Skype CEO presentation

I went to see Niklas Zennström's speech yesterday at Goldman Sachs. Niklas is the CEO and co-founder of Skype, the P2P VOIP company. The guy is a real entrepreneur: a bit shy and not very confident in front of the audience. Yet, he has a proven record as an entrepreneur (he has co-founded KaZaA, the most downloaded software on the Internet) and Skype is definitely going to be a great success story.

With more than 100 million downloads and 35 millions users, the company is already a big player in the phone industry. It's truly global since the software is in use in almost every country. Then, there is SkypeOut, SkypeIn and VoiceMail, the services with which the company hopes to make money. SkypeOut, with 1.2 million users is already growing fast and the 2 others services are probably going to grow exponentially as well.

I've been a user of Skype for 2 years now and I'm using it to call friends in France or Africa. I've started using SkypeOut to make some calls to companies in France and so good is the quality that there is no way the other side can tell that I'm using a VOIP software. I'm not planning to use SkypeIn in the near future but if I move outside Europe, this might be a good solution to keep in touch with friends and relatives.

Next step: Skype on a mobile phone. Motorola has already agreed to ship Skype on a phone but this will work only when the phone will be under a Wi-Fi coverage. Do not expect Skype over 3G soon and further more, the incumbents (Vodafone, Orange and co) will likely respond to this threat by decreasing the quality of service for VOIP packets on their 3G data network (my guess).

Anyway, if you haven't been using the software yet, it's time to do so to experience a different way of calling people.

Last term of the first year

This term is busier than the second term yet I'm not really motivated to work a lot for school. I guess the routine is kicking in and most of the students are in autopilot. Some are still looking for an internship, others are just waiting for the beginning of their summer job and lot is going on in club activities, like the Private Equity Conference, the Marketing Conference, the Africa Day...

I was motivated at the beginning by Markstrat but now that we are in the 4th period, it's becoming a bit boring. Further more, we've taken some pretty big losses in the Vodites market and it will be hard to recover before the end of the game. Macro-economics is definitely an interesting class and I'm learning a lot of things that I hope will be useful in my future career.

Finally, an interesting article from Business Week that relates the results of a study from a Wharton professor: the number of top executives with an Ivy League MBA working for F100 companies is on the decline. But is that so surprising? With salaries relatively low when compared to IB and MC, those companies are not really attractive for a fresh graduate with a huge loan to repay. Further more, it's not required anymore to spend 30 years in a company to reach to the top, since more companies are hiring outside talents for top jobs. Or as the professor put it:

If you wanted to run General Motors, would you begin as a junior engineer at General Motors, or would you begin by working at McKinsey? It's not clear that the McKinsey approach isn't faster.

Still, I'm not convinced that a good IB is necessarily a good manager. I think you need some operational experience to run a company and IB or MC is certainly not providing it.

French companies are slowly changing

In a surprise move, the CEO of ALCATEL, Serge Tchuruk, has designed Mike Quigley, an Anglo-Australian with more than 30 years of experience within ALCATEL, to be the next COO. This makes him the likely successor at the top job.

This is a mini-revolution in the world of big French companies, dominated by alumni from X, ENA and HEC. Quigley does not even speak French! At least, when L'Oreal selected Lindsay Owen-Jones for the top job, he was speaking French.

Overall, this is a welcome move. Foreigners won't be constrained by cultural hurdles that could have limited their ability to shape French companies to face new challenges. I'm not saying that French firms should forget all about their nationality but to compete in the international arena requires a multi-cultural and diverse team.

For MBA students interested by French firms, this is also good news. Although most big French firms do not yet have a formal MBA recruitment program (some firms barely know what an MBA is), this will probably change in the future as a larger share of their business will be operated outside of France, in countries where X, ENA and HEC does not mean much but where an MBA does.

Madagascar will receive US aid package

The Wall Street Journal dated April 18 has an interesting article about Bush's new strategy for poor countries. Madagascar is one of the first country that will receive money from the Millenium Challenge Corp program. This program has been launched in 2002 by G.W. Bush vowing that he was commited, in his "soul" to relieve 1/3 World suffering. Although the budget is lower than what was initially expected, it still top at $2.6bn in this fiscal year and Madagascar will recieve $110 million in a 4-year aid package.

To recieve the money, Malagasy officials went through extensive interviews and they engaged themselves to use the money to install computers in land offices in order to better manage property land: the goal is to simplify for the landowner the selling and buying of land, or use it as a collateral for a loan.

