Abstract:

Gideon later wrote, “One could argue that regimentation creates robotic rather than creative skills, but I’m now a big believer that students can’t do well in any field without a basic foundation of good work ethics, among other values; and solid grounding was drummed into my classmates and me every day and eventually became an ingrained habit. I know many bright kids who let things slide until the last minute and rely on their smarts – and some desperate allnighters – to get by. It works in the short term, but obviously is not a recipe for long-term success.”

How does creativity blossom? In Gideon’s case, through frequent Socratic dialogue with his father – at dinner, in his dad’s photo darkroom, on weekend family drives from Brooklyn to Spring Valley (where his aunt ran a hotel called Gartner’s Inn), during frequent chess games, or while Gideon was looking over his father’s shoulder when he played bridge or pinochle. His father would ask numerous questions and expect Gideon to defend his responses with facts – nodding and adding follow-up questions when the boy stimulated an intellectual discussion. These wonderful exchanges could be on any topic – Israel and world politics, mechanics and how things worked, game strategy, religion, music – but the end result was that they left shy young Gideon with the sense that his thoughts and ideas were ultimately valuable. The more questions that were raised by his ideas, the longer the conversations, and the more proud his father seemed.

Mechanical engineering wasn’t easy, though, and despite his enjoyment and skill at playing the French horn, Gideon quit the MIT orchestra after his first year due to academic pressures. “I was so pressured and backlogged academically that I felt I had to come up with ways to save time. I actually experimented with my sleep habits in order to reduce the number of hours required per night. At one point, I woke myself up at 3 a.m. each morning to do homework for one quiet hour, followed by a bit more sleep, thus surviving on less than six hours of sleep.” That lasted one month. More successful were his time-saving experiments in personal hygiene, as a result of which he figured out how to fast-shave in twelve short strokes and shower in ten seconds.

Gideon never went as far as his MIT friends, however. He was appalled when, one summer, his classmate Lloyd Breslau, who had also gone to high school with Gideon, pulled a prank at Ebbets Field. Gideon and his old friend had put aside their MIT pedigrees that summer to get jobs at the home of their beloved Brooklyn Dodgers. Experienced regulars got to sell beer and hot dogs, which were priced rather high and therefore produced more tips, while newbies like Gideon and Lloyd were assigned the cheaper ice cream, peanuts, and orange drink. The drink was sold from a large and heavy tank strapped on their backs with a spigot up front. One sweltering afternoon, Lloyd suffered the complaints of a Dodger fan who loudly proclaimed, “This orange drink tastes like piss.” A certified MIT prankster, Lloyd went to the bathroom, and returned boasting to Gideon that he had actually urinated in his tank of orange drink, which he then went on to sell saying that obviously, no one would ever know the difference. Gideon was shocked; he could never get his head around such a horrible prank — it was his first experience with how far some people would push the envelope. It was dreadful, but also terribly brave. The more he thought about it the more he realized that for some people, there were truly no limits — and to get away with something that immoral! It was both an outrage and a jaw-dropping achievement. He wrestled with the implications for weeks. Of course, he never knew for sure what really happened — at this point, looking back, Gideon wonders if the actual “hack” had been to get a naïve classmate to believe that anyone would actually pull such a terrible trick!

Gideon’s boss allowed him to travel around the country looking at other companies’ use of data in what were then called “decision rooms.” Through an IBM connection, he was allowed to visit United Airlines’ decision room in Chicago. It was a huge room, hung with blackboards and letterboards from floor to ceiling. Sliding ladders of the sort seen in old-fashioned libraries crisscrossed the room. Employees scampered up and down reaching to move the letters of the alphabet around on the letterboards. The blackboards listed every single United Airlines flight. People scampered up and down the ladders, chalking in late arrivals and departures, the numbers of passengers on each flight, and various other pieces of information, while managers stood around a central table and peered at the blackboards to organize global operations. It’s difficult to imagine: Even in the 1970s, United Airlines, one of the largest airlines in the world, was plotting its entire fleet by hand.

As soon as he returned to White Plains, he approached his boss with two propositions. IBM management should have its own internal war room; and IBM should use its advanced technologies to create and sell prototypes of an advanced war room, complete with easy-to-use, up-to-the-minute data enabling real-time response. IBM was certainly an innovator in those days and what helped make it such a great company was a policy that Gideon’s boss frequently reiterated: Any employee, regardless of seniority, with an idea which his/her manager thought useful could recruit other IBMers to a small task force to develop the idea. The only caveat was that these task force members had to work on their own time, not on company time. In other words, new ideas had to be compelling enough to convince colleagues to devote their free time after work or on weekends. It was an intimidating proposition.

