Smelly Fridge - Different Perspectives = Different Approach

Smelly Fridge

Janet, the VP of Marketing for a startup is preparing for a meeting with a potential customer. Brian, the CEO of the company, self-professed marketing genius, has assembled the team in the conference room for a final review.  Joe, the VP of Sales, opens the small refrigerator to grab a bottle of water.  The air throughout the entire office is quickly filled with a horrid smell gagging the three people in the conference room.  Back to back meetings are scheduled with customers for the next few hours.

Panic sets in.  Suggestions are flying from all three.  Janet runs to her desk and comes back with a bottle of air freshener and starts spraying everywhere.  Brian and Joe are frantically fanning the air using the handouts and their notebooks.  Just as Brian is catching his breath, his Admin announces the first customer is here and she is heading down to get them.

In the afternoon, Sunil, head of engineering walks in the same conference room.  He opens the fridge to grab a bottle of water. The air filled with the horrid smell again.  As he has the door open and is figuring out his options two more engineers walk in.  After a few colorful exclamations, they jump into action.  One grabs the trashcan and removes the source of the smell, leftover Chinese food from last marketing meeting. Water bottles are removed. Sunil unplugs the fridge and with the help of his engineers, take the fridge to the balcony for a proper cleaning and to air it out.

In my experience, this story is indicative of how Engineering and Marketing look at a problem from very different perspectives. In most successful companies, they manage to respect their differences and work together in finding the right solution for a problem.  In some companies these differences lead to animosity and power struggles. In most cases, common sense requires besides looking at a problem from different perspectives, we should also consider time, budget, and resources.  

Pronunciation of Houman (My Name)

My name has been a great source of amusement and frustration for me since I left Iran. Thanks to my parents and the Passport office in Tehran, my name was spelled Houman. Most people pronounce this as "How - man" at best.  This gets quickly changed to Hunan during most initial meetings. I'm assuming this because my name looks similar to Chinese region. On a ticket, an officer spelled my name as Holiman replacing the U by LI. When I went to court, the judge kept calling for Holiman with an unpronounceable last name. It took me a few minutes to realize that was me.I didn't dare correct him. At the end, he announced case against Holiman is dismissed because there was no one to content.

My Starbucks name is Joe. I use Joe Houman for restaurant reservations. I've thought about changing my name officially to Joe Houman or Hank Shafie or many other variations. I know a lot of people in UK and US that have gone through the name change. The process seems painless but I can't bring myself to do this. It might be because I don't have any brothers or sons to carry the name. My daughters bring up the possibility of changing "our" last name. It's now our last name and not solely my choice.

I've had various nicknames since leaving Iran. I went by Shafie while at boarding school in England. Towards the end it was changed to Ponch after Officer Poncherello on CHiPs for those of you old enough to remember that show. This stayed with me through college in Miami. When I got my first real job in Boston I went back to Houman. I've flirted with some other names, my favorite being Sebastian Ibis.

I'd like my name pronounced "who" + "man" or "Who Da Man" without the "DA". The kids in my old neighborhood in  Arizona created a cheer for me" Who Da Man? Houman".

If you thought my last name was wait till I explain the pronunciation of my last name.

History repeats itself

Remember when almost all phones in the world were made by Nokia (2004)? Remember when Motorola Razr was the best selling phone and everyone wanted one (2005)? Where are these companies now? Nokia’s stock prices are near where it was before cell phones became popular in late 90s. Motorola Wireless is owned by Google.

This story is not unique to mobile phones nor to just new technology companies. Once giants like Kodak are falling or have fallen to anonymity. Kodak had a great global brand having many successful product lines and patents across multiple industries. The Entertainment Industry, and many like it was totally dependent on Kodak film and services. Kodak was the biggest vendor for Deluxe Entertainment up until the last few years. Kodak is now in bankruptcy!

