Ed Roberto – CEO of Newmerix – has started a blog. He joins Matt Blumberg (Return Path), Jim Lejeal (Oxlo), and JB Holston (NewsGator) as CEO bloggers in my current portfolio. I’ve added Ed to the CEOBlogList – which is a fun evolving list of CEO bloggers.
I’ve known and worked with Ed since 1998. I fondly recall the first time we met – at Dot’s Diner on the Hill in Boulder. We got together to talk about starting a company to buy up ISPs throughout Asia. Ed ended up co-founding this company – called Asia Online – which we funded with a host of other VCs. Ed was the M&A guy – we bought about 25 companies in Australia, New Zealand, Hong Kong, China, and India – putting together a $50m (going to $100m) south Asia-based ISP (we were the biggest ISP in Australia for a while.) CSFB was in the process of taking the company public in the summer of 2000 when the bottom finally completely fell out of the IPO market.
The failure of the IPO was the first of what became a series of body blows to the company. While we still had plenty of cash at the time the company was trying to go public, like many other telecom companies, we were burning a prodigious amount of it each month. After an emergency board meeting in Hong Kong (it’s never too much fun to fly from Colorado to Hong Kong and back in three days, but hey, it was 2000) we decided to replace the existing CEO with Ed and aggressively move to stop doing acquisitions, integrate the business, and get cash flow positive as quickly as we could.
Ed did an amazing job of working with the hand he was dealt. Remember the time frame – 2000 to 2001. Within six months, Ed cut the burn rate from $6m / month to slightly over $1m / month, reduced headcount by 50%, but kept gross margin contribution steady. He consolidated his senior management team, cutting out half the folks and adding a few new key people – who dove in aggressively to try to turn around a business that was clearly spiraling toward disaster.
In the summer of 2001, I spent a week with Ed going to all the company locations to formulate a plan as to what to do (put additional money into the company, or sell it for whatever we could get.) The entire telecom sector was in the process of disintigrating and it was clear to us that it was unlikely that we would be able to get much for the company if we sold it, especially given all the contingent liabilities we had taken on as a growing telecom company. To Ed’s credit – he called the ball. At dinner in New Zealand at the end of the week, he looked at me and said “let’s sell this for whatever we can get – I can’t in good conscious ask the investors for more money because I don’t think we can get a return on the new dollars invested.” So – he started a process of selling and liquidating the company – which was incredibly complex due to the disparate geographies we had offices in. Ed has been able to return some of the invested capital – albeit a modest amount – to the last round investors – which is a huge achievement given that many of the telecom companies that blew up in the 2000 – 2001 time frame simply went splat.
As a result of how Ed handled this experience, he earned my lifelong trust and respect. While we’ve created a strong “business intimacy” (my true measure of a deep relationship in a business context), I also adore Ed as a human. There are a few folks on this planet – besides my wife Amy, my parents, and my brother – that I would do anything for – Ed is one of them.
Today, Ed’s doing a spectacular job of leading Newmerix. Not surprisingly, he’s incorporated many lessons from the Asia Online failure and he’s building a company methodically and systematically. Cash is precious this time around and he and his partner Niel are obsessed with building a real company, rather than just slapping a bunch of pieces together and hoping it all works out.
Ed’s a deep thinker, strong personality, feerless human, and loyal friend. I expect his insights and thoughts to be stimulating and worthwhile. Have fun!