End of a Silicon Valley Era

Scott McNealy, visionary founder CEO of Sun Microsystems has quit his job after 22 years.

A silicon valley era has ended.

Scott was one of my closely watched heroes, along with Steve Jobs, Andy Grove and Larry Ellison. Very few CEOs of major corporations have served as CEO for over two decades. I first met Scott during my 1997 stint with Tata Technologies Pte. Ltd., Singapore, and was impressed by his charisma.

Scott McNealy received his MBA from the Stanford Grad School of Business.

At Stanford aged 28, he met Vinod Khosla, Bill Joy and Andy Bechtolsheim and joined them in starting up Sun Microsystems in 1982. "SUN" originally stood for Stanford University Network.

During the early and mid-1980s, companies like Sun Microsystems, Silicon Graphics, 3COM, and Oracle Corp. defined a new wave of successful Si Valley startups.

In 1984, Scott took over as CEO from Vinod Khosla.

Sun Microsystems helped the microprocessor chip to oust the mainframe out of the corporate computing world. It helped spawn the new tech world as we know it. One of Silicon Valley's most innovative companies, Sun was an early promoter of UNIX. It developed the Java programming language widely used on the Internet today.

Diametrically opposite the vanilla executive who manages based on business-process ideas, Scott McNealy scratch-built a successful company with passion and a belief system.

In the dot-com years, every Internet startup relied on an array of Sun servers.
Sun used to tout itself as the "dot" in dot com. McNealy coined Sun's slogan, "The network is the computer". He pushed to make all technologies interoperate. He even named his dog "Network".

But Scott McNealy failed to change his company's strategy swiftly enough to absorb the new-tech world's profound changes.

And when the dot-com bubble burst, Sun failed to recover.
Its stock price went into free fall from more than $60 per share in Sept 2000 to single digit in Feb 2002, never to recover. The stock closed Mon. 24th April 2006 at $4.98 per share.

Computer makers like Hewlett-Packard and Dell Computer also ate into Sun's market share.

In recent years, McNealy tried touting the open source software movement.
Although open source is becoming increasingly popular in the business world, few companies have made big money selling services for free software.

He put in 80-hour weeks.

The corporate culture, Scott McNealy created encouraged humor. It also treated business as war.

From the beginning of his tenure, Scott McNealy took the giants of the industry, such as IBM and HP, head-on. For many years, he beat them. He outlasted many, such as Digital, a pioneer that was absorbed by Compaq and in turn absorbed by HP.
But ultimately, he didn't change quickly enough to keep the job he loved.

Companies needed cheaper systems, with fewer bells and whistles, but Sun continued to charge high prices and offer high-end systems. When he didn't change strategy, Dell and others selling low-cost servers gobbled up the market.

Scott McNealy was the epitome of old-school Silicon Valley. Entrepreneurial, brash and tough talking and taking huge risks. Sun would not have been the innovator it was without Scott McNealy at the helm.

A diehard opponent of Bill Gates he strongly spoke out vehemently against Microsoft's monopolistic initiatives. Nevertheless, Microsoft grew ever more dominant.
Scott McNealy spent too much focus on Sun's competition with Microsoft for the last decade, instead of focusing on Sun's customers and natural competitors, like HP, IBM and Dell. He missed a key industry turning point: the threat of the open-source Linux, which gained tremendous market share in many erstwhile Sun-dominated markets.

A tenacious CEO, he stuck with failing strategies for too long. Someone less charismatic and populistic might have changed course sooner.

Scott McNealy leaves Silicon Valley legacies of fighting tenaciously for his business and of fostering tremendous innovation. Stepping down from the driving position of CEO, Scott will continue as Chairman of Sun Microsystems. He will now focus more on talking to large Sun customers and less on managing the company day to day. Scott McNealy is very good at standing tall in the marketplace, telling the Sun story.

May his tribe soldier on!