"I'm convinced that most people think about software companies in an upside-down way. The common belief is that when you're building a software company, the goal is to find a neat idea that solves some problem which hasn't been solved before, implement it, and make a fortune. We'll call this the build-a-better-mousetrap belief. But the real goal for software companies should be converting capital into software that works. If you understand this, its easier to make the right strategic decisions."

"Imagine that the goal of your software company is not to solve some specific problem, but to be able to convert money to code through programmers. That's a little bit strange, but bear with me. A software company has to think of recruiting the right people as its number one problem. If you are successful, this can solve any other problem. Hire smart people, and they will produce good stuff that you can sell and make money off."

"Microsoft has a great recruiting strategy. They hire inexperienced, smart people right out of college... people that haven't learned from dysfunctional corporate cultures elsewhere. These kids get to Seattle, not really knowing anybody, work their asses off, and absorb the Microsoft way of doing things like a sponge. By the time they are ready to get disgruntled, their stock options start to kick in and their effective salary for staying around goes up into the stratosphere, where it is unlikely that anybody else will be able to lure them away. A five year Microsoft veteran could be making $500K a year including stock options -- care to match that?"