Our industry is cyclic but the latest wave of efficiency harkens back to the time when companies told us not to be penny wise v. pound foolish. It didn't seem realistic to me then but was competitive.
On an article this week talking about tech "going hardcore" (always a big fan of that word given Microsoft's 1980s recruiting slogan—hardcore software) which is mostly about RTO, meritocracy, and some cutbacks on perks, with a little bit of layoffs mixed in. See Tech Employees Getting the Message: Playtime’s Over.
Business Insider, March 19, 2025
Our industry goes in cycles. When I started at Microsoft in 1989 the company had seen a flat stock price for two years after the IPO pop (see October crash). Even though Windows 3.0 was about to breakthrough there was a bit of a cloud. Success and then Windows 95 fixed that. Then a decade later came dot com bubble and the malaise decade (2001+).
During that malaise decade we saw the rise of Yahoo, Google, and then Facebook/Meta. One of the most competitive aspects between all of us became something I still can't believe—office perks.
Google introduced in its 2004 S-1 that the cost of perks pales in comparison to the output of engineers. Everything from 20% time to massages to dry cleaning and of course three gourmet meals a day. From the S-1:
Our employees, who have named themselves Googlers, are everything. Google is organized around the ability to attract and leverage the talent of exceptional technologists and business people. We have been lucky to recruit many creative, principled and hard working stars. We hope to recruit many more in the future. We will reward and treat them well.
We provide many unusual benefits for our employees, including meals free of charge, doctors and washing machines. We are careful to consider the long term advantages to the company of these benefits. Expect us to add benefits rather than pare them down over time. We believe it is easy to be penny wise and pound foolish with respect to benefits that can save employees considerable time and improve their health and productivity.
Meanwhile Microsoft had private offices AND free soda AND Lipton soup. Also at Microsoft we had always said "people are our most important asset". We agreed with Google but had different ways of showing that I guess. It is worth noting Amazon also supercharged during this time and had historically (and today remains) extremely frugal, as retailers would be. The desks were still cheap surplus doors back then.
By then I was an executive and also leading much of Microsoft's technical college hiring process because Office hired hundreds from college each year. I started a blog TechTalk (most of the posts still remain but not all for some reason) to take on the competition and make the case for Microsoft.
One of the first posts I wrote was about perks and the whole idea of "work life balance". See Microsoft people were growing up and starting to raise the issue of balance while at the same time our chief competitors for college hiring were touting all these new perks to keep people at the office as much as possible.
My view then (and now) was that the hard work is a literal requirement for new ventures or "impossibly difficult" projects. I grew up in the shadows of NASA and knew plenty of people who gave it all for those big projects. And to _me_, bringing software to the first billion people on earth was that same level of calling.
BUT, doing so did not require the elaborate perks. Those did not create a culture and importantly might create an environment or culture of entitlement. Bill and Steve were always worried about those kinds of tradeoffs or costs, and really fought to keep Microsoft's perks (v benefits) at a sustainable level.
Competing with Google then was difficult because of the meals just to start with. The PowerPoint team had always been in SV (on Sand Hill Road if you can believe that) and the first challenge I faced leading Office was just how to avoid everyone going down the street to work for free meals as our PowerPoint office didn't even have a kitchen to prepare meals. We ended up having one meal a day brought in but that hardly compared to gourmet chefs.
Then in Redmond HQ, the HR and Benefits teams finally succumbed and put in dry cleaning pickup locations (though I was never sure who paid for the actual cleaning since I owned nothing requiring dry cleaning). I should mention Microsoft also provided towels in the locker room for employee use. Years later in a moment of frugalness the towels would be discontinued and there was a huge uproar. The towels eventually returned. I digress.
We had so many leadership team meetings and discussions about perks. Microsoft had 50-60K employees at the time. Every benefit multiplied by that headcount was an enormous cost. Plus we had massive presence across Europe where regulations required benefits many in the US didn't get such as mobile phones, transit, and extended vacation. But we always talked of the benefits of HQ itself.