Is this really going to help the country reduce poverty? The reform of the land system should boost what my macro-economics teacher calls the TFP (Total Productivity Factor), which means higher GDP for Madagascar. But is this shift of GDP going to be significant? And does an increase in GDP automatically means lower poverty?

Don't take me wrong: I'm not criticizing the Millenium Challenge Program of Bush. I think it's a great initiative from the President. What I'm hoping is that this money will really help decrease poverty in Madagascar, a place where I spent 10 years as a child in the 80s.

EU guns for China

French Prime Minister Jean-Pierre Rafarin is visiting China next week. A central point of his visit will whether or not to lift the arms embargo imposed on China in 1989 after Tiananmen.

France and Germany are pushing for the lift of the embargo. They argue that the European code of conduct (link in French) that will be enforced will be sufficient to monitor the arms sales and prevent any transfer of critical technology. Case in point: a French watchdog agency (CIEEMG) has recently refused to Thales and Sagem the right to equip Chinese military plane JF7. Italy, a staunch ally of the US, has on the other hand agreed to equip the plane.

The US has increased its criticism of the lift and has threatened retaliatory actions against Europe such as cancelling all military contracts between European and American firms. At risk: the potential sale of EADS tanker aircrafts to the US army, the collaboration between BAE and Boeing on the JSF and much more.

So why are the US and Japan against and the EU for the lift? First it's about money. Not so much for the arms market (Russia is a long time suppliers of the Chinese army with 90% of the market and this won't change, embargo or not) but in all other area such as commercial aircraft, cars and other industry, the EU is the biggest trade partner of China. The embargo lift will increase the economic cooperation between the two partners. Then, the main other issue is the way China is perceived in the future. The US and Japan view the Middle Kingdom as a potential military threat, whereas Europe believes that the dependence China has on foreign trade makes it condemned to pacifism.

How is this going to end? As usual in diplomacy, it will be a grey answer. My guess is that the EU won't lift the embargo now but will leave the issue opened for future talks. Finally, I believe it would be a mistake to weaken the fragile reconciliation between the EU and the US over this Chinese issue.

Le Monde has a couple of interesting articles on the issue (in French).

Venture Capitalists state of mind

Like I wrote a few days ago, I'm pretty interested by the venture capital industry after my MBA. After 3 years in a VC-backed startup, this move would make sense. The job of a venture capitalist looks pretty attractive: mentor companies, evaluate new attractive ventures, stay close to technology, interact with a bunch of diverse people...

Yet, there is at least a big drawback: I think you become a negative person after some time. Because you refuse 9 investments out of 10, your mind is switching in a systematic 'no' mode and you are always on the lookout for what could go wrong in a business opportunity. I'm not saying it's a bad thing ("Only the paranoids survive") but I'm not entirely sure I'm that kind of person. I'm a more positive person, trying to imagine the potential success of a venture instead of its likelihood of failure. And this post is making me think twice about this industry.

Are you a VC or an entrepreneur? I'd love to hear your opinion about this industry.

Kigali, April 94

Every year in April, one can usually find an op-ed about the Rwandan genocide. This year, the International Herald Tribune has opened his columns to Romeo Dallaire, the Canadian general who was in charge of the UN mission in Rwanda at the time of the genocide.

It's been more than 10 years now and Dallaire is still traumatized by what he witnessed in Rwanda. He has described the events in his book, Shake Hands with the Devil and the recent movie Hotel Rwanda describes the genocide through the eyes of an African Schindler. Nick Nolte plays the role of Dallaire. The movie is actually very powerful and I strongly recommend it to anyone who wants to learn more about this somber part of history for Africa and for Western governments. It's quite realistic. For example, the Hotel des Milles Collines looks exactly the same as in reality and the sounds of gunshots fired sporadicaly accross the city are similar to the ones I actually heard in 1994 while I was in Bujumbura.

Many sites, such as this one, are outlining what hapened during 1994 so I won't relate the events here, except the number of death: 800,000! Most of them killed with machettes, unless the victims could pay their killers for a bullet... That's the tragic history of Rwanda and Burundi where killing between Hutus and Tutsis hapened during the same period, albeit at a smaller scale.

And what did France, Belgium (the former colonial power), the US or the UN did at the time? Nothing! And did they learn any lessons? Looking at Darfur, it's hard to think 'yes'. History is repeating itself, all in an almost total indiference of the media and the Western world. And I'm very worried that in 2014, I will go to a movie theatre and watch Hotel Darfur.

