Rod Canion

Cofounder and former CEO of Compaq

• Born: January 19, 1945
• Place of Birth: Houston, Texas

Primary Company/Organization: Compaq

Introduction

Trained as an electrical engineer and known for his soft voice, khakis, and sports shirts, Texan Rod Canion has spent much of his life defining new technologies. As a cofounder and the first chief executive officer (CEO) of the Compaq Computer Corporation, Canion led the company in breaking records during the early days of the computer revolution in the late twentieth century. Under his guidance, Compaq rose to become one of the most trusted names in home computing. The company initiated the trend in cloning the personal computer (PC) and originated the first “luggable” computer by removing the boundaries that restricted computer use to offices, allowing users to work while at home or traveling. During his time with the company, Compaq broke a number of records and set high standards for the technology companies that followed it. After being fired from the company in 1991, Canion created a new company in partnership with his old friend and Compaq cofounder Jim Harris.

Early Life

Joseph “Rod” Canion was born on January 19, 1945, three months before the end of World War II. Thus, he grew up in a rapidly changing world that ultimately saw the technology revolution of the late twentieth and early twenty-first centuries. Canion developed a love of tinkering as a child, and he spent much of his teen years building hot rods. Canion spent most of his early life in Houston, Texas, and he received a bachelor's degree in science from the University of Houston in 1966. Two years later, he completed his master's degree in electrical engineering with an emphasis on computer science at the same institution. After graduating from college, Canion moved to Dallas to work for Texas Instruments, which was generating cutting-edge technology at the time. For this reason, Texas Instruments was widely known as the “electronics Titan.”

Canion's work ethic was formed during his early years at Texas Instruments. While there, he worked with James (Jim) M. Harris, a fellow engineer, and William (Bill) H. Murto, a vice president of sales, and the three became fast friends. Except for a brief period when Canion was lured away from Texas Instruments with the promise of better compensation, he spent thirteen years on his first job.

Life's Work

In the early 1980s, Canion designed an IBM clone, inviting Harris and Murto to work with him on turning the design into a model. In 1982, the three friends established Gateway Technologies, financing their initial efforts through an investment of $1,000 each. Their plan was to form a company that would build hard drives and peripherals, and none of them was really interested in building entire computers. However, financier Ben Rosen was convinced that their PC clone was capable of rivaling IBM's PC, and he persuaded them to manufacture computers. After investing heavily in the company that had become Compaq Computer Corporation, Rosen agreed to serve as chairman of the board of the new company.

The Compaq Computer Corporation was officially founded in 1982 by Canion, Harris, and Murto. The fortune of the company was initially tied to a single computer, which weighed 28 pounds and was roughly the size of a large briefcase or a small suitcase. The first Compaq computer ran the MS-DOS operating system as developed by Bill Gates and Paul Allen of Microsoft. Sporting a nine-inch screen and a folding keyboard, it was dubbed a “luggable” computer. Some reviews of the computer suggested that it was a viable companion to the International Business Machines Corporation (IBM) office computer rather than a rival product. Compaq promoted the model as both more powerful and more versatile than the IBM PC.

Canion raised $25 million in venture capital and decided that it was in Compaq's best interests to sell through dealers rather than directly to customers. Upon becoming Compaq's first CEO, Canion devised a savvy financial strategy that emphasized marketing of the product. He launched a series of television commercials hawking the Compaq computer. During its first year in business, Compaq shipped fifty-three thousand personal computers to consumers. Canion led the company to becoming the first in American history to generate more than $100 million in sales during its first year of operation. Under his guidance, Compaq subsequently rose to Fortune 500 status faster than any company had ever done, went public faster than any other company, and became the first American company to reach $1 billion in sales.

Eschewing competitiveness within the company, as CEO of Compaq Canion chose to emphasize consensus building and was adamant about maintaining the small-company atmosphere as Compaq continued to expand. He instituted the practice of holding quarterly meetings at a local church in Houston that lasted for four days. Canion's purpose was to promote a sense of both personal and combined responsibility for the company's success. As Compaq's fortunes continued to rise, Canion's personal lifestyle appeared to be little affected by the company's enormous success. Alison S. Weintraub of Inter@ctive Week reported that he continued to drive a Chevy Blazer, wear a $29 Casio watch, and use a 29-cent Bic pen.

