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Microsoft Chairman John Thompson Talks Cloud Competition, Diversity, and New Rubrik Board Seat

February 20, 2018, 2:00 PM UTC

Microsoft chairman John Thompson has another position to add to his 40-plus year-career with some of the world’s biggest tech companies.

The former Symantec CEO and IBM (IBM) executive has joined the board of fast-growing enterprise technology startup Rubrik, the company announced on Tuesday. Rubrik sells software and hardware that corporate customers use to archive data that is stored in internal data centers or in the servers of cloud computing companies like Amazon (AMZN).

Thompson, like Microsoft (MSFT) CEO Satya Nadella, believes that more companies are moving to a so-called hybrid cloud model, in which they use cloud computing services without completely abandoning their existing data centers. Rubrik’s technology caught Thompson’s interest because it fits into that hybrid cloud model.

Although Thompson invests in many companies, he doesn’t typically take a board position unless he clicks with the company’s leadership and wants to personally help them grow, he explained. His other board positions include Microsoft, genome sequencing company Illumina (ILMN), and cybersecurity startup Illumio.

Regarding Microsoft, Thompson echoed previous comments in which he said he was happy that the company is growing its cloud computing business, but that he wants the company to move faster in other areas like revamping its sales force and changing how it does corporate partnerships to better reflect the changing technology landscape.

“While I’m quite pleased with the progress that Satya and the team at Microsoft have achieved, the reality is that this is the very, very early stage of the transition to the cloud,” Thompson said. “Therefore, we have to be on our A-game to remain competitive in the functionality that we deliver on our cloud services, but also price-competitively as well.”

Thompson acknowledged the growth of Google’s (GOOG) competing cloud computing business, but said that Microsoft faces more competition in cloud computing than just one company. “I don’t think the threat, if you will, to the cloud is necessarily Google,” he said.

He cited the cloud computing units of Chinese technology giants like Tencent and Alibaba as among the “probably six or seven global companies that really have a footprint and could become very important to users around the world.”

“While Microsoft is one of them, they don’t stand alone, and while Google is certainly one of them, it too doesn’t stand alone,” Thompson said. “Let’s not be naive with how competitive this market will become as time goes on.”

It would be misguided for a cloud computing company to solely focus on attracting U.S. businesses as customers when so much potential money is overseas, he explained.

“It’s clear that in a cloud-based world, scale matters, and you cannot scale if you confine yourself in a regional marketplace,” Thompson said.

The challenge for cloud providers like Amazon, Microsoft, Tencent, and Alibaba, Thompson said, is operating in multiple countries with different regulatory requirements while offering cloud services that are appealing to customers in those markets as well.

Thompson also shared his thoughts on the diversity issues that plague technology companies, in which women and minorities are underrepresented in high-paying engineering and senior leadership roles.

“I think there’s no question that as the economy has evolved, the inclusiveness of companies around the world, not just in tech, has also evolved,” said Thompson, who was once among just a handful of top African-American CEOs at large companies. He said that investors are increasingly pushing public companies to include more people of diverse backgrounds to board positions.

Facebook, for example, recently added former American Express CEO Kenneth Chenault as its first African-American board member. The appointment came months after the Rev. Jesse Jackson and some Facebook investors criticized the company during a shareholder meeting for not adequately addressing diversity issues.

“While we’re behind, I don’t think there is a single tech company that doesn’t recognize that we go to do a better job,” Thompson said.

Microsoft’s latest diversity report said that the percentage of women in leadership roles is now 19.1%, compared to 17.9% in the prior year. African-Americans in leadership positions stayed mostly flat, inching up from 2.1% to 2.2%, while Hispanics grew only slightly from 4% to 4.3%.

“We certainly are making progress but much, much more is needed,” Thompson said of Microsoft’s recent diversity report.

The diversity problem also affects startups, and not just big public companies, Thompson said. Many startups are mainly focused on their technology or rapidly growing their businesses and not the “structure of the company they are stitching together,” he said.

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Startups must ensure that they have a diverse workforce because the products they build need to reflect the diverse nature of the customers that use their technology, he explained.

“Tech needs to make sure that it stays in the right position relative to others in the marketplace,” Thompson said.

Rubrik has raised over $292 million from investors like Khosla Ventures, Greylock Partners, Lightspeed Venture Partners, and newbie tech investor Golden State Warrior Kevin Durant. Rubrik has roughly 800 employees, CEO Bipul Sinha said, and it’s $1.3 billion valuation puts it in the club of so-called unicorn startups, which have a valuation of $1 billion or more.