Talented Competition: Palm Versus Handspring

The saga of Palm versus Handspring illustrates well the tensions inherent in trying to acquire and retain top innovators. Here’s the typical scenario: Acquired innovators uncomfortable with serving their new corporate masters yearn to break free. Instead of staying put, the top technical and entrepreneurial founders bolt, found a new firm, and sometimes even end up competing with their former masters. This was Handspring’s story.

Donna Dubinsky and Jeff Hawkins founded Palm, the pioneering maker of personal digital assistants (PDAs). With their PDA product still in development and starved for cash, Palm needed assistance. U.S. Robotics, the leading modem supplier, came to the rescue and acquired Palm for $44 million. Apple’s Newton might have come earlier (perhaps too early), but Palm became the first successful PDA. Unlike many earlier and clunkier concepts, Palm’s PDA easily linked and synched with a standard PC. In 1997, more than one million Palm Pilots shipped. Palm was an unqualified success, literally the stuff of Silicon Valley legend.