By 1983, Compaq was being publicly traded, and Canion poured much of the money raised back into the company. It was then that Compaq began manufacturing its first desktop computer. Within a year, Compaq had begun marketing a Desk Pro model that used Intel's 8086 chip. By December, Compaq had shipped out 150,000 units and had generated $329 million in annual sales. By 1987, Compaq had reached the billion-dollar mark. Over the course of the next three years, Compaq became the first company to sell a 386 PC and the first to offer a 20-megahertz machine. Joining the laptop market in 1988, Compaq was generating sales of more than $3 billion by 1989.

However, 1991 brought a reversal of fortune. Other dealers began opting to sell directly to customers. At the same time, a recession hit the United States, and foreign sales began to slide. For the first time in its history, Compaq reported a loss. Admitting that losses had risen to approximately $71 million, the company was forced to lay off fourteen hundred workers.

Amid mounting rumors of internal strife at Compaq, reports surfaced that Canion and Rosen were arguing about the advisability of moving Compaq operations overseas to save on production costs. Allegedly, Rosen supported the move while Canion opposed it. Despite the fact that Canion considered him a close friend and mentor, Rosen forced him out of the company that he had cofounded, setting him adrift. Murto had already left the company in 1987 to produce religious films, but Harris, who was serving as vice president of engineering, handed in his resignation and opted to continue to work with Canion rather than remain with Compaq.

Canion benefited financially from his dismissal from Compaq, receiving a $3 million severance package and selling off $10 million in Compaq stock. He later noted that he spent the next few months with his family considering his options for the future.

In 1992, Canion and Harris founded Insource Technology, a consulting firm that specialized in providing services in the fields of finance, technology, and the Internet. Their contracts with Compaq prevented competing with their former employer by manufacturing computers. By the twenty-first century, Insource was recording $20 million in revenue and a 49 percent compound annual growth rate. Even while continuing his ties with Insource (he served as chairman until 2006), Canion took on new challenges by investing in new technology companies and becoming involved in making them successful.

In 1998, Canion signed on as an executive with Tricord Systems and led the company in developing computer storage devices. That year, Canion invested in GK Intelligent, a company involved in using artificial intelligence to develop a web-based training program for businesses. He abruptly left the company when rumors of illegal financial dealings emerged, refusing to become involved in illegal activities. The executives he had brought with him to Tricord also left the company.

In 1999, Canion decided to invest in the start-up Questia Media after hearing its young founder, Troy Williams, and becoming enthusiastic about the concept of facilitating online research for college students. Canion and Harris each invested $400,000 in the company, and Canion agreed to serve as chairman of the board. By 2001, Questia's employee base had swelled to 145 employees. He stepped down as chairman in 2010. As of 2019, having been a director of the company ChaCha between 2004 and 2015, he was serving as a nonexecutive director of the investment company Invesco. Canion became the director of Outrider, an automous yard operator for logistic hubs, in 2018 and remained in this position as of 2024.

Personal Life

Canion married, but he and his wife were divorced in 1987. He was remarried, to a real estate broker, the following year. Together, Canion and his second wife had two sons and three daughters.

Canion has repeatedly been recognized for his contributions to technological innovation. In 1988, he was named Houston's International Executive of the Year and was designated as the CEO of the decade by Financial News Net. He also received awards from the University of Texas and Southern Methodist University. Canion has served on the boards of a number of companies, including AMVESCAP, Blue Arc, YoungLife, and Health, Inc. He has also served on the board of advisers for Sternhill Partners and has been director emeritus of the Houston Technology Center. He continues to pursue his passion for flying.

Bibliography

Bridges, Linda. “The 15 Most Influential.” PC Week 16.9 (1999): 69–72. Print.

Canion, Rod. “Consensus, Continuity, and Common Sense: An Interview with Compaq's Rod Canion.” Interview by Alan M. Webber. Harvard Business Review 68 (1990): 114–23. Print.

Ceruzzi, Paul E. Computing: A Concise History. Cambridge: MIT, 2012. Print.

Jones, Kathryn. “Rod Canion.” Texas Monthly 29.9 (2001): 76–103. Print.

“Joseph R. ‘Rod’ Canion.” Entrepreneur 10 Oct. 2008; n. pag. Print.

McWilliams, Gary. “Is Something Fishy at GK Intelligent?” Business Week 3595 (1998): n. pag. Print.

"Outrider, a Goose-Backed Company, Launches with $53 Million in Funding for NEA and 8VC." Goose, 18 Feb. 2020, www.goose.capital/press/outrider-launches-with-53m-in-funding. Accessed 7 Mar. 2024.