Q&A: HP's Former Networking Chief Looks Ahead

Marius Haas presided over some of the biggest gains for Hewlett-Packard's networking division it is history, but it wasn't enough to keep him at HP.

Earlier this week, HP confirmed Haas' departure following nearly three years as senior vice president and general manager for HP Networking, and before that, five years as chief strategy officer and global head of corporate M&A for the computing giant.

Haas is headed to private equity firm Kohlberg Kravis Roberts & Co. (KKR) as an industry advisor. According to KKR, Haas will work closely with the KKR team to identify new investments, particularly in the technology sector.

In an interview with CRN -- Haas' first on-the-record since his departure was confirmed -- Haas expounded on why he departed HP, what he hopes to accomplish with KKR and some of the tech segments that interest him most. Excerpts of the conversation follow.

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HP Networking has grown significantly in the last two years. Why was it time for you to leave HP?

It's very simple. It's been a passion of mine to go into the private equity space ever since I did the corporate M&A work at HP for five years, and when an opportunity came around to work at such a fine firm as KKR, I had to take it.

Fair enough. Did KKR approach you?

We've been in conversations for a while, and known each other many years.

And you sought to go into a private equity role?

Yes, absolutely. You know going back, HP Networking, what a phenomenal story. We had a phenomenal accomplishment and I feel extremely proud of what we have done, the market momentum we generated and the value that's being presented to customers and shareholders. I have nothing but fond memories of working at a great company and establishing the foundation that is continuing now.

Do you know who will replace you at HP?

No, there's a search going on right now. Bethany Meyer [currently vice president of worldwide marketing and alliances for HP's Enterprise Servers, Storage and Networking unit] is currently acting. She heads marketing for ESSN and she's the perfect person to shepherd it to the next step.

Do you have a particular highlight from your nearly three years running HP Networking?

We brought the business to double digit growth and established a phenomenal team with a great portfolio. Just that in and of itself is something I'm extremely proud of. You go back four years when we hadn't yet spent the time in strategy and corporate development, and we're growing the company to make it a truly efficient and productive organization -- that was something that was rewarding.

You're mentioned as part of this high-level executive churn happening at HP. Why are so many HP executives leaving the company right now?

I don't want to comment on that. I'm leaving a great organization and I'm leaving on good terms with the management.

Next: Haas' Role WIth KKR

Turning to your new role with KKR, you'll be helping the company evaluate technology companies to invest in. Can you expound a bit on what that means?

It's an area of investment they think is going to create significant value for their partner community. They were looking to bolster up that team to help with the sourcing of opportunities and make it an efficient organization. It fits very well with my background. I did 32 deals at HP during basically a four-year stint, so with sourcing, I can certainly help. I also understand how large companies operationally continue to evaluate how they want to keep areas and others they want to divest. There are clearly areas of opportunities and businesses we can go after. It's very synergistic, with the talents they have and the value I bring to the team.

What technology segments might KKR be looking at?

I haven't officially started yet at KKR, so it's hard to me to speak for KKR in that capacity. I would assume there are enough trends where technology is driving the transformation that KKR would view them as an opportunity.

How will you be evaluating what companies would make good investments? I ask because a lot of our readers are seeing potential for a sale, or M&A, or a private equity investment and would want to know what makes their business more attractive.

Well again I can't represent KKR and what they're looking at right now. [At HP] we had three key levers: what was the strategic fit, what was the financial attractiveness and what was the operational strategy in order to achieve our financial goals. All three were important. If one lever didn't work, we wouldn't do the deal. Looking at the trends and how attractive they are, they need to be well positioned technically and well positioned in an attractive growth market that either needs some capital to grow or requires some assistance or incremental operational know-how to achieve their objectives, or the help of expertise that needs their focus.

What might those attractive growth markets be?

You can see some of the core themes: themes of cloud computing, themes around security, themes around connectivity and mobility, and the transformation going on in the telecommunications space as to how content is going to be consumed. You drill down in the different sectors of the tech world, you realize there are trends that are going to be disruptive and require investment for the current leaders in those segments to continue to be leaders. Technologies can help to make those transformations happen.

