Announcer:
From the library of the New York Stock Exchange at the corner of Wall and Broad Streets in New York City, you're Inside the ICE House. Our podcast from Intercontinental Exchange on markets, leadership and vision and global business, the dream drivers that have made the NYSE an indispensable institution of global growth for over 225 years. Each week we feature stories of those who hatch plans, create jobs, and harness the engine of capitalism. Right here, right now at the NYSE and at ICE's exchanges and clearinghouses around the world. And now welcome Inside the ICE House. Here's your host, Josh King of Intercontinental Exchange.
Josh King:
A couple of weeks ago I was in Las Vegas for ICE Experience 2023, our massive customer conference focused on our mortgage technology business. The event brought together leading experts from those in the housing adjacent arena. And one of the speakers we had was a guy we think about or should think about every time someone knocks at the door. His name was Jamie Siminoff, founder of Ring doorbell, who shared his entrepreneurial journey growing the robotic doorbell from the germ of an idea to an industry defining device manufacturer.
Now, Jamie's story began seemingly where all tech company success stories begin, literally in his Silicon Valley garage. Now, his garage to IPO track is a well-worn tale that really dates back to the 1920s, well before the cost of renting office space on Sand Hill Road, priced out a legion of tech founders.
Now we try to find a silver lining in the headlines out of Silicon Valley these days. As I record this today, Meta, the corporate parent of Facebook announced that it's going to lay off another 10,000 employees. Now these are probably 10,000 highly educated, tech savvy, super motivated individuals. Now, will they wallow in the news that the metaverse might not yet be ready for primetime or will they be driven to take to their garage to dream up the next innovation that will make life better for us all?
This is a question being tossed around as we speak in coffee shops from San Francisco to San Jose and all points in between in the belt between Interstate 280 and Highway 101 in Northern California. Our guest today, Hewlett Packard Enterprise CEO, Antonio Neri, works for a company whose roots go back to a Palo Alto Garage at 367 Addison Avenue in 1937, where a pair of Stanford students named Bill Hewlett and Dave Packard first opened up shop.
Under Antonio's leadership, the company has relocated to Spring, Texas near the Woodlands. But the entrepreneurial spirit of Messer's Hewlett and Packard is alive and well in the Lone Star state. Our listeners, were going to recall our recent conversation in episode 346 with Howard Hughes Corporation CEO David O'Reilly, whose company built and manages the Woodlands that planned community outside of Houston. David extolled the virtues of its work-life balance, its access to talent, its focus on sustainability and the cost effectiveness of moving a workforce to a place like that. It was for those reasons that Antonio moved HPE to the area and opened up a new headquarters there about a year ago.
Our conversation with Hewlett Packard Enterprises, CEO Antonio Neri, on the HPE's ambitions to lead the edge to cloud sector, partnering with customers to meet the technology needs of the future and his career from inside the call center to being CEO. It's all coming up right after this.
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Josh King:
Our guest today, Antonio Neri, is the president and CEO of Hewlett Packard Enterprise. That's NYSE ticker symbol HPE. Prior to his current role, Antonio spent more than 20 years at Hewlett Packard Company, that's NYSE, ticker symbol HPQ and HPE, holding a bunch of leadership positions including president, executive vice president and general manager of HPE's enterprise group, leader of HP's server and networking business and head of HP's technology services business. Welcome, Antonio inside the ICE House.
Antonio Neri:
Thank you, Josh. Great to be here.
Josh King:
What brings you to New York this week?
Antonio Neri:
As always, visiting customers, partners, also talking to investors.
Josh King:
Let's start with the customers and partners and then we'll talk to the investors. What are you telling your customers and partners?
Antonio Neri:
Actually, I visited them to listen to them because obviously, we serve them, we are important to them, we are becoming more relevant to them. But at the same time, it's to gather information in terms of what are the key challenges and priorities and what are the business objectives they're trying to achieve so that we better align our innovation and our execution to their needs. So it's always great to be with customers and partners because the truth is in the cold face when you talk to them.
Josh King:
And investors, you released earnings a couple weeks ago. What are you updating them on?
Antonio Neri:
It was about reinforcing the fact that we had a fantastic call it historic performance in many ways because we grew revenues double digits, we expanded profit, we delivered the best EPS in the history of Hewlett Packard Enterprise, which is now in a company that's been in place since the split for seven plus years. So I'm really proud to the journey. But as always, one thing I learned in my career is the power of repetition. You can't leave it just to the print. You have to talk to people.
Josh King:
Absolutely. And the power of the journey over these last seven years is what you and I are going to spend the better part of the next hour talking about. But before we get there, it is an interesting week to watch fortunes rise and fall in the regional bank sector. What are your thoughts on the fate of Silicon Valley Bank and what it means to the tech world of which you're such a big part?
Antonio Neri:
Well, it is unfortunate because obviously, it's adding more uncertainty to what is already a complicated situation from the geopolitical microeconomic perspective. Obviously, we are coming out of a very difficult pandemic where we saw recovery. We're living in high inflation, obviously high interest rates. And it puts a little bit dent on the cries of confidence. But for us, obviously has no implication of sorts directly. But it's great to see some sort of resolution because ultimately, they have been provider of funding to create innovation, particularly in the startup ecosystem. So I'm pleased to see that there is some resolution to that and I hope that will continue to be the case.
