HP Keeps Making News

Image by plαdys via Flickr

Ben's Blog: Ben Horowitz: In Defense of Standards, Ethics, and Honest Financial Reporting at Hewlett-Packard: my business partner, Marc Andreessen, is on the board of directors of Hewlett-Packard. I note that I have no inside information, and this blog post is based purely on published material. In 2007, I sold Opsware, the company that I founded and ran to Hewlett-Packard for $1.6B. I worked at Hewlett-Packard from 2007 to 2008 as an executive in the software business. Recently, my old company Hewlett-Packard has been in the news—and not in a good way. ....... HP employs over 300,000 people. ..... Jodie Fisher had more access to the CEO and was paid more than 99.9% of HP’s workforce, despite having no traditional qualifications. ...... It is not an easy thing to fire a popular, highly successful CEO.

Something tells me this drama is far from over. The Oracle-HP alliance is now a full blown rivalry. This is about money. Like they say, follow the money. Oracle is now firmly in the hardware business as well, and HP feels eaten up. Oracle can do hardware, but could HP do Oracle-like software?

This is not about people getting along, or not getting along. This is about the money. And Larry Ellison might be dramatic, but he is first and foremost a businessman. His flare ups are market signals. Watch them and you are watching an industry churning.

This fight has quite a few rounds to it.

The Leo Apotheker Is Human Drama

New York Times: A Double Standard at H.P.: Oracle and H.P. had once been the closest of partners, with the latter selling the industrial-strength hardware that ran Oracle’s industrial-strength software. But that partnership appears to be dissolving. ..... Larry Ellison, Oracle’s flamboyant founder ..... “Hiring him had nothing to do with fighting Oracle,” said Ray Lane, the former Oracle (!) president who is set to become H.P.’s chairman next month. “The board chose Léo because he was the best available athlete.” .... Apotheker was likely to further traumatize the already demoralized H.P. staff. ..... “If you wanted to find someone who represented the diametrical opposite of the H.P. way, it is Léo,” said Jason Maynard, a veteran technology analyst with Wells Fargo Securities. “He is tough as nails and chews glass for breakfast.” ...... the same board that viewed Mr. Hurd’s minor expense account shenanigans as intolerable has chosen as its new C.E.O. someone involved — however tangentially — with the most serious business crime you can commit. ..... the chance to embarrass H.P. and its new C.E.O. is likely to be irresistible to Oracle and Mr. Ellison. Which will mean yet more egg on the faces of the H.P. directors.

Related articles

• Talking Business: A Double Standard at H.P. (nytimes.com)
• In Defense of Standards, Ethic, and Honest Financial Reporting at Hewlett-Packard [Voices] (voices.allthingsd.com)
• VC Ben Horowitz Takes Aim at HP Critics (Are You Listening, Larry and Jack?) (kara.allthingsd.com)
• Larry Ellison: HP Board Must 'Resign En Masse Right Away' (dailyfinance.com)
• Larry Ellison comes out fighting against HP Apotheker 'madness' (go.theregister.com)
• With New Hires, HP Identifies Its Enemy as Oracle (nytimes.com)
• What is going on in the enterprise software space? (kinaxis.com)
• With Hurd On The Street, Now What? (online.wsj.com)

Fat Can Work, But Lean More Often Does

Ben Horowitz: The Case For The Fat StartUp

There are only two priorities for a start-up: Winning the market and not running out of cash. Running lean is not an end..... Sometimes running fat is the right thing to do.....Running fat meant that I laid off zero software engineers so that we could keep on investing in our technology, find our product/market fit, and build a lasting technological advantage..... the only thing worse for an entrepreneur than start-up hell (bankruptcy) is start-up purgatory..... Start-up purgatory occurs when you don’t go bankrupt, but you fail to build the No. 1 product in the space.

Fred Wilson: Being Fat Is Not Healthy

Ben and his partner Marc Andreessen. They have started and built multiple successful businesses and all I do is write checks...... I have never, not once, been successful with an investment in a company that raised a boatload of money before it found traction and product market fit with its primary product.....The very best investments that I have been involved in established product market fit before raising a lot of money. That's how Geocities did it. That's how Twitter did it. That's how Zynga did it..... they had significant user or customer adoption before ramping up hiring and spend..... it is very hard to be nimble and quick when you have hundreds (or even dozens) of engineers and other employees....Ben explains that Loudcloud raised $350mm in four rounds of financing (including an IPO) in the first 15 months of its life. Marc Andreessen and Ben Horowitz can do that. Most of you can not.

Albert Wegner: The Sui Generis Startup

There are extremely few people in the world that can raise money for super high burn businesses on the strength of their vision and reputation.

Ben Horowitz: The Revenge Of The Fat Guy

Fred is one of my favorite VCs .... Product market fit isn’t a one-time, discrete point in time that announces itself with trumpet fanfares....Some companies achieve primary product market fit in one big bang. Most don’t, instead getting there through partial fits, a few false alarms, and a big dollop of perseverance..... I show below that Fred himself didn’t realize that Loudcloud had achieved product market fit even though we had...... We had to rebuild completely and would ultimately find product market fit in a different set of markets altogether....... the best markets are usually the ones in which competition is fierce because the opportunity is big...... Twitter (one of Fred’s brilliant investments) ..... Twitter is more exceptional than Loudcloud or Opsware..... Marc had moved on to found Ning and I was the CEO who nearly ran Loudcloud into the wall.

The real answer to this debate is there is no one size fits all. Fat or thin is right depending on what business cycle the economy is going through, depends on what stage the startup is in, depends on what the eventual size of its market and the startup's share of that market ends up being. There can only be so many Googles, and so many Facebooks. Most startups end up being neither and still succeeding. You can absolutely make the case for fat, but overall it is the lean startup that wins. Fat is few and far between. Some of the fat ones might be some of the biggest winners, but they will still be a numerical minority, a super minority. So if it is about betting, I'd bet on lean. Especially for early stage, definitely go lean. But a startup can start lean and go fat later. There is no one formula.

Loudcloud/Opsware is clearly a fat success story, but that does not make it the norm. The number of lean success stories far outnumber the fat success stories.

Ben and Fred come across as two large size figures in the tech industry who both have much respect for each other. That makes this debate extra interesting. There is this with-all-due-respect deference from both sides. You could argue this whole debate was masterminded by two heavyweights to pay compliments to each other.

Both are right. There is no one formula. The disagreement is in nuances. Ben has done fat well. Fred has done lean well, and many, many times. Can't argue with track records of success. Or maybe you can. Hence the blog posts and counter blog posts.

Ben saying "Twitter is more exceptional than Loudcloud or Opsware" had me chuckling. The statement is so very true.

Related articles by Zemanta

• Jack Sprat and the semantics of startups (feldmanfile.blogspot.com)
• Ning CEO Bianchini steps down to become EIR at Andreessen Horowitz (digital.venturebeat.com)
• Continuations: The Sui Generis Startup (rafer.tumblr.com)
• Startup Funding: Being Fat Isn't Always Healthy (seekingalpha.com)
• Ning's CEO Shuffle: Gina Bianchini Steps Down (gigaom.com)
• Can profitability suck? (jamessiminoff.com)
• Embrace feedback, but don't let it own you (vator.tv)