While many wanted to increase benefits and perks we mostly held our ground because a) we believed in the work we were doing and the benefits of being part of that work and b) we just could not believe that as the new SV companies grew these benefits were economically sustainable. And c) most of all we agreed with the idea being espoused in SV about the level of hard work required to do great things.
Right then a BusinessWeek article appeared, Revenge Of The Nerds -- Again. It highlighted these perks and the battle between Google who was growing employees at the expense of Yahoo and Microsoft who was losing to both. They called it the "Willy Wonka Effect". It included gems like "Free perks range from gourmet meals at the company cafeteria to bathrooms equipped with digital toilets, where the seat temperature and bidet pressure can be controlled with a remote" as well as this killer:
Indeed, Google -- and, to a lesser degree, Yahoo -- has become what Microsoft used to be: a young, vibrant company working on the bleeding edge of the day's vexing technical issues. Before the Internet became the phenomenon it is now, Microsoft was a magnet for top talent interested in solving the toughest tech problem: making personal computing easy. Today, though, the gravitational force at the center of techdom is no longer the PC -- it's the Net. And while MSN holds its own with Google and Yahoo in terms of worldwide use, its engineers can't develop products that would undermine Microsoft's monopoly businesses, Windows and Office. Some researchers say privately that restricts creativity.
“Revenge of the Nerds—Again” from BusinessWeek July 29, 2005
That's why I wrote this post:
7/29/2005 On juggling, unicycles, and jousting
BusinessWeek has an article this week about the hiring binge at some companies in the bay area are doing (ok, Yahoo! and Google). The article raises a number of the standard “new high-tech hiring” clichés that are worth talking about because they seem to repeat themselves.
Let’s go back to 1989 – The Seattle Times Sunday Magazine ran an article the “Velvet Sweatshop” (some proud Microsoft people all got sweatshirts with that silkscreen – this was before zazzle when getting silk screening was a long lead analog process). The article was sent to me by my recruiter as I was about to make the trip from graduate school to start at Microsoft. The article was magic for me. It told the story of how employees work hard, work on great new technologies, and have a great time doing so. The article was my first exposure to some of the classics in “high tech employee” photos including of course people juggling and people riding unicycles, and of course the ever popular people riding unicycles re-enacting medieval jousting. But suffice it to say the article resonated with me (and scared my parents terribly since everyone had really long hair and wore flannel shirts even in the summer). Except for the 1983 Time magazine Machine of the Year article and the Microsoft Press Book, Programmers At Work, for me this article represented the best coverage of the programming culture I had seen to date (Steven Levy’s book Hackers later captured the spirit brilliantly).
Seattle Times, April 23, 1989 “Inside the Velvet Sweatshop”
Yet I have to admit, I’ve never actually seen programmers juggle, ride unicycles, or even joust. I have seen my share of golf in the hallways, filling offices with packing peanuts, and of course laser tag and water guns (all of these this summer at Microsoft!). That is to say, you probably can’t take literally what you read and at the same time the environment of fresh from college programmers has been pretty much the same, perhaps expressed differently, for at least the past 16 years that I know. It just seems that every new company generates the same “new” story about college grads joining computer companies.
Of course there is an element of one-upmanship that comes from these articles as companies try to portray their interpretation of the new-hire culture as unique. That's the marketing -- these articles are not spontaneous but come from PR efforts.