Josh King:
A slogan that I've seen you and your colleagues across Hewlett Packard Enterprise use is, "Our purpose is to advance the way people live and work." How does the company's relocation to its headquarters to Spring make that possible for both your employees and also your customers?
Antonio Neri:
We have been always in the history of HP, and HP a purpose-driven company. If you read another The HP Way and some of the core values that Bill and Dave instilled in the company was to always make a contribution and to give back to the communities. And that's one of the ways how the company has grown. In fact, many of the sites we have had around the globe is because Bill and Dave went on trips. They love the environment, the love the community, made an investment and start new businesses along those new sites.
So for us, it's core to everything we do and it's a core value why the culture is now more vibrant than ever, and is a reason why we can attract and retain talent. Particularly this generation with the challenges we see around inclusion, diversity, sustainability is how we apply technology to advance the way we live and work, is to drive that capability at the local level and at the global level.
Josh King:
Talking about the way employees live and work. Back in December you tweeted a picture of your employees watching the World Cup outside HPE's HQ. In interviews you've referenced that you still occasionally will lace up the old cleats.
Antonio Neri:
Not occasionally, I do it every Sunday.
Josh King:
Every Sunday.
Antonio Neri:
I play in the league.
Josh King:
So here is your countryman, Diego Maradona, wearing the blue and white of Argentina against England in the 1986 World Cup. Let's listen.
Commentator [Translated]:
Maradona has the ball, two are marking him, he touches the ball. The genius of world football dashes to the right and leaves the third. He's going to pass to Burruchage. It's still Maradona! Genius! Genius! Genius! Ta-ta-ta-ta-ta-ta-ta. GOOAAAAALLLLLLL!!!!!! GOOAAAAALLLLLLL!!!!!! Sorry, I want to cry! Dear God, long live football! GOOAAAAALLLLLLL!!!!!! Diegoal! Maradona! It's enough to make you cry, forgive me. What an unforgettable run!
Josh King:
And congratulations to the Argentina squad this year. Is your on pitch style more on your Italian heritage side or your Argentina background?
Antonio Neri:
No, no, no. Well first of all, every time you hear commentary like that, obviously there is hundreds versions of that. But there is one which an Argentinian commentator gives you the goosebumps. And I had the honor honestly to meet Diego several times, spend time with him at his own house and play a game with him. And so for me, it's something I treasure for the rest of my life. He represented us on the pitch, better than anyone else. So when I play, I play like an Argentinian. When it comes down to sport, I'm very Argentinian.
And one of the things we did during the World Cup is to watch the games in this jumbotron screen that we installed at the site. And I have to say the employees that came to watch with us with a bunch of Argentinian friends were in the hundreds and probably they were more interested in watching us as fans than watching the game. There was more entertainment about that, although the final game was amazing.
Josh King:
Does the strategy and teamwork on the pitch that you involve yourself in every Sunday sort of affect your thinking come Monday morning?
Antonio Neri:
Listen, I'm a very competitive guy. I always want to win. If you're going to do something, it's about winning. Let's not be confused, but win in the right way. On the other hand, I said, if you're not going to win, pick a fight. At least you have some fun.
Josh King:
So Antonio, what was the original opportunity that brought your dad from Sicily to South America? And did your mom ever explain what she was thinking, agreeing to travel across the globe to meet and marry him, sight unseen?
Antonio Neri:
Obviously, my dad had a hard time because he was one of a family of eight. Unfortunately, my grandfather was lucky enough to be drafted twice, World War I and World War II. And so he and the two brothers were the providers for the family. He was only at the time 13 and when the war ended he was 18. So he escaped the last call, if you will, although he had to do the military service for two years after that. In any case, so he was looking for better future and at the time, the joke was there is two routes, the north route or the south route. And he picked the south route because an uncle of him was already living there since the 30s. And obviously, Argentina in the late '50s was doing fantastic. Obviously, know from the 30 to the call it late '60s was one of the top 10 economies. Didn't turn out that way now. But he took with him two sisters and he was looking for better future and he worked really hard.
Josh King:
What was the profession that he took on when he got to Argentina?
Antonio Neri:
Actually, he did all sorts of jobs, including gas stations, but eventually he became a builder. So he was building real estate.
Josh King:
You studied both art and engineering growing up?
Antonio Neri:
Yes, I did.
Josh King:
Was this sort of a bifurcation of your parents' sensibilities? How did you sort of decide which was going to be your primary?
Antonio Neri:
If I would start all over, I'm an engineer by trade. But if we start all over, because of my curiosity and obviously the science part of this, on the other side, I love being creative. That's why I went to the art side as well. I would be an architect. At least I get to do both in the same job.
But it helps me actually to think very differently because on one end, you are more logical, on the other end, you are little more irrational if you will, imagine what's the art of possible. And it has helped me think differently. And so I use both sides of the left brain, the right brain to think differently. Our new site in Houston. And so the site in California, two brand new sites, I actually designed them from the ground up, including the experience we provide for employees. Normally, CEOs don't get involved. They kind of relinquish that to real estate. But I was determined to integrate our technologies with the experience we provide to our employees.