Update: At least one company is doing something in Darfur and other places with humanitarian crisis. The WSJ has a compelling story about French company Nutriset who commercialize Plumpy'nut, a nutrition bar that can be consumed right away, without necessary mixing with water.

European Private Equity

There is no doubt that the EU Private Equity industry is hot. Funds such as KKR, Carlyle, Blackstone and Co. have formidable buying power. In 2004, PE funds investing in Europe have raised more than €25.4 billion (€129 bn globally) so we should get ready for more buyout in 2005. Last year, they have invested more than €156 bn in EU companies and more recently, the €12 bn proposed buyout of Wind has stunned corporate EU by its size, which would made it the 2nd largest LBO after KKR buyout of RJR Nabisco in 1989.

Many funds are investing in Europe because of the large number of companies with low corporate efficiency. PE firms are hopping to improve the business and then exit with some nice profits. But with so many funds chasing a limiting number of deals, it will become increasingly harder for them to sustain high returns. And as it was not enough, hedge funds are now seizing companies and are competing against traditional PE funds for assets.

The smaller venture capital industry, that usually invests in early-stage technology companies, looks pale in comparison to the buyout industry. Returns in that asset class have been much lower in Europe when compared to buyouts and lots of VCs are still stuck with portfolio from the bubble. Furthermore, with no NASDAQ equivalent, exits are pretty difficult in Europe and therefore, the European VCs have difficulties raising funds.

But why am I writing about all this? This is an industry I closely monitor because ultimately, I would like to work in venture capital. So from time to time, I will post some info on VCs and buyout deals. Stay tuned if that interests you as well.

Update: Enel, the parent company of Wind has apparently decided to start exclusive negotiation with Weather Investments. This consortium formed by an Egyptian businessman, a US billionaire and a French financier has beaten Blackstone with a €12.2 bn offer.

More and more blogs.

As I said in my first post on this blog, I am very busy since the beginning of my MBA. As a consequence, I haven't surf too much on the blogosphere and things have clearly moved fast.

In the business, CEO, top executives and employees are blogging about their companies and jobs, which can lead sometimes to the release of confidential information (aka: Apple trial against a blogger to ask him to reveal his sources). Politicians have embraced blogs as a communication platform but I'm not sure that they are really writing themselves and finally, users with various interests are blogging and creating communities around the web. MBA bloggers are quite strong, as listed on this site and it gives pretty intersting information for would-be MBAs on the school from the inside. I particularly recommend the one from my fellow student Guillaume.

For once, France is not lagging behing. It's even the opposite according to NevOn who reports that newspaper such as Le Monde and Libération are actively using blogs and that the French community on CEO Blogger Club is the second behind the US. Another top French CEO blogger is Michel Edouard Leclerc, CEO of the French retailler Leclerc. I think that's impressive to read lines from the boss of a €28 billion company, in particular because he doesn't hesitate to voice his opinions, like a 'yes' on the EU referundum of May 29.

Business School

Apparently, "MBA are MIA". This is a main story of this week Business Week who reports that applications are down this year, which gives some serious headaches to the deans of the top 7 US business schools. The main reasons are pressure from European schools, increasing tuition and the fact that more companies are promoting their superstar employees, even though they have no MBA.

The major consequence is that schools are becoming less selective, which is probably not a good thing since lowering their recruitment standards will lower the quality of the class and may even produce poor managers. This in turn will decrease the value of the MBA that many people are now openly criticizing. Henry Mintzberg, Professor of Management and author of Managers Not MBAs, is going as far as to declare that MBAs are producing poor leaders who, once catapulted in management positions, are causing severe damage to the society. This is a bit strong and yet, when one looks at the Enrons scandals of the last years, many of the executives had MBAs...

So is an MBA worth the money? Although I'm biaised (I am currently studying for an MBA), I would definitely argue that it does. It clearly broadens your understanding of how a business operates, in particular for someone like me with a previous engineer degree. Yet, it doesn't teaches you everything and it clearly does not compensate for real business experience so I think it's important to realize that there is still a (very) long road to go before that CEO position, once you graduate.

Back to business...

So here I am, considering blogging again after more than 6 months of interruption. My previous blog was more about international relations, which is something that really passionates me, but I'll try to expand this one more onto business, economics and international news as well.
I hope I will have the time to write frequently but I'm afraid it will be sporadic posting because I'm very busy right now. We'll see!