A tough background, a college scholarship, and a near-death experience all went into making Sun's CEO the driven success he is today
Sun Microsystems (JAVA) Chief Executive Jonathan Schwartz writes about a lot of things in his well-read blog, but rarely about himself. Indeed, given all that's known about Oracle (ORCL) CEO Larry Ellison and his yachts, and Apple (AAPL) CEO Steve Jobs and his trademark turtlenecks, Schwartz is known far more for his opinions—say, that regulators should allow disclosure of key corporate information via blogs—than for his personal story. That's how Schwartz, a 42-year-old family man who admits to few consuming interests other than his family, his job, and food and wine, likes it. But he shared glimpses into his past during two recent interviews.
As a youngster, Schwartz showed few signs of the precocious future CEO. Rather, he was introverted and studious, consumed with living up to the high expectations of his parents, each of whom had overcome adversity. Schwartz' father had grown up "dirt poor" in the Bronx during the Depression, but excelled at New York's Stuyvesant High and got into City College of New York. His mother, of English and Asian descent, grew up in England. The boarding school she attended from the age of 5 was bombed by the Nazis. "They didn't lack for courage at all," Schwartz says. "They didn't feel like they had the ability to make a lot of choices. So I've always been very focused on making sure I had that ability—and wanting to make decisions that would have an impact for a very long time."
That desire overwhelmed him at times. Through high school, he describes himself as "paralyzed with fear" of making the wrong decisions. Making things tougher were frequent moves; the family moved back and forth between Riverside (Calif.) and Washington (D.C.) suburbs three times before he went to college, as his father shuttled between jobs as a professor in the University of California system and working as an intelligence analyst with the State Dept. Meantime, Schwartz poured himself into getting good grades. He stuck mostly to a small group of close friends, with whom he engaged in the intellectual sparring he'd learned at the dinner table. "Jonathan was considered a dork—not a techie dork, but a social outcast dork," says a grade-schoolmate who requested anonymity.
Schwartz got into Carnegie-Mellon, with aspirations of becoming an architect. But after a year, he decided the school's demanding program wasn't for him. Not wanting to commit to any life course, he transferred to Wesleyan University because it was the best school he could find that wouldn't force him to declare a major until senior year. "I was petrified of making choices at that point," he says.
Instead, he embraced the intellectual side of life. Nick Rasmussen, a roommate and close friend today, remembers Schwartz talking excitedly about his first economics course. And despite his leftist leanings, Schwartz eschewed the anti-apartheid and other political protests that swept the campus. "He had a keen understanding of the sacrifices his parents were making to send him to a pricey private school," says Rasmussen. "It gave him a seriousness of purpose."
Help from Mrs. Fields
Schwartz started to find his direction in his sophomore year. Running out of money, he says he shocked himself by winning a scholarship related to corporate responsibility that paid the rest of his tuition. He met with the sponsor, consulting firm McKinsey, in a borrowed suit, and then spent his junior summer working on a project in a shipyard in Denmark.
Schwartz joined McKinsey, though he quickly became shocked at the quality of management of some of the firm's clients. "I remember meeting people and thinking, 'Hold on, I can do this better than they can!,'" he says. "I went from being a not particularly self-confident kid to feeling that maybe I had a lot more choices than I thought I'd had. It totally changed my life." Then came another life-changing event. In 1986, Schwartz was almost killed while traveling. His train collided with a locomotive at 108 mph near Baltimore. "In retrospect, that's one of the things that led me to decide to run a company," he recalls. "What's the worst thing that can happen? You're not going to die."
That business chance came four years later, when some friends set out to create a company to write software for NeXT Computer, the company founded by recently ousted Apple CEO Jobs. Before long, Schwartz had moved into a rental house in Chevy Chase with an overgrown lawn and Ethernet cables draped over bannisters, and he dove into his role as the "business guy" of the operation, called Lighthouse Design. He says the group vowed not to cut their hair until the outfit was profitable—the genesis of his signature ponytail today.
At first, it was difficult just to get noticed among the many software houses clamoring to partner with Jobs. At one point, Schwartz and a colleague flew to Silicon Valley and sat in NeXT's lobby day after day, hoping for an audience. They finally got noticed after Schwartz bought Mrs. Fields cookies for the company's staff.