Josh King:
Now, for many of us, our consciousness of Argentina, if it wasn't shaped by Madonna, was shaped by what happened 40 years ago, the Falklands War. And you inadvertently had a front row seat for it while apprenticing with the Argentine military as a teenager. Here's a clip of the coverage of the 30th anniversary of the Battle of Goose Green.
Speaker 9:
Goose Green, a small settlement on East Falkland, a school, a few houses, a sheep station, and around 100 residents. On the 29th of May, 1982 though, Argentine troops were dug in around Goose Green and nearby Darwin, as 2 Para prepared to advance, they thought they'd have to deal with around 500 troops. Only later would they find that 1,200 Argentines were dug in and waiting.
Josh King:
How did your experience growing up in Argentina to have opportunities like this with the military prepare you and shape you as a leader and put you on the course for the career that's taking you to so many different countries?
Antonio Neri:
Yeah. I think first of all, I had a wonderful childhood and I enjoyed every moment of that. It was different times. So then, I decided when the time was to pick my middle school that eventually take to high school to join this middle school that was inside a military base, basically a navy base, that allows young kids to learn a practice and become an apprentice. Has nothing to do with the military side per se, you are a civilian.
And so I was very curious about electronics and I ended up preparing radars and sonars on the battleships. And to your point, it was a coincidence I was there during 1982. And it was a very hard time for the Argentinian people obviously, coming from a very turbulent and dramatic period in the '70s with the military coup and all the genocide that took place with tens of thousands of people that disappeared. And at the same time, we are entering now potentially a democratic process which the Falklands were actually accelerated because once that event ended, it was the catalyst to go back to a democracy. And so it makes you stronger in many ways. It makes you think about the impact you have on people and the decisions you make. And so for me, it's all these experiences over the years make me a better leader understanding you went through these hard experiences along the way.
Josh King:
After college you joined Exxon, NYSE ticker symbol XOM. What was your introduction to the private sector and why was the energy business what your focus was going to be?
Antonio Neri:
Actually, I ended up, by coincidence there, and my neighbor was a recruiter. And she always liked me as a neighbor and she was five years older than me. And said, "There's an open position," which in South America was called Esso, like in Europe.
Josh King:
Esso, sure.
Antonio Neri:
And said, "There is an open position. You're very strong, technically. They need a computer administrator and I think you will do great." And so I ended up going there, going from the shipyards to the downstream distribution. It was a wonderful experience because I got exposed to different culture, obviously an American company with a principle, quality manufacturing and so forth. But I learned new skills too. So I was able to do multiple jobs in that distribution plant, which better prepared me as the next step of the career, which is really into the IT business.
Josh King:
So here we come to Hewlett Packard. And the way that you've described the reasoning behind joining HP reminded me of that final scene of Good Will Hunting, which came out about the same time that you headed to Holland. Let's take a listen.
Speaker 10:
Sean, if the professor calls about that job, just tell him, sorry, I had to go see about a girl.
Speaker 11:
Well, son of a bitch. He stole my life.
Josh King:
The great Matt Damon and Robin Williams, Antonio. We don't know how it worked out for Will Hunting driving that 1971 Chevy Nova West from Cambridge to the New York border. But how did going to see about a girl work out for your career?
Antonio Neri:
Well, this is the terms of life. I was flying from the US, actually back to Italy because by then I was already living in Italy and I met this girl, decided to move to Holland to be with her. And what is remarkable about that is that I didn't spoke any English. I was already, whatever, 27 years old. She taught me English and a new brand culture, which is obviously Dutch, which is very different than Southern or Latin culture. But I enjoyed every moment and then became the opportunity to join HP. And that on itself was also pretty interesting because since I didn't speak English, but I was very strong technically, it gives you a lesson in life that carries on, which is basically someone, the hiring manager, looked at me and says, "You speak Italian, you speak Spanish, you're strong technically, we will teach you English." So if it was not for him, the hiring manager in the call center, I would not be here today.
Josh King:
Was learning English at 27 hard?
Antonio Neri:
Yeah. I think it is hard when you start late in life, but the fact is that when you have a culture like the Dutch, which are very welcoming people, great culture and community, they actually make the effort to make you part of it. And then over time, I learned to speak Dutch too, although the Dutch immediately switched to English because they know you are not Dutch.
Josh King:
Do you get back to the Netherlands much?
Antonio Neri:
I have been there visiting friends and people that I know and I always enjoy go through Holland.
Josh King:
So at about this time, Lewis platt was the CEO of HP.
Antonio Neri:
That's right.
Josh King:
And he, like you, had come up through the ranks of the company and was chosen by Dave Packard to restore the HP way in 1982. I want to play an HP spot from the mid '90s to help jog a memory.
Speaker 12:
An idea can happen anytime. When you work for Hewlett Packard, you don't just sell business computing systems, you solve problems. So when you have an idea, you do something about it. You never stop asking what if.