You mentioned mobility, and there's a big push right now by technology vendors to market themselves for mobility, with devices or cloud services or what have you. What are the trends in mobility you're watching?

The industry is very much in flux. There are new operating systems emerging and old operating systems disappearing and obviously you've got a proliferation of devices going everywhere in every part of the consumer group, and by that I mean consumers and I mean enterprise -- they're ubiquitous in the devices they use and the consumerization of IT is happening. To your point, it's interesting how there is a proliferation of devices, and the multiple operating systems, and all of that will have to shake out over time. It's anyone's guess as to who the winners and losers are at the moment but the access to the content is what the end users will look for, as well as the optimal experience as how to they can manage that content. That's an extremely fast-paced segment of the market.

As you know, the tablet market came up only two to three years ago and it's become almost a commodity space already. That's an example of how quick transformation happens. Anyone who says they can predict what's going to happen in 5 years or 10 years, I would challenge.

Who does your gut tell you the winners are going to be?

I'll tell you I've been so laser-focused on the networking space and how HP becomes a leader in providing the network infrastructure that enables all of this to happen in a standards-driven way, I was kind of a layer removed from really thinking through the question you're asking. We are going to find technologies that are very unique and offer a differentiated experience at the level of architecture, where there's tremendous value created in multiple different layers. Right now the big winners are the social media types in the market, but you don't know what's going to happen two years form now, or if a different experience will provide a certain level of content to end users that they'll find extremely valuable.

Everyone's asking that with the emergence of video will that be the next experience that drives tremendous transformation. When you see a transaction like the Skype transaction and the value paid for that by Microsoft, clearly Microsoft believes that that's an important area and an important trend for them. In multiple different places, there are bets being made.

Next: Haas' Take On Networking Winners and Consolidation

Specific to networking, do you think we'll continue to see the consolidation and M&A among networking companies we have been seeing?

I think the consolidation of networking continues to happen. Technologies emerge from opportunity. In the best case, technology and great innovation comes from multiple different players and the kinds of business service they can deliver for their constituencies. You've seen HP make significant investment in strides in the market. Clearly they have created a scenario where customers believe it's no longer a one-horse race [in networking]. The value proposition was presented both on the technology side and the total cost of ownership side, and that opens up the door to doing innovation on a standards-based platform.

You mention the one-horse race and you're referring to Cisco. Why do you think Cisco is being challenged now?

I think they felt as though they didn't have much competition in the market, and that clearly is a decision that has impacted their business.

If you were a solution provider getting started today, where would you focus?

The solution provider partners that have worked really well were the ones that selected carefully the technology partners they worked with, and made an investment in getting themselves well-trained and providing their end user customers a very good experience. Understanding, doing the training and certification that makes them unique and differentiated to the end user. The examples of that we saw in the market when VARs did that, the kind of returns they got were exponential versus being an order-taking VAR.

So your advice would be get to that level of differentiation? Find an edge?

Become deep and entrenched in the technology and partner with a strong technology provider like HP. That makes it a win-win combination between a technology provider and VAR.

So what are the areas they should focus on with customers?

There's only one answer to that, and it's around networking [laughs]. No, obviously, the industry's going through a transformation and a need for bandwidth, and application delivery is becoming more and more pervasive as video is becoming more pervasive, remote access to applications is becoming more pervasive, there are more remote workers accessing core data residing in the data center, more small businesses growing…you can imagine why HP was so excited and driving and investing in the networking business because all of these trends that create the need for much more flexible networking resonates extremely well with all of these constituencies.

Couple with that with a need for more storage, and you can see how the HP converged infrastructure strategy around servers, storage and networking becomes so compelling and allows for an end user to take advantage of optimizing their infrastructure layer, minimizing their cost, freeing up capital to invest in innovation. In many of these cases that resides in modernizing their portfolio for the next generation of application and access requirements. It's flexibility they want.