Scott McNealy Can Still Dish

Sun’s former chief talks Oracle, Apple, Microsoft and how in his next company nepotism will be ‘not a bug but a feature.’

Scott McNealy

The tech world has been a less interesting place since former Sun Chairman and CEO Scott McNealy stepped away from the company he co-founded. You will remember that Oracle (ORCL) boss Larry Ellison swooped in about a year ago and bought Sun from beneath IBM in a deal worth about $5.6 billion (after Sun cash and debt are subtracted).

McNealy ended his stint as Sun chairman this January, but that hasn’t meant the always-combative businessman has abandoned technology, or can keep his famously candid mouth shut. He had some zingers for a crowd of database heads, gathered recently for the roll out of new products by Greenplum, a startup McNealy advises.

On Oracle buying Sun: “Larry is a smart guy, he actually signed the merger agreement when the Dow hit bottom. It was a brilliant move. When someone comes into a public company and basically offers to double your stock price, your shareholders are going to want you to go with it. But Larry got a steal, it was almost like he was in cahoots with Alan Greenspan and Ben Bernanke.”

What Sun did wrong: “Sun has always been very early, and often way too early with a lot of our ideas. For example, in the ‘80s we were preaching that the network is the computer. Shame on us for not summing it up in one word – cloud. To sound a little Al Gore-ish we invented open source, but we went a little too aggressive over the last four years.”

Regarding his own legacy in the business world: “I will be known as a good capitalist.  We tried to balance the raging capitalist in me by sharing projects via open source.”

On Larry Ellison’s legacy: “He’s a great capitalist, but not all into that sharing thing and all the rest of it. You have to give the guy credit; he has found a way to extract every dollar he can from customers from every product he offers. He is very impressive, and there are very few who have lasted as long as he has.”

Apple (AAPL) and Steve Jobs: “Apple is beyond proprietary, and the consumer has no idea that they are checking into the roach motel. Jobs has been brilliant, and he also understands the power of the secret better than anyone I have ever seen.”

How Microsoft (MSFT) is positioned: “Technology turned on them so quickly with the advent of the Web. But they still have this massive cash cow in Office. That thing has minted more money than any product I can think of.”

On being a good CEO: “You gotta maintain integrity, and you can’t break character. You can’t let your customers down or the media down. Look, you aren’t a sports star or celebrity, people are trying to get their jobs done with your help, and that this is way more important than winning a tennis match or a football game.”

How to sell: “Every single employee in the company is in sales, and they have to know that. If your customers are happy then you don’t need PR or advertising.  Your customers will sell your product for you.”

Finding the right partners: “My gaming theory strategy says you can almost never partner with the leader. The leader has not interest in justifying or partnering with a smart, young, hot company. So it’s mankind versus Goliath. You go after No. 2,3,4 or 5. You team up to beat Google, beat IBM or Microsoft or Oracle or whatever. Everyone can coalesce around that, and they will partner with you because they think you will be collateral damage. We were going to be collateral damage every year at Sun, that’s why it was easy to partner.”

His conditions for starting another company: “It must be private,  never go public. There will be no upside investors other than me and the employees.  I will have enough of the voting shares – meaning more than half – so that the board will be hand-picked buddies that I know are smart. Nepotism will not be a bug but a feature, this will be a family owned and family-run organization. It also has to be cash-flow positive from day-one.

“I hope we can pull it off under those condition because I would be thrilled to lead another group of smart engineers, without all the crap that goes into running a company today.   I just don’t want Congress telling me how much I should be paid or firing me. I want to pretend I am back in the 1980s again.”

Who’s going to win the Stanley Cup: “Sharks all the way.”

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