Enrique Lores

The granddaddy of all Silicon Valley startups is Hewlett Packard. It would start in a garage in nineteen thirty nine, but in twenty fifteen it's split into two separate companies, Heulett Packard Enterprises and HP Inc. Recently, at the Economic Club of Washington, I sat down with Enrique Loris to talk about how he's led the successful personal computer and printing company following the split. So which company is better, Hewlett Packard Enterprises or HP Inc.

So, as you can imagine, I have a very unbiassed view, and I have say, of course, HP Inc. Is not only that we do printers and PCs.

We think we.

Are the company that can enable a more flexible way of working, to make employees productive, to make employees engaged, and this is what we stand for.

So, but their main business is today is computers and so much and printers that their main businesses. Right, So I can tell from your accent you're not from Baltimore or Washington, DCA.

Where did you grow up?

I can't say you're very astute.

So you're really detecting that I'm not from the US is very difficult, I know.

But yeah, originally from Spain.

I okay, so you grew up in Spain.

I grew up in Spain.

Now, how many companies in Silicon Valley are run by people who were born in Spain?

One one? So all right, so you're born in Spain.

Did you say I want to run HP someday or what it was your aspiration as a young boy in Spain.

No, it was not my inspiration to tufront a company like HP. I joined HP as an intern in nineteen eighty nine, so I have worked for the company for

I have to say though, that thirty.

Four years later, I have more passion for printers than these people had. So I have learned and I have been converted to the religion.

Okay, so you went to college in Spain and you got an MBA or an engineering degree.

I got an engineering degree first.

Okay, so you're electrical engineer. You moved to Slicon Valley. Where'd you move to?

No?

Actually, the full story was I got this opportunity to work as an interne in HP, and it was I had the opportunity to go to San Diego. So we went to San Diego for the summer, and when the internship was finishing, HP was opening an Rande Center in

You grew up in.

You are born in one place, you go to school in one place, and you build you live all your life there. So we said, oh, for a couple of years, would be nice to go to Barcelona. Thirty five years later we never came back. We went to Barcelona. Sometime later we came to the US and here.

We How long did it take after the split occurred in twenty fifteen for you to become the CEO.

What were you doing before he became COO?

Before I became CEO, I led the separation of the company. So when Meg, or the CEO, decided to split the company, we created what we called a separation office and there were two leaders, one from HPE and the other one for Hilopap Enterprise, one for HPING.

I led a separation from my side.

In fact, when I was asked to lead a separation, my immediate response was no, I don't want to do that. And then Meg, that was make Witnan, that was a CEO at that point. After a few days, a weekend, she called me home and said, and Rica, I need to talk to you. So I went to her home and she said, I know you don't want to do that. This is the opportunity of your career. You're going to learn things you will never forget. You should be taking different and when the CEO calls you to her home

So what was the theory, the business theory behind why sputting up Hulett Packard a very successful company in the two separate companies.

Why was that going to be such a great idea?

I think the main theory, which at least in our case, have proven to be true, was focus.

HP was a very big company.

We were selling from printers to service data centers, all sorts of technology products, and the theory that the board had at that point was that focus was very important. Each market was moving in a different direction, we were competing with different companies, so being focus, being able to invest in our segments was the critical thing, and in our case has proven to be right.

So when a company is split occurr in twenty fifteen, many people thought that Hewlett Packard Enterprises, which was in the sexual area of software and services, would.

Become more valuable.

But actually your company is now has a higher market capitalisation than Helot Packard Enterprises.

Is that make you sad or happy?

I only I'm only concerned about what happens with our company. And as I said, the separation has been good for us. We have proven that we can create value to two shareholders. Our ts are in the last seven years has been two hundred percent, significantly higher than the average of the market. So we have done well and what is more important. We have a lot of opportunities and ideas of how to continue to make the company better.

You compete against I guess Dell and Lenovo and also Apple. I assume which of your which o those companies makes the best personal computer? What you say really and is what makes your computer better? Why should I want to buy yours over somebody else? Aren't they all really pretty much the same? At this point?

I think there are three big differentiations for our products, especially in the piece space.

One is security.

Cyber security is every time more important, and we build both software and hardware in our PCs to make them more secure. Second big differentiation is industrial design. We have made a big effort to make our preces the best looking pieces, the most attractive, and the ones that have

Type of matiityre do you sell them? And you don't have HP stores the way Apple has stores, So where do you sell your computers.

It actually depends country by country. In the US, for example, we sell online on HP dot com or on Amazon. You can buy our products in any large consumer electronics retailer like Best Buy. But also for commercial customers, we have a big network of free sellers, commercial resellers that will sell our product and for our top customers, we have a dairy Excel force. In other countries, we have our own stores you do. For example, in India, we have more than five hundred stores that really we use.

