Jeff Benck took the chief operating officer role at Emulex Corp. about six months ago after a pretty public departure from QLogic Corp. The transition hasn’t been too rough on Benck, who touts his knowledge of the industry and Orange County as reasons for the soft landing at the maker of electronics for data networks. The Business Journal’s Sarah Tolkoff asked Benck about his new role. Following are his edited comments.
What have you been doing since you arrived at Emulex?
It’s been about six months now. I spent a lot of time getting to know the customers and understanding the business. Of course, I know the industry pretty well. But each company has its own business lines and products that they are developing. I’ve spent a lot of time better understanding what Emulex does and where the strategic advantages are. (I’ve also been) spending a lot of time with customers and with the team and really understanding what is working well and what’s not and where I can make an impact.
What’s your day-to-day role?
I essentially run all operations. So I have all of sales, all of marketing, all of development and engineering and all of the manufacturing operations. All of the primary business functions. I work for Jim McCluney (chief executive and president of Emulex) directly.
What were the reasons for making the jump from QLogic to Emulex?
Jim kind of said right up front who he could partner with and kind of keep a creative inside/outside team. I spend quite a bit of time with him. He’s been a great partner and a great coach and boss from that perspective. He’s also given me a lot of autonomy and a lot of flexibility to make changes and to do what I need to drive the business.
Was this a new post created for you?
There wasn’t an open position. Jim had been COO under Paul Folino. When Paul stepped out of the CEO spot and Jim took over, there wasn’t initially a COO spot. I think Jim decided after two years that there would be some benefit to having a COO and I understand he had been looking for several months for the right individual.
What happened when you decided to leave QLogic?
I was anticipating waiting for the right job. My desire, if I could find a great job, was to stay in Orange County. I put down roots here. I wanted to stay, but only for the right job. I wasn’t going to take a lesser job to stay.
As you know, I didn’t leave QLogic to come to Emulex. I left QLogic and later found out that Jim was looking for a COO. It was maybe a set of coincidences but it worked out very well.
How did you find out about the job?
From industry contacts and some of the customers who I knew who said they thought he was looking. Some of the suppliers kind of tipped me off to it. My departure from QLogic was pretty public, so then I think he became aware that I was available.
Be honest here. Is it weird now working for the other team?
It’s a small industry, anyways. I call on HP now, but I used to be a competitor to HP when I worked for IBM. So you could say that some of my new customers have once been competitors, but they also respect the fact that you know the industry, you’ve been there and you’ve accomplished things that give you the right experience.
I’ve walked in their shoes, so I can more effectively say, Mr. HP, this is what I think you need.
It’s probably been less weird than you would think, having been in the industry. I’ve been in this space and I know this market, and I think that’s an advantage that I’ve brought to the table. I’m sure that made me a stronger candidate.
Of course, I can’t share what I know about what QLogic’s strategy is, but there’s industry know-how. It hasn’t really been strange. I think you see in the storage and server industry that it’s a pretty small community and a lot of people have moved to different opportunities through their careers.
Is your relationship with the folks at QLogic amicable?
I run into them often and I have lots of friends at QLogic. But I’m a competitor, and I’m a pretty competitive guy. I want the team I’m on to win. That’s where my focus is. While I’ve made friends at QLogic, I’m still trying to beat the heck out of them in the marketplace.
Can you identify what you think will be the biggest trends next year in the storage industry?
Virtualization isn’t a new trend, but it’s reached a bit of a fever pitch. IT managers are trying to save money and be efficient, so they are looking at virtualization as a mechanism for that.
We also see, in the networking space, convergence as a key trend. While it won’t all happen next year, over the next several years I think we are going to see a lot of convergence of different protocols. We certainly see data and storage networks coming together on a unified fabric. That’s a trend that we’re certainly investing in and we see an opportunity for us in the market.
In the economic environment that we are in, some of these trends might move a little slower than what would have otherwise happened, unless they can deliver the efficiency and the benefits from an operating expenses standpoint. I tend to see generally in periods like we are in, people tend to stick to the knitting,they do what they were doing before. They become a little more conservative. Because of that, I think it might slow down some of the new technology adoption.
Storage as an industry has been more resilient in some of the tough periods. There are a number of things that will still drive the need for storage. Some of it is regulatory things, but there’s also the whole explosion in content depots. It’s not just photos, it’s moving to video. Businesses are starting to latch on to video capabilities that perhaps previously were being just used by consumers.
Emulex is losing market share to QLogic in host bus adapters. What is the company doing to snatch back share?
Market share is a key focus for us. We have a number of initiatives to address our share position and to grow it. I’m not going to share with you all of our plans there, because I’m not the only one who reads the Business Journal.
Internationally, there’s an opportunity as we look at emerging countries. How do we have a bigger presence there,that’s been a focus as we opened an operation in Ireland about a month ago. We’ve continued to add staff in Asia. We get more than half of our revenue from outside the U.S., but I feel we can do a better job aligning where our key customers are investing in emerging areas.
Are you in charge of assessing where Emulex can tighten its belt?
We are being smart about that. We are focused on expenses and we took some actions at the end of summer to trim them a bit. We need to be balanced about what our spending is, given where the revenue projections are. We are fortunate that our business model allows us to invest.
We believe that if folks retrench in this environment and we are able to invest in the downturn, than we will come out stronger on the other side. That’s one of the harder parts of the job,it’s balancing being smart fiscally but also protecting some growth investments. You want to be there with the right products and services when the business environment improves.
We are probably better positioned than a lot of companies. We don’t have any debt, we are not invested in high-risk securities and we have a great enterprise customer set that continues to grow.
What’s next for Emulex?
I think Emulex is a company that’s really evolving. Traditionally, we’ve been strong in fibre channel HBAs and fibre channel technology and we see the convergence happening in the market. Customers want to move to one wire and one network. We are in a unique position to help customers through that transition. Not only protecting where they’ve come from, but helping them into the future. But it does require that we invest in some new areas so that we are not just focused on fibre channel in the future. Because of that, it requires some new leadership, and we are adding to the team people with other experiences and new skills.
Jim and I recognize that in order to scale, we have to bring in a broader set of leaders and we have to give them the freedom to make decisions so we can move with more agility and be more responsive to our customers.
