Over much of the past three decades, i have been an investor. The highest calling of mankind, ive often thought, was private equity. [laughter] and then i started interviewing. While i watch your interview, i know how to do some interviews. Ive learned from doing my interviews how leaders make it to the top. Jeff i asked him how much he wanted. He said 250. I said, fine. I didnt negotiate with him. I did no due diligence. David i have something i would like to sell. And how they stay there. You dont feel inadequate now because being only the second wealthiest man in the world, is that right . [laughter] the granddaddy of all Silicon Valley startups was hewlettpackard. It was started in a garage in 1939. But in 2015, it split into two separate companies, hewlettpackard enterprises and hp inc. Recently at the Economics Club of washington, i sat down with Enrique Lores about how he has led this successful personal computer and Printing Company following the split. So, which company is better . [laughter] hewlettpackard enterprises or hp inc. . Enrique as you can imagine, i have a very unbiased view. I have to say, of course, hp inc. It is not only that we do printers and pcs. We think we are the company that can enable a more flexible way of working to make employees productive and engaged. And this is what we stand for. David but the Main Business today is computers. And, to some extent, printers. Those are the Main Businesses. I can tell from your accent you are not from baltimore or washington, d. C. Where did you grow up . Enrique i can say youre very astute. [laughter] you are really detecting that im not from the u. S. , is very very difficult, i know. But yeah, i am originally from spain. David so you grew up in spain . Enrique i grew up in spain. David now, how Many Companies in Silicon Valley are run by people born in spain . Enrique one. David one. [laughter] so you are born in spain. Did you say, i want to run hp someday . Or what was your aspiration as a young boy in spain . Enrique no, it was not my aspiration to run a company like hp. I joined hp as an intern in 1989. I have worked for the company for a very long time. When i was studying, there was a group of hp engineers who came to my university in spain, in valencia, and they explained what it took to develop a printer. It was when printers were starting to be created. I was amazed by the i was amazed by the both the technological complexity and also the passion these people showed about the printer. And in fact, i was thinking, how can someone feel passion for something so strange . I have to say though, 34 years later, i have more passion for printers than these people had. So i have learned and i have been converted to the religion. David you went to college in spain and got an mba or engineering degree . Enrique i got an engineering degree first. David you are an electric engineer . Enrique mmhmm. David you moved to Silicon Valley . Or where did you move to . Enrique actually, the full story was, i got the opportunity to work as an intern in hp and go to san diego. So, we went to san diego for the summer. And when the internship was finishing, hp was opening another center in barcelona. So they told me, you are from spain, we are creating this new r d center, you might be interested in joining. And i said at that point, yes, maybe for a couple of years, because we were living in a different city. And in spain, you dont change cities. You grow up in one place, go to school in one place, you live all of your life there. So we said, for a couple of years, it would be nice to go to barcelona. 35 years later we never came back. We went to barcelona, sometime later we came to the u. S. , and here we are. David how long did it take after the split occurred in 2015 for you to become the ceo . What were you doing before you became ceo . Enrique before i became ceo, i led the separation of the company. When the ceo decided to split the company, we created the separation office. There were two leaders, one from hp inc. And one from Hewlett Packard enterprises. I led the separation. In fact, when i was asked to lead the separation, my Immediate Response was, no, i dont want to do that. And then meg whitman, that was the ceo at the time, after a few days, she called me at home and said i need to talk to you. I went to her home and she said, i know you dont want to do that. This is the opportunity of your career. Youre going to learn things. You should be taking this road. And when the ceo calls you to her home on the weekend, you know there is only one answer. [laughter] which was, yes, i will do it. I have to say, i learned a lot. David so what was the business theory behind why splitting up hewlettpackard, a very successful company, into two separate companies, why was that going to be such a great idea . Enrique i think the main theory, which in our case has proven to be true, was focus. Hp was a very big Company Selling from printers to servers to data centers, all sorts of technology products. The theory that the board had was that focus was very important. Each market was moving in a different direction. We were competing with different companies. So being focused, being able to invest in our segments was a critical thing, and in our case that has proven to be true. David when the Company Split occurred in 2015, many people thought hewlettpackard enterprises, which was the sexier area of software and services, would become more valuable. But actually, your company now has a higher market capitalization than hewlettpackard enterprises. Does that make you sad or happy . [laughter] enrique im only concerned about what happens with our company. As i said, the separation has been good for us. We have proven that we can create value to shareholders. Our tsr in the last seven years has been 200 . Significantly higher than the average of the market. So we have done