India rate five hundred stores and the US rates non.

Because of the structure of the distribution and retail model in India, there is not an electronic retail network in many of the cities, so we had to build our own to be able to really reach consumers anywhere in the country. And we continue to expand because we see continue to see a big opportunity.

So pose I buy one of your computers and then you, lady, you have another model. Can I trade it in and get a discount Like a car, I can trade them when I buy a new car.

Don't you don't have trade ends or anything.

Like that today today we don't.

But this is one of the businesses that we're starting to develop, both because we see we can really help customers to always stay on the latest technology, but also because from a sustainability perspective, recycling and refurbishing is a very important thing to do. So we are going to be building that model at scale.

Right, So where are your computers manufactured today?

Majority are still produced in China.

China?

And are you worried about somebody putting a chip in the air that can enable the Chinese government to listen to what you're doing?

Is you're worried about that? Or should I worry about that?

You should not worry about that, because we worry about that, okay.

And what we.

Have built is what we call a secure supply chain through so across every step of the manufacturing process, we control anything that is inside of our printers, inside the chiefs, inside the sover to make sure that the printers, the PCs are the printers as we are.

You're worried about being too dependent on China for your manufacturing because there could be us problems with China.

Who knows what can happen? Why not diversify?

Actually we are diversifying. We realized and learned painfully during Covid as many other companies, that depending on a specific territory or having too much dependency was too risky, and that the what we had done over many years of really pushing for a cost and therefore concentrated non manufacturing in one place created some the issues from a resiliency perspective. So since then we have been diversifying to increase resiliency.

But the key is the semiconductors of the chips and where are the chips made in China or the made in Taiwan or US.

Or majority today are still built in Taiwan. We are working with all the key chip providers to make sure we diversify with the location. And this is why, for example, last year we were very supportive of the Chips Act because getting government funds to accelerate the change, we think is very important.

So when you're at your home and you're working on a computer, do you ever use the opposition or the competitors to see what they're doing or you only can use HP.

I use both, as you can guess I have lots of hppcs at home because every time there is something new, the team was me to train and sometimes they don't like it because I find things they didn't like me to find. So I give a lot of feedback, but of course I test also the latest innovation from our competitors to make sure I understand.

You work at your competitors computers and say why don't we have this?

And can't we don't have that?

You ever ask yes, and the team hated it?

And how do you protect against hacking? And how do you kind of give your people who are customers warning about what they're going to say if a hacker is coming in.

What we have done is we.

Have developed both software and hardware to protect our pieces. For example, in any of our commercial pieces, we have achieved embedded in the board that detects if the BIOS has been modified. The BIOS is kind of the brain of the PC, so we can detect if there has been any intrusion in the BIOS and if we detect that,

You make servers as well, No, we only do pieces.

We do workstations, which is a very high end type of PC, but we don't do servers.

You make cartridges, right, and the printers. So on printers, it's one printer really different than another from your competitors. Aren't all the printers pretty much the same?

Printers are fairly different.

In fact, there is more difference print to printer than PC to PC because printers are a totally integrated business. So we develop the printer, we develop the ink, we develop the cartridge. Is a much more vertically integrated model that dries more differentiation.

Is the printing business a growth business because people now printing stuff as much, they're just sending it by email or computer digital means to other people. So is printing a growth business or it's kind of a shrinking business.

In printing, there are three very different segments.

There is what we call home printing, so printers you will buy to use at home, to print photos or to print email. This is clearly a not growing business. Then we have an office segment people copiers printers that you will do in the you will use in the office. That's a market that is table is declining in more developed countries, is growing in emerging countries. And then we

I actually do have an HP printery good, but the cartridge is always running out. I'm running out of ink all the time. So is that a problem? How do I how do I know where my ink is going to be out and right in the middle of printing something. Is that a big problem that you guys have, which I do about it.

When we talk to customers, they always have two concerns about printing. One is what Jja said, I want to print my kid has finished homework. I need to print homework. The print is not working because the cartridge is not working. Second complaint that we have is printing is expensive. I really hate paying fifty dollars forty five dollars fifty five dollars for the cartridge. And we have a solution for that.

What are you doing about carbon and your global footprint?

We have an aggressive plan to reduce that to be carborn by twenty thirty and we are working in the areas of the company where we have more impact. Because of the products that we build, we use alls of plastic, so we have an important initiative to use a recycled plastic in any of our products. We are also I mentioned before, we are going to be changing business models to move into referbised products.

So we live, we give to our products toward the lives.

And finally, and one of the things that I feel most proud of in this space is people always associates printing with paper, paper with trees, and therefore, if you print, you're doing something wrong for the environment. So what we have is an initiative that we call forest positive printing. So we look at the amount of print paper that is used in our printers, if that paper is not coming from recyclable forests, for forests that have been planted

Silicon Valley companies are not famous for diversity, So what do you do.

