Palm ruins another career
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, an unregulated natural monopoly, enjoys network effects so large that, after 1998, it would have wildly succeeded with a chimpanzee at the helm. Form that mental picture before voting in Ms. Whitman as governor. Not to say she’s bad — maybe she’s great. But we have no evidence either way, because eBay’s strategic advantage renders good leadership almost immaterial.
As regards Palm, my opinion (as head of a top-5 Palm software developer during the peak of Palm’s popularity) is that Palm’s window of opportunity had already closed before Ed took command.
Colligan will do great in private equity. It runs in the family: his older brother Bud, also sharp, is a GP at hoary 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 and/or feathered by Palm’s decline. Judging from his Apple career, he is a brilliant product guy (caveat: he’s the first Palm CEO that I’ve never met). And Rubinstein’s own reasoning is obvious — no one can rise above VP at Apple. But Palm has none of Apple’s advantages: scale, the network effect of iTunes, retail distribution control, and the Apple brand.
Palm’s only realistic window was far earlier, ending in perhaps 2003. At that point they had most of what Apple has now and a few things Apple doesn’t: leading share in smartphones, multiple carrier relationships, and a huge, experienced software developer base, many times larger than that of any competitor.
That’s all gone now, and Palm is trying to scale a smooth teflon wall with its bare hands. Maybe Rubinstein will find a career later in private equity. It’s more forgiving, and intelligence is more predictably rewarded.
The calculus of joining a 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. Two facets of that dialog are relevant here.
1. Palm’s strategic options are hamstrung by its misplaced consumer ambitions
Our talks ended immediately after I proposed a product strategy: abandon the hopeless quest for 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. (Apple did all of this a couple of years later.)
My position, then as now, was that Palm was already doomed as a consumer play, for lack of scale. Any ephemeral market share gain would be pyrrhic, because mass market consumer phones have very low margins. Motolora’s travails illustrate the problem. Even for Apple, many times larger, with a strong brand and distribution advantages, success with the iPhone was by no means assured, and even now enjoys high margins mainly because of the network effect of iTunes.
2. Promotion to First Officer — of the Titanic
From a career perspective, would it have been worthwhile for me 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…