well. And what is most important, we have a lot of opportunities and ideas of how to continue to make the company better. David do you ever look at your competitors computers and say, why dont we have this . How come we dont have that . Enrique yes, and the team hates it. [laughter] david you compete against dell, lenovo, and also apple, i assume. Which of those companies makes the best personal computer . Enrique hp. David what makes your computer better . Why should i want to buy yours . Arent they all really pretty much the same at this point . Enrique there are three big differentiations for our products, especially in the pc space. One is security. Cybersecurity is every time more important, and we build both software and hardware in our pcs to make them more secure. Second, industrial design. We have made a big effort to make our pcs the bestlooking pcs, the most attractive and the ones that have the better use model. And finally, is sustainability. We think sustainability is really important, and we use, in our pcs, all types of materials that are environmentally friendly, from plastic that we get from the oceans to coffee beans, too, you can look at our materials, any type. David where do you sell them . You dont have hp stores the way apple has stores. Where do you sell your computers . Enrique it depends country by country. In the u. S. , for example, we sell online, on hp. Com, or on amazon. You can buy our products in any Large ConsumerElectronics Retailer like best buy. But also for commercial customers, we have a big network of resellers, commercial resellers that will sell our products. And for our top customers, we have direct sales. In other countries we have our own stores. David oh, you do . Enrique for example, in india, we have more than 500 stores that really david why does india rate 500 stores and the u. S. Rates none . [laughter] enrique because of the structure of the distribution and retail model. In india, there isnt an Electronics Network in many cities. We have to build our own to be able to really reach consumers anywhere in the country. We continue to expand because we continue to see a big opportunity. David so i buy one of your computers and a year later theres another model. Can i trade it in and get a discount like a car, you dont have tradeins or anything like that . Enrique today, we dont, but this is one of the businesses that were starting to develop, both because we see that we can really help customers always stay on the latest technology, but also because from a sustainability perspective, recycling and refurbishing is a very important thing to do. So we are going to be building that model at scale. David where are your computers manufactured . Enrique today, they are still majority produced in china. David are you worried about somebody putting a chip in there to allow the Chinese Government to listen to what you are doing . Should i worry about that . Enrique you should not worry about that because we worry about that. What we have built is what we call a secure supply chain. So across every step of the manufacturing process, we control anything that is inside our computers, inside the chips, inside the software, to make sure the pcs and printers are safe. David are you worried about being too dependent on china for manufacturing . Because there could be u. S. Problems with china, who knows what could happen. Why not diversify . Enrique actually we are diversifying. We realized and learned painfully during covid, as many other companies, that depending on a specific territory or having too much dependency was too risky. And that what we had done over many years of really pushing for cost and therefore, concentrated manufacturing in one place, created issues from a resiliency perspective. So since then, we have been diversifying to increase resiliency and this is a process we embarked on a few years ago that is going to take some time. But clearly, we are doing that. David the key is the semiconductors and the chips. Are the chips made in china . Taiwan . U. S. . Enrique the majority today are still built in taiwan. We are working with other key chip providers to make sure they diversify with the location and this is why, for example, last year we were very supportive of the chips act, because getting the Government Funds to accelerate change we think is very important. David so when you are at home and working on the computer, do you ever use the competitors to see what they are doing . Or you only use hp . Enrique i use both. As you can guess i have lots of hp pcs at home. Because every time there is something new, the team wants me to train, and sometimes they dont like it because i find things they didnt want me to find, so i would give a lot of feedback. But of course, i test the latest innovations from our competitors to make sure i understand. David do you ever work on your competitors computers and say why dont we have this . How come we dont have that . Do you ever ask that . Enrique yes, and the team hates it. [laughter] david how do you protect against hacking, and how do you give your customers warning about what they are going to see if a hacker is coming in . Enrique what we have done is we have developed both software and hardware to protect our pcs. For example, in any of our commercial pcs, we have a chip embedded in the board that detects if the bios has been modified. The bios is kind of the brain of the pc. So we can detect if there has been an intrusion in the bios. If we can detect that, we can restore it to the original. This is technology hp has that helps to protect our pcs. And we have many other Software Developments and other layers to do similar things. David you make servers as well . Enrique no, we only do pcs. We do workstations, which is a very highend type of pc, but we do not do servers. David you make cartridges, right, and printers. So, printers, is