BUSINESSWEEK ONLINE : DECEMBER 13, 1999 ISSUE
BUSINESS WEEK E.BIZ -- PEOPLE

The Man Who 'Dot.commed' Sun
How Ed Zander transformed Sun Microsystems into an Internet heavyweight

In the midst of a hellish month-long business trip in mid-October, Sun Microsystems Inc. (SUNW) President Edward J. Zander slumped into his airplane seat, eager for time alone with a newspaper. But his respite lasted only seconds before his seatmate introduced himself as Nicholas J. Earle, computer marketing chief at rival Hewlett-Packard Co. (HWP) ''Suddenly, he's yelling to four other Sun executives in nearby seats, saying, 'Hey, here's the guy who's doing the Internet stuff at HP.' And then, with everyone listening, he proceeds to try to hire me,'' says Earle. By the end of the flight, Zander had offered Earle a $20 million pay package to jump ship. Earle sat tight--in his seat and at HP, but he was flabbergasted by Zander's moxie.

Friends don't kiddingly call Zander ''Fast Eddie'' for nothing. The 52-year-old Brooklyn native is famous for his energy, wisecracking, and unceasing competitiveness. Don't let his Armani-wearing, slick-talking ways fool you: It is substance that's made him one of the most feared, respected, and well-liked executives in computerdom. On one hand, he's the toiling executive who transformed Sun from a maker of geeky workstations used by engineers into the leading producer of high-powered compu- ters that form the backbone of the Net. At the same time, he's the creative mastermind who first coined the ''we're the dot in dot.com'' expression, in a Sun ad campaign. ''I don't know how Sun could be doing any better, and I give Ed 80% of the credit,'' says analyst John B. Jones of Salomon Smith Barney.

Indeed, if ever there was an executive-behind-the-executive, it's Zander. Today he's the rock-solid force behind Sun Chairman Scott G. McNealy, the whirling-dervish co-founder and chief executive officer who spends more and more time crisscrossing the country laying out Sun's vision of ''networked computing.'' It's Zander's job to keep Sun going full-tilt by running day-to-day operations, guiding marketing, and trying to push the already high-flying Sun even higher. Since Zander took over the computer business in 1995, Sun's market capitalization has mushroomed from $9 billion to $100 billion.

Now, he's getting ready to do it again. Having watched former employers Data General Corp. and Apollo Computer get creamed at the height of their success, Zander is launching his second makeover of Sun in five years. He's trying to create a new kind of company, designed to be less about selling stand-alone computers and more about making Web sites, corporate networks, and handheld gizmos work without a glitch. Zander believes that for the Net to truly transform business and society, computing must be as reliable as the phone network. ''We're going to break the company again,'' he says. ''I want Sun to be the IBM of the Internet Age.''

FIELD COMMANDER. To put Sun at the center of that upheaval, Zander's changing the way the company designs, supports, and even sells its products. He's assigned task forces that are redoing hundreds of everyday processes at Sun. From now on, Sun's computers will be designed so problems can be diagnosed remotely and fixed immediately. And with more companies looking to pay a monthly fee for somebody else to run their computers and Web sites, Zander is refocusing the sales staff on the hosting companies that provide such services. Guiding Sun through that transition without ruining the company's impressive growth record will be Zander's biggest test yet. ''I don't know what we'll look like in five years,'' he admits.

As tough as it sounds, it's the kind of thorny problem Zander loves. Field commander, rather than CEO, is the role he thrives in. Unlike many other top execs in Silicon Valley, Zander says he doesn't have an overpowering need to be the top dog. His Sun stock is worth more than $100 million, say insiders. And he's got plenty of prestige. Rather than run his own show--and he's had plenty of offers, including top jobs at Apple Computer Inc. (AAPL) and Compaq Computer Corp. (CPQ)--he's satisfied to play a vital part at a company that's shaking up the world. ''I've seen friends who wanted to run a company at all costs, but I don't stick pins in myself at night because I'm not CEO,'' he says. ''There are much more important things in life.''

Like what? Family is vital for Zander, as it was for his father--an immigrant from Poland who gave up his dream of becoming a lawyer to take a job as a furrier to support his ailing parents. The younger Zander is cut from the same cloth. A proud soccer coach to his two sons, now ages 22 and 25, Zander was known to spend hours on the phone while on business trips to go over homework. ''He always felt guilty about being away, but he was an A-1 father,'' says wife, Mona. Zander even relishes that his eldest son, who is studying international affairs, is interested in socialism. ''I mean, he's got an E*Trade account--I call him my socialist day trader,'' says Zander.

