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Eric Benhamou & the Turnaround of 3Com (Part 6)

Posted on Saturday, Aug 25th 2007

After the merger with 3Com, the company faced some significant internal challenges. There were two opposing business strategies, and clearly only one could be followed. This set the stage for Eric, not yet 35 years old, to become the CEO.

SM: Was the 3Com merger when Metcalfe was running it? EB: Bill Krause, Metcalfe was CTO. We started some initial discussions. No one was forcing us to do anything but everyone felt that it made sense. It was highly complimentary, and there was only one thing that gave us some pause at Bridge. At the time, 3Com was behaving like a computer company, acting as if networking was an interesting thing you had to do, but that it was not their primary concern. They really seemed like they wanted to build computers and mainframes. In 1987, just before our talks became serious, 3Com was almost combined with a computer company whose name I have forgotten. In 1986, they were abandoned at the altar by their acquirer, so they had a bit of egg on their face.

SM: So you were concerned that their vision was significantly different? EB: Exactly correct. We ended up combining with them, and we came together in a 45/55 combination in October of 1987, I still have the T-Shirt – “Bridge and 3Com, an Unbelievable Combination”. It became a substantial networking company of about $200 million, which was the largest at the time.

SM: That is a huge company for the time and the industry. EB: It turned out to be a very difficult period because this merger proved to be very difficult to implement. The point that I mentioned before, that they had not figured out if they wanted to be a computer company or a networking company, came back to haunt us, as it turned out to be a huge issue because as we were born to be a networking company. Bill Krause came out of HP, and he saw the world as computers and thought networks were an interesting way of connecting computers. He saw 3Com revolving around computers and storage.

Metcalfe was mostly absent from the debate, he was taking some time off. In 1988-89, we had difficult years and the company went backwards. The fact that we had a divided strategy, where people had not bought into the same vision, combined with the fact that culturally the two companies proved to be very different, made progress very difficult.

3Com was a typical HP culture, fairly process oriented, form over function, detail oriented. Bridge was far more rough and entrepreneurial, really quick technology, and substance trumped form. We would show up at business reviews with handwritten slides which had really good content. The 3Com counterpart would show up with PowerPoint. They were slick. It was well presented, but sometimes they had very weak content. It was a definite clash of cultures. It turned out to be almost fatal to the company. This is the backdrop to how I became CEO.

[to be continued]

[Part 5]
[Part 4]
[Part 3]
[Part 2]
[Part 1]

This segment is part 6 in the series : Eric Benhamou & the Turnaround of 3Com
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