At VeriFone It's a Dog's Life (And They Love It!)

CEO Hatim Tyabji leads a company where work follows the sun, e-mail follows you home -- and everyone follows the leader.

Hatim Tyabji is sitting at a small conference table in his office in Redwood City, California, about 25 miles south of San Francisco. This, it should be noted, is nothing short of miraculous. As president and CEO of VeriFone Inc. http://www.verifone.com, Tyabji is a perpetual-motion executive. He travels up to 400,000 air miles per year -- visiting customers, cajoling employees, sizing up markets. When he's not in the air, he's working on his laptop. That's because he has banned all secretaries and paper correspondence at VeriFone. Tyabji receives more than 100 e-mails per day and conducts all business -- from granting raises to approving budgets -- through the company's electronic infrastructure.

At the moment, however, Tyabji is talking about Irish setters. Specifically, he is pointing to a poster on his office wall. The poster consists of twelve blocks, each with a photo of an Irish setter. The first 11 blocks show the dog standing, thoroughly oblivious to a command to "sit." Finally, in block twelve, the Irish setter sits. "Good dog," reads the poster.

"To me, that is the essence of leadership," Tyabji declares. "Human beings are worse than the Irish setter. Leadership is an ongoing, nonstop, continuous process. I can't get disillusioned when I say 'sit' and nobody sits. So I just keep repeating the message."

It's working. In North America today, it is virtually impossible to eat at a restaurant, rent a car, or stay at a hotel without your credit card experiencing a close encounter with a VeriFone terminal -- the hardware (and, increasingly, software) through which retailers "swipe" credit cards to receive authorization from Visa or MasterCard. That's increasingly true in the rest of the world, too; sales outside the United States are growing by 50 percent each year. Since 1990, the company's total revenues have doubled to more than $300 million.

But what VeriFone does is not nearly as remarkable as how it does it. This is a company that knows what it stands for. Hatim Tyabji's job is to remind his people when they forget. Four attributes define the VeriFone business model:

  • Global Reach. Tyabji declares that VeriFone has no corporate headquarters, recognizes no national origin, and is at home everywhere in the world. It generates roughly one-third of its revenue and stations more than half its workforce outside the United States. This global reach creates enormous advantages over the rag-tag band of local companies against which it competes.
  • Location Independence. Like their CEO, VeriFoners spend lots of time in airplanes and at their computers. It's all part of an obsession with "forward deployment" -- a drive to stay physically close to customers. One-third of VeriFone's 2,500 people are away from the office at least half the time. The very concept of "the office" doesn't count for much. VeriFone executives live wherever they choose. Tyabji has a home in northern California, but VeriFone's chief information officer lives in Santa Fe, New Mexico, and its head of human resources lives outside Dallas. Why? Because they like it.
  • Electronic Knowledge Network. How does such a radically decentralized organization hold together? Through robust computer networks. All corporate information is available online, worldwide, for immediate access. The company's top 250 people, for example, track sales down to the last week, the last day, even the last hour using RevWatch. Another database tracks which people speak what languages -- a useful tool for solving the day-to-day communication headaches that come from doing business around the world. Another system posts the travel itineraries of everyone in the company, including flight details, hotel reservations, and phone numbers.
  • Time Compression. VeriFone calls it the "culture of urgency," and it is the company's ultimate battle cry. Tyabji boasts that VeriFone has achieved a 24-hour workday. Software projects, for example, routinely follow the sun. Programmers working in Bangalore, Paris,
    Dallas, or Honolulu ship code back and forth to keep the development process moving while they're sleeping.

 

Applying these principles has made VeriFone a devastating competitor. In 1986, when founder William Melton recruited Tyabji to become CEO, the company was privately held, had revenues of about $30 million, and was barely breaking even. Today VeriFone is 12 times as big, is growing by 20% a year, and is publicly traded (with a market value of more than $600 million). Last year, the company shipped its 4 millionth system. Its market share in North America is a stunning 60 percent.

