Brief Gartner Story: Competing With Ourselves

In 1989 Ryal Poppa, Chairman of the Board of Storage Technology Corporation, a billion dollar computer peripherals corporation which Poppa had brought out of bankruptcy was visiting our Gartner analysts to present his marketplace strategies and he asked for an audience with me. I had known Poppa for many years from the early 1970’s when I was on Wall Street and he ran Pertec, another computer peripherals company.

Should we compete with ourselves before someone else does?

In 1986 after we went public, I had actually talked with Poppa about his possible interest in joining our company to manage it as CEO (I was thinking of doing other things even then, but actually stayed on as CEO until 1992). Poppa shocked me with the fact that when he saw Gartner Group for sale by Saatchi, he immediately contacted his financial associates who visited Blackstone and analyzed our books. He then began planning his own buyout of our company!  They concluded that an LBO would be marginal relative to the price Saatchi required, and when he read that we might be planning our own buyout, he dropped the whole issue.

But now Poppa had a January 1st window to tell his board if he was leaving Storage Technology, and our conversations three years earlier had convinced him that running and building a company like ours would be a fun challenge; it would offer opportunities for major capital gains, and based on an LBO scenario he was enthusiastic about working with us. I immediately responded that we still had to deal with the succession issue, and that if he were interested in investing money, but more important in joining us to succeed me as Chief Executive Officer, I would be gratified and very interested in talking with him. Poppa changed his flight plans, and with Grigs Markham, we drove to LaGuardia. Poppa then asked about the non-competes which our people had.  After we told him that they were one-year, he asked why couldn’t a new firm which he would set up be able to tap our people in the case of an outside buyout?  I was shocked and impressed by the suggestion.

“You mean you would actually consider setting up a competing firm to Gartner?” I asked.

“Why not, especially if you would be part of it!” We finished our meeting and planned further communications.

In the 1980s I had often played with the idea of setting up a competing operation, but one which would be a SUBSIDIARY of Gartner! Why not compete with ourselves before someone else did?


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