Speaker 13:
You know that electronic mail project for the bank? What if we used HP messaging?
Josh King:
The great What If campaign. What was the company like when you joined and how did its culture of innovation encourage the career that you were ultimately going to develop?
Antonio Neri:
Well, I loved the first moment I crossed that building and to join the call center. You knew immediately it was different. It was culture that care about people, care about customers. Very customer-centric in everything they did at the time. But at the same time, was a company transformation because obviously Bill and Dave, they're an amazing set of innovations that needs to be constantly modernized, obviously starting with the Oscilloscopes, the calculator, the mission-critical system with the HP-UX, the 3000.
And before Lou you had another gentleman called John Young, which was a very manufacturing quality driven CEO, which improved the quality of the products and so forth. Lou was more a salesman and his focus was about elevating the quality of how we engage with customers. And I had the opportunity to meet with him a few times even though I was fewer levels down in the organization. But it was the typical HP culture, open door policy, never underestimate in the power of any employees to bring ideas. The same time, HP culture was all about driving accountability and performance. So for me, it was an opportunity to think broadly where I wanted to be. Now, when I joined HP, I never thought I would be the CEO of the company. But I had the aspiration to one day lead one of the businesses, and from there on, the rest happened.
Josh King:
So we've talked about growing up in Argentina, we've talked about living in Italy, we've talked about working in a call center in Holland. Within three years of you joining the company, you're running service operations across Europe, but then you decide to make this move away from the continent and you and your wife headed to Boise, Idaho of all places, right After getting married. Was Idaho a culture shock for you, talking about a kid who just learned English not that long ago?
Antonio Neri:
Well, yes and no. Because obviously, when you grow up in Argentina, you come to appreciate certain things about nature and quality of life versus the Amsterdam high adrenaline type of life you may get there. But that said, it was a wonderful transition. It was offered to me as a way to continue to grow my career. Actually, the team in Boise, which is we are the LaserJet, the famous franchise was invented together with our partners in Canon, asked me to go lead the technical marketing for one of the LaserJet business units. And I spent there eight years, which I treasure, and my two kids were born in Boise, Idaho.
Josh King:
Now, we all bought our first LaserJets at some point in our lives with that HP logo on it. How did working in that division advance your understanding of the business and where innovation was going? Because today we think of a LaserJet and we said, "That's the most basic kind of technology compared to what you're doing now." But how did the kind of breakthrough that represented from I guess what might have been a Xerox machine or an electric typewriter think, this is just so eye-opening?
Antonio Neri:
Well, it was all about not only the technology piece, which is, even though it's simple, it's actually complicated with fusing technology and the like. It was all about leadership and business models. HP LaserJet. So the LaserJet franchise is one of the most successful businesses HP ever invented. It was invented in the early '80s in one of these locations that Bill and Dave went to hunt and decided, we love this space, so let's build a campus here so that we can drive some sort of innovation. And it has been now for 40 plus years an incredible success. But what I learned through that journey is the quality of R&D, the quality of product marketing, the quality of pricing and go-to-market strategies that I believe today still are one of the best run businesses in the world.
Josh King:
Eventually, a couple years later, you found yourself in Houston running the PC services business and you began working closely with the then CEO of HPE, Meg Whitman, in California. What was the mandate on innovation that you both sought to bring back to the company at that point?
Antonio Neri:
Well, the move to the PC business, again, one of the things I had in my career throughout is that I never apply for a job. They always ask me, can you or will you consider this opportunity? Remember, we just talked about the LaserJet business, one of the most successful franchises in the history of the company, making a lot of profit. To move into the PC business, number two at the time after the Compaq merger losing money. And it was a lateral move, but I thought, you know what? If I want to continue to progress, I need to be able to learn new skills and make even a bigger impact.
And the opportunity at the time with the PC business was to bring them back to number one, restore some of the experiences that we lost over time, particularly on the service side and be able to make it profitable. And we did that in an arch of three years with elements like PC as personal, again, new designs that we brought to the market. And we became the number one PC vendor in the mid 2000s with a profitable business growing. And so part of that journey is rewarding because you turn businesses around. And I learn different markets and different customer needs and that was also an opportunity for me to springboard there to new opportunities down the road, which happens in the early 2000.
Josh King:
We're going to get to that. I have this memory of the announcement of the HP and Compaq merger, Carly Fiorina and Michael Capellas. And I remember, I think my dad had one of those big suitcase Compaq machines before the merger.
Antonio Neri:
The laptop.
Josh King:
The laptop, right. It's probably still in the garage somewhere gathering dust. But that also sparked so much reporting on the challenges of two big companies integrating. What was it like sort of looking across the table at career Compaq people and figuring out how are we all going to work under the same roof?
Antonio Neri:
Actually, that's a very good point. I was able to work with both sides. The blue side, which is HP and the red side, Compaq. And both had different aspects that you need to consider in the culture. Obviously, the thesis to combine the two companies was very strong. So Compaq was very strong market leader in PCs and servers, meaning the X86. HP at the time was a market leader in Unix and printing, as well as a very strong services organization. The combination made a total sense.
