Marc Andreessen as Interim CEO of HP

by Scott

Perhaps I am getting too out front on this issue, but the pieces are really starting to fall together for the decision to put in Marc Andreessen as the Interim CEO of HP[11.A note to future readers: as of this date Sunday, 8/15/10 no announcement had been made ;) ].

It is now clear that the ouster of Mark Hurd by the Board of HP was a manufactured crisis, but the immediate perception of this being a hasty move still stands: this was a hasty, manufactured crisis.  The hastiness was most revealed in the installation of the CFO, Cathie Lesjak, as the interim-CEO.  From everything I’ve heard of Ms. Lesjak she is an extremely competent individual, no lightweight, but regardless of competence the optics of installing the CFO as the interim-CEO really makes this state of affairs an untenable situation.  Putting in your CFO is the equivalent to hanging a Gone Fishin’ sign in the storefront for all your employees, partners, suppliers and customers to see.  If it is going to take before next Tuesday to find a full-time CEO, and this being a +$114B company I’d imagine it would, the Board of HP needs a new, longer-term interim-CEO ASAP.

The way things are leading this new interim-CEO may very well be Marc Andreessen who has been put in charge of the CEO search committee. If you reread Joe Nocera’s nytimes article about the ouster of Mark Hurd in the context of putting in Marc Andreessen, things start to become more clear. The article is here:

Joe Nocera: Real Reason for Ousting H.P.’s Chief

Takeaway: this was indeed a hasty decision and it’s clear that the current Board of HP is subject to being gamed.  During any manufactured crisis there is one person, or one faction, that is beating the drum on the issue and leading the Board up to what I call the “false dichotomy decision” that is the climax of the manufactured crisis.  Is Mark Hurd a “moral person” or an “immoral person?” Well, Mark Hurd is neither a moral nor immoral person.  Just like the rest of us, Mark Hurd has aspects of both in his personality.  Now if the Board of HP is never put in a position where it needs to decide “moral/immoral” then everybody is happy and we keep making our numbers.  But the Board was put in that position, and it was put there by a single person or an interested faction.  I address this not as a comment on the wisdom of the ouster but instead to illustrate the decision making dynamics of the Board of HP.  It should be said that I have no first hand reports of the current decision making dynamics.  From all of my usual sources it seems that the Board is on total lockdown: a bunker mentality.  This isolation only serves to increase the Board’s subjectivity to being gamed.

One of the “honest” motivating factors for the manufactured crisis was the gap between external perception by Wall Street of Mark Hurd as the savior of HP and an internal thesis that Mark Hurd is “burning the furniture for heat” and making his self-imposed financial targets by devastating the company’s future competitiveness.

It’s hard to understate how strong and mono-cultural is Wall Street’s belief in the story that: “HP’s financial performance is driven by Mark Hurd, operations wiz.”  If you are HP you better have a damn good alternative if you want to convince Wall Street of something else.  The Board faction that manufactured the crisis saw an opportunity to take, what is by all reports, very minor peccadilloes on Mark Hurd’s part and use that as cover with Wall Street.  Essentially messaging to Wall Street: we are totally onboard with the Mark Hurd Plan that the both of us love so much, but damn, we were blocked from keeping him by the fact that he is “immoral.”

One unfortunate aspect of American Corporate Governance as it exists today is that all of our large corporations are run by dudes receiving facsimiles in their den and/or getting monthly board packets Fedex’ed to them at their town home or their country home depending on current exigencies.  These individuals are called “Board Members” and they do this work part time and for compensation that is required to be no greater then an amount that would leave them completely indifferent to keeping this gig.  As a consequence of this arrangement, nobody on the Board of HP had the time to develop an alternative strategy to the strongly entrenched Mark Hurd Plan and message that to Wall Street.  There is no budget in place or standing resources that the Board can access to start the transition.  So there was a golden opportunity to use the Hurd Peccadilloes to bridge what would otherwise be a brutal transition from the Hurd Plan to a new plan.  Yeah, you’ll take a hit with the scandal resignation but it’s important to keep Wall Street thinking we still are on the Mark Hurd Plan while we get an interim CEO in there, somebody with some real time to devote to this thing, and have him work on the new plan. The interim CEO can develop the “Reinvest in the Future” plan and communicate that to Wall Street when it’s fully baked.

Along with the under-investment critique there is also a perception that HP has lost its “Technology Mojo” and the company has no strategic vision on the direction of the industry.