The fierceness of VeriFone's business model is a reflection of Tyabji himself. Born in Bombay, Tyabji, now 50, moved to the United States when he was 22 and earned two graduate degrees. He spent 13 years at Sperry Corp., signing on as a junior project manager and rising to run all commercial computer operations for what is now Unisys. He is a genuine corporate radical -- fanatically committed to his ideas, utterly fearless about offending the business establishment (or even his own people) when he believes they deserve it, hell-bent on the proposition that his company will walk its talk every day. The only true motto of leadership, Tyabji proclaims, is "Do as I do, not do as I say."

There is no doubt that what Tyabji does -- and what he expects of his company's people -- is breathtakingly powerful. But is it sustainable? Can a corporate ethos this unforgiving crush the competition without chewing up its own people? Most of us already worry that the line between "work" and "life" -- the boundary that provides a safe haven from the exhausting toll of global competition -- has been dangerously blurred. VeriFone appears to have erased the line altogether. Life is work; work is life; there can be no rest in the 24-hour-a-day organization.

During two long interviews with VeriFone's CEO -- one in his office, the other, more appropriately, in an airport conference room -- William Taylor, one of Fast Company's founding editors, explored the irresistible force and dark corners of what Hatim Tyabji has built -- and the lessons it teaches about work and competition in the global economy.

People look to VeriFone as a model of global competition and the "virtual" organization. Yet you worry that they draw the wrong lessons. What don't they understand?

Much of the stuff that has been written focuses on the form -- e-mail, information systems -- and not on the substance. The true power of running a company, the true power of growing any enterprise, is 5% technology and 95% psychology. With all this technology, you run the risk of becoming a robot. Leadership is not robotics. Leadership is human. Leadership is looking people in the eye, pumping the flesh, getting them excited, caring about their families.

It's so easy to worship technology or to blame technology for problems that are human in nature: "Our e-mail system isn't good enough." Bullshit! The e-mail system has nothing to do with anything. Companies have this funny idea -- they forget that human beings are human beings. Not here. Nothing I say should be construed as pie-in-the-sky stuff that doesn't take into account the frailties of human nature. I'm extremely mindful of the frailties of human nature. What I do is acknowledge those frailties and address them, rather than pretend they don't exist.

What frailties, exactly?

Look at that poster on the wall. I have taken that poster with me to staff meetings, or to meetings where I'm offering the same point of view for the umpteenth time. I'll say, "You know, there are twelve blocks in this poster. The Irish setter sits in the twelfth. Right now we're at block two. Would you please get rid of my ulcer and get us to block four?"

To me, that is the essence of leadership. It's amazing how many people forget that. Why do I constantly reinforce the VeriFone philosophy? Why do we publish our Commitment to Excellence? Why do we have VeriFone Virtual University? Why do I distribute e-mails about leadership? Because human beings are worse than the Irish setter.

Leadership is an ongoing, nonstop, continuous process. I can't get disillusioned when I say "sit" and nobody sits. I understand that in the grand scheme of professional life, the Irish setter may never sit. So I just keep repeating the message.

You talk about the frailties of human nature, and then you compare your people to an Irish setter. Aren't they offended?

Are some people offended when I say that? Absolutely. But I have no reservations about making people feel uncomfortable who have reason to feel uncomfortable. Nothing I do is noncontroversial. And if someone wants to be offended, tough.

That goes for me too, by the way. If you read my e-mail on leadership, I state very clearly that if anyone feels I am not following my own precepts, they had better sit on my head.

So you want people at VeriFone who aren't afraid to make waves?

Nothing frustrates me more than somebody sitting back and saying, "So and so won't let me do this" or "these people are getting in the way." Who the hell are these people? There is no such thing as they.

You have to repeat that message, too. I've been running this company for nine years, and we'll be sitting in a staff meeting and someone will say, to pick a random example, "Services just doesn't work." And I'll say, "What the hell does that mean, `Services doesn't work'?" And the person answers, "Well, you know, they won't do what we need."

I reach into my folder and I pull out a mirror that I carry with me. And I hand it to that person and say, "Would you look into the mirror please?"

You really do this?