But then we started finding that two cultures were not the same. HP culture was about talking, engaging more consensus driven. Compaq was, and by the way, in that you will use analog means, meaning pick the phone and call someone. On the Compaq side, email was the main way to communicate. And you take that just that simple basic difference, it was massive, when you talk about the scale of the company. The second piece was more top down. Here is the order, you will execute. And HP was more about let's see how we get together to that point. And I think you leverage the best of both worlds as you go forward to what I call pull and push and be able to influence people in different ways.
Josh King:
Interestingly, Lou Platt we spoke about earlier really sought to encourage innovation by bringing together both personal and enterprise. Here's a presentation he gave back in April, 1996.
Lewis Platt:
Indeed, we're witnessing the convergence of what have been two separate computing environments into one that combines the best of both worlds. We're accustomed to thinking of personal computing and enterprise computing as distinct and separate arenas. While both of these environments come together in client server solutions, each has consisted of very different models for technology and support. But that is changing.
Josh King:
So what had changed about the business that ultimately led to HP's decision to split into what you've called from a tech supermarket into two specialty stores?
Antonio Neri:
Well, think about that time, 1996. It's a year after I joined HP in the call center and it was the time where when you hear Lou talking about the PC client era. And so what happened is that many of us grew up in the mainframe era. That was a centralized model where the green terminal was your user interface. But that was available only to few enterprises, very expensive and very pointed in terms of what applications you can use, most ERP to manage the enterprise. Then you know what happened after that? We went to a decentralized model with the PC client data. And then with the advancement of X86 from the PC and through the server. And then obviously, we went through much more distributed enterprise and then the internet came along. So now, not only general departments have access to now technology, obviously spreadsheets and word documents, typewriting moving to more a digital type of engagement became the next big thing.
But then the internet came along, now we start connecting enterprises along the way. And ultimately, that required different business model. And HP was more in the centralized model, not the mainframe, but the HP Unix era. And that's where we had to move fast. And that's when Carly came and said, "We believe we need to drive this integration between Compaq and HP." Now where we live today, Josh, it's very different. We live back into decentralized model where the mobile phone is your terminal. It's no longer green and ugly, but it's colorful. By the way, that's many things, sometimes to your own detriment if you use it the wrong way. But the fact of the matter, it actually gave access to information in way we haven't done it before. And the cloud has become the new mainframe. But as we go into the future, we're going to go back to a decentralized model because how the data is managed.
Josh King:
And we're going to talk about the future and where HPE is today after our break in the second half of our conversation, Antonio. But overall, as we head into our break, HPE is a relatively new company that carries with it this legacy of the original Silicon Valley success stories of Hewlett and Packard, as you talked about. How do you leverage both the ingrained history of innovation and the brand equity with what I think you feel as a mandate of a fresh start to build a new and unique HPE culture that you see on display with jumbo screens watching the World Cup down in Texas?
Antonio Neri:
Listen, every culture goes through its own transformation. You have to preserve the good and modernize it for the current times. There is a lot of things that Bill and Dave created in their HP way to make a contribution to advance talent, to think about communities, how we give back. Those are alive and well. At the same time, we need to modernize for the new way we work for the new trends we see. And that has been my priority, leverage the past, the good things that are alive and well and the resilience of it because that's a very important aspect. And then modernize and then add new thinking into that culture. And that was one of my top three priorities when I became CEO. It was innovation, it was customers, it was the culture, because in the end culture is everything.
Josh King:
Culture is everything. After the break, we're going to talk a lot more about culture with Antonio Neri, CEO of Hewlett Packard Enterprise. We're going to talk about his vision that he had back in 2018 for a Hewlett Packard Enterprise and the future of cloud and tech. And that's all coming up right after this.
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Josh King:
Welcome back. Before the break, I was talking to Antonio Neri, CEO of Hewlett Packard Enterprise, about his career and the evolution of the business leading up to the creation of HPE. So since the creation of HPE in 2015, company's made a number of deals including the sale of its enterprise services division, to what became DXC technology, which is listed here in the New York Stock Exchange under the ticker symbol DXC. What is the size and offering of the current company?
Antonio Neri:
Well, based on our latest guidance, we just provided the end of Q1, we are roughly a $30 billion company that this year will grow between five and 7%. Since the creation of HPE, to your point in 2015, we have more than doubled our earnings per share. And in that, we are focused on four distinct areas. One is the cloud, but cloud as an experience, in this now new centralized and decentralized world. Number two is the edge. Edge meaning where we live, where we work, where connectivity and digitization becomes paramount. The third place is AI. AI now is becoming a mainstream set of capabilities that every enterprise of every size needs to use. And last but not least is a platform where customers can consume all these services when they want it in a unified integrated experience.
Josh King:
So cloud, edge, AI and platform. I think in the rest of our conversation we're going to touch a bit on each one of those. So after being named CEO, you laid out a vision for your company at the 2018 HPE Discover Conference. I want to take a listen.
Antonio Neri:
Over the last few years we have transformed Hewlett Packard. We have created Hewlett Packard Enterprise to uniquely address the three biggest areas that are holding you and are actually slowing you down, the transformation of your technology, the transformation of your people, and honestly, the transformation of your economics. I believe when you bring all three of these transformations together, technology, people and economics, you get the strategic partner who can best accelerate your dreams for the future.