The form of the proposed deal was instructive in illustrating to Gideon the mindset and approach of venture capitalists. The VCs would capitalize the company with 6,250 shares of “two-times preferred” stock at 50,000), which would be divided three ways: one-third to the VCs; one-third to Gideon as the founder; and one-third to other management people who would join the business. Gideon’s own cash investment for one-third of the equity in this new company would be only 625,000 to $1,250,000, the sum the young company would have to pay to redeem the outstanding preferred stock. If the company couldn’t redeem it, the voting rights would shift dramatically in favor of the VCs, and their one-third equity position would instantly become a controlling interest in the business, enabling them to make whatever management changes they chose or, more likely, to recapitalize the firm further in their favor. All this for a relatively small investment.

It was now April 1, 1979. Over the next month, Gideon and Dave called or visited most of their “hard dollar” clients, which included such big names as Xerox, Pepsico, and Procter & Gamble. Of the seventeen, only three were open to the idea of canceling their written contracts with Oppenheimer based upon staff changes and the loss of Gideon’s research. Meanwhile, Opco was claiming that Gideon’s replacements would soon provide the clients with similar research reports. Fourteen clients decided to sit tight, but ten of them told Gideon that after honoring their one-year contractual commitment to Opco, they would re-assess the situation when it came time to renew. “We had to accept the assumption that some but not all were quite pleased with what Orlansky and McAffery were delivering,” Gideon said.
Three weeks later, the inexplicable occurred. Orlansky and McAffery quit Oppenheimer to join Dean Witter. “The two were obviously aware of their unpopularity with the Opco sales people, and must have questioned Opco’s attitude towards them,” Gideon explained. “Also, they obviously assumed that Dean Witter would inherit most of the Oppenheimer contracts. But they did not count on what immediately transpired.”
Within hours of their quitting, Opco’s research manager Bert Fingerhut phoned Gideon at home, asking him to travel downtown to his office ASAP. Gideon rushed to the Opco offices, where Bert disclosed that Orlansky and McAffery had just quit and probably expected to inherit the contracts. “We immediately negotiated and swiftly signed a straightforward deal whereby Opco would sign over all of its contracts to our new company, Gartner Group, in exchange for a 15 percent royalty to Opco which would decline to zero over a two-year period,” Gideon recalled.

Gideon’s insistence on a strict discipline using established standards rigorously applied when making financial projections to the industry lent a much needed dose of reality to market research, and differentiated Gartner Group’s projections from what sometimes sounded like wishful thinking from their competitors. Gideon recalled, “We scored a hit in developing a mathematical model which correlated the future residual values of mainframe computers to how long it would take for the machines to become obsolete, thus aiding user clients in their rent vs. purchase decisions. Some employees claimed that this single innovation was critical in jump-starting our business. It certainly was an important factor.”

The firm’s unique research process sounded theoretical but worked brilliantly. Gideon soon drafted a Research Manual, which, through several iterations over the years, became the basis of a series of courses, which were taught to all incoming analysts. The process centered on a seemingly-simple dictum:
Scan as many sources as possible in order to recognize patterns among companies, markets, and industries.

Even so, precautionary memos would be distributed the day before a client was due to visit. “We all knew what that meant: Dress appropriately and do not smoke wacky weed in the hallways,” Stacey Hawkins said. “Of course, the smell carried right out the doors of the offices.…” Marijuana was used recreationally and generally tolerated at the firm. And just in case anyone got the munchies, the company cafeteria regularly set out bowls of fresh fruit and healthy fare.

“Our spouses, dates, and significant others never quite understood why we spent a huge amount of time socializing with the very same people whom we worked with for eight to twelve intense hours every day,” Jonathan Yarmis remembered. “It was a magical time with a magical group of people. We worked very hard to build a great business but at the same time, we knew if we were going to work that hard, it had better be with a group of people we enjoyed being around. And believe me, after twenty-three kamikazes, we were a lot of fun to be around.” So much fun, in fact, that many Gartnerites met their future spouses at work.

Gideon was very closely involved in all aspects of the company on a daily basis. As many typical entrepreneurs do, he was always thinking up different ways to organize and reorganize functional areas and always coming up with new ideas and schemes. “Many of the senior management team dreaded Monday mornings because Gideon had the whole weekend to come up with a new list of ideas and suggestions,” recalled Dorothy Langer, the first head of Marketing and Sales. “One of Gideon’s minor ideas was that the sales department should have a bell, which would be rung whenever a salesperson brought in new business, and it should be loud enough for everyone in the building – at the time, on Soundview Avenue – to hear it. My sales guys thought it was a kooky idea, but we installed the bell. It turned out to be a great morale booster for all of the employees and especially for my sales team.”
Another time, Gideon was complaining during a meeting that analysts took too long to write research notes. To illustrate his point, he composed one during the meeting – in fifteen minutes.