Thursday, August 28, 2008

What's Swedish for "I remember when you were cool"?

Today we made a day trip across the water to southern Sweden, stopping off in the lovely town of Lund. Snapped this along the way, the mighty Bredbands Bolaget, now branded under Telenor's limp, three-winged roomarang. More normal blog service should resume next week, when I'm back in the Big Smoke. Meanwhile, thanks to the ever-impressive Benoit for the kind words (one of my proudest moments was in hounding him into blogging in the first place, and he has never once let me down!), as well as to Dan York and Alec Saunders. Whoever said nobody loves you when you're down and out was waaaaay off target.

Sunday, August 24, 2008

Fiber, to a thatched cottage near you

I'm with the family in a rented summer house in the forest in North Zealand in Denmark, about an hour north of Copenhagen. While I'm having a mostly self-imposed web hiatus during the holiday, I figured I might as well blog this as I was posting the photos to Flickr. This photo was taken in the village of Vejby (my guess is there are maybe 100 households), where the unfortunately named Dong Energy is apparently in the midst of a fiber roll. I have seen similar scenes in other nearby villages, and am highly impressed, even envious.

Thursday, August 14, 2008

Hangin' in the WiHood

Podcast, moi? When I was cut down in my subprime and returned to this humble bloglet, I determined that I wanted to do things differently this time around. As a case in point, here's an interview with Thomas Anglero, a friend and passionate entrepreneur, about his new venture, WiHood. WiHood weds e-learning with SaaS and cloud computing, delivering a unique, portable, virtual desktop aimed at students, and I think it deserves a lot more attention than it is getting so far. Thomas has a lot of interesting things to say about the process of establishing a start-up, cutting through the noise, dealing with VCs and staying motivated. There's obviously a lot more he could have said about the specifics of WiHood, but we wanted to try to keep it light. Hope you enjoy it.

Interview, 31:57 (warning, performance is variable may be slow to load)

WiHood promo video

New addition to the English language

Thanks Damien, for "uberbolloxmegashame". I couldn't agree more, but couldn't find the words to articulate it - until now!

Wednesday, August 13, 2008

Every time it rains, it rains...

Eurodata from heaven... A super-prime polyglot Palladium Class mega-uber value reader thankfully responded to my plea for pan-European data on subscriber satisfaction/network performance data, with some interesting input on France and Germany.

France: Grenouille has some very detailed and assiduously-maintained measurements and rankings, including some fairly damning assessments of Numericable's 100 Mbps offering. What the hell, never mind the leverage, it's Pierre's problem now...

Germany: An interesting and comprehensive ranking of operators here. I'm intrigued to see cable operators, which have historically suffered from a hugely asymmetrical funding and capex legacy, scoring on a par with, or slightly better than, many of their DSL competitors (on a 1-to-5 ranking). In particular, the results turn up as: Kabel BW (cable) 4.1, ish (cable) 3.6, Primacom (cable) 3.4, Kabel Deustchland (cable) 3.3, Unitymedia (cable) 3.1, iesy (cable) 2.9. In contrast, many of the DSL players rate below 3.0 (i.e., average), including DT's own offerings. Not hugely impressive. I am particularly depressed to see Versatel at a ranking of 2.2, given that many regard this company as the jewel in the crown in any German infrastructure roll-up scenario - the company has unparalleled infrastructure assets in its four major regional markets, but has significant issues on the retail front, an unwelcome challenge for Apax, who are presumably looking for a get-out-of-jail card sooner rather than later.

Speaking of which, am I alone in assuming that there must eventually emerge an unholy alliance between the alternative DSL players and the Level 3/4 cable players in Germany to create an alternative to DT's monolithic infrastructure "vision"? Perhaps I'm a conspiracy theorist, but I find it really interesting that Kai-Uwe Ricke, former CEO of DT (whose DNA is very definitely magenta), left the company under pressure (God knows the CEO role at DT is something you would only wish on your worst enemy), and ran straight into the arms of private equity (as an advisor to BC Partners, majority shareholder in Unitymedia, and as an advisor to KabelBW) and also earlier this year joined the advisory board of United Internet, DT's major irritant. Dr. Ricke is nobody's fool, and I'm sure he doesn't hang out with German cable and altnet companies just for the comic value. Something is going to happen here, mark my words.