one printer really different than another . Arent all printers pretty much the same . Enrique printers are fairly different. In fact, there is more difference printer to a printer, than pc to pc. Printers have a totally different business. We developed the printer, the ink, the cartridge, it is a much more vertical integrated model that drives more differentiation. David is the printing business a Growth Business, because people are not printing as much, they are just sending it by email or digital means to other people. Is printing a Growth Business or is it kind of a shrinking business . Enrique in printing, there are three very different segments. There is what we call home printing, printers you would buy to use at home to print photos or to print an email. This is clearly a not growing business. Then we have office segment. Copiers and printers you will use in the office. That is a market that is stable. It is declining in more developed countries and growing in emerging countries. We have our third segment, which is industrial printing. Industrial printing means printing labels, packaging, and this is a significant area of growth. David i actually do have an hp printer, but the cartridge is always running out, running out of ink all the time, is that a problem . [laughter] how do i know when my ink is going to be out in the middle of printing something . Is that a big problem you guys have . What should i do about it . Enrique when we talk to customers, they always have two concerns about printing. One is what you just said. I want to print. My kid has finished homework. I need to print homework. The printer is not working because the cartridge is not working. The second complaint we have is printing is expensive. I really hate paying 50, 45, 55 for the cartridge. And we have a solution for that. We have created a subscription model where we monitor the amount of ink that is being used in the printer. Customers pay us for the number of pages they print per month. And before the printer runs out of ink, we send a new cartridge to customers, and by doing that, depending on your volume you can save up to 70 , i mean, you print 70 cheaper. David what are you doing about carbon and your global footprint . Enrique we have an aggressive plan to reduce that, to be carbon free by 2030. And we are working in the areas of the company will be have more impact. Because of the products we build, we use a lot of plastic, so we have an Important Initiative to use recycled plastic in many of our products. We also, i mentioned before, we are going to be changing Business Models to move into refurbished products. So we give our products lengthy lives. And finally, one of the things i feel most proud of in this space, is people always associate printing with paper, paper with trees. Therefore if you print, you are doing something wrong for the environment. So we have an initiative we call forestpositive printing. We look at the amount of paper that is used in our printers, if that paper is not coming from recyclable forests or forests that have been planted to create paper, we plant trees and we have programs of reforestation to compensate for that. David Silicon Valley companies are not famous for diversity. What do you do in that regard . Do you have a program to ensure you have a fair amount of diversity . Enrique we take it extremely seriously. For example, my compensation and the composition of my direct team is dependent on the progress that we make on diversity. David suppose i want to buy a computer but i want to have ai in my computer. I want to be really uptodate. Do you have ai in your computers yet . Enrique not yet, but it is coming soon. We think this is going to be one of the largest transformations in the pc industry in decades. What will be possible starting this summer is to run Large Language Models in ai pcs, which means that what today all of us are doing in the cloud where you use any of the applications that you can, you will be able to do it locally. Why we think this is important is, it will be much better from a cost perspective because running models in the cloud is expensive. It will be better from a security perspective because you will be able to use the model with your own data locally without having to upload your data to the cloud. And you will be able to do it anywhere in the world. And also for applications where speed is important, where latency is important, you will be able to do it locally much faster. For example, in gaming, where the game needs any resources the computer has, it will be better. So its going to be a big change starting this summer. David at the same price . Enrique slightly higher price. But if we look at the increase of price versus the increase of value, not comparable. David one of your competitors has come out with a product, apple, they call it a spatial computer. Its like virtual reality. Do you have that kind of product yet . Enrique we have had a similar product for some time. Focus on two spaces. One was gaming and one was in some commercial uses. We think that over time, these categories are going to grow. What we really think is that computing is going to become, we call it immersive. That today, we interact with computers through our screen for through our keyboard. More and more, we are going to interact with our full body, with our gestures. This is the trend we are pushing for. You will see these in some models like what apple has done. There are also very interesting concepts where you interact with holograms. And we are really exploring a multitude of different things. Which one will win, at this point, is difficult to say, but clearly, immersive is the future. David lets say somebody says i dont really care about price, im not price sensitive, give me your best stuff. What is somebody going to spend, 5,000 . Enrique for a consumer, 5,000, we have