McNealy's cold feet and other tales of Sun

Co-founders recount Sun's early history, including CEO's reluctance to join and attempted mergers with Apple.

A correction was made to this story. Read below for details.
MOUNTAIN VIEW, Calif.--Sun Microsystems CEO Scott McNealy had to be wined and dined at a Silicon Valley McDonald's before he gave up his reluctance to help launch the workstation maker in 1982, according to one of many tales the company co-founders recounted on Wednesday.

McNealy joined Sun's other co-founders, Vinod Khosla, Andy Bechtolsheim and Bill Joy, at a panel discussion at the Computer History Museum here to reminisce about the server specialist's past and prognosticate about the future.

Khosla said the McDonald's meal took place just after he and McNealy met with venture capitalists and got Sun's first funding commitment. "We went out and sat in the parking lot. Scott said to me, 'I don't know if I really want to do it.' So I took him to an upscale dinner at McDonald's on Page Mill Road" in Palo Alto, Calif., he said, where he put the screws on McNealy to resign from his $40,000-a-year job at Onyx Systems.

Sun's cofounders

"Vinod asked me, 'When are you quitting?'" McNealy recounted. When McNealy balked, Khosla countered, saying: "'You can't back out on me now. You're a founder.' "I said, 'Oh, OK.' It was that quick," McNealy said.

Khosla left Sun in 1986 to become a general partner at venture capitalist firm Kleiner Perkins Caufield & Byers, and Joy followed suit in 2005. Bechtolsheim left Sun in 1995 to found gigabit Ethernet start-up Granite Systems, later acquired by Cisco Systems. But he rejoined the company in 2004, when Sun bought his next start-up, Kealia, to provide the foundation of its new "Galaxy" line of x86 servers.

The Apple connection
It's no secret that Sun once tried to acquire Apple Computer, but Joy noted that it wasn't the only near-union between the Silicon Valley companies. "We almost merged with Apple two other times," he said.

There were other alliances with Apple that fell through, Joy added: an attempt with Microsoft and the Mac maker to create a common file protocol; an attempt with Apple to create a merged user interface; and an attempt to persuade Apple, when it was moving away from Motorola's 680x0 processor family, to switch to Sun's Sparc processors rather than the PowerPC chips it ultimately chose (and began abandoning this week with Intel-based Macs).

"We got very close to having Apple use Sparc. That almost happened," Joy said.

In total, "there were six very, very close encounters" with Apple, he noted. That none of them worked out was a "personal disappointment" said Joy, who spent years as Sun's chief technology officer.

"The tip toward the public space being much less private is one that's hard to fight."
--Sun co-founder Bill Joy

McNealy added that he went to Steve Jobs' house to try to hammer out the user interface agreement. The Apple co-founder and CEO was "sitting under a tree, reading 'How to Make a Nuclear Bomb,'" with bare feet and wearing jeans with holes torn in the knees, McNealy said. The interface work, though, "never went anywhere," he said.

Khosla also lavished praise on Jobs, who he said was a role model, along with Oracle CEO Larry Ellison and Intel's former CEO Andy Grove. Jobs is the kind of person "who passionately, religiously believes his own ideas. No matter what anybody else says, he's going to push them through," and that determination and self-confidence is in large part why he succeeds in doing so, Khosla said.

McNealy has praised Jobs on occasion, but he acknowledged on Wednesday that he doesn't have time to listen to his own iPod and forecasted doom for the popular digital music player. The right place to store music is on the network, where it can be accessed by many devices, he said, much like the right place to store voice mail is on a central server.

"Your iPod is like your home answering machine. It's a temporary thing," McNealy said. "It's going to be hard to sell a lot of iPods five years from now, when every cell phone is going to be able to automatically access your library wherever you are."

 

Correction: This story misreported the amount of money Sun takes in every year. The company's annual revenue is approximately $11 billion.

Of course, Sun is the company that wants to sell the servers that could store such material, the software that could govern access rights and the Java software to power cell phones. Its various product lines are reflected in the company's tagline: "The network is the computer."

The tagline was invented by Sun's chief researcher, John Gage, whose hiring at Sun was a condition that Joy placed on his own employment. Gage invented the phrase while headed to Japan for a trip, he said, but the second half of the expression never caught on--"The machine is the manual," meaning that using a computer should be a self-explanatory experience.