Sunday, August 10, 2008

Who knows what lurks in the heart of your ISP?

Sam knows, at least in the UK. I assume a number of other countries have similar sites/services, so please send me some links, no matter how insurmountable the language barrier may seem. I'd be particularly interested in seeing some performance comparisons between cable and DSL in the German market, if anyone knows of such data, and also anything from Eastern Europe/Turkey would also be appreciated.

Shameless self-promotion, revisited

Well, my newfound idleness has already resulted in a couple of invitations to speak at conferences, the dates for which I will provide nearer the time. One presentation is to focus on my old flame, FTTH, with an emphasis on real-world issues. So, if you're involved in a real-world FTTH project, or are trying to get one funded, I'd be interested in speaking with you in order to make your experience part of my message. Ping me.

James Enck, 3.0, beta

Dearest mega-uber-value readers, the last time I wrote anything serious here was in April 2007, as I was embarking upon an amazing journey into the world of principal investing within a major Wall Street bank. Recently you might have noticed that I started posting again, albeit in a fairly sparse, cryptic and non-committal way. This was because I wanted to prime the pump for a return in a non-controversial way while waiting for the paperwork to be signed off and final paychecks to clear. Well, this has all come to pass without a hitch now, so I can do a bit of explaining, to the extent that I am able.

I think a number of you seemed to work out that a job-imposed hiatus from blogging, followed by a sudden return, probably pointed to impending unemployment - and you were right on the money. In July I was "right-sized", along with a number of my team. Many of you have sent me some very kind messages welcoming me back to the blogosmos, and while I share your sense of enthusiasm, it is far from a straightforward thing for me emotionally, as I feel intensely frustrated and disappointed at the ultimate outcome of my "reinvention" - not to mention the fact that I now find myself unemployed for the first time ever.

No matter, I will resolve this in time, potentially with your help. For now, perhaps I should try to paint a picture, for those who are interested (I must assume that most of you who seek this site out are to some extent interested in the person behind it), of what has transpired (to the extent that I am actually free to speak) in the past 16 months since we last met. I have spoken with or corresponded with a number of you during that period, and I have frequently encountered confusion as to the precise nature of my role, such that I eventually determined that the best way to answer questions was in the form of - duh - Q&A. So, I hope this helps to give some useful background. Apologies to those with a more sophisticated knowledge of the financial markets - I have assumed a very low level of knowledge in this regard.

Q: Why did you stop blogging?

A: I was hired in April 2007 by the Principal Credit Group of Merrill Lynch (a.k.a. Merrill Lynch PCG - typically a low-profile group, though some limited internet footprint exists), and while my bosses and colleagues there seemed to be hip to the value of blogging and the ensuing potential network effects in the investment process, Merrill Lynch has some very clear policies which prohibit this. This is entirely understandable, given the potential abuses which could arise across the firm, but I guess this also illustrates the extent to which a firm-wide dragnet internet policy is also potentially counterproductive in terms of its effects on individual business units. In any event, the blog had to die.

Q: What was the Principal Credit Group of Merrill Lynch?

A: This was a unit set up in 2002, to look for investment opportunities in the distressed end of the market, i.e., good companies with troubled finances, or bad companies with valuable assets which were undervalued due to the lack of market confidence in the management or market dynamics. For those of you too young to remember, 2002 pretty much marked the nadir of the post-dot.bomb era, and Merrill Lynch made a financial commitment to allow this group to invest the firm's own capital to focus on this space to maximize returns in its favor. In other words, it was an internally-funded hedge fund, or in Wall Street parlance, a "balance sheet group," "principal investing group," or "prop desk". Our Chief Investment Officer was a great guy named Boris Ehsani, and I reported to the fabulous Mark Devonshire, who was an absolute joy to work with. While the group started out as a primarily credit (i.e., corporate debt)-focused unit, as pricing in the credit markets became more questionable, and the credit market became more crowded with newcomers who further exacerbated these distortions, the group gravitated more towards public and private equity situations, which is where I came into the mix.

Q: So, how did you end up as part of this team?

