Antonio Neri walks right past a carafe of filter coffee, “mud water”, as he dubs it, and heads for the espresso machine he had installed on the top floor of the Silicon Valley base of Hewlett Packard Enterprise. It is one of the perks of being the boss of the original Silicon Valley start-up.
If Neri is about to hold forth about how an Argentinian kid whose parents were immigrants from Sicily, had a cameo in the Falklands War, started at a Dutch call centre for HP — as it was known then — and ended up in the top seat at the California tech icon, he is going to need something a bit more refined than American-style, served-by-the-vat fare. “You have to have good coffee,” he says through an Argentine accent.
These are heady times for Neri, even if most people wouldn’t know it. HPE is something of a tech senior citizen; the pioneer that time forgot. The $20 billion company is one of the two successors to the original Hewlett Packard, which famously began life in the Palo Alto garage of the co-founder Dave Packard in 1939. That garage has, rather poignantly, been turned into a museum. And one would be forgiven for thinking of HPE, which builds data centres and infrastructure for businesses, as a relic.
Neri, however, is raging against the dying of the light. Luckily for him, artificial intelligence has arrived, which Neri scents as his opportunity to return HPE to its former glory. “AI is going to be the most disruptive technology in my lifetime,” he says. “We are in such an incredible position as a company to capture that mega-trend.”
As developers such as OpenAI roll out jaw-dropping tools that can ace standardised tests, turn sentences into high-definition video and write flawless software code, a scrum has broken out among the companies building the chips, data centres and network equipment to power the revolution. Jensen Huang, the chief executive of Nvidia, the AI chip specialist whose market value surpassed $1.9 trillion last week due to record-breaking sales, declared that the world had reached a “tipping point”.
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Companies, having seen enough of AI’s power, are now rushing to integrate it into their businesses. That often means moving their operations to the “cloud”: third-party data centres run by giants such as AWS (Amazon Web Services) capable of handling the complex, data-intensive workloads that AI requires. This is HPE’s opportunity, as Neri sees it. Only about a fifth of corporate IT operations are handled by cloud providers today. And HPE has built a “hybrid” cloud business that runs on HP hardware and software but allows companies to own and control the systems, rather than sharing space with other companies in far-off data centres.
Neri has made his move as well. When we meet, sun streams through the top-floor office perched on the southern shore of San Francisco bay. The 56-year-old, in jeans, short-sleeves and loud-coloured designer trainers, is beaming, having just announced an audacious deal: an all-cash, $14 billion takeover of Juniper Networks.
The takeover of the maker of routers and network switches that link high-powered chips inside data centres is its biggest since it scooped up the rival Compaq more than 20 years ago. “It’s a defining moment for the company and for me as a leader,” Neri says. “I’m transforming the company for the future.” Investors are less convinced. HPE’s stock has fallen by 15 per cent in the weeks since the deal.
Toni Sacconaghi , the Bernstein analyst, cut his price target because the deal throws the company into debt and adds a “significant integration” challenge. Juniper employs more than 11,000 people, so it is a big bite for HPE, whose workforce last year hit 62,000, including about 1,400 in Britain.
Neri is unfazed: “Juniper was a no-brainer to me,” he explains. “For my shareholders, it will take a little time for them to understand it.”
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He knows what’s at stake. He has been with HPE since 1995, so has had a front-row seat to its many previous corporate misadventures. “We kind of lost our direction,” he says, ticking off the trends HPE saw, but missed. “We understood the cloud, we understood converged infrastructure, we understood the internet of things. But we didn’t execute it. And when you miss those trends, it takes a long time to recover.”
Indeed, there was the 2002 Compaq merger, which sought to turn HP into a PC colossus. It was a disaster, leading to tens of thousands of layoffs and years of strategic drift. And then, of course, there was the $11.7 billion purchase in 2011 of Autonomy, the British technology company founded by Mike Lynch. That too went utterly pear-shaped. Within a year, HPE had written off $8.8 billion due to what it claims was an elaborate fraud allegedly engineered by Lynch, who denies the allegations. Years of bitter courtroom disputes followed. As The Sunday Times explored last week, a San Francisco court will hear opening arguments next month in the Department of Justice’s fraud case against Lynch, a full 13 years on from the original deal announcement.
Will Neri be watching? “No,” he says. HPE sued Lynch, but is not a party to the government case. “This is a historic dispute that has not impacted the day-to-day running of the company for over ten years.”
With his Juniper deal, Neri hopes to position HPE as the AI and cloud provider of choice for big business, what Americans call “soup-to-nuts”, offering everything from the beginning to the end of the process. So, HPE will be an infrastructure operator capable of building supercomputers like the £225 million Isambard-AI supercomputer it is building at Bristol University, handling data centres, or securely managing thousands of smartphones and computers operated by large workforces.
In a cloud computing world dominated by the likes of Amazon’s AWS and Google Cloud, HPE hopes to carve out its beachhead with a pay-as-you-go offering that can be more easily tailored to specific customer needs.
