Thoughts on the Apple-Palm “Poaching” Controversy

I don’t know whether I would describe it as a tempest in a teapot, but I definitely think the red-hot controversy over a story published today by Bloomberg suggests that we’re in a slow news cycle.

I’ll recap quickly, and then make a few points.

Like a good reporter should, Connie Guglielmo gets right to the point in her opening paragraphs:

Former Palm Inc. Chief Executive Officer Ed Colligan rejected a proposal from Apple Inc.’s Steve Jobs to refrain from hiring each other’s employees two years ago, calling it wrong and “likely illegal,” according to their communications.

Colligan, who stepped down as CEO in June, discussed the matter with Jobs in August 2007, as the mobile-phone war heated up, according to the communications. Apple had introduced the iPhone two months earlier, just as Palm hired a former Apple executive, Jon Rubinstein, to develop new smart phones. Jobs, Apple’s CEO, told Colligan he was concerned that Rubinstein was recruiting Apple employees. “We must do whatever we can to stop this,” Jobs said in the communications.

This development builds on and feeds into reports in June indicating that the US Justice Department has begun investigating possible collusion in the hiring practices among technology companies.

Now, I’ll make a few observations and, as always, you can make of them what you will.

First, it’s pretty obvious that Ed Culligan was the source of the salient disclosure that formed the basis for Guglielmo’s story. Culligan comes off looking better than Jobs in the correspondence cited in the article, and Jobs isn’t exactly known for his openness and willingness to share with the press.

So, if you’re a curious sort, you have to ask: What’s Culligan’s motivation here? What does he hope to achieve? Is it simply that he’s continuing a vendetta with Jobs, or is something else at play? I would imagine he still has a whopping number of Palm shares, and that it would be in his interest to distract Apple as Palm fights for its commercial life in the savagely competitive smartphone market.

There are multiple possibilities as to what’s driving Culligan, lots of potential intrigue.

My second observation is that the alleged non-poaching collusion between and among technology companies is, well, pervasive. Anybody who’s worked at a senior level in the technology industry knows that.

Here’s how the dynamic typically works, though there are variations on the theme:

A senior staff member leaves a company to found a startup or join a competitor. He then hires another high-ranking staff member from his former firm, often a member of the team he led. Seeking to staunch a potential domino effect of personnel defections, the raided firm unambiguously conveys its displeasure to the raiding entity, seeking to find a rapprochement that protects it from further personnel losses while mollifying its rival.

Typically, they come to an understanding, if not a formal agreement. The understanding might look something like this: If you, upstart company, refrain from raiding our staff, we won’t take you to court on some pretext or conduct reciprocal on your staff. Employees, of course, can leave either firm of their own volition — they have the right to do so, after all — but poaching is considered bad form and shall be off limits.

Is it ethically wrong? Perhaps so. Is it illegal? I have no idea. Does it happen? It is endemic to the technology industry, and it’s said to be widespread in many other industries, too.

That’s why I can’t believe otherwise jaded observers are feigning surprise or shock. This isn’t exactly a new development, and it isn’t a recondite practice exercised by only a few Silicon Valley companies. This is a widespread practice, considered a form of self-defense by companies whose employees are raided.

Now I have one other observation to make, and then I’ll retreat to the shadows again.

It’s about Steve Jobs and Apple. In many ways, I think Jobs and Apple are reminiscent of the Nixon Administration.

No, I’m not referring corrupt practices, because I haven’t seen compelling, definitive evidence that Apple has broken the law in this particular matter or in others. Instead, I am referring to the intense paranoia that Jobs and his top lieutenants evince. I seem that as paranoid, and not in a good way, because their fear and loathing is out of proportion to the real-world threats they face.

Take Palm, for instance. Jobs clearly perceived Palm as a serious competitive threat, back in 2007 and probably even today.

Well, I just don’t see it, not to the degree that Jobs does. I could just as easily envision Palm going out of business in the next two years as seeing it emerge as a meaningful number-three player behind Apple and RIM in the most lucrative realm of the smartphone market.

Jobs overreacted to Palm and probably overreacts to much else besides. He probably wastes cycles on imaginary demons. He must have a lot of cycles, though, because that particular peccadillo doesn’t seem to have cost him or his company much benefit.

My cavil takes nothing away from Jobs’ manifold accomplishments. Moreover, it’s quite possible that the paranoia is part of the whole Jobs package, an essential ingredient in his recurring and remarkable business successes.


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