Silicon Cowboys Page #9

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What are your plans?

Oh, no, the fun is still there.

The challenge is different,

that's all I can say.

There's nothing quite

like starting a company

And having it grow rapidly.

As we moved to a

fortune 500 status

And then approaching the

billion dollar level,

The problems are different.

Rod canion:
We knew

we needed a leader

To build a team in europe,

and through a recommendation,

We contacted eckhard

pfeiffer and very

Quickly he joined

the company and began

To build our european team.

We decided that we would

go into the major markets

Right from the start, which were

germany, the uk, and France.

And from then on

expand gradually

Into all the other countries.

He was more accustomed to

high volume manufacturing,

Get the cost out,

kinds of situations

And that's exactly what compaq

needed with the new lower

Cost product line.

In our ceo forum this

week, we take a look

At the art of competing on

the international scene.

American companies

versus the japanese.

Do you worry about

the competition that's

Coming from the far

east and from europe,

Particularly in the

computer industry?

The japanese certainly

have a lot of strengths.

The japanese company has major

competitors in the long term.

Foreign manufacturers

got to be pretty good.

Quality improved, and

essentially, for someone

Like compaq, they no

longer could get that price

Advantage that they once had.

You wouldn't want to buy these

things for $3,000 anymore.

Could you buy them for $1,000?

Do I hear $950?

Announcer:
The new notebooks

like toshiba's t-1000,

Tandy's 1,100-fd and

zenus mini sport are

In the $1,000 to $2,000 range.

At the high end, about

$4,000, compaq lte 286.

We had companies like

dell computer actually

Begin to build better

and better products,

And they were selling

them at a lower price.

Announcer:
Compaq,

the houston giant,

Has been facing an advertising

assault from the much

Smaller dell computer.

The industry can't recall

anything like these biting ads

Comparing features and price.

The dell ad calls dell

appealing and compaq appalling.

Dell, top of the mark.

Compaq, top of the mark-ups.

Compaq is not amused.

You can't survive, I believe,

for very long at least,

Just by selling the same

products at a lower price.

Bill fargo:
And

there were people

Who said we need to get a low

cost product out there now

And take on these people.

That was primarily

led by pfeiffer.

I think it has been

a little bit more

Difficult for them to

keep up with the changing

In technology.

Announcer:
Compaq, a

darling of wall street

That could do little

wrong in the past,

Found itself on the

market's bad side last week,

Compaq's stock plunged.

Announcer:
On paper, combined

losses to all shareholders

Of more than $740 million.

It certainly is a stumble in

the eyes of the stockholders.

We didn't want to disappoint

relative to expectations,

But I think you've got

to differentiate that

From the actual

health of the company.

Ben, with some

prodding from pfeiffer,

Was becoming paranoid that we

would not be able to recognize,

And switch, and move, from as

high a quality provider as we

Were to low cost computers.

Ben rosen:
We certainly

started seeing changes

In marketing strategies,

changes in the competitor base,

Changes in the

importance of pricing.

The essential view

was that rod could not

Adapt to what the company

needed going forward.

Ben had other

concerns about it.

He was more concerned

about me losing

Commitment to the company.

Rod was working on

a low cost concept,

But I don't think he was pushing

it enough to satisfy the board.

The chairman of your company

is a guy named ben rosen.

What's the chemistry

between the two of you?

I'd say ben and I

are very good friends.

Ben joined compaq at a time

when we were just forming,

And I think he's played

a key role in helping

Guide us along the way.

We have a lot of mutual

respect, and we bring

Different things to the party.

Roger mcnamee:
You have to

give ben credit for two things.

One, he saw that the

vision was a real vision.

He got it right away because

they did finance the plan,

And then at each

stage thereafter

He encouraged and supported.

Without ben rosen compaq

computer corporation

Would not be where it is today.

Bill fargo:
The

board did not want

To take any action against

rod, but they got to the point

Where they felt like

we had to do something.

Jim harris:
Ben decided

that he might want

To create a situation

where there's

Kind of two bosses,

pfeiffer and rod,

Because of a loss

of confidence in us.

Roger mcnamee:
There are

some management changes

That you make because an

opportunity is created

By bringing that new person

in, and even at the time,

There was no evidence

of that at compaq.

Hugh barnes:
I don't

question the motives of it.

I think ben was

genuinely concerned,

I mean there's just

no doubt about it.

Jim harris:
Rod

wouldn't compromise

And take the dual leadership.

We were getting ready to have a

board meeting and rod told me.

He said, you know, jim,

they're going to vote

Today on whether to remove me.

My attitude when we

started compaq was I

Would be ready to move aside

if that ever was necessary,

And I thank the other

founders of compaq

Had the same attitude.

That night of

the board meeting,

It was 10:
30, 11:00

o'clock at night.

I got a call from jim.

Kim walker:
I can

only say there was

Open weeping in the hallways.

Bill fargo:
Going on without

him was almost unimaginable.

Charles lee:
I had

quit compaq that day.

Kim walker:
It was

like the heart and soul

Of the company being torn out.

Jim harris:
I went ahead and

turned my resignation in.

Rod canion:
I cannot even

think of being tired of what

I'm doing and the

opportunity that I

See at compaq in

the same fault--

They are two different things.

I see so much

challenge out there,

A challenge that, I

believe, we're capable of,

And yet I really want

to see it through.

Roger mcnamee:
Ben

convinced himself that this

Was the right thing to make.

Bill fargo:
He lost it.

He said several tears

over the decision.

Hugh barnes:
It was inevitable

that there'd be a change.

Rod canion:
It was

a very sad time.

It sunk in, what had really

happened and what it meant.

It took a very

long time before it

Finally began to feel normal

not to be there every day.

It was tough, it was tough

on-- it was hard on me.

Roger mcnamee:
Compaq's

focus on portability

Was the beginning of

mobility and mattering

To the technology industry,

and everything that we do today

Is really driven by

the ethic that if you

Can't do it while you're moving

around, it's not very valuable.

And we can thank

compaq for all of that.

My dad would always look at

some of these cell phones,

Or some of the newer

computers, and say,

Are you responsible

for all of this stuff?

Well, yeah, it's a good thing.

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