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John Chambers, the legendary former chief executive of Cisco Systems who transformed the router-maker into one of America’s biggest companies via 180 acquisitions, knows Neri as a competitor, a fellow Silicon Valley executive, and a friend to whom he “would trust with my life”. Neri, he says, is playing a “medium tough hand”.
He adds: “Most companies that have achieved the heights that HPE did, once they start down they don’t come back. If you try to do incremental improvements in this industry, you’re destined for failure. You’ve got to have the courage to make big bets and that is what he is doing.”
Neri’s parents grew up in what he calls a “donkey and cobblestones” town in Sicily. They emigrated to Argentina at the invitation of an aunt and Neri was born there in 1967. They returned to Italy where Neri went to primary school, before moving back to South America in 1978.
He quickly became interested in electronics. A technical apprenticeship led to him working at the naval shipyard where the General Belgrano, the Argentine Navy light cruiser that was sunk by Britain in the Falklands War in 1982, was stationed. “I worked on its rudders and sonar,” he says. He recalls of the sinking: “It was a very sad moment. I knew the people who were on the ship.”
So how did he end up all the way in Amsterdam? “There’s always a girl,” he says with a glint. Neri stayed in Europe until 1999, when HP asked him to move to Boise, Idaho, centre of its then-booming laser printer business. He relocated with his wife — the “girl” from Amsterdam — and had his two children in the landlocked US state more known for potatoes than printers.
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Neri began to climb the ranks. He headed the PC businesses, which he helped knock into shape after the Compaq deal, before getting plucked to run the IT consulting arm and then the struggling server operation. Then, Meg Whitman took over as chief executive in 2011 and decided to split off the business infrastructure operation from the printer and PC side four years later. She tapped Neri to run the former.
Since then, he has done more than 30 acquisitions, with the goal of stitching together an entire artifice, rather than focusing on offering a small handful of products. Chambers says one of Neri’s great strengths is laying out his vision and then acting upon it. “He makes decisions even when decisions may not be popular. He also has an ability to be pretty candid and direct,” Chambers says.
Among Neri’s most controversial decisions: moving HPE’s headquarters in 2020 from Palo Alto to Houston, Texas. The decision sparked howls from critics claiming that he had turned his back on the state that made the company. Others, including Oracle and Elon Musk’s Tesla, soon followed. Neri says Texas, which has no state income tax, was “easier to do business” in than in California, with its sky-high cost of living and thicket of regulations.
Spending time with Neri, it is not hard to understand how he managed to climb the greasy pole. He wraps his hard-driving approach in a disarming breeziness. Toward the end of the interview, Neri, an avid footballer, brings out his phone to show photos of him with his “good friend” the late Diego Maradona. And then there he is with Lionel Messi, or with Toto Wolff, the billionaire boss of the Mercedes-AMG Petronas Formula One team (HPE is a sponsor). Jensen Huang, the billionaire boss of Nvidia, is also, apparently, a friend.
As he lays out his grand vision, his mates in high places, an obvious thought materialises. In addition to helping put Silicon Valley on the map, HPE also seems to attract, and produce, political aspirants. Carly Fiorina, author of the Compaq merger, ran for president in 2016 but dropped out when it became clear she had no chance against Donald Trump. Whitman, Neri’s former boss, made an unsuccessful run for California governor.
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So, does Neri have his eye on public office? “No!” he guffaws. “My job is to make sure we stay ahead of the game.” For HPE’s man in the AI hot seat, that means avoiding the mistakes of his predecessors, who swung big deals only to watch them sour. “You need to make bets,” he says coolly. “And I have a unique affinity and understanding for how this company works.”
The life of Antonio Neri
Born: May 10, 1967
Status: divorced, two children
School: Escuela Nacional de Educación Técnica, Punta Alta, Argentina
University: graduated from Escuela Nacional de Educación Técnica and attended the Universidad Tecnólogica Nacional (UTN)
First job: electromechanical technician at Puerto Belgrano naval base
Pay: $20 million
Home: the greater Houston area, Texas
Car: Land Rover Defender
Favourite book: Dave Packard’s The HP Way, which discusses insights into managing and motivating people, long ahead of the strategies being accepted mainstream.
Film: Gladiator
Drink: water
Music: Pink Floyd and M83
Gadget: iPhone
Last holiday: Caribbean
Charity: within the past year, I have joined our team members in Houston to support more than 50 local organisations, as well as Texas Children’s Hospital, Kids’ Meals, Houston Food Bank, and Toys for Tots.
WORKING DAY
Neri typically arrives at HPE’s headquarters in Houston, Texas, between 6am and 7am. Whether in Houston or travelling, his day primarily consists of in-person and virtual meetings with customers, with whom he spends roughly half of his time.
DOWNTIME
The HPE boss plays in a competitive football league in Houston with several friends, including the nephew of his former “good friend” Diego Maradona. The league satisfies his competitive zeal. “When we get on the field, we are no longer who we are,” he says. He also enjoys painting, though has little time for it, and going to the cinema.
