Wednesday, May 12, 2010

24/7 Wall St Reports: Jonathan Schwartz Worst CEO in American History

I was sent a very interesting article from a friend that lists (in the opinion of 24/7 Wall St.) the top ten worst CEOs of all time in American history.

It includes some of the easy to guess usual suspects, such as Ken Lay of Enron, John Sculley of Apple, Bernie Ebbers of Worldcom, and John Rigas of Adelphia Communications.  Those names would likely appear on most individuals top ten lists.  Below is the text regarding Jonathan Schwartz on 24/7 Wall St. that has Jonathan Schwartz as the worst CEO in American history:

1.   Jonathan Schwartz. By the time Sun Microsystems was bought by Oracle for $7.4 billion, Jonathan Schwartz, the hip, blogging, ponytail wearing CEO, had ruined the firm’s prospects so badly that acquisition was its only option.

In the early 1980s, the company was founded by a small group of engineers and its CEO, Scott McNealy.  During his tenure, Sun Microsystems grew to become one of four dominant players in the server and processor space, which also included Oracle, HP and IBM. Prior to Schwartz’s appointment by McNealy, Sun was a largely profitable and competitive company.

Schwartz’s promotion to CEO in April 2006 was followed by a long series of losses. Despite its strong position, Sun started to fall apart as it lost market share in its main server business to HP and IBM.  The company’s shares fell from almost $27 to under $4 from late in 2007 to late 2008; Sun also later fired nearly 6,000 people, or about 18% of its employees.

In 2008, in an attempt to diversify, Sun bought MySQL AB, the company offering the popular open source database. The acquisition did not work.  As Sun’s share of the server market continued to fall, Schwartz tried to improve market adoption of its Java software, which never brought in much revenue.  Despite some success, the problem was that Java is free and Sun never came up with a realistic model to monetize it.
Larry Ellison went on to state in an interview his true feelings on Jonathan Schwartz:

Reuters published an article in which Mr. Ellison firmly stated that mismanagement and “madness” wrecked Sun.
Some of Larry Ellison's comments were:
Their management made some very bad decisions that damaged their business and allowed us to buy them for a bargain price.”
And this is my favorite quote by Larry Ellison:
“The underlying engineering teams are so good, but the direction they got was so astonishingly bad that even they couldn’t succeed. Really great blogs do not take the place of great microprocessors. Great blogs do not replace great software. Lots and lots of blogs does not replace lots and lots of sales.”
Larry Ellison is 100% accurate.  Great blogs do not make great companies and certainly do not show great leadership.  Larry Ellison is a brilliant businessman.