How a missile-building dropout saved EMC
From bankruptcy to glory
Into the Valley The recipe for extreme business success is so obvious. First, you take an entrepreneurial furniture salesman and hand him some memory. Next, you add a college dropout turned Harvard graduate who designs missile systems. Lastly, mix the executives, dash them with bankruptcy and bake.
Presto! You've got the best-performing company on the NYSE during the 1990s – EMC.
Mike Ruettgers, former CEO and chairman of EMC, revealed this simple path to fame and fortune during a question and answer session last night here at the Computer History Museum. Having been retired for all of three weeks, Ruettgers didn't hesitate to divulge the keys to making EMC the dominant storage player. Such openness, however, won't help too many aspiring business leaders, given the unconventional path Ruettgers and EMC took.
Ruettgers began his education at UCLA where, as a freshman, he "looked old enough to be able to drink". A penchant for partying and playing bridge over attending class made short work of his UCLA tenure.
"At the end of my freshman year, UCLA – in its wisdom – asked me not to come back," he said.
After one year, Ruettgers centered his chi and went to Idaho State where he excelled. This made acceptance at Harvard's business school possible, and off went Ruettgers to snake an MBA.
Out of Harvard, Ruettgers went to work for Raytheon where he was asked to analyze the company's Patriot missile development program. Ever the helpful MBA, "I said, 'As far as I can tell, we are going to be about eight years late and have about a $700m overrun.'"
Music to a military contractor's ears, especially with the pressure of the Vietnam War looming.
"To Raytheon's credit, within about 30 days, they reorganized how they were developing the product," Ruettgers said. "What I learned at Raytheon was that good engineers, by themselves, are not enough... Engineers work best when they have schedules, and they work best when you spend a lot of time asking them about their schedules."
(To all our engineer friends out there, please direct all your feedback on this issue to EMC. Or, what the heck, send it to us.)
Eventually, Ruettgers moved to Raytheon's services division that worked on mainframes and related hardware. That's how he ran into then EMC founder and ex furniture salesman, Dick Egan.
Egan told Ruettgers that EMC's young staff lacked maturity and could use some wisdom.
"I was indeed the silverback or greybeard who could come in and provide some adult supervision." Ruettgers said.
At the time, EMC was selling memory to a variety of customers.
"We were plugging Prime," Ruettgers said. "We were plugging Wang."
(My, how such a statement could be misinterpreted outside of storage retrospective.)
All was going well with the memory game and EMC's early business until the company entered the disk-drive market. EMC purchased a large batch of defective drives and put them to work with computers crunching through crucial data. When a drive failed, it could take up to 72 hours to restore the data and bring the box back to life.
"I had more than one data center manager break down and cry because they were going to lose their job over a decision to buy our stuff," Ruettgers said.
These failures - along with an overtaxed research and development budget - briefly pushed EMC into a difficult period where it was "technically bankrupt" in 1989.
My, what a difference a decade can make.
By focusing on providing storage for IBM's mainframes, EMC carved out a huge niche in a lucrative market. It then went after Unix vendors early and set aggressive sales targets for staff. (When they missed sales goals, workers would find excess inventory clogging their offices courtesy of Ruettgers.) EMC then nurtured the data warehousing market and pushed SANs early.
Before Ruettgers knew it, EMC's success led investors to hike shares of the company higher than any other firm on the NYSE during the 1990s. EMC's stock skyrocketed 88,000 per cent over 10 years. The only stock to perform better was Nasdaq player Dell.
While a retired Ruettgers now intends to spend most of his time pushing for strong education standards and improved health care, he will also do a bit of dirty work for EMC. That's a result of Ruettgers' decision to leave EMC before a strong enough No.2 executive was ready to complement CEO and chairman, Joe Tucci.
"Up until recently, we have always had a CEO and a chairman," Ruettgers said. "In other words, it was two, separate jobs. I find it's very hard when you have the chairman and CEO as the same person."
Er, so why did you let Tucci do it?
"I put him in a bind," Ruettgers said. "Some of these arrangements are probably temporary, and I told him I would do some things for him."
Anyone interested in the EMC chairman job?
It's so easy to glorify executives of solid companies on their way out. They were magicians, visionaries and business geniuses.
Such sweeping statements do little to get at the truth. And, in reality, only EMC veterans and competitors can gauge how effective Ruettgers was as a businessman.
However, our limited interaction with the man can confirm a couple of things. For one, he comes off as a warm, disarming chap. Ruettgers always treated us with the utmost respect in interviews and took the time to answer some stupid questions.
Two, this persona isn't just a song and dance he does for the press. As it turns out, a good friend of ours is a neighbor to the Ruettgers clan. She reckons he's as much of a class act away from the EMC scene as he is in front of it. ®
If you have any interest in technology history whatsoever, make sure you have a dig around here.