Christophe Aulnette is a Senior Advisor at Apax Partner, one of Europe’s leading private equity firms, and President of the deep tech company Dathena, a leader in the field of artificial intelligence.
Former President of Microsoft in Asia, Microsoft France, Altran Group and Netgem, he is today an investor and practitioner of Tech and international development of technology companies.
In this article of the Podcast n°3 of Innovation Leaders, you will be discovering an open and fascinating discussion between Geoffrey Behaghel and Christophe Aulnette.
On the program:
- Les grandes évolutions et perspectives de l’industrie Tech
- Le rôle d’investisseur actif et ses conseils aux entrepreneur.e.s
- La crise Covid-19 et son impact sur les modes de management
- L’Asie comme territoire d’expansion et le rôle grandissant de la Chine
Could you tell us about your career path and what has guided you during all these years?
These years are more than 30 years of career, which is a diversity of experiences but I always remain faithful to two matras which are technology and international development.
I started at Microsoft in 1988 when it was almost a startup. There were only 60 employees in France, and 2500 worldwide. I evolved first in the French subsidiary, then I went to Asia where I managed South Asia for Microsoft before coming back in 2001 to become CEO in France where there was Microsoft’s largest subsidiary.
Then in 2005, I wanted to have more control and be able to measure the impact of what I was capable of. So, I joined the Altran Group, as CEO, a company that needed a major transformation. I started it, and this transformation has practically come to fruition in the last few weeks.
In 2009, I took over the general management of an SME called Netgem, which is a supplier of hardware and software technology solutions for Internet operators. It was a concrete plunge into the management of a mid-size company that I internationalized. I increased the turnover from 5% to 75% internationally.
In 2013, I moved to Singapore where I followed several projects. I followed the Dathena project, where I am the executive president, which is a startup that uses AI to do document classifications.
I came back to France in 2018, and today my activities are getting structured. I am an advisor in the tech part of a private equity fund called Apax. I am also continuing my involvement in entrepreneurial projects as CEO in different startups.
What is your point of view about technology and about its evolution during the last few years?
I think we have been through four great eras in technology.
Starting with the 80s, which was the era of the memefrem. These were large computer centers with software developments and passive terminals, and everything was accessed in time-sharing by large companies essentially. This was the reign of IBM.
In the 90s, it was the era of the PC and client/server computing. These years were marked by the emergence of software players such as Microsoft with Office, Oracle, PeopleSoft, SAP… These companies accelerated and accompanied the globalization of companies that we experienced in the 90s.
Then in 2000 is the era of the Data Center. Companies had multiplied the number of servers on all their sites, in all their countries, and they were noticing a difficulty in managing all this work. That’s why the need to consolidate everything in data centers arose. For example, Linx and other new software architectures made it possible with virtualization to manage and recentralize servers at a very low cost.
In 2010, the combination of mobiles, very high-speed broadband, and new software were brought together. These datas were recentralized and migrated in Public Clouds of enormous power. We were returning to a recentralization in very powerful Public Clouds that we consumed on demand. However, there is a big difference with the era of the memefrem, because today it is terabits and betabits of data concentrated in these Clouds. There is a large amount of collected data that is retrieved from customers, from our own customers’ customers or our own employees. The hyper-connectivity makes it possible to amass a large amount of data and the power of computers and algorithms, the AI makes it possible to exploit this data and make a big business out of it.
The next era will go even further in hyper-connectivity with a border that will even blurrier between B2B and B2C. Most actors will integrate their entire value chain upstream and downstream.
We are experiencing a change in IT and business because in 2000 we could access high-tech technology only in the office. Today, since the emergence of broadband, 4G, social networks, the technological maturity of consumers is changing which drives the demand for business investment. We are witnessing a reversal of consumer power.
Can you explain the differences between Private Equity and Venture Capital?
First of all, Private Equity funds invest in large but smaller numbers of shares in profitable companies with the ambition of increasing their value. The investments are based on the fact that they are profitable in order to use cash flow and leverage debt. This requires a huge investment upstream of opportunity detection, analysis, and once convinced, it is necessary to seduce the managers, because Private Equity strongly involves the management. Then there is the pricing phase in a context where valuations are very high today.
Today, it is estimated that there is $1.5 trillion awaiting investments in private equity funds.
It is a role that requires professionalism and an ability to follow the investment and deliver the investment plan as it was worked out during the analysis. In order to create value, it is necessary to have operational efficiency, boost international sales, and to make acquisitions in order to create value.
Then, the Venture Capital fund follows a different logic, it is a logic of volume. For example, out of 10 companies, maybe 4 will be a flop, 3 will be respectable on the market, 2 will be good and one will be a hit. This means, there is a very important return to investors. The return curve is much broader and there are more risks than Private Equity.
There are Venture Capitals that are involved in the management, depending on what happens. In the startup sector, there can be a lead Venture Capital with a place on the board that is involved with “Venture Capital followers” that have brought in investments. Otherwise, there are also Venture Capitals that make several investments per month, and therefore it is impossible to follow each investment in terms of management.
How do you choose investment and what are your evaluation criterias?
First of all, it is based on the personality of the founder. You need to find someone who is both obsessed with his or her project, with persistence who manages to overcome obstacles and stay motivated. However, at the same time, you need someone who is flexible in order to adjust their plans.
Then I look at the scalability of the model: B2B analysis, software analysis, and IP analysis…
A few tips for entrepreneurs in their quests, how should they choose their investors?
In the first place, it is necessary to find out about the different Venture Capitals. However, an investor with a “friendly” company can be very beneficial, but you should always inquire with the portfolio companies, CEOs, and managers.
