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Originally published July 9, 2013 at 8:00 PM | Page modified July 10, 2013 at 7:35 PM

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Startup culture stirring at Microsoft

Can a company with 98,000 employees act like a startup? As it becomes a “devices and services” company, Microsoft is trying to encourage a culture that’s more collaborative and faster-paced than it has been over the years.

Seattle Times technology reporter

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Guy Shahine works at a multibillion-dollar company that has dominated the software industry for decades and has nearly 98,000 employees worldwide.

Yet, he insists, he also works at a startup.

Shahine, in Microsoft’s Online Services Division, believes a just-launched project his Bing Advertising team is working on — linking customers’ credit cards to discount deals offered by restaurants and retailers — is essentially a startup.

“We have these ideas out there that, to some people, might sound awesome, and, to others, they think might not work out,” he said. “The only way to know is to put out those ideas, see how the market, how the customers, react to them. It’s all about experimenting, learning from those experiments, iterating.”

That sort of thinking is beginning to take hold in certain pockets at Microsoft, some there believe, as the company becomes one that provides devices and services, rather than just traditional software.

That transition is one Microsoft CEO Steve Ballmer has been beating the drum on for almost a year now. It’s the reason the company is expected to announce soon a major reorganization to better align its divisions along devices and services lines.

And it’s a reason its culture is beginning to shift.

The company has long had a reputation of being a stodgy organization full of infighting where getting something done might require battling through layers of bureaucracy.

Now, some employees say, the company culture is becoming more collaborative, faster paced, and infused in places with what some are calling a “startup vibe” — a sense of being the underdog, of creating something experimental that has to be tested in the market, and a willingness to incorporate feedback into those experiments quickly.

“I would not say it is yet prevalent across the entire company or even consistent. But I would say you see it in a lot of spots and with a lot of people,” said Scott Pitasky, a Microsoft corporate vice president in human resources.

The change has come about partly because of direction from the top.

Ballmer, in his recent appointments to key positions, has emphasized the importance of cooperation across the whole company as its products and services become evermore intertwined: Skype on Xbox, for example, or Yammer in Office.

He also has stressed the importance of picking up the pace on updates as the company increasingly focuses on providing services.

These days, people are used to getting new features frequently in their services and apps. If those innovations don’t come fast enough, or if there’s a void in the market, competitors rush in.

Part of the shifting company culture has also bubbled up from the bottom.

More job candidates and employees either have experiences with startups or are attracted to their flatter hierarchies, high energy and sense of urgency and ownership.

In a market where Microsoft is fiercely battling for top-tier talent against newer tech giants such as Google and Amazon.com, as well as nimble startups, having that sort of vibe can be a recruiting plus.

And it appears Microsoft is realizing that it can learn from the cultures of the startups it acquires.

Hard lessons

That hasn’t always been the case. For instance, several years ago, after it purchased Silicon Valley startup Danger, maker of the Sidekick mobile phone, employees at Danger felt their startup culture clashed with Microsoft’s corporate one, and things took far longer to build than they were used to. And many of Danger’s people ended up working on Microsoft’s own smartphone, the short-lived Kin.

“In the past, we had the orientation of: ‘How’s the technology? How strong are the people they have?’ ” Pitasky said. “We paid attention to their culture in terms of integrating [them into Microsoft]. But ... I don’t think we paid as much attention to their culture in terms of learning from it.”

Now, he said, “We are a lot more aware of the culture of the companies that we are acquiring ... not just what they’re doing but how they’re doing them.”

Yammer opportunity

That seems to be the case with San Francisco-based Yammer, the business social-networking and collaboration startup Microsoft bought last year. Yammer, which provides a Facebook-like social network for companies, has about 350 employees in San Francisco and London offices.

“I actually think Microsoft is learning a lot from us, and we’ve been eager to share some of those things,” said Kris Gale, vice president of engineering at Yammer.

