Entrepreneur by Accident

Entrepreneurs come in different shades and colors. All of them have several common traits – and a lot has already been written about some of these common traits. This post is more about what makes each entrepreneur unique and amazing. I would illustrate this with a real example of a bunch of four entrepreneurs who seemed to me to be playing to a different set of beats.

This bunch of four entrepreneurs had two things in common:

• Capital Markets was in their blood. They had all served at very senior levels in global Investment Banks and Asset Management Firms.
• They loved working with high caliber people

Like all entrepreneurs, they too spotted a problem and decided to fix it. Investment Banks and Asset Management Firms worldwide were faced with spiraling research costs that clients were not really willing to pay for. Yet, the research was essential to provide a cutting edge to the recommendations. Like what the global IT industry had done in the past to cut costs – by outsourcing work to lower cost geographies – they could do the same. However, there was a serious problem. The IT companies off-shored repetitive and/or structured work, which was never anyway seen as providing a strategic edge. The strategic component of IT consulting continued to stay in-sourced.  Investment Research was seen as the core of Investment Banking and Asset Management. Off-shoring this was simply unthinkable. Apple could outsource manufacturing the iPhone to Foxconn in China, but technology and design was still the preserve of the Apple team at Cupertino. Off-shoring research was like off-shoring technology and design. The passion and deep knowledge of the domain that these four entrepreneurs possessed created sufficient confidence for a couple of global investment banks to take the plunge!

Andrew Houston, a Brit, lived in Bangkok; Mohan Alexander, a Keralite Christian who had grown up in Mumbai, was then based out of Hong Kong; Brad West, an American, married to a Singaporean of Chinese descent, lived in Singapore; and Anand Aithal, a Brit of Indian origin, lived in London. When they came together, it was a formidable team. It couldn’t get more global and diverse than this. I’ll call this team AMBA (an acronym from the first letters of their names)

I gradually realized that making money wasn’t even among their top three goals:

• They just seemed to be following their passion – recruiting amazing capital markets professionals and building a great work place where they could thrive and have fun. Every Friday evening all AMBA offices worldwide, from San Jose in Central America to Colombo in South Asia, would light up with some well contested debates on current events related to the world economy and capital markets. It was Wall Street time!
• They were extraordinarily liberal in sharing equity with all key employees. They were particular that senior execs were invested in the success of the Firm. They encouraged senior execs to buy equity (and rewarded performance with equity) unlike most of today’s start ups where equity is tightly held by a few investors and founders. The stock options plan too was very transparent (and structured in favor of the employee) unlike again most of today’s start-ups where plans are very opaque with exits being a time for heart-burn when key employees are forced to read the fine print.
• They were so particular about protecting the interests of their clients, against any violations by their own teams, that the primary role of the chief compliance officer was to protect the interests of the company’s clients and represent them within the company.
• They had appointed independent directors to ensure that minority shareholders were taken care (and seen to be taken care of). These independent directors were compensated sufficiently for them to take serious interest in their roles. Corporate governance was of the highest order.
• They created a strong and empowered leadership team and delegated key decision making to this team. The leadership team was invited to join Board meetings at fairly regular intervals, and without fail, all strategy sessions of the Board. The only thing they ensured was that everyone was aligned on the core values.
• While competition was using all the common tricks to boost profitability (using the same analyst to bill two different clients; having an analyst work two separate full/part shifts on two different billing opportunities; having a very high player-coach ratio that impacted the quality of work etc), AMBA strictly stayed away from these cheap tactics.

They didn’t name a CEO. They felt all four of them had some fatal flaw that wouldn’t make them effective in the role, and that they worked better as a loosely knit team. Quite naturally, this slowed decision making significantly in the beginning (that was when they hadn’t yet hired a strong team). When the Board pushed them to identify a CEO, rather than picking one among them, they agreed to hire a CEO from outside. Which bunch of founders would do this? I think it reflected their honesty. At another level it also pointed to their being idealistic in a bookish way as opposed to being pragmatic. As one would have expected, the external CEO didn’t survive for very long. It was at this stage that they figured out, though reluctantly, who the CEO would be. Mohan took on the mantle and was there until exit.

Each of them was a refined individual in their own unique way. Every client had a code name to protect their identity (that was the only name by which they were referred in any conversation). The choice of the code names was also very interesting – you could get a decent overview of world history, and geography, by googling every code name and reading about it on Wikipedia. Andrew was the perfect people person; Mohan was someone every client completely trusted; Brad was hands on and authored all the research training manuals in the early stages and built research processes subsequently; Anand was the strategy guy. Between them, it was a pretty well rounded team.

For the first time in my career I was seeing a bunch of entrepreneurs whose primary aim was not to raise money or aim for a spectacular exit. They were all enthusiastic professionals who derived their kick in life by working with similar high caliber professionals and building a workplace of their dream. At one level they were reluctant entrepreneurs, but great human beings. 

Nice people can be successful too. On a bright winter morning in December 2013, in a strategic move Moody’s acquired AMBA, and in one shot, endorsed the quality of the asset that these amazing entrepreneurs had built!