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[Music]
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okay what does it say about the board
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strategy let me begin this way let's
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look first at hpn Oracle for many years
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they were complementors they helped each
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other Hardware software they got along
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well they sold each other's products
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then Oracle bought son Microsystems what
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Hardware maybe a little tension creeping
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in little competitive tension so we saw
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some of it growing what happens next the
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board HP fires herd uh gets rid of him
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and that creates a furar of course
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people start questioning the board why
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there was Carly fiorina now there's herd
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and other problems like that it's do
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they know what they're doing do they is
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this a smart move well Larry Ellison at
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Oracle jumps on this of course and said
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the board is silly they're crazy they're
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doing the wrong things so he uh feeds
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the flame if you will of of conflict so
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what does HP do they hire Leo Apotheca
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from uh sap
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and is it a good move well is the board
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doing the right thing time will tell on
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one hand if the move is to get a or
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develop hp's moveing towards software to
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get away from the pure Hardware I think
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software accounts for approximately only
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9% % of their revenues and if you look
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at the growth of other companies like
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IBM and others that had hardware and
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then move to software move to services
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this could be an absolutely wonderful
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mood move that the board has planned it
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could backfire the question of course
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that we'll probably get to is is
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Apothecare style is his leadership
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capability does it fit with the new
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strategy does it fit with hp's movement
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into software and to broader Horizons
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that's really the next question yeah
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this there's a lot going on here uh when
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Apotheca was uh still at sap an employee
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survey was done to talk about his
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leadership capability and and confidence
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in the direction of sap and it was
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decidedly negative it didn't look very
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good for him he wasn't doing people
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thought a good job he had some few
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missteps too he made some decisions
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strategic and operating decisions that
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didn't fly so he didn't do that well but
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he only was there really in the CEO's
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role for about seven months not really a
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lot of time to prove yourself and so
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when the board let him go or he resigned
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whatever the official thing was uh his
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capabilities or his uh skills were up in
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question so when he comes into HP then
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let's look at the Strategic and
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Leadership issues number one portfolio
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question can he
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manage such a diverse portfolio they're
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on the consumer side they're on the
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commercial side they've got uh printers
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and PCS they compete with Dell they
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compete with apple uh on the other side
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of course the Enterprise SES they
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compete with IBM and others they it's
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it's it's a broad portfolio so when
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you're a consumer you're in commercial
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and you're strong in hardware and now we
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want to add software to this mix I know
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he's he has a software background and
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they did bring Lane in also on the board
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to give that software thrust the
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question is can anyone including
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Apothecare can he in fact manage this
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complexity can he manage this portfolio
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the portfolio question raises smaller
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questions I'll mention briefly like the
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structure of the organization do we
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leave the different parts separate do we
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create a new service business as a new
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strategic business unit what about uh
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resources resource allocation I mean
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there's a lot of portfolio issues
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involved with his coming in and pushing
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uh
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software another question might be uh
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and it's really a leadership issue but
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it's an important one if he's doing all
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these new things can he heal the wounds
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that clearly I think exist currently at
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HP you've had at least two or three
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people who were candidates for this
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position Apothecary comes in and in
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effect those three people were passed
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over and they run some pretty important
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businesses uh they're pretty important I
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can imagine right now the their phones
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ringing the head hunters calling them
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saying you've been passed over how can
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you work with Apotheca and so on and I I
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I think that this could probably uh be
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some a major challenge for him to get
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people on
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board uh in essence can you develop a
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kind of endtoend
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strategy now with HP does he have the
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skills to do that does he have the
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capabilities to pull this off and he can
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he get people behind him where does he
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go from here does he buy sap the rumors
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are starting already now if you're
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sitting back and you want to create
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software he knows sap it would be sort
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of a interesting strategic move not only
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do they get
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software but he could also like take a
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little shot at at sap that you know you
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didn't give me much of a chance now I'm
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taking you over can he do that well yes
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and no I'm not sure yet sap is
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approximately 155 of the size of HP but
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still to buy it would be close to $60
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billion or roughly that's what the
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market cap is right now approxim I think
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it's around 60 billion so this is a
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major
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Challenge
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and if he doesn't buy sap can he really
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enter strongly into the software Market
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strategic issue Oracle has basically
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made all these Acquisitions people soft
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and so on do they have the software
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Market locked
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up nothing's ever locked up but you know
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my point that they're very strong there
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if he doesn't purchase someone like sap
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or someone who can give a
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significant uh move in software if he
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doesn't do that can he compete with uh
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the on the software side can he compete
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with some of the organizations out there
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it's a tough road too it's a very good
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question this is why I say the the
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answer did the board do the right thing
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is up in the air because it's going to
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be tough entering this software Market
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there's no question about it but if you
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look you know IBM did it and okay at a
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different time in place they didn't have
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uh some of the competition out there
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that clearly HP will have and yet I go
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back to the portfolio uh is HP content
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with its consumer business its
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commercial business with such a small
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percentage of revenues coming from from
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software and from endtoend integration
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and Communications uh they could decide
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not to go strong into software but I
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think there's my opinion is that there's
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still enough some opportunity in
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software that if they bought someone if
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they bought sap if they bought someone
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else they could get an instant presence
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and really reap some revenues but again
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it's a very complex organization now
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Hardware software commercial consumer
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just to manage that large organization
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the complexity of it the size of it is
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going to be a challenge it's going to be
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a challenge for the top management team
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is the in nutson Bolt sky is that what
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HP needs I'm not sure about that I'm
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sure it can work out but remember uh
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he's German he's coming from a German
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company a much more hierarchical company
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than HP from what I've a little bit I
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know about their
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structures uh much more hierarchical in
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nature and so he has to come into a uh
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situation where in fact it's more of a
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what networking organization it's a
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little looser it's a little bit more
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decentralized it's a I mean this is my
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impression of it I could be wrong but
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this is what I've uh been led to believe
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so if he comes in and tries to move too
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quickly or impose things especially on
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people who are a little touchy because
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they were passed over I mean he might
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run into problem this is why of course
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he's doing his little honeymoon strut or
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walk around the organization getting to
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know people uh they're going to give
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them a little time whether that will be
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sufficient to smooth him a bit I read a
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quote and said he wakes up in the
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morning he chews glass eats iron and
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spits out nails that was a quote I found
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somewhere Apothecary so uh I don't know
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if it's that bad or whatever people love
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to exaggerate and newsprint articles but
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in essence what you're really raising is
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a kind of culture issue culture Clash
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style Clash leadership style might be an
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issue I think he's smart enough probably
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to overcome that and if he surrounds
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himself with good people keeps the good
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people gives them incentives to stay and
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work makes it worthwhile for them to
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cooperate with him he can build a strong
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organization around those people time
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will tell on that one I studied German
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at College in uh apota in German
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basically it means something like
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pharmacist so let's end the interview by
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saying let's hope that Apotheca is a
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good pharmacist he has the right drug
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and cure for HP because it's going to be
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a competitive interesting situation
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that
