When Lewis Platt early this year announced plans to step down as CEO and eventually chairman of Hewlett-Packard (NYSE: HWP), he said he was going to retire.
But those retirement plans have disappeared before Platt has even left H-P. This week, Kendall-Jackson Estates surprised almost everyone when it announced Platt would take over as its CEO after he leaves H-P at the end of this year. Inter@ctive Investor talked with Platt about going from the top job at the world's largest technology companies to leading a Napa Valley winery, the state of Wall Street and the tech industry, and other issues. Excerpts from the telephone interview:
ZDII: I imagine you had, given your obvious credentials, you had any number of options for your next move. Why Kendall-Jackson? How'd that come about?
Platt: Well, when I made the decision that I'd be leaving H-P at the end of the year, I also made a decision at that time that I was not going to go be a CEO of another company.
It was my intention to, you know, gather a few boards, maybe do some teaching and some consulting. But after you've been CEO of H-P, it's pretty hard to go and be a CEO of another company, and so I said, "That's out of the picture, I'll keep all other options open."
I get a call from a friend of mine who's also a head hunter who was doing some work for Kendall-Jackson, and he said -- he happened to know my interest in wine -- and he said, "You ought to take a look at this." And one thing led to another, I went up and met Jess Jackson and met some of the people up there and learned more and more about the business, and just decided that this would be a great way to spend a few years, the sort of next, or second, part of my career.
ZDII: Was the fact that you're an avid wine collector, did that play a big part in this?
Platt: I have a strong interest in wines, have had for the last 20 years, and a lot of my social life revolves around wine. We do a lot of charity things around wine, and so it's been a big part of my life. And the opportunity to get involved in the industry was something that I frankly had never thought much about; but when it presented itself, and particularly when the Kendall-Jackson opportunity presented itself, I had to look seriously at it.
And I say particularly Kendall-Jackson for a couple of reasons. Number one, it's a substantial operation. It's not just, you know, it's not just a hobby, it's a real company, and there's an opportunity to exercise real CEO skills there. But it's also a company that has a set of values that are pretty consistent and common with H-P's values. I'd have a very hard time after 33 years going to a company that didn't really emphasize people, and quality and value and innovation and all the things that H-P is known for, and I found all those things alive and well at Kendall-Jackson in a very different industry.
ZDII: What do you bring from your H-P experience that applies here? And if you could contrast the two industries for me.
Platt: Well,I think what I bring is CEO skills, quite frankly. And probably another thing that they found interesting is a lot of experience in overseas markets. They do not have a large presence in overseas markets today, and would like to have a bigger one. And as you know, H-P has more than half of its business in overseas markets, and has had for a long time. I've certainly had a hand in developing the overseas markets and have spent a lot of time operating in them. So I those are two things, I think -- basic CEO skills and strong knowledge of overseas markets -- that they found interesting.
Obviously technology is of some interest, but I think it's easy to overplay that. Every company today is trying to employ technology to try and improve its own operations as well as a way to reach consumers, so obviously I will bring some of that from H-P with me.
And I think the final thing that I found attractive about Kendall-Jackson, and they probably found attractive about me is just this common set of values, this sort of -- the culture of the company, the way of treating people. All those things, I think, were very important to Jess (Jackson) as he thought about moving on as a founder and thought about, you know, who's going to run on the company on a day-to-day basis when he's not doing it. He wanted somebody who he thought would respect those values.
ZDII: Have you been approached by other technology companies as a possible CEO? Did anyone else try to contact you about that?
Platt: Oh sure, I was contacted by a number of people, mostly smaller companies. I think everybody realized that I wasn't go off and run some comparable technology company to H-P, not of comparable size. But a lot of start-ups, people who were interested in having a CEO for awhile, or a non-executive chairperson on the board. Yeah, I had lots of contacts like that.
And that was, some of those things were interesting to me, by the way, but this opportunity to start and really do something entirely different, go up a steep learning curve again in terms of the business, was what really excited me.
ZDII: Let's talk a little bit about H-P and your successor there. Your successor got a short honeymoon on Wall Street, but probably since about mid-September or so, at least judging by the share price, the Street seems to be getting a little restless. (Note: Two days after the interview, H-P stock shot higher following an upbeat fourth quarter report.) What's your impression about what Carly Fiorina has done so far?
Platt: Well, I think Carly's brought a tremendous amount of energy to the company. I mean, you can see it in everything she does, whether it's the public appearances that she's making on the Today show this morning or at Comdex yesterday. So I think obviously, her personal presence and her charisma, I think brings a lot to the company. It's very energizing for the people here.
