Good business => good reputation
Ed Colligan today is officially out as CEO of Palm, ostensibly due to the fizzled Palm Pre product launch. Perfect example of Warren Buffett’s aphorism that when a good manager runs a bad business, only the reputation of the business survives.
We routinely confuse great businesses with great leaders. For example, eBay was a natural monopoly almost from inception. It enjoys network effects so large that, after 1998, it would have wildly succeeded with a chimpanzee at the helm. Think about this before voting in Ms. Whitman as governor. Not to say she’s bad — maybe she’s great. The point is we have no evidence either way, because eBay was such a great business that good leadership was unnecessary to its success.
As regards Palm, my opinion (as CEO of a top-5 Palm software developer during the peak of Palm’s popularity) is that, barring some hail-mary move, Palm’s window of opportunity had already closed before Ed took command.
Ed will do great in private equity. Apparently it runs in the family: his older brother Bud, also very sharp, is a general partner at top-tier VC firm Accel Partners. All longtime Palm folks who know Ed expect his best work is still ahead, now unencumbered by Palm’s limitations.
So now it’s Rubinstein’s turn to be tarred (perhaps even feathered) by Palm’s decline. By all indications, he is a brilliant product guy (caveat: he’s the first Palm CEO that I’ve never met). And the personal choice is obvious — he would never get to run Apple. But as he no doubt knows by now, Palm has none of Apple’s competitive advantages: scale, the network effect of iTunes, retail distribution control, and above all the Apple brand.
Maybe Rubinstein will find a career later in private equity. It’s more forgiving, and intelligence is more predictably rewarded.
Side anecdote — my almost career at declining Palm
Palm’s executive headhunter approached me around 2004 as a potential VP of product marketing. Terrible fit, for a number of reasons on both sides, not least my total lack of public company marketing credentials. But two parts of this are relevant here.
1. Palm’s strategic options are hamstrung by consumer ambitions
Our talks ended immediately after I outlined a proposed product strategy: abandon the hopeless quest to gain scale in consumer phones, and focus instead on ”enterprise” phones: ruggedized, WiFi, barcode reader, high-resolution camera, and deep software API. Acquire Symbol Technologies, the largest industrial PalmOS hardware vendor. Own the market for insurance claims adjusters, inventory clerks, security guards, etc. Leverage Palm’s only hard-to-copy advantage — the world’s largest base of mobile software developers — with a more sophisticated OS and radically simplified software installation and update system. (The latter is is exactly what Apple did 2 years later.)
My position, then as now, was that Palm was already doomed as a consumer play, for lack of scale. And success would have been pyrrhic, because mass market consumer phones have very low margins. Even for Apple, many times larger, with a strong brand and distribution advantages, success with the iPhone was by no means assured.
2. Promotion to First Officer — of the Titanic
From a career perspective, would it have been worthwhile to become VP of a public company in terminal decline (if offered, which it wasn’t)? Probably yes, but not at all clear. So I can really appreciate Rubinstein’s calculus in joining and remaining at Palm.
Who knows? Had I gone there, I might by now be settling into a comfortable semi-retirement in private equity…
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