By: Krista Dalton
The Real Story of Informix Software and Phil White - Lessons in Business and Leadership for the Executive Team by Steve Martin
When I first learned of the book, The Real Story of Informix Software and Phil White, I couldn't wait to hop on the "he's a crook" band wagon and tear him to pieces. Like many in Silicon Valley, I was surprised. No, make that shocked when I read about his criminal behavior in the press. Having seen him speak several times at CEO-only retreats hosted by NASDAQ, Phil gave the impression that he was an ethical and upstanding CEO, almost boasting about his relationship with his Board. Pre-Sarbanes Oxley he took full responsibility for making sure his Directors were fully knowledgeable about the company's business, touring the company's foreign operations and holding them accountable for judging his role as a CEO by giving him performance evaluations. Or so he claimed.
The Phil White/Informix "saga" is written by a former Informix sales person, an insider who could be biased either way, depending on his experience with Phil and at the Company. As it turns out the bias is favorable towards Phil. While the author doesn't make excuses for Phil's behavior, he is sympathetic. This attitude I believe enabled him to interview Phil pre and post incarceration because Martin wrote the story that Phil would have liked to have told.
While the title promises lessons in leadership, what the account does really well is provide a clear chronology of events beginning with Phil's first year as CEO summarizing his successes and subsequent failures along the way.
The book is also informative if you have an interest in technology as it relates to the database software that was being developed by Sybase, Oracle and Informix as they competed intensely for market share in the space.
In summary, when Informix was doing well, Phil was a GREAT CEO. He knew how to motivate his employees. He understood the importance of relationships (partners and customers) and the important role he played in helping to close deals. He cared about cost control. He cared about running a successful sales organization, but steered clear of the high pressure sales tactics that were typical in the software business. Phil didn't like to boast about results before they occurred always making sure that the Company didn't lose sight of winning business.
His personality and background were well suited for the role of CEO at a growing company. When Informix was doing well Phil exhibited some extraordinary behaviors. Every quarter he sent about 1,000 handwritten letters with the company's latest earnings release to business colleagues. When the company won a $21.8 M federal software contract he awarded $1K to each employee. Phil believed that if employees' wives were happy (sign of the times in the early '90s) then his employees were happy. Phil made sure that the wives were included on all Sales and Board of Directors trips. In retrospect, how much of this behavior was real or window dressing?
The Company's early success was attributable to its focus on value-added resellers and delivering a product that was inexpensive and easy to administer. Informix also offered a complementary suite of products that compelled customers to purchase more than one product at a time. Sales success was attributable to the strong relationships the Company had built with both customers and partners. And Informix's strong technical expertise that was exhibited pre and post sales was a key differentiator.
When that focus and product differentiation changed so did the Company. As Informix's business grew so did Phil's ego. He was awarded countless accolades, achieving celebrity status in Silicon Valley and beyond. He was invincible. He could do no wrong. The press LOVED him. The positive attention and the Company's success were ingredients for the pending demise.
Contributing to the downfall was a detour away from everything that had made Informix great. The Company lost sight of its core business, its customer and the business behaviors that had helped them achieve 28 consecutive quarters of meeting its financial projections. As Phil was traveling around the world accepting awards he had less time to devote to sales calls. Partnerships were no longer as highly valued as they once were and the Company was more interested in direct sales. Phil's god-like status had created a corporate culture where people (including the Board) were afraid to tell him he was wrong.
Then in 1997 the Company missed its number. The first time in seven years. This section of the book is the most interesting as the details of the revenue shortfall and the conditions related to the miss are revealed. Informix and Phil slid quickly to the bottom. Class action lawsuits were filed, Phil resigned the CEO role, accounting irregularities emerged and Phil was off the Board.
In the end, the mistake that ultimately landed Phil in jail seems accidental and totally possible. Here was a company that was experiencing fantastic growth, surpassing its competition, being run by a CEO who was personally battling the king of all egos, Larry Ellison, in a public display of advertising billboards. According to the author, what got Phil in trouble was that he signed an S-8 registration form when he knew that the company's financial condition was not correct. His "crime" was really an oversight. Especially since his general counsel had given him the S-8 and knew that the Company's financials were inaccurate.
But one of the most interesting "facts" about the story is that it wasn't until 2002 that Phil was indicted (on eight counts) by a federal grand jury. In order to avoid a lengthy trial Phil pleaded guilty in his criminal case, but by this time the whole world was familiar with the corporate scandals at Enron and WorldCom and therefore Phil believes the Judge wanted to make an example of him, the CEO of a formerly successful Silicon Valley company.
The book ends with an interview with Phil prior to imprisonment where he answers multiple questions about how he ran the company, the revenue shortfall, his successor in the CEO position and of course his crime. Phil himself, post incarceration, shares his own lessons learned from the entire experience. Definitely an interesting account, especially since it happened in our backyard.