Before Ballmer: Pretenders to Gates' throne at Microsoft

For much of Microsoft's earlier days, Steve Ballmer wasn't close to being Gates's equal, much less his heir apparent. Ballmer's first job at Microsoft in 1980 was assistant to the president -- who was Gates.

It took 18 years before Ballmer was appointed sole president of Microsoft in 1998, though he ascended to CEO just two years after that. But before that happened, there were others who, if things had played out differently, could have succeeded Gates.

(For our multi-faceted coverage of Gates's retirement at the end of June, see here.)

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James Towne, Microsoft's first outside president (1982-83)

It was Ballmer who actually pushed Gates to hire an older outsider to be Microsoft's president, according to the book, Hard Drive. But recruiters were unable to convince any candidates to relocate from Silicon Valley.

Instead, they found Towne, who was a VP for Tektronix in nearby Portland, Or. Hired in 1982, Towne had a "brilliant mind and a lot of energy," according to the book, Hard Drive. He also happened to be 40, married and with two kids -- all factors two standard deviations from the Microsoft norm (Gates himself was just 27). That created a problem.

"Bill would say that that some of his best times were sitting in his office at 2:00 am, said one Microsoft manager who worked with Towne, according to Hard Drive. "Bill felt better then than at any other time, knowing his company was working. And Towne wasn't around a lot of those hours. He was with his family."

For his part, Towne felt like a "babysitter." Once, he had to clean up Gates's hotel room, including picking up his dirty clothes and underwear, according to Hard Drive. Both men increasingly avoided each other, until Gates called him in one day and said he had 9 months to find another job. Towne had a job in Portland the following Monday. He would later be named Oregon's 'executive of the year,' according to Hard Drive.

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Jon Shirley, president and COO from 1983-1990, on board of directors until June 2008

1983 was a tough year, management-wise. Besides firing Towne, Gates had to contend with the departure of his co-founder and executive vice-president, Paul Allen, who had contracted Hodgkins Disease and also lost his father that year.

"Gates need to find someone he already knew, someone he liked and felt comfortable with," according to Hard Drive. He found that in Shirley, who was vice-president of computer merchandising at Tandy Corporation (now Radio Shack). Shirley was 45 -- 5 years older than Towne -- but he and Gates had worked with and negotiated with each other many times in relation to Tandy's line of personal computers, like the TRS-80 and the pioneering Model 100 portable.

Shirley was "dour, pipe-smoking...preferring cold logic to hot emotion," according to Hard Drive, which made him a good complement to Gates and Ballmer. He brought a lot more in the diplomacy department, too.

"He had kid gloves," recalled one early developer. "He was more able to make you feel good about a bad decision and redirect your efforts."

Shirley's early achievements included cutting Microsoft's manufacturing costs 20%, reforming the retail sales force and putting Ballmer partly in charge as vice-president of marketing, modernizing the accounting -- all operational tasks that had eluded Gates. This gave Gates the peace of mind and time to focus on product development and strategy.

Serving for 7 years, Shirley did well financially, worth $112 million in the early 1990s, tops among Microsoft executives behind only Gates, Ballmer and Paul Allen. He retired in 1990, but remained on the board of directors until this month.

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Mike Hallman, president and COO (1990-92)

Filling Shirley's shoes wasn't going to be easy for anyone. But Hallman, who was hired on April 2^nd, 1990, came with impressive credentials: VP for sales operations was his last title at IBM over a 20-year career. He then became president of Boeing Computer Services - its CIO, in other words, overseeing 14,000 IT workers, according to the Seattle Post-Intelligencer.

Microsoft was already a $1 billion a year company with 5,600 employees, but still growing. Hallman's job was to "let Microsoft get big, without getting big" and bureaucratic, he told the P-I newspaper.

While Microsoft kept growing, Hallman, reportedly a soft-spoken team player, never quite fit in. "I never got the impression he was in the inner loop with Gates," one analyst told the P-I when Hallman was let go in early 1992.

Hallman did fine after Microsoft. He started his own management consulting firm in nearby Kirkland. And he still serves on the board of several tech firms, including Intuit Inc. and In-Focus Corp.

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Frank Gaudette, CFO and co-president (1992-3)

After Hallman was let go, Microsoft created a three-person Office of the President: worldwide product group, headed by Mike Maples; worldwide sales and support, run by Ballmer, and worldwide operations, run by Gaudette, who was already CFO.

Son of a New York City mailman, Gaudette was a street-smart, wise-cracking financial expert who had led Microsoft's successful 1986 IPO. He had come from the mainstream corporate world -- Frito-Lay, Rockwell International and others -- and was also older and less nerdy than the bulk of Microsoft's employees. By all accounts, he was a great operations and financial chief. He died of cancer at the age of 57, just a year after being appointed co-president.

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Michael J. Maples, Sr. co-president (1992-95)

An Oklahoma native, Maples came from IBM. He worked at Microsoft for 7 years total, starting off as general manager of application software, and ending his tenure as part of the Office of the President. After leaving Microsoft, Maples has served on the board of numerous companies, including high-tech ones such as NetIQ Corp., PeopleSoft Inc., Lexmark International, and food ones, such as fast-food chain, Sonic Drive-In.

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Bob Herbold, executive vice president and COO (1994-2001)

The early 1990s appear, in retrospect, to be period of heavy management transition for Microsoft. Even before the Office of the President was dissolved, Microsoft had hired a 26-year Proctor & Gamble veteran Herbold to be executive VP and COO. Herbold had a Ph.D. in computer science from Case Western University. But at P&G, he was not only its CIO, but also a VP for market research and, later, marketing. According to Herbold's biography, his "disciplined approach to streamlining operations drove a seven-fold increase in profits while the company's [Microsoft's] revenues increased four-fold."

But during Herbold's tenure, Ballmer was also, finally, anointed Gates's heir, as president in 1998 and then CEO in 2000. Herbold retired in 2001, replaced by Ballmer's seeming pick as potential successor, Rick Belluzo. But Belluzo stayed for only one more year, before leaving for hard drive maker, Quantum Corp. Herbold, meanwhile, dabbled in politics, almost running for governor of Washington as a Republican in 2003.

Ballmer, meanwhile, has said he wants to stay on at Microsoft for another decade, until 2018. He appears to have no clear heir apparent.

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Did you work for any of these men? How were they as bosses and executives? Would any of them made a good CEO for Microsoft?