Josh King:
And I watched the video of that presentation, Antonio, and you're in front of this huge crowd, these huge screens in front of you and says technology, people and economics. Talk about the idea that you were talking about then, the idea of this edge to cloud company vision you had and how HP has made progress in realizing that ambition.
Antonio Neri:
During that time, again, because I spent almost 50% of my time talking to customers, I saw a series of trends that ultimately, someone needed to address. And the cloud alone would not address. And I said that the enterprise of the future will be edge centric, cloud enabled and data driven. And therefore, there is a series of transformations both from the technology and business model that need to take place. And fast-forward, we see that obviously through the pandemic, right? Think about what happened in the pandemic. We had to go back home and work from home. So technology plays a huge role. That became the edge. But the way enterprises connect people to applications and across a series of enterprises is ultimately through technology. And therefore, the digital transformation had to be accelerated. At the same time, we saw cloud obviously, an accelerated pace, but ultimately to increase speed and agility, ultimately to deliver better business outcomes.
And last but not least, what we see is a enormous amount of data growing around us at the pace we never seen before. In fact, latest report says that in two years from now, we're going to create more data than we created in the last 2000 years. And that data has value. But then in the 2020, I said now we are entering a new age, the new age of insights because that data costs money to store it and also has some challenge in terms of compliance and risk management. We got to use the insights for the data to solve some of the biggest challenges we live today.
And that requires a platform which we call it the edge to cloud platform that we have been developing as a part of our platform called HP GreenLake. And then in 2019, maybe just a preface to the pandemic, I said customers want to consume IT different than before. It's not the traditional CapEx, I just invest number of millions of dollars and are depreciated over the next three to five years. I just want to pay as you go. And that was informed by the growth of the public cloud. What if we bring that cloud experience to all your workflows and data? And therefore, in 2019 I said we're going to offer everything that we do in the company as a service.
Josh King:
You said somewhere around then you envisioned a future where work will happen everywhere. And in some respects, I don't know if you're a global person, I don't know what you're seeing in January or February of 2020, this is three years ago. My mind is very focused on where we were three years ago today and the pandemic hit. But did you game out in your mind how maybe this would be accelerated with some global event that would have people working everywhere the way the pandemic forces?
Antonio Neri:
No, not gaming out. And if I knew something I would have acted on it to solve problems before it happened. But I knew from customers that, "Antonio, my budgets are not going up. At best, they're staying flat. But I need to do more." And so we are actually as a company, not just a technology company, we are actually a business innovator also because we have a financing company that one of the things that does extremely well is asset lifecycle management. And so we said what about if we match the asset lifecycle management with our technology innovation and enable customers with a new business model, they only pay as you go, not moving data, not moving workloads to the public cloud. And so we saw that, we saw immediate growth with our flex capacity model. And since then, we have created a business now that in our balance sheet, we have $10 billion.
Josh King:
So we've talked about edge to cloud and this other element of the four that you mentioned, AI. What role does artificial intelligence have in HP's offering now and how are you viewing that technology and how it plays into such recent developments, with like ChatGPT?
Antonio Neri:
When we acquired Cray in 2019, we knew that the biggest workload will run on a supercomputer is AI. Now, we use AI in many different ways. Number one, AI to make our solutions more autonomous and intelligent. That's part of the process. All our solutions have AI ops embedded into it because it helps customer reduce opex in the way they run it. But at the same time we start offering these supercomputers. They're technically the all tech but became new tech. And if I go back and reflect some of the key inflection points in the market where the company's perfectly positioned, this will be one of them because we are uniquely in a way to position our portfolio to deliver large at scale AI. And if you think about ChatGPT, first of all I was very disappointed Josh that I typed there who won the last World Cup and it was not aware Argentina won it. So that tells you it's not accurate.
Josh King:
We need more supercomputing power.
Antonio Neri:
You do because the problem with this large language models is all about training and retraining. And the current cloud architecture as we know it is not designed for that. And let me explain you why. The reason why is when you run a model like that, which is very complicated and you're running a lot of data, one of the basic principle is you start the model and you end the run. Many of these generative large language models cannot even start, actually start, they may stop immediately. And so you need a different type of architecture, and this is where supercomputing is so important. And with our latest innovation at the silicone and software level, we were able to deliver for the first time in the history of humanity, the first Exascale system.
And to go from petaFLOPS to exaflop has taken us as an industry 14 years. And I'm proud that the United States is in the forefront of that, is now deployed at the Department of Energy, is the system called Frontier. And to give a sense the capability of the system, one system can process one quintillion transactions per second. So now you do ChatGPT on a system like that, you are able to train and retrain the model with a level of accuracy that the current cloud cannot deliver. And that's our opportunity.
Josh King:
And if that's our opportunity, and we've been talking about numbers like one quintillion operations per second and we've talked about creating more data over the next two years than currently exists, where do you see things in five years?
