"My biggest fear was IBM was going to just try to s— us in," Cormier, who was then the head of
Red Hat's engineering and product management, told Business Insider.
Just wait Paul, just wait. . .
https://www.businessinsider.com/red-hat-new-ceo-ibm-merger-worries-powerful-combination-2020-4
Paul Cormier, the new CEO of Red Hat, said he nearly fell off his chair when he was told about IBM's plan to buy the open source software giant two years ago.
After the shock came his big worry about the $34 billion deal. As a tech veteran, Cormier was aware of IBM's history of gobbling up companies that ended up being just another part of the tech giant's massive product portfolio.
"My biggest fear was IBM was going to just try to s— us in," Cormier, who was then the head of Red Hat's engineering and product management, told Business Insider. "I've been here a long time. I was employee No. 120 at Red Hat. That's the last thing I wanted to see, my previous 19 years of hard work end."
But Cormier, who was named Red Hat CEO on Monday when IBM's new CEO Arvind Krishna formally took over, now sees the merger as a "potentially powerful combination, if done correctly." For Cormier, that means sticking to one of the basic tenets of the merger: keep Red Hat a separate and independent company.
Keeping Red Hat separate
"Red Hat being Red Hat is really important," Cormier said. "The reason why we have had these successes is because of the partnerships and ecosystem that we've built...One of my biggest jobs here is to make sure we have solid business models between the two companies to keep that in place."
Red Hat is a leading provider of open source software popular among developers. It became a software powerhouse by forging partnerships with major enterprise players, including the giants of cloud computing — Amazon, Microsoft and Google — which are also IBM rivals.
One of the big concerns had been merging with IBM would hurt Red Hat. Critics said it could lose key relationships with longtime partners that would not want to work with an IBM entity. There were also worries that Red Hat and IBM's cultures simply wouldn't mesh.
IBM is a 109-year old corporate behemoth known for its conservative, even stodgy culture, exemplified in the 1970s and 1980s by the image of a tech engineer in a white shirt, black tie and clean cut hair.
On the other hand, Red Hat emerged from the laidback, freewheeling dotcom culture of the 1990s, when it launched shortly after the birth of the World Wide Web.
Fears of a culture clash
Cormier described "a typical Red Hatter" as someone who would speak his or her mind and for whom "title doesn't mean a lot and hierarchy doesn't mean a lot." That actually speaks to one thing Cormier had had a hard time adjusting to at IBM, a gargantuan organization with more than 300,000 employees worldwide.
"The hierarchy bugs me," he said.
But he said he has adapted to IBM with help from Krishna whom he calls "a very open guy." When Krishna took over on Monday, Krishna sent an email to employees vowing a "nimble and pragmatic" leadership style that aims for "speed over elegance."
It was a notable statement coming from the CEO of a company often portrayed as a slow and plodding battleship.
What Krishna said is also a good sign for Red Hat, Cormier said. He said it shows that Krishna understands that Red Hat's open source style is a collaborative, flexible and "iterative" process where you figure out with clients "what works and what doesn't work and you don't have to have every bell and whistle" all at once.
Cormier's other big challenge is maintaining the integrity of Red Hat's business model. This can be a delicate dance for Cormier since it involves managing ties with companies with whom IBM competes.
Maintaining Red Hat's business model
He cited the work Red Hat is doing with Microsoft, a longtime IBM rival with whom Red Hat has had a strong relationship. Cormier said that work sometimes gives Red Hat access to sensitive information covered by nondisclosure agreements, which it must not share with its parent company.
"Even Arvind doesn't know what we're doing with [Microsoft] Azure," he said. "I think that's so important and that's why we're so separate."
Cormier said he's been drawing ideas from a recent major tech merger: Dell's 2015 acquisition of EMC and its major subsidiary VMware, another major cloud software company.
The merger has been described as a successful merger. For Cormier, what's notable is how it preserved VMware's identity and culture.
"Do any of the employees or customers of VMware think they work for or are dealing with VMware or Dell? It's always VMware," he said. "That's the model we should take."
Asked if he had reached out to VMware CEO Pat Gelsinger for advice about being gobbled up by another company, Cormier said "No, not really. I'm not sure he told me anyway."
Lessons from Satya Nadella
VMware is a Red Hat competitor. But Cormier said that after the IBM-Red Hat merger was completed in July, he did reach out to Microsoft Satya Nadella about that tech giant's experience when it acquired LinkedIn in 2016.
"I got a lot of insight from Satya on how they handled LinkedIn," he said, noting that like VMware, LinkedIn was able to maintain its identity and culture even after it was gobbled up by another company.
Buying Red Hat seems to be paying off for IBM. The tech giant's fourth quarter results, which it reported in January, showed an uptick in revenue, boosted by Red Hat. Red Hat posted revenue of more than $1 billion, up 24% year over year.
"I think we've done a pretty good job of doing it right," Cormier said.
Like Krishna, he took over his new post while sheltering in place and when there's much uncertainty in technology and the broader society.
He's had to cancel several scheduled for the coming months. Pivoting to a work from home policy has not been a problem for Red Hat employees who've been used to working remotely.
But he also echoed Krishna's emphasis on a flexible, pragmatic approach.
"We're putting plans together still right now, while also understanding that we have to stay really nimble," he said.
"Because nobody knows what the economy's gonna be like. Anyone who tells you they know what the economy's gonna be like coming out of this, I don't think they really know."