Philly Front Office

Process – est. 1776

“I think we got higher expectations on us than the long, hard five, six years of absolute crap like the 76ers put in,” – Steve Ballmer Owner, LA Clippers

Steve Ballmer bounced out to center stage, punching his fist in the air and soaking up roars from a gathering of Clippers’ season ticket holders and fans. “Let me be clear,” the team’s owner proclaimed in a booming voice. “I’m fired up tonight.” – from LA Times Article 

This quote comes from an event held in LA on august 15th billed as “The Playbook” – essentially a CEO keynote and evangelical beggary wrapped into one. I will tell you that I have witnessed Ballmer and his schtick firsthand when he was the CEO of Microsoft. I attended a large national conference and sat in a room of a few thousand people as Ballmer whipped up his trademark enthusiasm and vigor to tout the latest Microsoft product. When we think of technology success stories Microsoft is in the pantheon next to Apple, Google, and Amazon. So Ballmer must be a genius, right? When he takes time to criticize the Philadelphia approach to team building, we should take pause and consider his words, right?

Well…sure, let’s consider Ballmer for a moment.

Who TF is Steve Ballmer?

Steve Ballmer was the 30th employee hired at Microsoft in 1980. The company had made a large deal to break into the nascent technology industry, and Ballmer was hired as the first “management” employee. At the time of hire, he was paid a salary of $50,000 per year and given an 8% ownership stake in Microsoft. Over the next 20 years, he rode the Bill Gates wave as the company became the behemoth of the personal computing world. When Gates decided to step down from his role as CEO in 2000, Ballmer, who had been responsible for sales and support, was named as his replacement. He retired from Microsoft in 2014 before purchasing the Los Angeles Clippers for an unprecedented 2 billion dollars.

Now you may be thinking, “Why do I care and what does this have to do with basketball?” Fair question. Bear with me for a moment, and I’ll try to bring it home. 

Ballmer Era at Microsoft

2000 was a watershed year in the tech industry. The internet boom was in full force and the Y2K panic had just been passed. In the lead-up to Y2K (where it was feared that any obsolete systems using 2 digit date codes would fail and the entire banking, air traffic control, norad, you-name-it systems would all fail), many businesses invested heavily in overhauling, refreshing, or implementing new client computing systems. Microsoft had a stranglehold on the industry and benefitted greatly from this panic. In 2000 when Steve Ballmer took over the company, they had a market cap of 500 billion dollars. They were easily the Golden State Warriors of the technology industry and one of the largest corporations in the world. Virtually all companies used Microsoft products and Internet Explorer was the de-facto browser with which people experienced the world wide web.

Let’s compare this to 2014 when Ballmer purchased the LA Clippers for $2 billion. The Clippers had won 56 and 57 games respectively in the seasons prior to the Ballmer purchase and were the new glamorous franchise in Los Angeles. Where the old guard of Jack Nicholson and old Hollywood would go to Lakers games to see and be seen, the new guard of celebrities were at the Clippers games to see Chris Paul, Blake Griffin, DeAndre Jordan, and JJ Redick take the floor. The team was young, talented, and had a very bright future – just like Microsoft was when Ballmer took the reins 14 years prior.

Ok, let’s step back. What happened at Microsoft? Obviously Ballmer was a wild success as CEO if he could afford $2 billion for an NBA team, right?

 

Well actually, Ballmer shepherded the company through its longest and darkest period of stagnation and slow decline in history. In all, Microsoft stock prices fell 40% during his tenure of leadership. There are various reasons why the 40% number is misleading – both because the tech bubble burst in 2001 and because all those companies had refreshed their technology infrastructure the past few years and PC sales cratered in 2001 in the aftermath of Y2K. That’s not what is interesting about his tenure. What is interesting is over the next 13 years, the company essentially stagnated and never found momentum again under his leadership. One might say that Google, Apple, and Amazon came in and ate Microsoft’s lunch during this time – and that’s true. But his company squandered such a massive lead during Ballmer’s tenure mainly because of his inability to think big and be strategic. For example, here is Ballmer in 2007 on the release of the iPhone:

Does that tone sound familiar?

“People can do it their way. We’re going to be good our way. We’re not going to show up and suck for a year, two years. I think we got higher expectations on us than the long, hard five, six years of absolute crap like the 76ers put in. How could we look you guys in the eye if we did that to you?”

“Who’s going to pay $500 for an iPhone?”

Ok, so are we still talking about basketball? Well yes and no. What I’m talking about is strategic vision. To reduce The Process into a lazy narrative that both exaggerates its duration and diminishes its accomplishments and future potential smacks a very similar tone as Steve’s dismissiveness about Apple and their approach to mobile computing.


Great minds discuss ideas; average minds discuss events; small minds discuss people.


So what has Ballmer done since taking over the Clippers? He has watched a fashionable young team become drained of their talent and slide into mediocrity. The Clippers have lost more games in each season under Ballmer in a slow slide onto the treadmill of mediocrity. Almost assuredly, you would think a team like this would take a move similar to the Lakers where they just strip down to bare metal for a year or two, clear their cap sheet, and then use the allure of Los Angeles in a two-pronged rebuilding approach using top draft picks and free agency.

But Ballmer’s history and words suggest something very different. His history is to whoop and smugly declare, “We are better than those people,” while watching the disruptors and innovators slowly eat his crops.

Year Team  Wins Losses
2012-13 LA Clippers 56 26
2013-14 LA Clippers 57 25
2014-15 LA Clippers 56 26
2015-16 LA Clippers 53 29
2016-17 LA Clippers 51 31
2017-18 LA Clippers 42 40

 

Ballmer cashed out of Microsoft in 2014 just before purchasing the Clippers. And what has Microsoft done since Ballmer left? Well, funny you ask. The company under new CEO Satya Nadella completely rethought how they were going to approach the technology world. They quickly pivoted from being a company that used various tactics to try to retain revenue from their existing enterprise PC and Server customers to a company that recognized that mobile and cloud were going to transform everything, and they quickly became a cloud-first company. All the defenses of Ballmer being a victim of circumstance in a changing market evaporated once Nadella showed that with the immense reach and depth of Microsoft, they could easily enter and succeed in any market they wished. The execution and vision that had been lacking for 14 years was suddenly back, and Microsoft stock has responded accordingly.

How Microsoft has evolved under Satya Nadella

Summary

This all may come off as a bit mean-spirited, but again this is about how to think. Basketball is very much a metaphor for life in many ways. In life, there are visionaries and stewards. Visionaries expose themselves to criticism and critique, and stewards are more careful about not rocking the boat. Stewards dislike disruption and seek to ride out the legacy of success which they were handed. Sam Hinkie talked about the kind of thinking that Ballmer exhibited last week in his resignation letter:

“There has been much criticism of our approach. There will be more. A competitive league like the NBA necessitates a zig while our competitors comfortably zag. We often chose not to defend ourselves against much of the criticism, largely in an effort to stay true to the ideal of having the longest view in the room.” – Sam Hinkie 

As we have seen, this journey we have undertaken has taken its share of criticism, some of which is fair. Steve Ballmer is among the newest owners in the NBA, but his thinking remains as outdated as many of his small-minded peers.

The losing part of The Process lasted 3-3.5 years from 2014 to 2017 (if you count sitting Ben Simmons and Joel Embiid the second half of the season). Ballmer is just another in a long line of detractors who seek to exaggerate our timeline to scare other fan bases away from having to “suffer.”

Long Live Satya Nadella. Long Live Sam Hinkie.

 

Jason Blevins