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Recently, I ran into someone who I have met several times before and we both have a similar backgrounds in the financial markets. He told me he recently left his job and was looking for another place to work. I casually asked him why not start something instead of working for another corporate giant. His response was “he was too young”, I almost fell out of my chair and had brain freeze for a couple of minutes.  I believe I’ve heard all the excuses in the book, but this was the first time I heard that one.

I looked straight at him and said “really, ever heard of Mark Zuckerberg?” I named a couple more people and his response was “in the financial markets I’m too young to start something on my own.” At this point I figured there is no point in mentioning anyone else but I did, I asked him if you knew John Arnold, who left Enron in his early twenties and started what is now one of the larger energy trading firms in the world – Centaurus Advisors. It was pretty clear he was getting all defensive and said “he left Enron, did he cause the collapse?” At this point I just backed down and said “yeah you are right, you are too young.” Not because of his age but his immaturity.

I didn’t mention the other person I had in mind, Barry Silbert. I recently had a chance to listen to a speech he gave at Stanford (via a podcast) and he was really impressive. At 25 years old Barry left investment bank Houlihan Lokey and started selling illiquid assets using nothing more then some phones and an Excel sheet via a firm called Restricted Stock Partners. Now, his firm is one of the most recognized names because when you hear those crazy valuation numbers for Facebook, Barry’s renamed company SecondMarket is behind those transactions.  SecondMarket has become the de-facto platform for Facebook employees to unload their restricted stock options on the partially open market. SecondMarket has created a whole new market for startups that are making money but don’t want to IPO for whatever reasons they have.

Actually, I could give several more examples but there is a bigger picture here. For this young kid maybe being an entrepreneur is not for for him and sometimes I question is it meant for anyone. With all the ups and downs and the constant strain on your health, wealth, friends, etc. Most startups are usually doing 4 things: begging for business, tweaking their product, getting publicity or addressing customer issues. And, those 4 things are not very sexy but once you have achieved your goals all 4 of them make for a great story.

In most instances people feel they are above doing the “messy” work that I mentioned above, such as begging for business. Begging might be a strong word but in essence it means cold calling, going to events where customer might be or giving product demos. I know many people that are working for large companies and they are really good at their job but would absolutely die in a startup and vice versa. I need to realize it’s a choice and it’s not for everyone.

Article on Barry Silbert and SecondMarket in Bloomberg BusinessWeek (link)

The above article originally appeared on VCCircle.com.

Recently, I was invited to speak at Reliance Industries’ (RIL) corporate campus located in Navi Mumbai. It’s ironic given that our office (MProfit)  is just a couple buildings away from where Mukesh Ambani works out of – Maker IV in Nariman Point.

The topic was about personal finance and the presentation was titled “The Road to Financial Freedom.” It was a 2 hour presentation and the slides were only part of the overall presentation. Many people commented they liked the personal stories that were sprinkled through out the presentation.  The presentation will be an ongoing event at the Reliance corporate campus which has over 40,000 employees. Below is the presentation that I gave:

Last week one of the most respected CEOs in Silicon Valley, John Chambers, admitted that Cisco Systems had lost it’s path (only a true geek would recognize that pun) and was planning to do something about. I figured Cisco would take some time to make those changes and then I could write about it, but John has already started the process by scrapping the Flip camcorder division. The interwebs lit up when it was announced and most of the comments were along the lines of “who couldn’t see that coming.”

As a past employee of Cisco I think John is a stand-up guy and a VERY charismatic speaker. I would joke with people that if John told us to sell cocaine, I would because he was so persuasive. However, as a shareholder of Cisco I think John really needs to clean house and take a hard look at the direction of the company and more importantly look in the mirror.

Since John’s admission, many columns have been written about what ails Cisco. Most articles are going for the low hanging fruit such as get rid of the consumer focused product line and get back to basics with enterprise and service provider customers. But there is a much bigger issue that goes to the heart of Cisco – people.

Executive Departures
John has been around since 1991 and has had the top spot since 1995, he runs a tight ship and probably to tight of a ship. So much so, that I believe many top executives are leaving because he won’t give up the throne.  The list of departing executives include Tony Bates (left for Skype), Sue Bostrom, Judith Estrin, Charles Giancarlo, Kevin Kennedy, Don Listwin, Carl Russo, Jayshree Ullal and Mike Volpi to name a few.

Failed M&A Strategy
Cisco was once hailed for it’s inorganic growth via their M&A (mergers and acquisitions) strategy. That strategy worked early on for Cisco when it acquired companies such as Crescendo (the heart of their LAN switching platform), Kalpana, Grand Junction, StrataCom (WAN switching IGX platform) and Calista (IP phones). Most of these deals took place on Mike Volpi’s watch when he used to run the M&A group. In a Fortune Magazine article back in May 15, 2000 they called Volpi the Cisco M&A wunderkid.  Volpi had a great reputation within Cisco of being super bright and potentially could have led Cisco.

But, over the past 7-8 years that strategy has been a complete disaster with acquisitions such as Scientific Atlanta, Linksys and Pure Digital Technologies (Flip camcorder line). It appears many of the consumer focused acquisitions happened under Ned Hooper, the recent M&A head. It’s easy to say the strategy was completely flawed in hindsight, but Ned took a chance and unfortunately it didn’t work out. However, a lot of money was flushed down the toilet in running this experiment. Little known acquisitions such as Monteray Networks were shut down within a year of signing a $500 million term sheet. Internally, Cisco talked about how quickly they could integrate these new companies into the Cisco machine. Unfortunately, many founders of these companies left just as quickly and started new companies. Such as Dev Gupta who sold two companies to Cisco, Dagaz and MaxComm in 1997 and 1999 respectively.