The question almost becomes: “whom better than Marc Andreessen to lead the technology and strategic revitalization of HP?”  It would be a crystal clear message to the tech industry that HP is aiming to be a technology player again.  Internally, HP knows that it has —zero— ability to recruit and build a cadre of game changing technologists.  Somebody very high up in BD told me with shocking plainness that the only hope HP has of attracting top tech talent is to do “talent acquisitions” of startups whereby HP would buyout the startup company solely for the purpose of hiring that team as a group.  The back of the envelope was that HP would pay $1 million per developer.  Ouch, and you thought you had a recruiting problem.

In the case of humbled giants like HP, top talent is always a sucker for the pitch that “this is a huge platform.”  Top talent knows that if you multiply their talent by the giant size of HP some really great things could happen.  That pitch goes nowhere when the ATM Repairman (Mark Hurd) is at the top of the organization. Marc Andreessen and his considerable tech cred could serve as a rally point for top talent to meet.  It would give the top talent a reason to take the risk and bite the hook on “this is a huge platform.”

And Marc Andreessen has serious tech cred.  Netscape remains the purest example of the Valley Dream (besting Goog).  Opsware is still considered a win though somewhat diminished by the chicanery needed to get it over the finish line and ironically a bit by its pre-cloud cloudness.  It’s sort of like Andreessen’s design for a nuclear powered car (called the Neucleon).  Instead of getting praise for presaging the electric car it’s derided for the wrong way bet on the “peaceful atom.”

Let’s forget Ning.

Most salient, however, is Andreessen’s role in Andreessen Horowitz– he’s really crushing it there.  We could be looking at full-fledged Act 2 stuff here.  Great, great results.  So really positive tech chops.

But old perceptions die hard, in the minds of many this is still the guy that[22.Sorry Marc, it’s ‘shorthand’ these days] … was photographed barefooted on the cover of Business Week.  The exceedingly coarse grained view from Wall Street never saw the details of his post-Netscape accomplishments, the solid track record of continued success and growth.

Now Steve Jobs had numerous barefoot photos floating around but his appointment as interim CEO of Apple was the last-ditch move of a seriously damaged company.  HP is a fully valued company and is considered a financially complicated conglomerate with sizable international businesses.  HP is the kind of company Wall Street loves to see an establishment Technocrat run.  Putting in a “young techie” as CEO would, unfortunately, bring more comparisons to Jonathan Schwartz[33.Ellison on the Sun ex-CEO “Great blogs do not replace great software. Lots and lots of blogs does not replace lots and lots of sales.” [link]] than to Steve Jobs.

I initially viewed this as impassible but there are suggestions of a possible path forward.  Appoint Marc Andreessen to interim CEO on a “short-term” basis to solve the immediate need of getting a new interim CEO.  The optics of CFO-to-interim-CEO is as bad as it gets so it can’t get worse and at a bare minimum you are at least adding a known name to the marquee[44.Known in the sense that this person is a known player in *this* situation, the HP situation.]. If Wall Street has faith in Ms. Lesjak to be a stable caretaker, even in the worst case scenario adding Andreessen, a known name, cannot be destabilizing enough to undo Ms. Lesjak’s stabilization.  And again, at least you have one more name on the marquee, a name which is known (ok, ok, I think I have made my point ;).  I think that it is also very telling that the Board of HP invoked the “Andreessen Totem” in its initial announcement of the Mark Hurd ouster by stating that Marc Andreessen was leading the CEO Search Committee.  The Board clearly thought the “Andreessen Totem” had value, so, might as well use that value full time, non?

One can see how this could be brought about by an interested faction of an isolated Board in crisis mode.

Where things get interesting is the mid-game. Continue stable caretaker management while Mark Andreessen works on the plan for the technology and strategic revitalization of HP.  Use the additional time and breathing room to recruit a top caliber COO to make the trains run on time and to satisfy Wall Street that this international conglomerate will be financially managed.  You can get a top caliber COO because if things nosedive it’s Andreessen’s name that’s getting all the press, and the real kicker for recruiting is, you can make a very credible promise to the COO that’ll he’ll get the brass ring (the CEO slot) in 5-years (or less).

Marc Andreessen plus a top caliber COO is the team that has the potential to sell the new plan (organic growth/franchise value) to Wall Street and then actually go out and execute.

Crises Precipitate Change – Deltron 3030