Making Bill Gates "Content Magazine", by Steven Brill, September '98 Pages 106 & 108

BILL IS THE BRAND

When the IBM PC was launched in August 1981, with Microsoft's MS-DOS installed on most machines, personal computing became an industry, rather than a pastime for hobbyists. Winning favor and attention from the trade press and the national media soon became a vital component of the young firm's strategy. In September 1982, Gates made his first PR hire, recruiting Pam Edstrom from a technology company called Tektronix. (Two years later Edstrom teamed with PR consultant Melissa Waggener to form what became Waggener Edstrom.)

To oversee PR and develop a marketing strategy that would end up being built around PR, Gates hired C. Rowland Hanson, a marketing executive from Neutrogena Corp., as his first vice-president of corporate communications in 1983.

Hanson then a 31-year-old computer novice with a Wharton MBA, flew to see Gates one Sunday. He says he didn't understand what a fledgling software outfit would want with a branding- and cosmetics-products specialist. Gates, who told Hanson he had been reading up on cosmetics Charles Revson, asked Hanson what the difference was between a $1-an-ounce moisturizer and a $100-an-ounce moisturizer, Hanson recalls "I said, 'Nothing. It all has to do with the brand halo that's been created.' He said, 'That's exactly what the industry doesn't understand.'" A few months later, Hanson was on board.

Hanson says he ordered extensive consumer research and focus groups, and concluded that the advertising was ineffective for software. Software buyers looked to computer magazines' editorial pages for their buying decisions, and Hanson, who oversaw advertising, PR, consumer marketing, and packaging, knew that was the place to start. He began building Microsoft as a brand, and the brand needed a single, widely recognized spokesman: Bill Gates. The personal computer's appeal for the general public had already been established (Time had named the PC its "Machine of the Year" at the end of 1982), and the media found it convenient to use Apple's Steve Jobs and Gates to personalize the confusing new era. "What we created was a credible authority figure," says Hanson. "He was very good at communicating, consistently, the message he wanted delivered. Therefore, [the press] started to look to him as a source for information."

Gates assumed the posture of industry leader, though his company remained smaller than many rivals, and the media accepted him in that role. Mathews maintains that "There was never any decision that Bill would become the single spokesman for Microsoft" and that his right hand man, Ballmer, did more press work in the early days. Still she says, "It's quite natural that [Gates] has a leading role." Meanwhile, none of Microsoft's rivals were conducting research or targeting the press in such a strategic fashion. "We ended up having so much momentum in the technical press that the popular consumer press started picking up on it," Hanson says. People magazine named Gates one of the 25 most intriguing people of 1983, Gates appeared on NBC's Today show in March 1984, and Time put Gates on its cover in April 1984. By then, says Hanson, "We started to see people going into stores and asking for Microsoft products by brand. We saw a clear shift in preference toward Microsoft in all categories. That was a direct result of all the positive editorial we were getting. It was a huge advantage." Big software competitors like Lotus and Ashton-Tate tried to fight back by spending more on consumer advertising, Hanson recalls-- an expensive strategy that flopped.

Yet because reporters at that time, like Carroll, were unaware of deep strains in the relationship between Microsoft and IBM, the resulting coverage showed Microsoft occupying a strong position. "The software company that stands to benefit most is Microsoft," wrote Carroll's Journal colleagues Brenton Schlender (now at Fortune) and David Wessel of the PS/2 launch. The article also cited Gates claiming intellectual ownership of IBM's move. This "major milestone," the Journal quoted Gates as saying, "is something we've been crusading for a long time." Years later, Schlender acknowledges he and his peers had missed much of what was really going on. "Microsoft soft-pedaled the problem, there's no question about that," Schlender says. "At that time, especially when PS/2 came out, the fact was that no one [in the press] was really aware of the tensions, and that's reflected in that no one tried to figure that out."

As he gained stature, Gates would exploit those tensions: In the summer of 1991, during one of his regular conversations with the Journal's Carroll, the idea of a book about IBM was discussed. Gates thought it would be a good thing for Carroll to write about how badly IBM was screwing up, recalls Carroll. To assist with the project, Gates offered him access to Microsoft's IBM files and promised his top executives would help Carroll if he wrote the book. Carroll's Big Blues: The Unmaking of IBM was published in 1993.

Earlier, another book-one never written-was dangled by Microsoft to journalists who covered it. In 1990, as the company released its crucial 3.0 version of Windows, Min Yee, an executive with Microsoft's publishing division, asked Fortune's Schlender if he would be interested in working with Gates on an authorized history. "Leave me alone, I'm working on a story. I'll deal with this later," Schlender recalls telling Yee. After his June 18 cover story, "How Bill Gates Keeps the Magic Going," appeared, Schlender did send a 10- or 11-page book proposal to Microsoft. He had a lot of company. The Journal's Carroll, Journal editor and former tech reporter Michael Miller, Business Week's Richard Brandt, and other reporters all had proposals into Gates as well. The contestants waited in limbo for months as Gates weighed their pitches. "It was an incredibly long process," says Brandt. "I expected an answer in a couple weeks, and figured putting Microsoft coverage on hold was no big deal."

"All the writers had expressed a desire to write a book on Microsoft, so that is why they were asked" to submit proposals by Microsoft Press, says Mathews. In the end, Gates didn't go forward with any of the book proposals. Steven Levy, then a columnist for MacWorld, had gotten an overture from Random House to do a book on Microsoft in 1991. Windows was going gangbusters by then, however, and Levy says that Gates told him he didn't want to be distracted from running his company.

THE "INFLUENCER MODEL"

Since the mid-80s and the days of Rowland Hanson, Microsoft has pursued an elaborate "influencer model" in its PR and marketing strategy, according to former Microsoft vice president Lazarus, who worked there from 1985 to 1996. "We really believed in this influencer model," Lazarus explains. The strategy envisioned "a series of concentric circles where the consumer approach is very late in the process. Most people look to the influencers for what product to buy. A lot of efforts were focused on the trade press, [which was] worked from every stage," given comprehensive product previews far in advance and invited to extensive product-oriented events at Microsoft. Then there was the "secondary audience of business press covering the industry," Lazarus continues. "As we reached deeper and deeper into corporate America, the role of a Business Week or Fortune grew more important."

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