The Corner Office
He soon had a deal to get the company's software supported on NeXT's $25,000 machines, but Jobs insisted that the program be priced at $99, like similar PC software of the day. Schwartz refused. Instead, he maintained a $1,000 price, telling Jobs, "When you sell your computer at PC prices, I'll give you PC pricing on my software," recalls NeXT Developer Relations Manager Chris MacAskill. That stubbornness helped Lighthouse become the largest, most successful supplier of NeXT software. "A lot of people tried to write software for NeXT machines," says MacAskill. "As far as I know, Jonathan was the only one that was a profitable…I've seen what a warrior he is."
Sun later agreed to support NeXT's operating system on its computers, and ended up buying Lighthouse in 1996 for $22 million. Schwartz stayed on as a product manager, but quickly rose through a series of jobs, and by 2002 was running Sun's entire software unit. He admits to being ruthlessly pragmatic about corporate politics—particularly the need to keep moving. "I've had 11 jobs in 10 years," he recently told a group of new Sun managers, "and every time I moved I got more valuable to Sun—and I felt it." He advised them to "pick your own boss," to ensure it was someone who could help them learn and keep rising. "You need to make the most of your time here." The flip side is that many inside the company feel Schwartz is too political—a backstabber who rose in part by taking credit for others' work.
Whatever route he took, Schwartz was singled out by CEO Scott McNealy as a potential successor by 2004. McNealy, who remains Sun's chairman, says he offered Schwartz the post of chief operating officer and was surprised when Schwartz said he'd only take it if McNealy agreed to stay out of Schwartz' staff meetings. McNealy refused at first, but relented a year later. McNealy says Schwartz wasted little time in executing tough changes that had long been under consideration. Case in point: Schwartz made the call to open the source code for Sun's Solaris operating system. "It was very controversial, but there was no teeth gnashing, no hand-wringing. He just did it."
By late 2005, Schwartz was anxious to make the jump to the corner office. McNealy says he delayed to let Sun's business and product line improve to ensure a smooth transition. "He wasn't sure whether I was trying to lead him on," recalls McNealy. "I told him, 'Relax, you're extremely hirable.'"
When the transition came in April, 2006, Schwartz insisted that McNealy not only stay away from staff meetings, but that he stay out of annual leadership meetings of top managers and that he not have a formal role in setting strategy. "As difficult as it was for Scott, he pretty much threw me the keys and said call me when you need me," Schwartz says. "And I know that had to be really, really painful for him."
Also problematic for Schwartz was McNealy's penchant for headline-grabbing barbs against Sun's competitors. In his first week as CEO, Schwartz called Hewlett-Packard (HPQ) CEO Mark Hurd, IBM (IBM) CEO Sam Palmisano, Dell (DELL) Chairman Michael Dell, and others to offer an olive branch and explore ways to work together. On occasion, Schwartz also read McNealy the riot act for bad-mouthing a company with which Sun was negotiating, sources say. "I reverted once in a while to my core DNA, but he hauls me aside and tells me when I'm not being helpful," McNealy says. "Even if he's wrong, he's right—because he's the boss."
Schwartz isn't above stretching the bounds of corporate good manners himself. At a recent conference on the future of media, Schwartz chastised an executive from Viacom (VIA) for pulling popular shows like The Colbert Report from Google's (GOOG) YouTube. "You're an important customer, so please don't take that the wrong way," Schwartz said. "But you're deluding yourself if you think this is a good thing."
Schwartz has begun to back up his tough talk with some real accomplishments. By returning the company to profitability, big customers are no longer fearful the supplier could go under. By inking deals with former rivals such as Intel (INTC) and IBM, he has expanded the ways Sun's technology can get to customers Sun doesn't have the sales breadth to reach.
Now, Schwartz is focused on the key question: Can Sun grow? More than ever, say insiders, he's pushing the company to move faster, even if it means unveiling a new initiative before it's ready. That's what happened with Project Blackbox. Sun managers had planned to unveil the data-center-in-a-shipping-container in early 2007. Schwartz told them at a meeting in mid-2006 that he wanted the launch to happen in just six weeks. "You hear 'When can I blog about it?' a lot," says Sun Chief Technology Officer Greg Papadopoulos. "In some sense it's also a character flaw. Jonathan is constantly having to make sure he's not running too fast."