Absolutely. Then I say, "That's they." Don't tell me what the problem is, tell me what the answer is. And if you don't tell me what the answer is, I'll tell you the answer and you won't like it. I submit to you that if more people handed out mirrors and more people looked into mirrors and said, "There is no they, it's me," we would all be much better off.

So we've got Irish setters and hand mirrors. Why would people buy into this philosophy and culture?

If you ask, "What really makes VeriFone different?" the answer is simple: We practice what we preach. People see constant reinforcement, on a day-to-day basis, of what we stand for. We almost have a religion -- and I use my words carefully -- of "Do as I do, not do as I say."

I communicate this to my people all the time: Life at VeriFone is not a spectator sport. You have a deep and fundamental obligation to live your professional life according to the VeriFone philosophy. If you don't like the philosophy, or if you think the philosophy is right but that Hatim is not following it, then you have a deep obligation to speak out. If you don't speak out, you have no right to complain.

What we're trying to cultivate in this company is moral authority. When I have moral authority, I can do anything. That concept is not understood very well in corporate life. People look for bullshit authority, not moral authority.

I know you worry that people who study VeriFone overemphasize technology. But the company could not exist without its electronic infrastructure. How is e-mail at VeriFone different from e-mail at other companies?

E-mail is powerful in this company because there are no exceptions. There is no paper. There are no secretaries. Period. I was interviewing someone recently from a very large bank. I told him about our e-mail system and he said, "Oh yeah, no problem, we have e-mail at the bank." And I asked, "Is every man, woman, and child on the e-mail? Does everyone in the bank have the power to e-mail anyone in the bank, regardless of rank? Does anyone in the bank have the power to send a message to everyone in the bank worldwide, just by hitting the equivalent of I_Staff in our company?" He said: "Oh no! The e-mail prerogative only goes from the CEO down three levels." Talk about people drinking their own bathwater! That's absolutely pathetic.

We put information into people's hands that most companies would be appalled by. We just don't see abuse. And it's more than information. We use e-mail very strongly as a vehicle to express emotion. I can't be more emphatic about this.

How do you express emotion over e-mail?

We do it every day. We recently had a major win in a market where we hadn't been having much success. Against all odds, we went after a big customer and won. When I got word that we had won -- and I'm so enmeshed in the organization that people just ignore the hierarchy and e-mail me that kind of news -- my first reaction, apart from pure joy, was: Why did we win? My next question was: Who are the key people who made the difference? Then I immediately sent out a message of congratulations. The e-mails and phone calls I got back were enough to make my eyes moist. That to me is what makes us tick. That's emotion.

What you're saying is that e-mail is not just an information system, it's a social system. It transmits the values of the company.

Exactly! Not many people think of it that way, but that's exactly what it is. I resonate with that big time.

So what are the rules of good citizenship in this social system? And what constitutes unacceptable behavior?

It's not all that different from a country. It's a free society. Which means we trust you. Which means there are no rules. Which means we expect you to behave responsibly.

It's interesting. As I think about the evolution of this company, it's almost like the evolution of a new democracy. People learn how to handle freedom. When we were younger, we had far more breakdowns in the social system than we have today. We used to see some of these e-mails, I tell you at times they almost made me cry. I'm a very emotional person. And I could see out-and-out abuse. You don't think I was tempted to clamp down? Of course I was -- it's very easy to revert to totalitarianism. But we stuck with it. And we are a much stronger company for it.

That's the spirit of the electronic infrastructure. What about the power of it? Can you demonstrate to skeptics that an online company is a more competitive company?

I can certainly do that. But let me step back and emphasize our fundamental competitive ethos: we are insensitive to distance and time. You know, if you are operating by conventional means -- phone or fax or whatever -- you have to know where someone is to work with them. The way we operate, it doesn't make any difference where people are. I don't give a damn where they are, as long as they can access e-mail.

We have also proven that there is no reason VeriFone can't have a 24-hour day. VeriFone does have a 24-hour day -- and without people pulling all-nighters or getting so frazzled they can't function.

We have software projects that basically follow the sun. Our facility in Bangalore, India is one of our centers of excellence for networking and communications. So Bangalore develops the communications code for new products. Of course, that code has to be tested, and that work is done in Dallas. It also has to be integrated into our overall systems code, and that work is often done in Hawaii, where many of our systems engineers are based.

