Former HP Global Gaming Head Rahul Sood Talks About Acquisitions, Brands, And Palm

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Curious to find out the possible thinking behind HP’s recent actions, we began to look at the parallels in past behavior by tech giant HP. The most interesting example comes from VoodooPC, one of the first high-end gaming PCs for the mass market. Led by Rahul Sood, HP bought VoodooPC in 2006 and the last product to come out of that branch was launched in 2009.

In short, we wanted to know if HP really was where good ideas go to die.

Mr. Sood was kind enough to answer a few questions.

TC: We at TC have been talking about how great VoodooPC was. We all loved the hardware and I remember unpacking the boxes and hearing the drums. It was consumer done right. I also think there are a lot of parallels between Voodoo and Palm in this case. Do you agree?

Rahul Sood: I appreciate the kind words, and I know my friends at HP will also appreciate them as well. Let’s just say if you’re going to make a strategic acquisition, no matter how large, you need to have patience to blend cultures and allow the companies to mutually flourish.

It’s been less than a year since I left HP – and about 1 year since the Palm acquisition was announced. One year goes quickly in a large organization. It takes the average person 8 months to “on board” themselves into a new organization.

I think these acquisitions should be protected by people who can effectively blend cultures and who can curate a vision that people can rally around. …and did I mention patience? If you don’t have patience you risk blowing up the strategy.

Yes there are plenty of parallels between Palm and Voodoo that could be drawn. If future Rahul could go back to 2006 Rahul I would have some good advice for him — but believe it or not I still would have gone through with the deal, but I would have managed it differently.

TC: What could have HP done to save the TouchPad? Anything?

RS: I find it interesting that the TouchPad went from a total failure to selling out just by changing the price. It proves that there is a market, somewhere between $100-$300 for this product. It also brings up some fundamental business rules that go back to the days of Sun Tzu;

“When strong, avoid them. If of high morale, depress them. Seem humble to fill them with conceit. If at ease, exhaust them. If united, separate them. Attack their weaknesses. Emerge to their surprise.”

In the case of the Touchpad HP tried to go head to head with Apple, probably not the right approach, especially since they launched it when it wasn’t fully baked. Either way, you should not go head to head with Apple, there’s no need to.

They could disrupt the market at a lower price to gain significant adoption of webOS, and then work to build some back-end recurring revenue via applications, partnerships, search, shopping, etc.

They could eventually turn up the heat and scale the business by open sourcing webOS and building a solid app model that caters to their enterprise customers.

There’s plenty of ways the TouchPad could have become a success – but it takes time, patience and vision to figure it out.

TC: Where is HP headed? Do you have any idea? Will they go the IBM route?

RS: By “IBM route” I assume you’re comparing HP PSG to Lenovo (or what once was IBM’s PC business). I disagree with this widely quoted comparison.
HP PSG is a giant with an insanely large footprint. Their biggest strength is the number of “ports” they have in the market The world needs hardware to make money on software. There is no bigger hardware company than HP. If only they could better leverage their footprint in a meaningful way they’d be almost unstoppable.

So if they choose to go “the IBM route” HP risks missing the winning formula of IBM and they could end up forgetting about the consumer and focusing on the enterprise. In my opinion catering to the “enterprise” is such an old school way of thinking.

Companies should cater to people, and the enterprise will follow, because real people run the enterprise. RIM is having a tough time because the competitor that displaced them is catering to real people.. not Wall Street… not the enterprise.

I also find it telling that an officer of the company was quoted on CNBC yesterday saying, “HP’s board of directors will make the final decision in the best interest of our shareholders”. I believe if you build beautiful products that excite your customers then shareholders will ultimately benefit. I believe if you cater to shareholders then customers will suffer.

So if you ask me where HP is heading, I would tell you listen to what the leaders are saying and try to make sense of it. I think they have giant problems to solve, lots of complex internal issues, and when you’re under stress you sometimes overlook things.

TC: It’s amazingly frustrating to see good products give up the ghost. How did you feel about Voodoo? Do you miss the brand?

RS: I still have a Voodoo tatt on my leg. I have Voodoo branding throughout my home. Voodoo will always be a part of me, it was once a huge part of HP’s strategy and I can’t help but feel bad about it. Yeah I miss the brand, the people, the culture. …but I made the right decision to move on, I was too emotionally attached to it. I love Microsoft’s entertainment business, it’s such a fun place to work. It reminds me of Voodoo in many ways.

TC: What does a company need to be successful in branding and consumer sales?

RS: A company needs to know who they are and where they came from. They need leaders who dream about their products and experiences creating the vision with people who dream about rows and columns supporting them. They need to establish a clear vision and strategy that people understand and can rally around.

They should live, eat, breath, sleep the brand – and they naturally become evangelists for it. The successful brands establish a soul, the brand becomes a living breathing entity within the DNA of the organization.

They also need great people. The best of the best… Finding and retaining these people is difficult — especially when you are in the Valley. Never has there ever been a better time for cool start-ups to get their juice. The acceleration for growth on tech start-ups is so slick that we’re seeing companies go from 0 to hundreds of millions or billions in valuation in less than 5 years. It’s unbelievable.

So the talent pool for great “Tech DNA” is getting smaller and smaller – and the Valley is easily the most competitive area on earth for attracting and retaining great talent. Think about it, you’ve got Facebook, Google, Apple, Zynga, then you’ve got companies who haven’t upgraded their facility in decades. As a college grad you can go to Facebook or Google and work in a beautiful inspirational environment — it’s hard to compete.

As companies mature, people start to look elsewhere to expand their horizons. HR and Recruiting could be one of the most important strategic functions of any business in the tech space….and yet in some cases they are probably the area that get the least investment because they are setup with the wrong charter.

This is why I find Microsoft fascinating. Microsoft is the oldest, most established tech company, they have done a great job of keeping up with the times. You should check out our facility in Seattle… It’s pretty sick…

TC: Can you buy Palm and run it for all of us? You have that kind of cash, right?

RS: I think HP should open source webOS. I think the vision of breaking up HP is cloudy at best. I did ask HP many times to sell Voodoo back to me, even came up with a couple of proposals. If they open sourced webOS and gave me back Voodoo then we might have something. Maybe Arrington can pull some strings and we can go into business together?

I would like to end by saying that HP treated me with the utmost respect. I was super stoked when we were building cool products like Voodoo ENVY and HP Blackbird and helping to shape HP’s overall strategy. I was sad to leave the company, but I was left with little choice. I’m very happy where I am now. Microsoft’s entertainment business is such a cool place to work — I mean really cool.

I would encourage your readers to check my latest post on HP, I’m going to write a series of them in the next week or so.