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Tech Industry

High noon for tech CEOs?

When tech execs from around the world gather in Spain next week, American CEOs can expect to get an earful from their global counterparts. And impresario Alex Vieux will be on hand to stir the pot.

If their counterparts around the globe ever considered U.S. high-tech chief executives too big for their britches, the stunning performance of the American computer industry in the late 1990s bludgeoned them into silence.

But that was before the dot-com bust. When many of these movers and shakers gather next week for a tech summit, don't be surprised if schadenfreude is featured on the menu. Chastened U.S. CEOs can expect to get an earful, but blunt talk will be perfectly fine with Alex Vieux, the impresario behind the three-day Etre conference that starts Sunday in Seville, Spain.

Since it began in 1990, Etre has served as something of a cross-border petri dish where tech executives and venture capitalists mingle and debate the issues dominating the computer industry. This year's theme: Technology's road to recovery.

The annual confab has acquired a reputation as a forum where otherwise-reticent tech CEOs speak their mind. Indeed, a few years ago, former Compaq CEO Eckhard Pfeiffer stood up at an Etre conference in Barcelona and issued a stinging denunciation of Intel's branding campaign that ignited a bitter feud between the two companies.

Before founding his company, Dasar, Vieux followed a career that included stints as an advisor to the French Minister of Industry and a position at Andersen Consulting (now Accenture) in the United States. He also taught at the University of Paris Dauphine and was a U.S. business correspondent for the French daily newspaper Le Monde. Trained in France as a lawyer, Vieux earned an MBA from Stanford University, where he was a Fulbright Scholar.

CNET News.com spoke with the Parisian-born entrepreneur about the contrasting views around the globe of tech executives, entrepreneurship and the future of technology adoption.

A couple of years ago, at the Etre conference in Prague, (then-CEO of Ariba) Keith Krach gave a keynote lecturing the non-Americans there on the superior ethical standards applied by the U.S. tech business. Considering what's happened since then, are there any lessons being drawn by the Europeans and Asians about what to follow and what not to apply to their systems?
I was talking with a European CEO not long ago, and he was telling me: "Isn't it funny. We had all those executives coming over to Etre telling us how great things were, and now we learn it's all been a scam."

Is that an isolated opinion, or does it reflect a larger backlash?
You and I have been in this industry a long time, and we know the reality is neither the one that people are portraying, nor the other one they are (not) portraying. There's the letter of the law that people follow, and the spirit of the law that many didn't follow. Now we're getting to the point where they will follow both the spirit and letter of the law. But what we find is that many CEOs had tenure of less than three or four years. By definition, they were behaving like football players, saying to themselves we'll go and get the most out of it and then be gone.

(CEOs) they were behaving like football players, saying to themselves we'll go and get the most out of it and then be gone.
So there's a credibility gap between what they were saying and what they were doing in their own careers?
A tremendous one. For a number of years--and because of the arrogance going on--there was some lecturing going on. And this lecturing better be reduced. Keith Krach has had his name and picture in Fortune magazine as one of the people who sold (company stock) in 2000 and 2001, and you're not talking about $2 million, you're talking about $200 million--$300 million while shareholders were bleeding. This is a very weird situation. I think the very same speech today would be analyzed with a lot of doubt.

Then how much credibility have American tech CEOs lost as a result of Nasdaq's implosion?
It's not good to throw the baby out with the bathwater. I do understand that criticism must be made; on the other hand, people tend to go overboard. I still think American CEOs are by far the best CEOs that exist in technology.

Are they more humble, given all that's happened the last couple of years?
Humble is not what they are being asked for. They're being asked to execute... It will take a while to sink in, but there will be a new generation of CEOs who accept the idea that making $400,000 is a lot of money. A lot of CEOs today don't think $400,000 is enough for their car expenses. So we have to get these things back in line.

In talking with executives, do you get the impression that they know how long it will take until they find themselves in a recovery?
Every CEO inside and outside Silicon Valley is trying to figure out if we are done with the recession, in the middle of it or just starting--and each of those different scenarios calls for different decisions. I have a job where I'm speaking with ten CEOs a day, and my impression is that there will be no recovery in 2002, very little recovery in 2003 and some recovery in 2004.