In a conventional company, where all the engineers are sitting in the same place, you'd have a tremendous amount of serial processing. First you write the code, then you test it, then you integrate it. Here, because our people are distributed around the world, everything works in parallel. Before they go to sleep, the boys in Bangalore upload code and ship it to, say, Dallas or Hawaii, let those guys work on it, and then start again the next morning in Bangalore. Allowing our projects to follow the sun is something that we have done consistently -- and with devastating efficiency.

One-third of your people are on the road at least half the time. Everyone is communicating over e-mail. Can you demonstrate how that translates into beating the competition?

We were just in a situation in Greece, a major dogfight over a customer where we thought we had the business. My guy went in to close and the customer was objecting: "This Canadian company just came to visit us. They say you don't have any expertise in debit cards. You don't have any PIN pads installed, and they are the world leaders in debit. So we're not really sure we want to go with you."

Well, it came like a bolt out of the blue. And as luck would have it, our man in Greece had been with us for only six months. He didn't know whether what this Canadian company was saying was true or not. So he asked for 24 hours. He had been inculcated enough in our culture that he went back to his hotel room in Athens and put out an e-mail to I_Sales, which is to all sales and marketing personnel worldwide. He reported on what happened, and that he was going to lose the account, and said: "Please tell me what kind of debit installations we have, what kind of equipment is in place, and any reference accounts I can use to go back and fight the case."

I sit here with great pride and tell you that within 24 hours he had 16 responses and 10 reference accounts. And what he did was really superb. Rather than paraphrase the e-mails, he went out, rented a printer, connected it, and did a screen print. He was in a hotel room, so he had to improvise. Then he went to the customer and politely laid out the e-mails. Sir, you can read for yourself. And oh, by the way, the e-mails include the names and phone numbers of our customers. And oh, by the way, we have 400,000 PIN pads installed. I don't have to tell you who won the order.

There are two morals to this story. Number one, it's a vivid example of what makes this company tick. The people from Asia or the United States who responded to this guy weren't going to get a commission. This was not a sales call, it was a call to arms!

Number two, because we have people all over the world, we were able to act on what happened in Greece. After all, this Canadian company is running around claiming that we are not savvy in debit. And so immediately, we launched a blitz in the market. And I don't mind telling you, when we launch a blitz, we go for the jugular. We're not very high on subtleties.

There are so many stories inside VeriFone -- it's almost a corporate mythology -- of these superfast, superhuman efforts. What kind of commitment do you expect from your people?

We expect people at VeriFone to go above and beyond the call of duty -- not because they are forced to, but because they want to. The people who join this company change. Their pace of life changes. Their intensity changes. Their emotional level changes.

How do you evaluate who's prepared to make that commitment?

People assume we've got these great screening techniques. Believe me, we don't. We've got this naive belief that if you have a fundamental set of values, and if you treat people with dignity, by and large you attract the right people. By the way, more than half our people work outside the United States. And even within the United States, our people come from different backgrounds, different industries, different ethnic origins. We have a global, multifaceted population. But we approach recruiting -- whether it's in San Francisco or Santiago, Chile -- the same way everywhere.

But how do you let people know what they're in for?

When we bring people in for interviews, we go out of our way to emphasize the negative. We don't sweet-talk them. We make it clear, for example, that whether they want to admit it or not, most people are more comfortable operating under a well-defined framework. People will tell you, "I love to set my own hours." But most people are happier when you tell them to be in by 8:00 in the morning and leave at 5:00 in the afternoon.

We are also very clear about the quid pro quo of life at VeriFone. The quid pro quo, in return for all the freedom we offer, is a tremendous emphasis on accountability. We expect you to perform and we expect you to deliver the goods. I don't care if you don't come to the office or if you take long lunch breaks. We don't have any system for lunch breaks. It's bullshit. You perform, you can do anything you want. You don't perform, you're out. A lot of people are very uncertain of themselves. So we make that clear.