Antonio Neri:
Well, I think we are at the early stage of AI. Obviously, I think of AI as resolving some of the easy mundane tasks and also aiding the human being to make better decisions. But I believe it has the potential to solve some of the biggest societal problems. Example, if you think about what we are able to do just with high performance computing and we've made available all our patents and systems during the pandemic to some of the research institutions to find a cure for COVID, that tells you normally our vaccine takes years to come. That was done in nine months. Now with systems like this, it may take weeks. Climate is another issue. I think about predicting climate changes and finding solutions before it happened. Decarbonization. Find the sustainable solutions.
One of the tenants of the Frontier system is going to be General Electric to design the next sustainable engine for airplanes. That simulation, computer fluid dynamic requires a lot of computational power. But if you talk to the head of GE that's leading this environment, he will tell you he's more excited than ever where it may take an R&D life cycle of years, now he can take it down to maybe months. So we are poised to solve some of the biggest challenges that we ever faced. And to me, that's something that aligns to the purpose we talked before. And HPE is uniquely positioned to make those capabilities available to any enterprise, not just the large government corporations because in many ways, we're going to offer super computing as a cloud.
Josh King:
Let's talk about how it affects at the human level, Antonio, because you're talking on one hand we start our conversation about what are you doing here in New York? You're visiting customers. What are you telling your customers? I'm not telling them anything, I'm listening to them. So you're listening to customers like GE talking about all the computational power that they're going to need to build their next gen engine. You could talk to one of your pharmaceutical client companies about building the next vaccine and all the computational power that they need for that. And at the end of the day too, you're also talking about your customers who tell you, Antonio, my budgets are flat. I'm not going to be able to spend as much on hardware or servers as I used to, I want to subscribe to the cloud. And they're also facing a pretty tight labor market. How does this all, at the customer level in terms of what they can buy and how many people they have to buy it for affect your business?
Antonio Neri:
They don't have to buy, they just need to rent it. You are not going to develop algorithm every day for everything. You may focus on specific areas of your portfolio, even banking. So risk management, if you think about all the data they need to process today to come to some sort of risk, they need more and more of that capability. So our goal is to offer them a solution that's easy to deploy and easy to consume. And so supercomputing has not been like that, but we believe with our software and our system engineering and the business model innovation we drive with HP GreenLake, we can offer that to any enterprise. And that's the massive opportunity because now you don't need to hire hundreds of data scientists, very specialized people to run supercomputer. They just need to focus on the business needs and the outcomes and then they can run it in an environment which is safe and secure as they go forward.
Josh King:
We talked about the culture that Bill and Dave first created, envisioned and then continued to grow and how that sort of historical culture has always permeated Hewlett Packard. You've been a champion for DEI and ESG efforts, not just across your company but for public companies in general. Can you talk about some of the things that your work with HPE has done to increase representation and encourage diversity of thought?
Antonio Neri:
Yeah, this is one of core of my values probably because of my diverse background, living in many geographies around the globe, more acutely aware and context aware about what's going on around me. And it becomes natural to me. If you go to countries like Holland, one of the most diverse countries on the planet, anything can be discussed, anything can be addressed. But if you think about the call center, I work with every ethnicity, every language, every nationality, 21 of them were in the call center. So for me it's about how we create an environment where everybody can thrive because I believe a diverse company is a more successful company. And everybody has to have equal opportunity to come and work, make a contribution in growth. So we have put a significant effort that we actually track in our metrics where we think about participation of female in the technical workforce, how many females are in the executive ranks.
Obviously, I'm really, really proud that my chief technology officer is actually a woman. A phenomenal woman that's brilliant in everything she does and she's spearheading our HP GreenLake platform. But that's just a example of it. But the reality is that at every level, we need to drive that process. And then some of the processes is when we hire, which by the way we continue to hire in different areas, very pointed areas is about having a diverse slate and holding managers accountable to it. And then ask the question why, why you picked that person, why you picked that location.
Josh King:
You've mentioned the HP GreenLake program a couple of times. You even went on your own podcast, Tech Talk, to talk about it. You talked about some of the talent that you've put against it. What's it going to take to make it a success?
Antonio Neri:
It's already a success because the platform has now more than 65,000 customers. It has more than two million devices connected to the platform. It has 120,000 users using it every day and was quite interesting when you think about data being the crown jewel of the enterprise, is your intellectual property is your new currency. Actually, we manage more than 1.2 exabytes to the platform. And as I said earlier, the entire as a service business at the end of Q1 2021 just two years ago was $5 billion. At the end of Q1 2023, eight quarters later is $10 billion. And we see that momentum continue because we give customer a true edge to cloud unified experience with hybrid in mind and we have more than 70 cloud services that customers can consume and grow.
Josh King:
To make a bet like that takes sort of a risk taking philosophy. How do you hedge taking risks with the need to be constantly disruptive to keep the edge in your business?
Antonio Neri:
My philosophy is simple. If you are not disrupting yourself, someone is going to disrupt you. So better you do it to yourself than someone else doing it to you. And it wasn't really a huge bet. But I have to say my learning over the last almost 40 years since as we have been to this transformation, technology is not the biggest problem. Actually, it's not. It's the culture. Because operating models of the companies get cemented in certain ways. The way you measure people, the way you run the business.
