Tom Perkins the Silicon Valley Man

Three years ago, worst episode in Hewlett-Packard’s history started to unveil.First they dismissed their chief executive, then they got rid of the chairman as well of a phone-bugging and identity theft scandal in which members of the board accounted for their secret surveillance of each other in front of Congress.

“It was never my intention to be a whistle-blower. In fact, I was not,” says Tom Perkins, the former head of the nomination and governance committee, with whos help Carly Fiorina, the former chief executive, and Patricia Dunn, the former chairman went down.

It is coincidental that as Mr Perkins launches his new book, Valley Boy, speaking to The Times in the Mandarin Oriental Hotel in New York, less than a 15-minute taxi ride away, two other giants of American business are enduring the same bloody coups. Knifings, plotting and timely leaks to the media are being reenacted down the road on Wall Street, at Merrill Lynch and Citigroup.

“It’s just a rerun. All the leaks from the boardroom. Leaks are a sign of an unhappy company. At happy companies, nobody bothers. What are you going to leak, the information that everything is great? But all the skulduggery is still rather rare. It’s not indicative of what is happening across corporate America,”

Mr Perkins goes on.

An MIT graduate and a Hewlett-Packard lifer, he was disgusted at the way that the company he helped to build, and still clearly adores, had behaved.

“Pattie and I saw things differently about what sort of people should be on the board. I wanted Silicon Valley types steeped in tech, she wanted recognised names off Wall Street. We had real trouble working together. We really went for each other.

“In today’s world [referring to Sarbanes-Oxley] just substitute box-ticking for judgment; it’s certainly easier. Why even have a board these days? Just let the lawyers check off the boxes, take always the safest course and maybe the lawyers will also check for Titanic-size icebergs as well. Increasingly, directors are becoming plug-to-plug compatible – any director can serve on any board. Just comply with corporate governance and don’t worry too much about the actual business.”

Mr Perkins, who was a founder of one of America’s biggest venture capital firms. Kleiner Perkins Caufield & Byers, argues that the Sarbanes-Oxley legislation is scaring off talent from running big business in America. One of the key planks of the legislation is that key executives have to sign off accounts and become personally liable for any mistakes or fraud in a company’s books.

“It is harder and harder to get good directors on board. Sox [Sarbanes-Oxley] has put them off. There are huge liabilities now. The idea that the director of an audit committee can somehow ferret out misdeeds is crazy. Big companies are so complex, you can’t know everything. What a director needs is a feel for a company, a feel for whether revenues look too high – you’re not going to get that by expecting that something will jump out at you from the numbers. A big irony is that Sox would not even have prevented Enron in the first place. Everything that happened at Enron was signed off by the accountants and lawyers.”

Mr Perkins says that he is proud of the record of American venture capital. “Every other quarter you see Wall Street scandals. You have yet to see one at an American venture capital firm. They have very simple, direct principles and a big role in helping create companies.”

Mr Perkins denied that venture capital and private equity have helped to overheat markets.

“Venture capital funds sometimes do have a tendency to pay too much, because they have too much money. Even when there was no money in venture capital, they still had too much money. Markets just have to deal with it. A young venture capital fund has to invest. When you are a bigger and older fund, there is less pressure. The new tech companies are just as good as the old ones, but some will become bubbles. But, hey, I’ve made a lot of money out of bubbles.”

So has Mr Perkins recovered from the fallout of the HP disaster? At the time, he was depicted, in his own words, as “an angry old fossil with a vendetta against the chairman”. He claims that both Ms Dunn and Ms Fiorina still harbour grudges, with Ms Dunn accusing him of launching a “well-financed campaign of disinformation” and Ms Fiorina claiming that he feels guilty about his Iago-like behaviour. “Whatever happened to my ol’ way with the ladies?” he chuckles.

Tom Perkins background:

Education:

• Perkins received a B.S. in EECS (course 6) from MIT in 1953.
• He earned an MBA from Harvard in 1957.[

Career:

• Started working for Hewlett-Packard in the machine shop in 1957, eventually led HP into the mini-computer business.
• David Packard allowed him to create his own laser company while he was still working at HP, which got later merged with Spectra-Physics a leading laser company group.
• He left Hewlett Packard and launched a new venture capital firm with Eugene Kleiner.
• KPCB (Kleiner, Perkins, Caufield & Byers) made more than 475 investments and provided seed capital to renowed names as Amazon, AOL, Google, and Netscape.
• He was on board of Compaq supporting the merger with Hewlett Packard.
• Joined HP board in merger, retired, then rejoined days before Carly Fiorina was dismissed as chairman and chief executive.
  
• Perkins resigned from HP’s board on May 18, 2006 over the actions taken by the board’s chair, Patricia C. Dunn, to ferret out the board-level source of media leaks using methods Perkins considered unethical and possibly illegal. HP gave no cause in the SEC-required 8-K filing, and according to Perkins refused to amend the filing to indicate his reasons for resigning.In response, Perkins disclosed his reasons publicly, triggering an SEC investigation and significant media interest into HP’s leak-finding activities.
• Sits on board of News Corporation, parent company of The Times.

Hobbies:

• Competitive yachtsman and owns the world’s biggest clipper yacht, The Maltese Falcon.
• Wrote a novel, Sex and the Single Zillionaire, after he was invited, as a single man in his seventies, to audition for a TV reality show involving a dozen women in their twenties seeking to marry a wealthy bachelor.

Personal life:

• He had two children with his first wife, the late Gerd Thune-Ellefsen who died in 1994.
• He and his second wife, Danielle Steel, the romance novelist.Her book: The Klone and I was about their friendship They divorced in August 1999. He was her fifth husband.
• He has houses in California and East Sussex, England.

Oh, while you are at it check out this youtube video:

The Maltese Falcon - The Greatest Sailboat Ever:

Enjoy!