The one common thread among companies that hire lots of people new from college is that it is the very presence of a bunch of people of the same age, motivation, skills, and general attitude that yield the culture and not the company itself. The company provides the higher level goals (and the money to support the stuff) and chooses what aspects to reinforce. It was incredibly cool when I showed up at Microsoft—I was 23 years old and ready to go to work. I had no friends in Seattle. My family was 3000 miles away. I lived in an apartment within walking distance from Microsoft that had a pool where beautiful people hung out. I had disposable income for the first time in my life. I was ready to be one of those cool people on Melrose Place, except I quickly found out that the work at Microsoft was way cooler than sitting by the pool. I never got around to buying much furniture (Seattle now has an IKEA) and certainly didn’t get that Webber BBQ I wanted. But man, I wrote a bunch of code and learned more in 6 months than I learned in two years of graduate school—hardware breakpoints, real mode v. protect mode, real-world code generation, USER/KERNEL/GDI, Microsoft’s cool internal compiler and tools. It was amazing. (not to limit things to the past, this week was filled with just as many learning experiences for me personally).
When I talk with our new hires this summer what they describe is *exactly* what I experienced, except they all have broadband at home so they can work even if they get woken up in the middle of the night by that party upstairs. I had to dial in and read my email over 1200b CrossTalk.
I became friends with the people I work with. We would go out to dinner then return to work. We would see movies. Our work and social lives were blurred completely. It made for great fun and a great environment. It was our own Melrose Place, but with C++ code instead of an advertising agency. It had COMDEX instead of Venice Beach.
The magic is not about joining the next big thing, but the magic is in being part of something big *and* doing that with a peer group that is just as motivated and just as smart you (think) you are. What I found out about Microsoft is that they had managed to hire a hundred college grads who were better programmers and knew more about software than me and were anxious to learn even more. And we were all working within the structure that allowed us to create the next big things. And we were all friends.
Microsoft is more about that today than we ever have been. Going through the “internet transition” that our company is famous for reinforced just how much the “under 30” crowd has to offer product development and at the same time just how far a little bit of “adult supervision” can go. To be clear that was about reinforcing that idea, not creating it. Steve Ballmer hired college graduates starting in 1980 and as late as 1990 I remember that he was copied on every interview schedule from college. Hiring from college is a core of Microsoft. Training people to be professionals and to focus their energy, creativity, and ideas on really delivering software to the world is also our core. Maybe in 1980 we were all trying to impress each other with software. Now we’re trying to impress the whole world!
One lesson I learned at Microsoft that I didn’t expect was how much of a meritocracy the company is. I mentioned previously that at a startup you are more likely to be the college “kid” doing grunt work than you might think, whereas at Microsoft the college kid is going to be the one presenting their work to Bill Gates (as we did a few weeks ago when we toured Bill around our hallways for an afternoon to show in Office “12”). We do not have a caste system based on seniority or on what type of or which degree you received. Once a company starts telling you about the degrees that people have or emphasizing specific schools you should know that such feelings run deep and don’t go away once you manage to get a job. In fact, companies that do that often look to folks outside those pedigrees to do the grunt work. When I was in college it was Bell Labs famous for hiring Cornell grads, and then you get there and find out that all the talk about PhDs was simply because it was the people with PhDs that ran the place. I think when you look at the leaders of the company you are likely to see a company created in their model—if the founders value a PhD then you can bet that they will value that in employees. Microsoft’s founders are probably most famous for the degrees they didn’t earn and therein rests the focus on the merits and the accomplishments over a career. I thought I was all fancy with my degrees, but really what mattered was can I get done what I committed to and how good was the work I did.
So there is a lot of talk about joining these “new” companies and the "new" way they hire people and let them work. It is one of those stories that repeats itself in journalism. What you experience at Microsoft is as much about what you bring to Microsoft—this is a business, not an amusement park. The great people that are drawn to Microsoft every summer create their own thrill rides while we together build software that changes the world. So grab your unicycle!
--Steven
Here we are in 2025, with all the companies having gone through layoffs, reduced benefits, and the vibe shift as some might say about focus on execution, delivering, and prioritization of important work.
I think history will record that post-bubble era of perks and "Willy Wonka" as the aberration and what we are seeing today as the best practice for innovation. Nothing comes for free but it is also the case that businesses need to operate as businesses even when the times are good.
No matter whether the change is a return to what was normal or a resetting to a previous normal never experienced at a company, change is difficult for sure.