Indeed, some engineers on Microsoft’s Redmond campus who used to be part of the SharePoint team have adopted some of those principles and re-branded themselves “Yammer North.” SharePoint is Microsoft’s work-collaboration software.

But, Gale points out, there are two things working in Yammer’s favor that were perhaps absent when Microsoft acquired other startups.

The first is timing.

“We’re in Office at a time when they’re transitioning to services and they’re working on increasing their cadence, trying to get faster,” Gale said. “It was easy to say: ‘We have these cultural things that are important to us and we think they might provide value to you.’ ”

Microsoft, like many other engineering-focused companies, is hierarchical and centered on predictability, Gale said.

Yammer’s hierarchy is flatter, and its engineers organized in a more free-flowing fashion, forming, disbanding then reorganizing as ever-new projects start.

“There’s no traditional concept of product ownership or code ownership,” Gale said, leading to fewer turf battles and lots more flexibility.

The second factor in Yammer’s success at Microsoft, Gale said, is assertiveness on its own behalf.

As much as senior leaders may buy into the idea that their staff can learn from an acquired smaller company’s culture, middle layers often want things done as they’ve always been.

Though he declined to get into details, Gale said there have been times when Yammer clashed with Microsoft on IT or human-resources policies.

“We were able to appeal to senior leadership and get that resolved,” he said. “With Yammer, we’ve been firm about company values, about employee empowerment.”

Acting on idea

Shahine, a development lead with Microsoft’s Online Services Division, is working on Bing Offers Card-Linked, which electronically links a user’s credit card with discount deals featured on Bing Offers. When someone purchases a deal, the discount is automatically applied to their credit-card statement.

That means the user doesn’t have to carry easily misplaced coupons; or, if the offer is for 50 percent off if a customer spends $20 at a certain retailer, the offer is automatically redeemed when you ring up $20 at checkout.

“The idea was about how we can make this simpler, more customer-friendly,” Shahine said.

There were questions team members didn’t have answers to, he said, such as whether they should first attract merchants or customers. So they decided to just try putting the idea out there and getting a pulse on what works and what needs changing. Card-Linked is now up on the Bing Offers beta site.

Bing Offers, which also will be featured on Outlook.com and Skype (for customers who use the no-fee version of the service), is an example of how the company is integrating its products.

Such collaboration “is a rallying cry. We all feel it,” said Ben Gilbert, who runs The Garage, Microsoft’s initiative to encourage innovation among employees.

Project center

The Garage is a community and actual physical space on the Redmond campus where employees can work on their side projects and get feedback. A number of employee projects that have come out of The Garage have been incorporated into company products — and at a quicker pace these days.

That’s important, Gilbert says, “in a services world, where you have to move quickly.”

Then there are the one-time events that attempt to incorporate some elements of startups, such as hackathons — a set time during which programmers and others create code or software for defined purposes.

One of Pitasky’s recruiting-team members came up with the idea to hold a 24-hour nontechnical “hackathon” to brainstorm how they could improve the recruiting experience for college candidates.

They held the event a few weeks ago in The Garage, complete with a Zumba class at night, a yoga class in the morning, and no requirement that people be there the entire time.

Typically, ideas for improving recruitment processes pop up here and there among team members, then take six more months to execute, said Anthony Rotoli, the technical recruiter who came up with the “hackathon” idea.

“I thought it would be better to just knock it out all at once, then implement it immediately,” Rotoli said.

Pitasky said this sense of a startup culture at Microsoft is only just emerging — but enough so that “it’s something we’re starting to be able to expose to candidates,” along with the traditional strengths of Microsoft, such as its scale and resources.

“There’s this recognition,” Pitasky said, “that maybe we’re heading toward trying to get the best of both worlds.”

Janet I. Tu: 206-464-2272 or jtu@seattletimes.com. On Twitter @janettu. Information from The Seattle Times archives was used in this report.

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