In that regard?

You have a program that I'm sure you have some fair amount of diversity.

We take it.

Extremely seriously and for example, my compensation and the compensation of my direct team is dependent on the progress that we make on diversity.

Also, I want to buy a computer, but I want I want to have AI in my computer. I want to be really up to date. Do you have AI and your computers yet?

Not yet, but it is coming soon and we think this is going to be one of the largest transformations in the PC industry in decades. What will be possible starting this summer is to run large language models in AIPCS, which means that what today all of us are doing in the cloud, where you use any of the applications that you can, you will be able to do it locally.

With one of your competitors.

Apple has recently come out with a product that is they called spatial computer.

It's like a virtual reality. Do you have that kind of product yet, And we have had a similar product for some time. Focus on two spaces. One was gaming, one was in some commercial usance. And we think that over time this category is going to grow. But what we really think is that computing is going to become

Or somebody comes and says, look, I don't really care about price. I'm not price sensitive. Sell me whatever you got, give me your best stuff. I mean, what's somebody going to spend that five thousand dollars or something for.

A con five thousand dollars? So we have products at five thousand dollars for a business customer. If you want to buy the top of the line workstation with the top of the line processor ten fifteen thousand dollars.

Wow.

So if somebody goes into your stores in India and they spent five thousand for a personal computer, that they call you up and side. We just sold somebody a five thousand dollars personal computer. They don't call you about that since you mentioned it.

This summer we were in India, so I decided to go to some of our stores without telling them who I was, so you should see the faces.

When I went to the store, they look at me.

I asked them about what products they were selling, and at some point I said, well, you know, I'm the sea of the company, and they became white.

First war Like they didn't believe it.

They didn't believe it, or after a while.

They believed it, but some of them look at the web to make sure it was me.

Okay, why should somebody want to join Hula Packard as an employee? Why is it better than working at Apple or one of the other competitors that you might have.

So when when Ivy CEO, we define four objectives for the company and one of the four objectives is to become a school of talent. And our value proposition to employees is that they can join the company, they will learn their job, they will be able to experience multiple businesses, multiple functions if they want. They can live in multiple

So that's one of the key values that we have.

So if somebody wants to work at a company like yours, what's the best way to get a job? You get an engineering degree from a good school or not a good school. Is being an engineer is the best way?

I think there are multiple Always clearly there are a lot of engineers in the company, So studying engineering and graduating from a good school is important. But we hire people that graduate from marketing. We graduate people from law schools. I mean, we are a very large company that has any function that you can think of in the company, So we have lots of people.

The average person you hire do'es he or she lasts one year or two years, five years?

How long are your average people?

In general?

We are a company with long tenure. I mean I said before I've been more than thirty four years in the company. You will find people that has been the company for a long time.

Would you say that the computing business is one that is likely to increase in value? Is more companies come in, or computers become more sophisticated, or you think it's pretty much a solid business, but not going to be a high growth business.

It depends on what you mean by high growth.

Is a business that we think is going to grow between two and four percent, but it is a four hundred billion dollar business, so twocent of four hundred billion is a lot of additional business every year in.

Your business today, would you say that your biggest problem is what your biggest concern is? Competition, government, regulation, the economy.

What is your biggest concern?

I think one is all the geopolitical changes that we are seeing. I think one we have had a very stable environment for the last twenty years. It was very clear how to manage the company to be successful. Things have changed extremely fast and this is having significant impact on our business. And the second is to make sure that we stay in the lead. From an innovation perspective.

That's one of the challenges.

And today you get a lot of people coming to here with great ideas what new businesses you should be in, or you generate your own ideas of new businesses that can expand your business space is both.

We have teams in the company that are constantly exploring new ideas, but we also have a small venture fund that looks what is being invented, what is being created in startups, and then.

We invest on those.

The innovation model has changed a lot in the last thirty years. Thirty years ago, companies like US used to have big central labs that were the ones creating new things. The model is way more decentralized today and the combination of university startups.

Is really now driving the innovation.

So we need to be much more external focused than we were before to continue to stay on the lead.

So what is the most important message you would like to convey anybody watching here today about the personal computer world is that it's a great thing for society and that they should buy more personal computers. And what is the most important thing you want to convey about HPA inc.

About HPS that is a company that really cares about helping society. That we have a big opportunity to enable our employees to be more productive, to be more engaged, and that we see a lot of opportunities to innovate to make it happen. And also that is a company with very strong values and strong principles. Since the company was funded in nineteen thirty eight, the Villa, and they've defined before all the conversation about sustainability or diversity even existed.

And since then we have been driving both.

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