Cisco Globalization Center East
I get annoyed every time I read an Indian business magazine and Wim Elfrink is talking about how he re-located to India to setup Cisco’s second biggest campus.  It’s a catch-22, is Cisco East something truly revolutionary? If so, then please communicate that better to the world so we can learn. If it’s not revolutionary then get over it, many large technology companies do it all the time – it’s called cost arbitrage.

In summary, John Chambers has one goal and that is to keep his shareholders happy which has not been happening. Cisco was the internet darling in the 90′s and all the way to March 25, 2000. On that day, Cisco became the largest company by market capitalization in the world at USD 579.2 billion, few companies can say that. Since then it’s a different story, if you bought Cisco in April 2001 you should have paid around USD 18.00 a share which is exactly where it is today in April 2011…over those 10 years it hit a low of USD 9.50 and a high of USD 33.00. Compare that to Apple, in April 2001 you would have paid USD 12.00 a share and now it is hovering around USD 330.00…the lure of the consumer market.

I recently read through “Delivering Happiness” by Tony Hsieh who started Zappos.com, the worlds largest shoe store, and it surprised me how quickly the company multiplied around a simple decision – be customer focused. It’s almost cliche when a company says they are customer focused or care about their employees however at Zappos it’s genuine.

At one point within the company they were debating whether to outsource customer service, but they decided it was a core function of the company and that should never be outsourced. That decision is what defines Zappos today. It’s not some new technology they created, it’s not some cool application they coded, it’s just basic customer interaction in helping a customer with their buying needs.

Have you heard this story before? I have, it’s called Nordstrom. Nordstorm is a large department store chain in the US that was known for their customer service back in the day (I don’t know about today, have not visited in years). Like Zappos they also wrote a book documenting their path called “The Nordstrom Way to Customer Service Excellence.” In one story, a customer wanted a refund for tires that were bought.  The salesperson refunded the money to the customer even though Nordstrom does not sell tires.  I’m guessing the salesperson figured they could take the tires to the actual store and get a refund and then payback Nordstrom. I’ve noticed more and more companies emulating the Zappos model in the apparel vertical including Bonobos. They have a heavy internet presence but if you need assistance you can call them on the phone and talk to a “customer service ninja” who can guide you through the process.

As I mentioned before Zappos was looking to outsource their customer service department and of course India was at the top of the list.  If Paul in the US can help a customer at $15 an hour, then someone named “Paul” in India can do the same thing much cheaper, it’s all about labor arbitrage. So naturally you would think Indians living in India would have access to amazing customer service everywhere…WRONG.

It’s almost a given that you can expect poor customer service in India, whether it’s a store, restaurant or your mobile phone provider. I believe it’s because there is so much pent up demand that these companies are just trying to scale to meet the demand.  At some point when the market is saturated you will see companies offer true customer service.  In the meantime the companies that are providing a high level of customer service are growing exponentially such as Flipkart.  Flipkart is what happens when Zappos meets Amazon, they are an online bookstore with excellent customer service. I swear by them, I might goto Crosswords to browse books but I usually end up going online and buying them from Flipkart.  I recently order a book on a Monday night and by Tuesday evening I had it in my hands…that customer experience just blew me away.

I would love to see a company like Bonobos or J. Hilburn start in India, considering India has such a rich textile history. Imagine the customer service they could provide by sending a “tailor/ninja” to the customers house, take measurements and then show various fabrics available. Then come back a week later for a trial fitting and then deliver the final product in a couple weeks. This would also solve the issue I always hear from entrepreneurs that getting commercial space in Bombay is very expensive and throws every business model out the window.

Honestly, there is no excuse for an Indian company to provide sub par customer service today.  With all the technology that is available via forums, Facebook, Twitter, help desk software, blogs, podcast, etc…you can constantly stay in touch with your customers and find out if they are happy or have issues. By getting a customer addicted to your customer service you have locked in a customer for life. Granted you might end up targeting early adopters but these same early adopters will tell all their friends and family about their experience just like I did with Flipkart.

The above article has been syndicated on GQindia.com and VCCircle.com.

Anil & Mukesh Ambani

Over the past 5 years I’ve had several chance meetings with people from the Reliance Group (both Reliance Industries and Reliance/ADAG) and I can only laugh when these employees tell me how well connected they are to the Ambani’s.  I call this the IKEA (I Know Every Ambani) Syndrome.

The latest episode was several months ago when someone contacted me and wanted to setup a meeting.  He went on and on about his close proximity to Mukesh-bhai (MDA) and Anil-ji (ADA), almost as if he was the 3rd lost brother of the Ambani family. We started to talk details about how we could work together and then suddenly he developed a case of cold feet and said he needed to speak to his CEO. I have no issue with running a deal past a CEO but it seemed odd for this “well connected” individual…or he just wasn’t as connected as he said he was.

I think it’s admirable that many employees of the Reliance group feel a sense of family but it’s also very destructive. Throwing around names is one thing but getting business done is another. From the ones I have met they seem to have very similar traits – Middle aged and mid level managers. They use the Reliance platform to setup meetings not for the company but their “side business.” Unfortunately, most are too scared to let go of the Reliance name brand and instead throw around the Ambani name to make themselves feel special in an organization that probably has over 120,000 employees.

Now when someone from the Reliance group calls, I do my due diligence and go straight to LinkedIn to see where they stand in the organization. The IKEA Syndrome is not a deal killer as long as you are talking to the right people in the organization who are not affected by the syndrome.