products at 5,000. For a business customer, if you want to buy the topoftheline workstation with a topoftheline processor, then 15,000. David wow. So if someone goes into your store in india and buys a 5,000 personal computer, do they call you up and say we just sold somebody a 5,000 personal computer . They dont call you about that . Enrique this summer we were in india, so i went to stores without telling them who i was. You should see their faces when i go into their store, they look at me, i ask them about what products they were selling and at some point i said, you know, i am the ceo of the company. And they became white. [laughter] david they didnt believe it . Enrique after a while, they believed it. Some of them would look at the web to make sure it is me. [laughter] david why should somebody want to join hewlettpackard as an employee . Why is it better than working at apple or one of the other competitors you may have . Enrique when i became ceo, i defined four objectives for the company. One of the four objectives is to become a school of talent. Our Value Proposition to employees is that they can join the company, they will learn their job, they will be able to experience multiple businesses, multiple functions. If they want, they can live in multiple countries just because of the presence that we have. So we really focus on Employee Development as a key Value Proposition. To the point that we say when someone leaves, we celebrate their graduation. Because really that person has learned from us and has developed. And this also gives us the opportunity to bring someone new, to bring someone younger, to continue to refresh. That is one of the key values we have. David so if somebody wants to work at a company like yours, what is the best way to get a job . Get an engineering degree from the best school, not a good school . Is being an engineer the best way . Enrique there are multiple ways. Clearly there are a lot of engineers in the company. Starting engineering and graduating from a good school is important. But we hire people that graduated from marketing, we have got people from law schools. We are a very Large Company that has any function that you can think of in the company. So we have lots of people. David the average person you hire, does he or she last one year, two years, five years . How long . Enrique in general we are a company with long tenure. I said before, i have been more than 34 years in the company, you will find people that have been in the company for a long time. David would you say the computing business is one that is likely to increase in value as more Companies Come in or as computers become more sophisticated, or do you think it is pretty much a solid business but not going to be a highGrowth Business . Enrique depends what you mean by highgrowth. It is a business we think is going to grow between 2 and 4 . But it is a 400 billion business, so 2 of 4 billion is a lot of additional business. David in your business today, would you say that your biggest problem is what . Your biggest concern is competition, government regulation, the economy . What is your biggest concern . Enrique i think one is the geopolitical tensions we are seeing. We have had a very stable environment for the last 20 years. It was very clear how to manage the company to be successful. Things have changed extremely fast. And this is having Significant Impact on our business. The second is, to make sure that we stay in the lead from an innovation perspective. The pace that technology is changing by is faster than ever, so making sure that we are making the right technology bets, that we hire the right people to develop those technologies, is one of the challenges. David today do you get a lot of people coming to you with great ideas of what new businesses you should be in . Or you generate your own ideas for new businesses that can expand your Business Base . Enrique it is both. We have teams in the company that are constantly exploring new ideas. But we also have a small venture fund that looks at what is being invented, being created in startups, then we invest on those. The innovation model has changed a lot in the last 30 years. 30 years ago, Companies Like us used to have big central labs that were the ones creating new things. The model is way more decentralized today. The combination of universities and startups is driving innovation. So we need to be much more external focused than we were before, to continue to stay in the lead. David what is the most Important Message you would like to convey to anybody watching here today about the personal computer world . Is it that it is a great thing for society and that they should buy more personal computers . And what is the most important thing you want to convey about hp inc. . Enrique about hp, that it is a company that really cares about helping society, that we have a big opportunity to enable our employees to be more productive, to be more engaged, and that we see a lot of opportunities to innovate, to make it happen. And also that it is a company with very strong values and strong principles. The company was founded in 1938. Bill and dave, they defined before, all the conversation about sustainability or diversity even existed, they defined the values of the company. They defined that Great Companies create a lot for their shareholders but also have a positive impact for our communities. And since then, we have been doing both. We created xfinity rewards to show our genuine gratitude for having you with us. Its free to join and rewards start from day one. From special perks and surprises. To onceina lifetime experiences youll be talking about forever. Theyre all ready and waiting for you right now. Just go to the xfinity app, tap join, and voila, youre in. It might just be the most rewarding thing you do all day. Xfinity rewards. Our thanks. Your rewards