing something with them with CA Sort?” And that’s how the company started.
In retrospect, your roundabout method of acquiring CA Sort worked, but if you had to do it all over again, would you have done it that way?
That’s a hard question because, you know, I don’t have to do it over again.
To be honest, I don’t know. There were really no choices like that. The question may be whether raising money is better or bootstrapping is better. In the software business, I think that it is better to bootstrap, because one of the problems you have when you throw money at these kids—you know, kids really—is that they have no understanding of what it is to go hungry.
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They have no understanding of what it is to struggle to meet a payroll. They usually take the elegant business school approach of doing things, when really, for us, it’s just great that the company was alive.
Do you understand? They have no concept what it is to go hungry.
For example, we had a printroom. Sometimes on the nightshift, I went in there randomly. You would never find an MBA guy—no offense to MBAs—( All laughed), but you would never find an MBA guy doing that. Why? Because he’s funded. That’s not his job. And that’s what is wrong.
So you are saying that being funded too much in the beginning affects the—
Culture—
—right from day one.
Absolutely. For example, we’d answer phones all the time even if they weren’t ours. I’ll go by a desk today and if the phone rings, I’ll answer it. Even if it’s not my desk, I’ll pick it up. I’ll pick it up because we still want to be small and classy—that’s what made us successful.
Managing is not just telling people what to do, but it is leading by doing. That’s the fun of it and people can lose that [with early funding], so if I had the choice again I would want to bootstrap.
What kind of advice can you give us on how to choose people to work on your team?
I think what you first have to do is make a list of your strengths and weaknesses. And, then, get people to complement yourself if you are going to lead.
You really have to decide what you’re good at, and what you enjoy doing. Then, I’d complement myself with people that can do the things that I’m not good at and can do them well.
Part of this process is to be realistic and objective. You can’t be so egomaniacal to say that you’re good at everything. It’s almost like ath-letes on a team—there are some that can play every position on the field, but you can’t play them all at the same time. So you pick the best one for the team.
In CA’s case, Russ is the one that I first started out with, but, financially, the person who was instrumental to get us going was my brother. He planned to stay three years in order to get us organized,
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get CA public, and so forth. He had no interest in software really.
Thirteen years later he retired.
So you have to surround yourself with great people who complement you. Sanjay [Sanjay Kumar, the President of CA], for instance, is just incredibly bright. He’s out of this world. He could run any of these companies—that’s how talented he is. Sanjay does a lot of the administrative work now. But, he is also technical which gives us a great commonality—it isn’t like he talks a different language than I do. He knows what it is to go hungry. He has great touch with people. So, when we look for people, we look for their best assets.
But you really need to see whether a member of your team has what I call “the CA heart.” You have to believe in the company. I tell my people not to bet their career on a product or a particular job, but to bet it on the company. I try as much as possible to guarantee that we will not have layoffs, rifts, and all that because if you’re betting with me, then I have to give you some kind of feeling that, “Hey, we are with you.”
Right now, we are in the midst of doing a retraining of CA people because our whole foundation for the knowledge base of everything we do has shifted dramatically with the internet. We are retraining everybody in CA. It’s taken over a week for every one of the people here.
Everyone through this course. Unbelievable. Most companies won’t do that. Because I said now is the time to rebuild the foundation. People ask us if we are in trouble. We’re not in trouble—but the time to rebuild foundations is when you don’t h
ave to. Otherwise you end up with a euphemism called reengineering.
You gave us an opening when you said that when you pick your executive team, you take stock of your strengths and weaknesses as an executive. What are yours, starting with the weaknesses?
Well, how much time do you have? ( They laughed. ) I hate the administration part. I am very very poor at it. I hate the bullshit. I’m too direct, too blunt. Bob [Bob Gordon, CA’s VP of Public Relations] usually has to shield me from the press at times because I say my mind.
I don’t like people spinning things—don’t edit it for me, just give it to me with the good and the bad. I’m a big boy. I’ll take the bad
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news, but give it to me straight. If you start spinning it, then I can never trust you. In that sense, I’m not the best front guy and I know that. And that’s a weakness.
I’m really impatient. For stock analysis and all that, Bob knows he’ll use Sanjay, since he’s much better at this and a little more patient. I’m so impatient it’s unbelievable. I just don’t put up with bullshit. By the time we argue what can and cannot be done, we would have done half of it.
Sometimes I forget my window of opportunity with a particular CA employee is very brief. He sees me for twenty minutes. I may blow his whole career by asking him, “What the hell are you doing?
This is bullshit!” This poor guy goes home and cries. I blew his career. And I forget about this. So that is a weakness. I’m not the smoothest guy when it comes to being political about things, so therefore I need people around me that are better in those things.
We all have to work as a team. You really have to feed off of each other. There is no ego here, no pomposity.
For example, when we have a meeting we don’t have a lot of overheads. No. We just sit down and talk about it. It’s a known rule at CA that if you come to a meeting with Charles and you have a big agenda prepared, you’re probably in trouble. We probably won’t follow it. I know what the purpose of the meeting is and I want to go right to it. I don’t need all of the background stuff. If I didn’t know, then I would have asked.
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