I’m not convinced Symantec’s acquisition of Veritas last summer was the best investment the former could have made.
Symantec made a huge bet, at great expense, and it incurred a substantial opportunity cost as a result. There were all sorts of other companies Symantec could have acquired, some with more obvious connections to Symantec’s core business and with products that could have been adopted and sold more easily by Symantec’s field sales force and channel partners.
Nonetheless, Symantec made the right move in seeking to grow by acquisition. It’s traditional competitors from the antivirus realm, McAfee and Trend Micro, were being joined by larger competitors that were new to the space, including Microsoft and Cisco Systems (among others), pushed into the security business by customers as they were being drawn to it as a source of growth during the long darkness that followed the Internet bust in 2001. So, it isn’t a question of whether Symantec should have gone about growing through acquisition, but whether it made the right choices in the acquisitions it made, especially the $10.2 billion purchase of Veritas Software in July 2005.
In an article that appears in today’s edition of the Wall Street Journal (subscription required), Thompson explains his rationale for the acquisition by expressing the view that Symantec’s security software and Veritas’s storage software serve a similar purpose: protecting digital data.
Is that really true? Security software, when there is truth in advertising, protects computers, networks, and their users from malware. Storage software ensures that data is retained permanently and safely, preferably in a structured manner that makes valuable information instantly retrievable when required. Yes, storage software, and the archival systems it supports, should be secure, but that’s a different assertion from the one Thompson made.
Put another way, Symantec’s software and Veritas’ software are complementary, you can see how one could be used alongside or with the other, but they aren’t exactly mirror images of one another. They have different purposes, and they often have different buyers within the enterprise, something that Symantec discovered when it attempted to push Veritas product through its own sales channels. Thompson and his lieutenants saw the similarities between the two companies’ products but they didn’t appreciate the differences, and that made for a period of assimilation and integration that lasted longer than many expected.
Has Symantec got it sorted out now with its Veritas group? Do they know whether what’s complementary and what’s orthogonal? It’s getting better, I think, but there’s still some question as to whether the synergies are as compelling or a valuable as Symantec assumed prior to the acquisition.
A statement Thompson makes in the Wall Street Journal article concerns me. Says he:
"People say, ‘We don’t think you guys know what the hell you’re doing.’ Well, we’ll prove that wrong….Nothing gets me more jazzed up than proving my thinking about the company is right."
Okay, I understand the need for assertiveness, confidence, and steely resolve in a CEO. I understand why they’re important character traits for a CEO to possess. But what Thompson is saying is that he is "jazzed up" by proving himself right instead of by being right. There are important differences between the two concepts. The first suggests stubbornness and an inability to mistakes or errors in judgment, whereas the second connotes a willingness to continually adapt one’s thinking to the intrinsic dynamism of factual data and reality. As Don Ameche said in the David Mamet film of the same name, "Things change." People need to be able to change with them.
It’s not a sign of weakness to admit past mistakes and to learn from them. In fact, it’s essential for our personal and professional development, and for the robust evolution of corporations and other organizations. We’ve all made mistakes, and we’ll make more of them, presuming we live long enough.
For the sake of Symantec’s shareholders, let’s hope Thompson and his team choose to be right rather than to prove themselves right at all costs.