A: In the summer of 2004, I got an email from a great man named Tim McDonald, from Merrill Lynch PCG, who expressed an admiration for my humble bloglet and an interest in maintaining a dialogue. Tim had previously written his own extremely impressive blog, and seemed to understand what I was trying to do as a sell-side analyst. We continued to speak regularly, and when I ended up in NYC as a presenter at a Columbia University event in autumn 2004, I had a chance to meet him and Boris in person. Beyond the ongoing dialogue and friendship which developed between Tim and me, there were a number of informal meetings which took place over the next two years, during which it seems Tim championed my cause internally. All this culminated in a formal interview process in late 2006, and finally a job offer at the beginning of 2007.

Q: Why you?

A: You'd have to ask the individuals involved, to be honest. However, if I had to make a guess, it would be that (to a large extent due to this blog) I had/have a network of contacts which could/can deliver interesting and funky proprietary investment opportunities, independent of a major investment bank advisor or private equity sponsor. Looking back at my transaction pipeline, I determine that my own personal network alone delivered over $300m in investment opportunities during my time in the group, roughly 1/3 of which I would describe as "high conviction".

Q: So, how was it?

A: I loved every minute of it, apart from the getting fired bit. I genuinely loved working with my colleagues (respect, people, if you're reading this), our bosses were great, the atmosphere was one of mutual respect and intellectual rigor. It was a fundamental research-driven approach, at heart, which on one or two occasions was frustrating when I could see purely short-term speculative investment cases being compelling, but that was the DNA of the group, and its track record (as portrayed in this article) was hard to argue with. As my bosses used to chant at opportune moments, we were investors, not traders.

Q: So, what did you actually do?

A: I had a beautifully wide mandate. While I was brought in to diversify investment opportunities on the private equity side of things, as one of the team of global sector analysts, my other duty was to identify and analyze opportunities in the public credit/equity markets. In practice, >85% of my time was spent developing investment opportunities in the private equity space from my own network, and the remainder was spent looking at secondary public market positions in credit and equity, as well as a handful of primary deals (keep in mind that, of course, the primary markets were mostly closed within a few months of my arrival on the scene). Opportunities I focused on (please note that I am under NDA with a wide range of companies) include, generically: energy-efficient datacenters with a bias towards managed services in the virtualization space; datacenter virtualization OS developers; WAN optimization solutions for financial trading platforms; next-gen satcomm; P2P-assisted CDNs; wireless towers; 4G wireless; a variety of FTTH deployments; account provisioning systems for open-access FTTH networks; P2P video platforms; targeted ad-insertion platforms for telco IPTV deployments; enterprise 2.0 voice and messaging platforms; a couple of take-private scenarios for busted (i.e., zero liquidity) tech IPOs; and one broadband roll-up vehicle in an unnamed European market.

Q: What did you enjoy most about it?

A: Apart from the people I worked with, the thing which really impressed me about being part of the Thundering Herd was the extent to which being associated with a credible brand could open doors and command people's attention. What I personally liked most was getting interesting young companies/entrepreneurs in through the door and spending hours talking about what makes them tick. One gets a very rich education from people who have spent years working in a particular industry vertical, which in turn makes one's holistic understanding of the industry much richer. And hopefully those on the other side of the table got something out of it too, in the form of advice, contacts, brainstorming, or maybe just free coffee! I'm proud to now call a number of these individuals friends, so something good must have been happening. Most of all, I viewed the eclectic nature of the role, ranging from quasi-venture to traditional private equity, as well as public equity and credit, as being an exciting and fulfilling mix.

Q: So what now?

A: Good question. I'm having a number of interesting discussions with a number of interesting people, as you might expect. My ideal scenario would be to resume the sort of role I had within PCG (i.e., free reign across the capital structure, globally, public and private) with a properly funded, understanding, and supportive structure behind me. I enjoy the investment process and believe I am well-suited to it. Moreover, I think we're entering an era of tremendous upheaval, which will present the prepared mind (and well-stocked wallet) with huge opportunity. However, I remain open-minded overall - the point for me is to find THE job, as opposed to A job. Any ideas/suggestions would be warmly welcomed. For now, I'd like to extend thanks to the good people from ML PCG - I loved working with you and wish we'd gotten to where we had hoped to go.