Riding The Bear [on startup growth strategies]

As documented by only a few publications, Microsoft’s rapid growth and domination of the operating system industry involved a strategy that consisted of three steps.

  • Writing Microsoft BASIC with the sole intent of partnering with the leading makers of personal computer kits.
  • Developing Softcard in order to wed Microsoft’s BASIC with the leading operating system at the time, CP/M.
  • Luck. Grabbing the attention of IBM through the development of Softcard and forging a partnership with IBM when CP/M’s Gary Kildall faltered in developing an IBM PC version of CP/M on schedule for IBM’s aggressive growth target as the PC market was heating up. The tipping point.

A Ph.D and accomplished academic, Gary Kildall developed the first operating system as we know it today. He was an older family man with realistic objectives, timelines and a proper understanding of how to write elegant code that worked well on the new ‘computer on a chip’ processors that Intel started manufacturing in the ’70s. Kildall called his operating system CP/M, standing for ‘control program for microprocessors’. CP/M grabbed the attention of a lot of hobbyists and small personal computer makers, as it was the first platform, or framework if you will, on which other engineers could write software applications to solve problems easily on PCs.

IBM, the largest manufacturer of business machines felt like they were missing out on the PC revolution and set an aggressive goal to create their first PC by the end of 1980. Digital Research – CP/M’s Kildall at the time was approached to write a version of his operating system that would work with the PC IBM was planning to build. Kildall could not commit to IBM’s aggressive schedule, neither was he able to give them a definite date when he would be able to complete their version of the operating system. This made IBM start looking out for other options, and they spoke to the young Gates at the time, who had developed Microsoft’s BASIC and Softcard to integrate BASIC with CP/M. In this case, Gates and Allen also rode the bear by integrating with the leading operating system at the time, CP/M through Softcard.

Gates and Allen approached a little computer maker (Seattle Computer Products) that had written a new operating system by following CP/M’s manual feature by feature, and cut a ┬ádeal with them to license the imitation software they wrote, QDOS, renaming it MS-DOS. The rest is history.

Gates and Allen saw an opportunity, and they jumped on it. IBM was a tough company to work with, but a large one. By riding the tumultuous bear called IBM at the time, bending to their needs, working aggressively to meet their deadlines and practically doing everything Kildall was too uncomfortable to do, they created a partnership that launched them to the top of the operating system industry within a period of seven years. Microsoft has been known to continue riding the bear within the tech industry, forging alliances and making acquisitions with forces on an upswing, and riding.

Riding the bear is a tough growth strategy, and could go south *if* the bear finds a bigger or better positioned partner, but if you can ride the bear, stay on top of it and keep it under control through a crazy ride, you could get all the clout and resources you need to grow and position your products or services better for the mass market.

Have an eye for mutually beneficial alliances, don’t fall off the bear, but keep your eyes on the price.

Goke.

Image Credit – Everyday No Days Off

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