You sound awfully pessimistic.
If we want to be optimistic, we'll say, great, the second half of 2003. But the reality is that the early signs that signal a recovery are not there.

Your last conference was held right after the Sept. 11 attacks. At the time, people couldn't fully gauge the economic effects it would trigger. With the lessons of the last year behind them, is there more, or less, certainty among tech CEOs as they talk about the future?
In 2001, people were starting to grasp the ins and outs of the economic slowdown, but it became more complex after Sept. 11. And now people are dealing with the aftermath of a financial crisis (that) was a consequence of the terrorist attack as well as a technology crisis. Also, the future potential of a war occurring is not making it any easier for their decision-making.

What technologies are getting attention outside the U.S.? In Europe, what they are they most interested in? Web services, for example?
European users simply want to be able to make lower (information technology) investments and see faster returns. Web services are a consequence of that situation. Technology as a utility is a profound change. Once you know you can get something at $50 today instead of $500, is why people are going for Web services, for instance, or the ASP (application service provider) model.

It will take a while to sink in, but there will be a new generation of CEOs who accept the idea that making $400,000 is a lot of money.
(Salesforce.com CEO) Marc Benioff talks a lot about the end of software, but do the people you're speaking with still believe the ASP model has life left?
It has life, but Marc Benioff is a great self-promoter who has a great talent for doing that... On the other hand, the reality today is that people cannot go to the board anymore and say we're going to spend $10 million for this or that implementation.

How much buzz is there in European IT circles about Linux?
Let me answer it this way. I'm not excited about technology; I'm excited about what I can do with it. I'm excited by having the application run fast. And this is very important to have people understand. We spent the last 25 years providing solutions that are useful and agreeable, and that you can democratize.

If you (bring about) again an elite group of brilliant people creating brilliant things, that will not do. This is not (the) vanguard. The vanguard has nothing to do with democratization. If I'm a small country, I want to be able to speak other languages, so I can get around. That's what happens to companies; they want to be able get around.

You were born and raised in Europe, and you've lived here for many years. Why has Europe failed to produce the number of great software companies that you might think it should, given the continent's size?
Europe is not one entity. If I were to look at America as a whole and take out five states, there are very few software companies in the U.S. The situation is tougher than we thought in Europe--

Is that because of a brain drain, or over-regulation?
No, I think it's because it takes a number of skills to build a software company that has a global business. Europe has advantages, but some of (them) come back to haunt them.

The example being France and its 35-hour work week, where that sounds great if you're an employee, but not so great for the employer?
That is one. But more profound (is) that you have a situation in the software field, where if a company competes in a 90 million-person market, it ends up growing fast enough just to be content with those things. If you are a Scandinavian or Israeli company, by definition you have only six million people in your home market. So you have to go outside. That's why Nokia is Nokia or Checkpoint is Checkpoint. But that's not necessarily true if you are a German company.

When I said this 10 years ago, most people treated it as a joke. But most of the successful companies in Europe will come from small countries, because the larger companies in the bigger countries have had very little incentive to go beyond their borders.

Is that mind-set changing?
I believe it will happen, because there are countries which have lost a lot. France is one, England being another. They need to do something with all the talent they have.

Speaking of countries with tech talent that's underutilized, will there be many Russian companies attending the Etre conference?
One or two, but that's largely because we didn't go to Russia enough. What will happen there is the same as what happened in India. There will be a huge brain drain, but because there's a huge amount of people of extremely first-class quality, those people will start to work with those who remain. The Russians are very entrepreneurial and creative, and there will be a technology economy in Russia. In fact, I think they have the potential to become tech leaders.

That's not likely to happen anytime soon, don't you think?
I was with the minister of technology in South Korea recently, and he was saying they had numbers showing the market for outsourcing in India ranging to $15 billion to $50 billion. Those are huge numbers. So if you had told me 10 years ago that there would be a $50 billion Indian outsourcing business, I would have said it wouldn't happen. And it's also going to happen in Russia.

Where do you think the next high tech power will come from?
China or India. Over the next three or four years, it will be Korea.