And most of these businesses are large business. Take our intelligent edge business, it's a $5 billion business. Last quarter we grew 31%. Take our compute business, which generally is a commoditized business. We grew double digits and we are making more profit than before. Our AI business grew 37%. Each of them on their own need some autonomy, but ultimately, architecting through one common experience. And that was a massive culture change. And it takes many, many repetitions to get through it because now, those people are relying on other peoples to get the job done versus I own everything. And that has been my learning. At the core of this is actually a culture transformation, not a technology transformation.
Josh King:
On the culture element, I took a look at your Twitter feed over the last couple years. Some of the things you are most proud of, it seems when you either tweet yourself or retweet what the company is talking about. Last year you promoted HPE's selection by Fortune in its Best Places to Work list and People's Top 100 Companies That Care list. You've talked about what you've done to this point. How do you maintain that culture and spirit and continue to grow it?
Antonio Neri:
It's by working with my colleagues, 60,000 strong team members. Culture has to be self-sustaining. It's not one individual. It's all our job to shape it and continue to evolve it. And when 60,000 people are working together, it makes a huge difference. Today, you quoted some of the stats, but we are number two employer in Texas overall, number 19 in the Fortune 100 company.
We have the lowest attrition we ever had in the history of the company. Low, low single digits. We have very high retention rates, particularly on the high performing talent. And we continue to attract younger generation into the workforce. But all of this have to support ultimately, innovation and shareholder value creation. And that's what it's all about. And I think when you talk to our employees, the love, the culture and the ability for them to come, contribute, have fun and grow. And ultimately, one of the most important jobs CEOs have as others have done with me is to develop succession. One of my former managers told me one time, "Hey, you are like a diamond in a rough. With a little of polishing, you can go far." The question is, who is the next diamond in the rough? Who's going to lead this company in the next journey?
Josh King:
You said last year that the next CEO of HPE would come from within its ranks. You were certainly an example of that. How do you and the board work through succession planning as a decision that might be coming up?
Antonio Neri:
Well, it's one of the fiduciary duties of the board, and I'm a director in the board. And this is probably one of the most important roles I have to plan succession. And so I always look for the capabilities and the type of leadership we need at that given time.
Meg Whitman did something remarkable. Obviously, she got a very tough hand. The company in 2011 had a massive debt. It was not growing, it was lacking innovation and it was coming out of a decade with a little bit of drama. But she turned that around, gave her purpose, and then she realized this is too big to run as one single entity. Each of the business have to compete on their own. That's why we split and we spin off some assets that were not aligned to this new way we see enterprises working. And so when that came, that decision said the next CEO has to come with it because need to understand the culture and need to understand technology. And so I became the next CEO. And now when I think about the next part of the journey, and I'm still here and I'm still enjoying, I love it, what I'm doing, it's very interesting and exciting to be honest with you is whatever that time comes, what type of leadership we need to get to the next level of execution that we may need at the time.
Josh King:
February marked your fifth anniversary. So curious, over those last five years, if you could pick one moment that made you most excited in that single moment, one moment that you think was the toughest moment that you've had during those five years? And then as you look toward the next five years, what are you most excited about?
Antonio Neri:
Well, definitely as I reflect on my five years, it has been kind of remarkable to deal with all the crisis that were thrown at you, some geopolitical potential to tax reform, to COVID obviously, to supply chain disruption. Actually, natural disasters that have to deal with because you are a global company and you get hit by one of those every so often. In fact, one of the reasons why we build a new headquarters in Houston is because the original Compaq site was hit twice by hurricane, or tropical storm.
But it has been remarkable to see the resiliency of the company. But definitely COVID was the toughest moment because it impacted people so much at every level, the family level, the mental level. And one thing I learned and I had to say, I have a wonderful team, constant engagement and communication got people through. And that over time pays off because you see people remember those actions. And together, we went through it.
One of the excitement moments is always to celebrate success. But I have to say these milestones of achieving Exascale, if something is going to go in the legacy of the company. It's a massive breakthrough not only for the company, but for the world and the United States because once again, we are in the forefront of this. And when I think about the possibilities of what this can do, it's just simply remarkable. And as I think about the future, take that model and now make it available to everyone to advance their own business and what I call a more swamp learning approach, and AI is at the core of this. I think we're just starting that journey.
Josh King:
Just starting that journey from Bill Hewlett and Dave Packard to Antonio Neri and beyond. It's great to have you back to the New York Stock Exchange and Inside the ICE House.
Antonio Neri:
Thank you, Josh.
Josh King:
And that's our conversation for this week. Our guest was Antonio Neri, president and CEO of Hewlett Packard Enterprise. That's NYSE took a symbol, HPE.
If you like what you heard, please rate us on iTunes so other folks know where to find us. And if you've got a comment or a question you'd like one of our experts to tackle on a future show, email us at icehouseice.com or tweet us @icehousepodcast. Our show is produced by Pete Ash with engineering and editing from Ian Wolf. I'm Josh King, your host, signing off from the library of the New York Stock Exchange. Thanks for listening. We'll talk to you next week.
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