Despite working eleven hours a day, Zander finds time to relax. He spends weekends with his family at a vacation home by the sea in Carmel, Calif. He set up a romantic return to Cape Cod, where he and wife Mona met 30 years ago--complete with a new diamond ring. He golfs with friends like Inktomi Corp. CEO David Peterschmidt. ''We usually play $1 a hole, but you'd think it was $5,000,'' says Peterschmidt.

Indeed, for all his competitive zeal at the office, Zander doesn't savage his people when they stumble. ''If you cross him, you're going to get a fight,'' says friend Dave Herter, who worked with Zander in the 1970s at Data General. ''But if it's just a case of not meeting your numbers, he doesn't say 'you screwed up.' He says, 'How are we going to fix this?'''

When the pressure is off, Zander can be a clown. He oftentimes brings his dog Mitzi, an exuberant Yorkshire Terrier, to work. And staffers look forward to Zander's gig at Sun's annual sales meeting with longtime sales executive Joseph P. Roebuck. One year, Roebuck and Zander did an impersonation of Placido Domingo and Luciano Pavarotti.

The duo of Zander and McNealy is the one that really matters at Sun. ''Scott is Sun, and Sun is Scott,'' Zander says. But, in fact, this is the Scottie and Eddie show. McNealy is the company's public face--delivering rousing speeches to the faithful at Sun gatherings and cutting rival Microsoft Corp. down to size with Lettermanesque quips. He's the dreamer--touting how Sun's nifty technologies will transform the computing world. Zander is the grounded one who must make those dreams come true. They cover each other's flanks. ''I'm more paranoid in the long-term, and he's more paranoid for the short-term,'' says McNealy.

CAREFUL LISTENER. Right now, short- and long-term are entwined. Practically everything that Sun does is under review--and subject to radical fixes. Zander has assigned a task force to look at supply-chain management so the company can better predict and meet demand. All of his direct reports must show how they'll support his e-Sun campaign, to boost how much business Sun does online. To make sure sales reps get on board with the shift from selling machines to selling solutions, he's considering tying their commissions to customer satisfaction rather than just sales quotas.

When Sun falls short, Zander is quick to find out why. Each morning at 8, he has a conference call with key sales people to find out if any major customers are having problems with their gear. And he's always available to listen to customer complaints and wish lists. ''Ed listens carefully--and you absolutely see changes as a result,'' says Maynard Webb, the CIO at eBay Inc. (EBAY), a major Sun customer.

Zander's potential wasn't always obvious. While his parents, Jewish immigrants who couldn't afford college, stressed education, Zander was content to revel in his tight-knit Brooklyn neighborhood, his beloved Brooklyn Dodgers, and trips to Coney Island. ''It's all true what they say: It was the best place on earth,'' says Zander. But when his father moved the family to Commack, Long Island, to get their first home, 12-year-old Zander turned inward. He had few friends, sat at the end of the soccer team bench, and experienced some painful antiSemitism, something he won't delve into. He threw himself into jobs, from flipping burgers at Buddy Burger to delivering newspapers. His dream: to become an engineer and take part in the Space Age.

Zander learned to work hard from his father--who left the house at 5 a.m. six days a week to toil in Manhattan as a furrier. And he learned stoicism from his mother, now blind with glaucoma, who emigrated from Greece after her entire family was wiped out by Turks in 1922.

The first big success in Zander's life was earning an electrical engineering degree from elite Rensselaer Polytechnic Institute. Emboldened, he began to set, and meet, a series of goals, like earning $30,000 by age 30. After getting married and working as a self-described ''so-so engineer'' at Data General Corp., he convinced a superior to give him a shot at marketing--and threw himself into the job full-bore. It paid off. Zander turned a series of poorly designed products into decent businesses. ''It was like a light went off,'' he says. ''Until then, I didn't know I had a creative side.''

From there, Zander hit his stride. McNealy hired Zander as vice-president of marketing in 1987. He quickly rose to run Sun's software unit where he turned its me-too software into the Solaris operating system--which dominates with the dot.com set. Then he took on the computer business. And shortly after McNealy took the big step of naming him chief operating officer in 1998, Zander had a heart-to-heart talk with his boss that changed the company's course. At the time, Sun was known more for McNealy's caustic barbs against Microsoft than for anything else. ''I told him we've got to stand for something,'' recalls Zander. A few months later it came to him: Sun was ''dot.comming the world.'' It became the company's ad campaign. ''All of a sudden, everyone understood what Sun was all about--my mother, my customers, and 30,000 employees,'' Zander says.

What of the future? While Zander says he intends to remain at Sun, he admits to having been tempted by some of the offers to run Web startups. ''It crosses your mind, because for me those companies are all about the future,'' he says. Still, friends and family say he's more likely to stick around Sun. Says wife Mona: ''There was a time that I thought being CEO was one of his ambitions, but I'm not so sure anymore.'' Either way, the field commander will likely make a difference.

By Peter Burrows

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