Contrarian Minds: Jonathan Schwartz

You have to be different to win.

By Al Riske

22.Jul.04--Jonathan Schwartz came to Sun when his software company, Lighthouse Design, was acquired in 1996. He has stayed because his personality -- contrarian to the core -- fits the culture.

It fits so well, in fact, that Schwartz now serves as president and chief operating officer under CEO Scott McNealy.

"Nobody is here because they want to sit around and agree with the rest of the industry," Schwartz says. "We want the opportunity to disagree with the industry and prove ourselves right."

Examples of Sun's contrarian approach are easy to find. The Sun Java Desktop System is a classic example, Schwartz says, because the strategy stirred debate within Sun and ran counter to what industry analysts and pundits were suggesting.

Customers were often just as skeptical.

"I've been with so many customers in North America who have huge IT budgets and say, 'We don't need an alternative to Microsoft,'" Schwartz says. "I had one customer tell me, 'Microsoft could triple their prices and I'd still buy their products.' My response? 'Thank you very much for your time, but you're not my target demographic.'"

And the industry and financial analysts?

"They wrote us open letters telling us to spin out Java and cut our desktop," Schwartz recalls.

Yet the Java Desktop System, now in its second release, is picking up rave reviews and gaining momentum with more than 250 enterprise pilots (not to mention the huge deal with China that kicked it off).

The reason: the software package deftly integrates open source technologies, Sun's StarOffice productivity suite, and Java run-time environment -- and adds military-grade Java security features. Sun sells the desktop package to enterprises for $50 per employee, per year -- a fraction of what Microsoft charges for its software.

Even Sun's pricing strategy is contrarian.

"It runs counter to the belief that you should price per CPU and audit your customers," says Schwartz, who ran Sun's software group before becoming president and COO in April. "Our aim is to make things simple. We said no to the software licensing madness -- the per CPU, per mailbox, per directory entry, per terabyte insanity -- and created a simple, affordable formula."

Open, integrated desktop software, offered at a compelling price, is proving to be quite attractive in the market.

"The Chinese government agrees with Sun that this is going to be phenomenal. That our Java Desktop System has the capacity to bridge their digital divide -- the economic separation caused by an extremely expensive desktop supplied by our principle competitor, Microsoft," Schwartz says. "Now they have an alternative -- the opportunities are limitless."

So how does a project like the Java Desktop System survive so much resistance?

"You have to be tenacious. Sun is not a company for the faint of heart," Schwartz says. "You won't do well here if you're a wallflower and you want everyone to agree with you."

As noted, pressure came for outside as well.

"Over the past two years, three years, four years, people were giving us a hard time about StarOffice and Java on the desktop and, you know, why are you even doing a desktop? We're not getting those questions anymore," Schwartz says.

Schwartz credits the software team for its vision and persistence.

"They recognized that you can't have servers without desktops. It just doesn't work that way," he says. "Servers are disintermediated by clients, not the other way around. So if you want to be in a perpetually defensive position, then just satisfy yourself with servers. If you want to go on offense, go build a client base."

Schwartz likes the way people at Sun aren't shy about expressing their opinions.

"Life is short; be assertive," he says. "I wouldn't want to work in an organization that just blindly followed orders.

"Controversy stirs debate and debate is always healthy, but then you also have to know when the debate should end."

His own staff meetings are never quiet. "It reminds me of my dinner table when I was growing up," Schwartz says. "If you didn't grab the bowl of potatoes it would be gone and you wouldn't eat."

From that statement, you might think that Schwartz came from a large family. Not so. "I came from a small family," he says. "We were just voracious eaters."

It was also a very combative family, he says. "I remember bringing a friend of mine over to the house and I got into this rip-roaring argument with my dad about politics. That's just the way I am with my dad. I enjoy his intellect and he enjoys mine and we just swap barbs and try to outwit one another. But this friend of mine left the dinner saying, 'Gee, I'm really sorry you got into a fight with your dad.' I said, 'No, no, you don't understand. That's the way we are together -- wouldn't have it any other way.'

"My staff meetings are just like that. I thrive on it. We have a lot of that at Sun. Name a project we're working on, and I'll tell you why it's contrarian to the market's perspective," Schwartz says. "Fundamentally, if you don't have a contrarian strategy, you're not going to make money in the long run."