Donald Haile exudes a relaxed bonhomie these days. It was not always thus, especially when poorly prepared salesmen came canvassing for his business.
“As a chief information officer,” he sighs, “I can’t tell you how many cold calls I would get. The salesman would say he could explain his whole deal in five minutes and how it would save me 75 per cent of what I was spending on the X, Y or Z function.
“So I would reply: ‘and how much would you say I’m spending on that function?’ You know they’re reading from a script.
“I was heavily involved in IBM’s purchase of Tivoli Software, so I really know about systems and networking management, and a guy calls me and says: ‘You’re spending too much on your network management.’ ‘Wait a minute,’ I said, ‘I’ve spent more time in my life understanding network management and the total cost of ownership than you can possibly imagine. You probably weren’t born when I started’.”
From which you will gather that Mr Haile knows a lot about technology, has firm views on how it should be managed and does not suffer fools gladly. But these days, as he approaches his 65th year, he is wearing a different hat.
Formerly a top IBM software development manager and latterly chief information officer for Fidelity Investments, Mr Haile has become a venture capitalist – Fidelity describes him as a venture partner – one of a small group of professionals responsible for sieving and analysing new investment possibilities for the group.
Fidelity, the world’s largest mutual fund company with $800m invested, believes strongly in technology both for its own use and as an investment vehicle – Atari, the computer game company, was an early speculative move in consumer electronics, sold eventually to Warner Communications.
More typically, the company invests in serious products for corporate use: its main interests are telecommunications, networking, systems management, development tools and security. Its successes include Airespace, sold to Cisco Systems, and Nexabit Networks, acquired by Lucent
It is a “go-to-market” or late stage investor, usually pitching in about $6m for a 25 per cent stake in a company on the verge of bringing a product to market: “We’re not there for the gleam-in-the-eye guy,” Mr Haile says, paying tribute to the thoroughness with which the partners vet potential investments.
Mr Haile, who as Fidelity’s CIO had responsibility for 11,000 servers, 55,000 desktops and laptops and 9,000 information technology staff and claimed his mainframe configuration would never crash, has plenty of experience from the user’s perspective.
So what advice has he for the would-be entrepreneur? Mr Haile makes four points.
First, communication: the company must be able to articulate the principal commercial and technical advantages of its product simply and concisely. He says he is seeing signs the message is getting home.
Second, worth: the value of a new product to a business must be clear. There is little investment potential in a technology, no matter how brilliant, that is looking for an application.
Third, marketing: the danger of overselling, à la Mr Haile’s hapless network management salesman, can be avoided by training and educating the salesforce.
Fourth, perspective: he is attracted to companies where the management is thinking of the next product even while it is getting the first one out the door.
And while many entrepreneurs’ eyes are on the prize of an initial public offering as the route to riches, Mr Haile has more respect for those who want to make a go of the business: “To me, one of the more positive things is when a chief executive tells me ‘I don’t care about an IPO. I’m going to make revenues. I’m going to make money and an IPO is the farthest thing from my mind’. I like that.”
Joining Fidelity in 1998, Mr Haile was CIO during the period of the dotcom bubble and its collapse. It left an indelible mark: “I saw the impact of dotcom on a company that prides itself on stability and the stability of its workforce.
“People would come up to me in 2000 and say: ‘I’ve got a great opportunity and I’m going to move on’. Unfortunately, they were back at the front door by 2001. Almost all of them. During that period, we looked carefully at our spending on IT. But it’s cyclical. We were in a cycle which we are now pretty well out of.”
By which Mr Haile means that corporate purses are loosening as companies seek to boost their basic IT infrastructure. “They want to spend conservatively but they want to know what they can do to enhance their transaction processing,” he says.
Fidelity’s search for new investment opportunities is being guided by the theme “Re-engineering the core”. That means the search is on for companies with products that have obvious practical value in rendering IT systems more
efficient and productive and, in particular, enabling the migration of legacy systems to more modern platforms.
Mr Haile points to the falling cost of memory: “The storage companies have done well. The price/performance curves are phenomenally good. But as you buy more storage, how do you manage the data, how do you control it, how do you know it’s safe?
“What about the new regulatory and compliance requirements?” He gives Njini, a company based in Richmond, London, whose software manages unstructured data as an example: “We have 1.6 petabytes of data in Fidelity and a lot of it is unstructured. That’s one possibility I’ll be taking back to Steve Elterich [Mr Haile’s successor as Fidelity’s CIO].”
For all his enthusiasm for the new job, one has the sneaking suspicion that Mr Haile remains a technology manager at heart. At one time he was responsible for IBM’s Hursley Laboratory in
the UK where CICS (customer information control system) was developed.
CICS is a teleprocessing monitor that controls the interaction between applications and users as the bedrock of transaction processing. With 73m customer accounts, everything at Fidelity is transaction-oriented, Mr Haile explains, smiling proprietorially.