We're also clear about how we work. It takes some getting used to. Many times, I'll see people six months after they join the company, and they'll tell me, "I feel like I'm a slave to e-mail." All I can say is, "What the hell do you want me to do about it? Run your life? If you choose to make yourself a slave to e-mail, be my guest. This is not Big Brother. You want freedom, you exercise it."

Doesn't that scare off 90% of the people you recruit?

Without any doubt, there are people who hear our message and say, "This is not for me." Fine. And there are people who start with us and do not fit the mold. That's fine too. But I'll tell you this: we have been able to attract people who, at face value, would appear to be total misfits, people who come from very large companies, and it's amazing how comfortable they get with our way of working. And I'll tell you something else: we don't lose people.

You see, in addition to being a really tough, results-oriented culture, we are also a culture of caring. We do things for our people that most companies don't even think of doing. I'm not talking about grand gestures. I'm talking about the day-to-day realities: being generous with acknowledgment, always making people feel important, always communicating. More than anything else, these informal methods of recognition are what stick. A private, one-on-one e-mail. A private telephone call. The spirit that creates is incredible.

I certainly see the culture of toughness and personal freedom. I'm not sure I see the culture of caring.

One of the things we preach very strongly is quality of life. The way we look at quality of life is, at one level, very pragmatic and, at another level, very emotional. The pragmatic level is to articulate clearly that we are a public company, registered in Delaware, with all the expectations that entails. We will produce results and we will produce results quarterly. Otherwise life is going to be very short and very uninteresting. I make no bones about it.

At another level we are, in fact extremely soft. We are constantly searching for ways to create a degree of empathy in the VeriFone family. Whether people are single or married, whether they have children or they're living with their parents -- unless their personal support system is excited about VeriFone, unless they feel a part of VeriFone, then VeriFone will fail.

Let me give you an example of something we're just putting into place It's called VeriKid. We're going to sponsor an exchange program so that VeriFone children can live with VeriFone families in different parts of the world. Is this very profound? No, but how many companies do it? And it's going to be powerful. Let's say we have a family in Bad Homburg, Germany, where one of our regional offices is, and they have a 14-year-old girl who has never been to America, and she wants to come live in San Francisco for a while. We sponsor her to stay with a VeriFone family here. You can't tell me that family in San Francisco is not going to be very close to the couple in Germany. We're constantly searching for ways to bring the VeriFone family closer together.

VeriGift is even more revolutionary. During my travels I met one of our guys who was in some trouble. His wife was very sick, he needed to be home with her, but he had run out of vacation. So he took an unpaid leave of absence. We were talking about it -- he wasn't complaining -- and he said, "How can we make these kinds of situations easier for people in the future?" I didn't have the answer; I'm not all-knowing and all-seeing. But he formed a team, and at the next review his team proposed the VeriGift program. Lots of people here have vacation time they don't use. Rather than take the time as extra pay, they contribute it to a vacation bank. Then, when people have personal hardships, and they've exhausted their vacation, they apply to the bank and get additional paid vacation that others have donated.

You want human, that's human.

It's human, but it raises some thorny issues. There are fewer and fewer boundaries left between business and personal life. Haven't you just taken away another? When people join VeriFone, are they signing up for a job or are they signing over their lives?

It's a profound issue for us. The distinction between life at VeriFone and life outside of VeriFone, between the professional and the personal -- that distinction, in our company, is blurred. We work very hard to blur it. VeriKid is a case in point. Once my children are living with another VeriFone family, suddenly we're very much into personal lives. We've crossed the line.

But isn't that a dangerous life to cross? Is there ever a safe haven from the company or from work?

All I can say is that every person has to come to terms with himself or herself in the context of this new environment. Let's say it's Sunday, and you're at home. You walk past the den or bedroom, wherever your computer is. Are VeriFone people more likely than other people to log on? Absolutely. Am I expecting that? To some extent, yes. But I'm not demanding that. You have to decide.

Now the reality is, if you are a global company, you can't say, "It's Sunday in the United States so I'm not going to think about work." If it's Sunday here, it's Monday in Australia, and people there may need you. So it's a never-ending cycle. I make no bones about that.

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