Microsoft CEO Ballmer's Do-Over Wish: Search

Posted by: Michael Arndt on June 18, 2009

Steve Ballmer isn’t Edith Piaf after all: He does have regrets. The chief executive of Microsoftsays he wishes his company had been much swifter in developing a search engine. “If I could have one do-over,” he says, “I would say start sooner on search.”

Ballmer was in Chicago on June 18 for back-to-back speeches before two business groups. At the second event, before the Executives Club of Chicago, he talked about the recession and innovation. (More on that in a moment.) He gave a plug for Bing, Microsoft’s new search engine, which my colleague, Peter Burrows, blogged about recently. And he took a few questions from the audience that numbered 1,500-plus. That’s when he turned rueful.

Ballmer said he and his predecessor at Microsoft, Bill Gates, used to keep a list of 10 biggest mistakes they had made. They’d look at it and rib each other by asking: “Can you believe that we spent $2 million building blah-blah-blah?”

But he said what bothers him most is something he didn't do: come up with a popular search engine before Google. "Sometimes the error you make is what you don't do or what you don't start soon enough," he said. "Most of our mistakes came not because we didn't see the technology change that was coming. Ironically, we didn't see the business change that was coming."

He blames Microsoft's corporate heft, in part. Microsoft had spent richly on research and development. Its R&D budget comes to $9 billion this year alone. And the company had plenty of people working on producing a search engine. But Microsoft had lost its startup brashness. New companies have an edge: They have to succeed big or go bankrupt. That forces them to take risks fast, before it's too late.

It's actually more difficult for the market leader to experiment," he said. "We had all these people doing search research. But we had no business model in mind. So we were slow to move and slower to invest in it. We should have started earlier."

Of course, late is better than never. Microsoft launched its newest search engine, Bing, a few weeks ago. Today, he said, it has 8% of the market. (Industry tracker comScore puts Microsoft's latest share at 12%.) Google has 65%, by comparison. But success isn't always overnight. He noted that Microsoft introduced Windows in 1983 and it didn't really become a hit until 1992.

"In our industry, the No. 1 mistake people make is they quit too early. Most technology businesses took a while to build up. The key is to show a little patience."

Ballmer used his spotlight to try to win more users. Try it, he urged the crowd. "If you really want to do me a favor, click on one of the ads. Otherwise, we don't make any money." The audience roared.

A few other take-aways:

* "I don't think we're in a recession. I think we're resetting the economy. This is the new normal. Yesterday was the exception."

* "It's clear that debt will not be the economic growth driver of the next 10 years. For now, debt is not the key. Productivity and innovation are."

* "The next 10 years are going to be as good or better than the last 10 years, from an innovation perspective. You'll see amazing things."

* "We've got our mojo going now. We're rolling. We're the little engine that could."