Secondly, you must look at the dry power, which is the ability to follow in case of a hard blow. So, you must choose investors with some reserves.
Finally, you must have a network of advisors who can help you in a concrete way (business connections, partner introductions, recommendations on HR processes, etc.).
How does the accompaniment of a structure with which you work operate?
The Business Model helps the entrepreneur build a business strategy and an organization that will create scalability. This is done through partnerships because I try to avoid the risk of large account projects with a long sales cycle being transformed into a service company. I warn them a lot about this so that they learn to say no in order not to turn into a service company. I help to set up the business model with the keys to acquiring new customers, cashflow… Partnerships are essential in B2B, to create an ecosystem that will accelerate sales.
Business Development is very concrete. Meeting a customer, making an introduction, helping to answer tenders, making support calls…
What is your advice for entrepreneurs to face the Covid-19?
The Covid-19 pandemic is a period where the tech and B2B players have managed to hold their grounds, but the new businesses have been through a hard time because it is not simple to sign new contracts without meeting the customer.
My advice would be:
- Cash is king: review the plans to hold until the end of 2020 by raising money.
- Transparency: be honest in the discussion with the investor. You must not allow him to feel a sense of reality so that he can trust you so that he can bring a bridge or complementary investments.
What do you think about remote working?
Technology can be the best and the worst of things. Covid-19 has triggered remote working and unblocked many taboos about the subject. This creates hyper-connectivity.
However, on the part of companies, there is a risk, because they can see in direct time what the whole organization is doing and try to steer all the company’s decisions. Nevertheless, it is necessary to take advantage of this hyper-connectivity in order to transform the organization.
What is your advice for model management?
I’ve always been a proponent of a very high level of trust, the fact that you can communicate very widely must be put into action to get a message across and have effective transparency on communication and objectives.
As CEO I have always tried to explain the objective and explain it to everybody in the organization so that it translates into clear objectives. I want every one of my employees to understand how our goal is part of a coherent whole.
Today there are methods such as “objectives and key results” that have been popularized. It’s a matter of setting up the role of each employee and explaining how they participate in the overall objective and how they do it at their level.
However, you have to be “dictatorial” on the values, the vision of the company, but on the rest, you have to bet on intelligence. I think that the manager is the most important job of all, he is on the front line, he must ensure customer satisfaction and manage all sales. It’s important to leave him the power and rely on this front line.
What tools or applications do you use for management?
There are a lot of EPRs that allow you to do this but today I have a matrix with an Excel spreadsheet that works very well.
How important are values and team alignment? As a CEO, are values important? How do you align teams with the values?
You must define the DNA of a company, then leave sometime, let the employees take ownership of these values. This must be translated into behaviors and reflexes, which are compasses that provide guidance when problems arise. Practice, expertise, ownership, and challenge must be translated into one’s job, one’s responsibility. It is essential that the leader is exemplary in relation to his own values. Values are a compass because, in case of a storm, they point the way.
What is your vision of things on the market right now in the Asian tech community?
Asia today represents 60% of the world’s population, the middle classes are emerging, it’s a huge potential. There’s a growth zone that’s just growing.
However, Asia is rather complicated, because it is not a homogeneous block. It’s diversity on three axes: a diversity of market size, a diversity of market maturity, and a diversity of culture. On these three axes, we can classify countries and we cannot approach it in a single way, as for example the US, which considers the EU as a whole.
Asia is a very attractive opportunity for technology despite its diversity.
Why do we hear about more companies launching in the US and much less in Asia?
First of all, I myself would advise an entrepreneur to start in the US. The market is huge and homogeneous with great power of consumption. Also, it is THE territory of great technological success in sales marketing, there is a certain maturity.
For Asia, the right strategy is to accompany its large customers internationally. This builds a local reference that can go to meet new customers. It is necessary to focus more on the NZ, Australia, Hong Kong, Singapore in order to find new customers, because they have operating modes and sales approaches like the one we know how to lead. For the countries around them, these are developing countries, you must build the right partnerships and go there in a very targeted way and absolutely prepare everything in advance.
What do you think of the US-China trade war?
On the technical aspect, there is a real will to create copy-cats of ideas coming from the United States. However, the copy has, today, surpassed the original. China is making technology one of its nationalist arguments, it is part of the daily life of all their citizens.
Why doesn’t Europe have great unity in its technological approach?
American Gaffa is an instrument of domination. As a result, Europe has to choose its master between the United States and China. Nevertheless, we must not hesitate to play this rivalry because we have enormous potential, we must facilitate the consolidation of the European player in new technologies, we must support each other between European countries.
Nevertheless, for this to happen, we need a European vision and not just a national one. We must take advantage of this conflict to solidify ourselves and make a little more use of access to the European market between the United States and China in order to benefit from it.
Do you think that there are EU signals that are going in this direction?
There are contradictory signals, however, the example of the gaffa tax is a good example, we are coming back to the solidity of the Franco-German relationship. We have to face the two giants together and solve the problems by addressing them.
Some recommended books?
- The American Trap, by Frédéric Pierucci, explains the trap and the American political and judicial hell that all employees, especially executives of companies subject to pension funds go through.
- Blitzscaling, by Reid Hoffman (founder of Linkedin) and Chris Yeh, is a user manual, recommendations for the hyper-growth phase of an organization.
- Culture Map, by Erin Mayor, explains how cultural differences between different countries can be considered vulgar. There is a selection of about 20 countries with a description of the countries under different axes with various tips and tools.
Any newsletters or websites to recommend?