The pattern seems to repeat itself. Take a look at Intel. It has been a dominate force since the explosion of personal computers. Intel has destroyed the competition. Their biggest competitor AMD is barely alive. Intel missed the boat on mobile. ARM has dominated that market. Smart Phones and the Tablet market are growing while the PC market is shrinking. Can Intel use it’s superior manufacturing and processes to catch up, or is this the beginning of the end for Intel? It’s conceivable that 5 years from now Intel could be consumed by another company like Google’s purchase of Motorola Wireless.

Will we learn from history or repeat the same mistake? Is EMC too focused on NetApp? Should EMC worry more about the fundamentals of storage changing instead? Will customers buy or rent storage? Can EMC’s salesforce and processes compete with more nimble companies that were created based on the rental model?

Vendor vs. Partner

Part 1 of 3 on IT Procurement

A lot of companies we buy from, want to be our partners or form a collaborative partnership. Having been on both sides, this means, please focus all your spend on us and don't buy anything from our competitors. In return, they offer better pricing, more technical and pre-sales support, ability to influence their roadmap, etc.

The incentives of most sales groups are based on closing deals in a given period. A salesperson is focused on closing deals while preaching long term partnership. The pitch is about long term goals, understanding where we want to go, and helping us get there. In reality, the only things that goes up the chain and is asked for, is how many unit are we going to buy.

From sales perspective, buying IT equipment is not very different than buying a car. Our salesperson plays the good cop by seeking to form a long term relationship. His boss or boss's boss is the bad cop, demanding immediate sales.It becomes a game just like the one played at a car dealership. Salesperson makes numerous unnecessary trips to their supervisor "helping" us get the best deal possible because they are on our side and want us to recommend them to our friends or buy our next car from them.

Purchasing teams and savvy IT purchasers are very familiar with this tactical approach. They leverage it to their advantage by waiting for the deals at the end of the month, quarter, year. For every deal, competitors are pitted against each other. A lot time and money is wasted by everyone in the ecosystem chasing after the deal. In a large deal the number of entities involved and therefore hours spent is very significant. Besides the customer and manufacturer, most deals include a value added reseller, system integrator, hosting, and  financing/leasing. Each group is using business development dollars to win the business. There's only one winner, if you don't count businesses that specialize in business entertainment!

Is there a better way to do this?

Is Western Digital (WDC) a great value?

Jim Cramer/ The Street.com recommended Western Digital (WDC) as a great value based on a P/E of around 6. WDC has a lot of cash on hand and therefore P/E minus cash makes it even more attractive. I'm always looking for companies with a low P/E and PEG for long term investment.  Seeing the explosion of data, I thought WDC would be a great company to invest in.  Is the low P/E justified or is WDC a great value?

Looking at 2012's 10k filling, it appears that the lion share of their revenue comes from PCs.  PCs are quickly being replaced by tablets. Smaller form factor requires smaller drives with lower power consumption. Will WDC be able to compete in that market?  Intel didn't get into the mobile processor market till it was too late. They dominate the PC market which is shrinking while mobile is growing.

Another threat might be the availability and affordability of cloud storage. Will users find it more convenient to store their pictures and music in the cloud or keep buying USB external drives at Costco? My family of 4 has 4 laptops, 2 iPads, 3 iPhones, 2 iPods, a Time Capsule, and numerous USB and Firewire drives.  Most of the calls coming into daddy's service desk are related to "Where is my stuff?" and "How can I get to my stuff?".  Our family CFO and General Counsel, my wife, is very concerned with privacy, especially for our two young daughters.  I think the move to cloud is inevitable!

iCloud charges $20/year for 10 GB of additional space. This is equivalent to $0.16/GB/month which is really expensive. At our company, the goal is around $0.01/GB/month for archive storage but our volumes are much larger than 10 GB.  I would estimate at $20/year the margins are pretty healthy for Apple and they can probably reduce prices to acquire marketshare.  For most Apple users, the convinience and ease of use seems to be worth it.

Is the low P/E justified or is WDC a great value?

Looking for feedback and opinions,

Houman