She's really done a major piece of work around brand, and helping refocus the brand. I think she's doing all the things I hoped she would do, in terms of bringing new energy, fresh perspective, while still being quite respectful of the core values of the company. But (she's) asking a lot of questions, and frankly taking on some projects that I either wouldn't have done because I didn't recognize how broken some things were because I've lived with them too long, or frankly may not have had the courage to do. So she's, I think, just done a terrific job.
You know, she's living with a couple of things right now, in terms of the stock price, a whole bunch of things that happened around us in the industry. I mean, there were a series of reports, whether it was Xerox or Lexmark or Unisys or IBM, I mean, the reports came thick, left and right, they were pretty thick and the news was generally bad. And a lot of our falloff came then, when other people were reporting disappointing results. And then we had to tell the Street ourselves that we thought we were going to fall short of where they had originally pegged us. So all those things are what caused the share price to go down.
I wouldn't -- you know, that (stock price) is a very poor way to evaluate Carly's first 100 days, frankly.
ZDII: Well, that's how (Wall) Street does it, fairly or unfairly.
Platt: Well, that is how the Street does it, but they ought to give her a chance to put her programs in place and see how they work.
ZDII: Actually, I want to ask you about that, especially since you're probably in more of a position to comment on it now. Is the enormous Wall Street pressure -- it just grows every year -- is that kind of stock market pressure on tech companies a good or a bad thing?
Platt: Well, I think some pressure is always good, frankly. It helps to have the presence of the stock market and shareholders to wake up to every morning, to make sure that you're doing the very best job that you can.
Having said that, I think of late, the emphasis on short-term results, I think, is beginning to take its toll. I commented on that in the Wall Street Journal piece this morning. You know, I think it is making it more and more difficult for CEOs to make great long-term decisions that might cost them in the short-term. And I think capital that's a little bit more patient would get better rewards in the long run.
So I'm a little troubled by the very short-term nature of the market these days.
ZDII: Do you think that there's much that can be done about it?
Platt: No, probably not.
ZDII: You also referred to the fact that some of (H-P's) peers put out some below-expectations reports. H-P obviously isn't the only hardware manufacturer trying to remake itself, you have Compaq, SGI and some of those guys out there who are trying to, I guess, retool themselves. Do you see any common thread among some of these older hardware firms, or more established ones?
Platt: Well, the only common thread is that it's an incredibly competitive market these days. And because it's incredibly competitive, everybody is searching for new models, new businesses, ways where you can find a business and have a little bit more margin in it. (That's) one of the things that's attractive about going to Kendall-Jackson by the way. (laughs)
ZDII: Is part of Kendall-Jackson's attraction the fact that it is a smaller, privately-held firm?
Platt: Yes, it is private. Yeah, it gets you, at least today, it gets you away from the month-to-month and week-to-week pressures of Wall Street. It is smaller, you know, it reminds me of an H-P division, and I'll tell you, running an H-P division is still one of the best jobs in the company, I love doing it. I like the notion of being able to actually know almost everybody in the company by a, on a first name basis. So all those things are -- yeah, they are attractive.
If you're going to do something, I think doing something that's simply, you know, more of the same, an extension of a 33-year career, to me doesn't sound as exciting as doing something that's totally different. Really, a second career.
ZDII: That brings up another question. I'm wondering -- back in March, when you first announced your decision, I think one of the things you mentioned was that you're only two years from H-P's mandatory retirement age anyway, so this was a good time to do it. If that retirement age didn't exist, would you have chosen to stay longer, or given the industry trend, do you think you have done this now anyway?
Platt: I might've done it anyway, in all honesty.
I think, first of all, seven years isn't bad tenure as a CEO. I think fresh perspective, move on quickly, is something you're going to see happen more and more often. I think younger people tend to be in somewhat better touch with the technology today. So I think you're going to see a trend toward relatively short tenure and for relatively young people to be running these companies.
ZDII: So when (Cisco CEO) John Chambers says that he wants to be you when grows up, as he said a few months ago, does that indicate that this is perhaps an industry for people who haven't quite grown up yet?
Platt: Well, I don't think John Chambers -- I mean, I'll let John speak for himself, but I don't think John's a person who'll work till he's 60 either in this business. Seriously, I really don't.
ZDII: Do you ever foresee a return to the IT field at this point, or is this it?
Platt: Well, I'm going to keep my hand in through some, you know, activities, involvement in some smaller companies and some boards, so I'm not exiting the IT industry. I love it, really I find it exhilirating and exciting. Am I ever going to return to a major position in the IT industry? Probably not.
But you can still have an impact and be involved. I mean, John Young, you know, who preceded me as CEO here, you don't see his name as, you know, CEO of a Fortune 500 company, but he's very involved in the industry and I think really enjoying himself. QAFOLKS>