CRN Interview: Don Bell, Bell Microproducts

Friends of Don Bell have joked that he's the longest-serving chief executive in Silicon Valley. That may or may not be true, but as chairman, CEO and president of Bell Microproducts, Bell is certainly one of the elder statesman of the IT distribution industry with the retirement next week of Steve Raymund as Tech Data CEO.

Bell founded San Jose, Calif.-based Bell Micro in 1987 and has grown the storage-focused distributor to more than $3 billion in annual revenue. He recently spoke with CRN Distribution Editor Scott Campbell about the addition of former Ingram Micro president and COO Mike Grainger to Bell Micro's board and other initiatives at the company.

CRN: What led to the appointment of Mike Grainger to Bell Micro's board?

BELL: We're always trying to find people to put on the board in various ways, whether it be for governance, financial knowledge, knowledge of the industry or good solid, overall management experience. I've known Mike Grainger for the last 10 years or so. We're not close friends, but I saw him at various conferences and knew he had a very big job with the leading company in our industry. Frankly, when he was free, given some time, I thought he would make a good board member.

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Our bylaws require a maximum of nine board members, and we had nine. We talked about it at the board meeting for a while. How often do you find a guy that has been president and COO of a major company with no encumberances and his knowledge? We felt that it was a no-brainer. As we talked further, Mike and I, and he met other board members, we felt he would be a significant addition. Another board member, Roger Smith, is keeping busy with other initiatives, and he was the newest board member and offered to resign and let Mike take his place. We had discussions over a number of weeks. We decided that it was a good move.

CRN: Did you have to wait for Grainger to end a non-compete clause with Ingram Micro?

BELL: I'm not familiar with the details of the non-compete he had. It's been about two years [since Grainger left Ingram Micro]. Typically, they only last a year or so.

CRN: Grainger sits on the board of another public distributor, ScanSource. Were there any concerns about a conflict of interest?

BELL: We don't compete with ScanSource. I have the utmost respect for them, but they are in a different part of the market. We don't see any issues, and Mike had that OK'd by them and us.

CRN: I've heard that Bell Micro's board has a mandatory retirement policy for its CEO at the age of 70. Is that the case and, if so, is Grainger's addition to the board a precursor to him joining the company in an executive position?

BELL: No. Mike will strictly be a board member. We hope sometime there will be a succession, and Mike will be a key contributor in picking my successor, as you would expect a member of the board to be. As far as mandatory retirement, there is none in the company. Heck, I'd sure like that. I'd have more fun.

NEXT: Bell gives update on distributor's business.

CRN: Can you give us an update on the business? Bell Micro has been a storage company for a long time, but it seems like it's branching out lately. Is the company going through a transformation or an evolution?

BELL: We're continuing to go through an evolution of the business. If you don't do that, you're in trouble. Our business is made up geographically of North America, Latin America and Europe. It's no secret that we are having profit problems in Europe, as are a lot of people. We are spending a good amount of time there to get it fixed. We have a new vice president and managing director of that continent coming on board Oct. 1, Jens Hartman, who is formerly the CEO of a European distributor named Elko. We are building up the management team. Our main challenge is to get that turned around, and we are making progress.

In the U.S. operations, we continue to make good money with our enterprise [distribution] group and Rorke Data and our reseller [unit] TotalTec. They continue to flourish, and we will continue to roll out value-add in our business. We're on the right track. You always like to execute a little quicker, a little faster, but I think we're doing the right things.

CRN: Over the last few months, Bell Micro has picked up vendors such as Red Hat and D-Link. Are you looking to expand beyond storage, or do you view this as rounding out your storage solutions?

BELL: I think it's more rounding out. That's the case when you look at other companies we've signed, like Apple, where we sell primarily their enterprise storage products but have access to the whole product line. We'll expand our product offerings in that area. We came at this from a storage-centric view. We represent a lot of the leaders like Hitachi and HP. As we look at this market, storage is tied to things like networking and computers. We will round out those product areas but stay with a limited line.

CRN: How do you find new vendors?

BELL: Generally, we have customers asking, 'Would you represent this line?' We'll talk to the suppliers, or they might recommend us as a preferred supplier to them. Once we do that, we take it to our existing customer base and look for a new customer base. We try to develop the business. It's a give-and-take situation.

CRN: How do you find new customers?

BELL: We try to find customers that we can bring our expertise in and bring them up to speed by utilizing our technical resources. That's worked well. We do a lot of training and, for the first few installations, we'll do the work and wear their badge. Then they pick it up. We've been doing that for three or four years now, and that's been successful. We lead with storage, our strength, when we go into a new customer base. Our No. 1 priority is finding new customers who haven't sold storage. We want to move beyond being the best-kept secret.

CRN: Do a lot of new customers take advantage of your capabilities?

BELL: Some of our best customers are people who have the capability, but they need a particular niche like iSCSI, SAN or Fibre Channel. They may be good in network appliances, but not in storage area networks, so they'll call us in. We can be hands-on at the customer level. You can do installations daily with a partner that you can trust.

CRN: What are you looking for in new vendors or new technologies?

BELL: We'll flesh out the storage side of the line card with high-end enterprise networking. We'll flesh out some unique applications. Probably, we won't be selling commodity software, but we will be selling enterprise software in the U.S.