"We are the last server company that's survived."
--Sun CEO Scott McNealy

Another close call with Apple came in 1991, when for an April Fool's Day joke, vice presidents at Apple and Sun went to the other company's CEO staff meeting, Gage said. The executives wore masks made of 8-by-10-inch glossy photos of their counterparts from the other company.

Apple CEO John Sculley was not amused when Bechtolsheim arrived wearing a mask. "Sculley looked stone-faced. Maybe he thought some terrorists were trying to take over," he said.

But the founders didn't restrict themselves to the past. McNealy reiterated his infamous quotation from the 1990s--"You have no privacy. Get over it"--and forecast that today's trend of cell phone cameras will transform into tomorrow's trend of using the devices to record everything that happens.

"They're going to put this (mobile-phone recording device) right here (in a shirt pocket) and walk around all day and record it," McNealy said.

Joy had a similar view. "Technology and privacy are on a collision course," he said, because ever-cheaper processor technology means it's constantly getting easier to create sensors and collect data. "The tip toward the public space being much less private is one that's hard to fight. It has Moore's Law on its side."

Early days at Sun
As it turned out, McNealy wasn't the only founder who didn't leap at the chance to join Sun.

Khosla had to convince Bechtolsheim that he was more interested in the computer engineer than the software he was licensing from him. However, Bechtolsheim was reluctant because his licensing business brought in $500,000 a year and Bechtolsheim had a year to go before finishing his doctorate, Khosla and Bechtolsheim said.

Convincing Joy wasn't easy either. McNealy said he and others piled into a rattletrap of a car to visit the Unix wizard across the San Francisco Bay in Berkeley, Calif., but they got the cold shoulder. Later, he asked Joy, "Why didn't you talk to us?" and was told, "I was waiting for top management to show up," McNealy said.

Fellow computing expert Bechtolsheim and Joy hit it off, though. Joy had a collection of six VAX 750 computers from Digital Equipment Corp. "It looked like a computer center, but they were actually my machines," Joy said. "I took him in the machine room. I walked up to a minicomputer, turned it off, pulled one of the boards out and said, 'Here, look at this. It's a very early system from DEC.' That was our way of bonding."

DEC was one of Sun's prime targets, and the company's success came at DEC's expense. "The VAX 750 had an 80MB disk drive, a couple megabytes of memory" and was able to process about a million instructions per second, Joy said. "Andy's design from standard components, once we had the (Motorola) 68010, was the same thing but at one-tenth the price. That was really a revolution in capability." Joy, who had earned a reputation as the power behind Berkeley Software Distribution, which modernized AT&T's Unix, was a major draw for early customers. McNealy handled purchasing calls in the company's early years using a phone with four or five lines. One early conversation went like this:

Customer: "Is Bill (Joy) onboard?"
McNealy: "Yeah."
Customer: "I want two of whatever you got. What are you selling?"

Among McNealy's other tasks was writing the company's first accounting software using the --though he initially used Onyx systems and not Sun's own. He also oversaw "burn-in" tests to weed out flawed computers, turning off the office air conditioning to find any machines that couldn't endure the overheating.

Gage was the company's original salesman, McNealy said, and kept track of prospects on pink slips of paper. When calling back customers, "He'd organize pink slips by time zone. He'd start at the left side of his table and move right."

Joy marveled at Gage's system. "Every once in awhile, John used to take all the slips and throw them in the trash. He said, 'If it's important, they'll call back.'"

The early years left an impression on McNealy, who still can recall how many millions of dollars in revenue the company garnered in each early year. "It was 8.5, 39, 110, 210, 450, then a billion. Then I forget after that," he said.

Sun has annual revenue of roughly $11 billion now but has struggled financially in recent years. McNealy is confident that Sun will survive, though, because innovation matters and it's not easy for competitors to get started.

"Barriers to entry in our business are big, because it takes a lot of capital to do what we do...(Hewlett-Packard) kind of checked out, in that they don't do microprocessors, operating systems, the software stack. At some point, you no longer are a car company, you are a car dealer," he said. "The major research and development is being done by (Advanced Micro Devices) and Intel, Microsoft, Sun and IBM," he said.

And McNealy is convinced Sun has staying power. "There haven't been any other companies that started after Sun," he said. "We are the last server company that's survived."

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