Microsoft Lays Out Regional Agenda

By Josh Feit June 11, 2010

Brad Smith, Microsoft's General Counsel and Senior Vice President for Legal and Corporate Affairs, held court in a private dining room on the second floor of the Hotel Andra in downtown Seattle last night with a batch of local publications including PubliCola. It was an informal Q&A session over dinner: fish or roasted chicken with couscous, green beans, SY Syrah wine, and mini sugar donuts and cream for dessert, all courtesy of Tom Douglas' Lola, the restaurant that's tucked away on the first floor at 4th and Virginia.

Microsoft VP Brad Smith gets cozy with the press. However, he didn't appreciate having his picture taken with an Apple iPhone, he joked after I snapped this.

Smith, who looks like a smarter, all-grown-up version of Archie from The Archies (maybe it was the white-and-red checked shirt and orange hair), started his extemporaneous gig by rattling off some random litmus tests that define successful regions.

First, he said, be in the top 10 on quality-of-life lists while simultaneously staying off the top 10 on cost-of-doing business lists (Smith groused that Washington's climbing sales tax impacts big companies like Microsoft the most because they are the biggest purchasers of goods and services in the state). Second, be a patent leader (he was happy to point out Seattle is fourth, right behind California, Texas, and New York). Finally, have a diverse population. That seemed to mean encouraging immigration for tech talent, which led him to say Microsoft "was the most active proponent of any business" lobbying for "comprehensive immigration reform in D.C." I think he was referring more H1-B visas as opposed to a pathway to citizenship, but it's all connected, and it was clear Smith got that.

Over the course of the hour-plus dinner sit-down, Smith was candid, at ease, earnest, and seriously quotable. "If you want to build a bridge, you can't hold out for your own design," he said, using the word "bridge" literally---referring to 520---and as metaphor for the need to compromise in order to move ahead. This notion of compromise and collaboration was the main theme of Smith's spiel as he told small group of reporters that Microsoft was ready to step into Boeing's "leading role" in the "cast of corporate actors" to help set the region's agenda.

Smith outlined Microsoft's top two priorities for the region: Education and transportation. He also tacked on: maintaining a "strong social safety net"; "arts, culture and sports"; and preserving the natural beauty of the region. And he also said Microsoft didn't have a position on Bill Gates Sr.'s high-earners' income tax (although he did note that Microsoft finds the initiative process "suspect" and prefers the legislative arena). And he thought that reining in the "cost side" of government was just as important as figuring out the state's long-term revenue problem—although, when I asked him if Microsoft had a position on Tim Eyman's tax-averse I-1053, he said "We haven't taken a position yet, but we have never supported a Tim Eyman initiative."

But mostly, Smith's rap was all education and transportation.

On transportation, Smith says Microsoft is committed to light rail, particularly connecting the main Microsoft campus to downtown Redmond. This prompted me to ask him why Microsoft basically punted on 2008's Proposition 1, which paid for light rail expansion to the Eastside. (Microsoft donated just $10,000 to the rail measure, compared to the whopping $200,000 the company kicked in on the roads and transit initiative in 2007.)

Smith's answer was either really interesting or really disingenuous.

He smiled knowingly and acknowledged that I was right. But then he said that when "No" campaigns are well-funded, it's easier for them to win than "Yes" campaigns, so "we were testing out a political theory."  Microsoft figured that if it didn't go all in, the "No" side might not feel compelled to raise as much money.

"I think if you check, you'll see that it worked out that way," Smith said. And he's right---sort of. While the light rail campaign (coupled with roads) raised a whopping $4.1 million in 2007 with Microsoft on board, it only raised $900,000 in 2008. The anti-light rail folks raised a nominal $152,000 that year—and light rail won. (Slight flaw in Smith's theory, though. In 2007, the pro side's $4.1 million didn't bring out huge dollars from the opposition. The "No" group raised $780,000.)

Smith also admitted that he'd originally been for light rail on 520. And this played into his "compromise" theme.

Microsoft made a big deal about backing the state's "preferred" design for 520, which does not include light rail, earlier this year, taking out ads in the Seattle Times urging the state to "get moving" on the bridge ("We'd never done that before.") He said the legislature's decision to get going on the current 520 plan now was "the greatest political success of the year."

On eduction, Smith espoused the same reform model that President Obama and his education secretary, Arne Duncan, advocate. Smith pushed Duncan ideas like "rewarding excellent teachers" (the positive spin on fighting the unions on teacher accountability). And, referring to the Race to the Top Obama education grants, he said Washington State should consider offering money to promote successful models at the district level, similar to what the federal government is doing with the states.

I asked him what Microsoft could do to move the education reform agenda forward given that union intransigence upended the Washington State legislature's efforts to go for the Obama agenda this year. Citing "incremental" victories, Smith applauded the legislature for expanding the definition of basic education and giving the state the power to step in and deal with failing schools.

He even brought up charter schools (another Race to the Top thing). "It's been a long time since this state has had a discussion about charter schools," he said, suggesting a pilot model like "charter schools within schools."

The most exciting part of Smith's rap, though, was when he talked about Microsoft's role in the region---exciting because I'd never fully considered the upside of Boeing's departure from the Seattle area. Smith explained that Microsoft—happy being "the best supporting actor in the movie"— used to rely on Boeing to be the local leader. But when Boeing decided to leave, he said, Microsoft thought, "Boy, we can't rely on Boeing, we have to try out for the leading role."

Microsoft thrives off brain power and that means they want a culturally rich region where high tech culture can thrive. Note Smith's 21st-century rap about education, transportation, and diversity. Smith strikes me as a guy who reads Richard Florida books.

It's not that Boeing is reactionary—they score 100 on the Human Rights Campaign's corporate ratings (so does Microsoft)—but face it, Boeing's top agenda became, well, Boeing. The company infamously threatened to leave the state if they didn't get $3.2 billion in tax breaks in 2003. They got the tax breaks.  That's a metaphor, man. Boeing looks inward. Microsoft looks outside itself.

And Smith's talking points reflected that mindset. Describing his vision of corporate leadership, he stressed that Microsoft wanted to work collaboratively with the other local Fortune 500 companies. Smith looked genuinely heartbroken when he noted that WaMu no longer existed as he listed off local big-deal companies as potential partners.

Some reporters in the room, though, took his rap—"I'd like to see other companies get more involved"— as sly dig at local firms like Amazon, for not being engaged. "I love Amazon," Smith said. "It'd be great to have Amazon more involved." He did say that Amazon—still a young company—reminded him of Microsoft in its early years, when they were still 100 percent focused on developing the company and didn't think about outside issues. "I see a bit of us in Amazon," he said.

Footnote: Check out today's Morning Fizz, where Smith talks about why Microsoft's position on net neutrality has changed—and why it has to do with Microsoft rival Google.
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