Chief Executive Officer, Ensim Corporation
A conversation with Kanwal done by Krishna Kumar
September 8, 2002, Ensim Corporation announced that Kanwal Rekhi would
take over the reins as its CEO. In an interview with The Catch, Kanwal
talked about fitness-fiscal and physical-productivity, the dot.com
mindset, and what it will take for Ensim to win.
Q: You came out of retirement to become Ensim's CEO. What was your retirement like?
A: I had a very active retirement, mostly built around mentoring entrepreneurs and companies. I retired at the end of 1994. I was 49 years old. I had worked non-stop for 25 years, mostly without vacations. When I worked, it was very intense. I worked long hours.
By that time I felt I had done my bit. I would take one year off. And that one year that I was supposed to take off really was a very productive year for me. It turned out to be a transition year from a structured job to an unstructured setup.
I mentored lots of entrepreneurs that year and several very nice companies came out of that. Exodus Communications, Cybermedia, Versata - there were 13 or 14 companies that came from people I mentored that year.
I became active on several boards, but I also became active in the policy-making domain. Economics is my passion. How the economy works, how you create wealth, how you become prosperous as people. And from there, why is India poor? The last four or five years I spent a fair amount of energy on that one.
What made you decide to come out of retirement for this opportunity with
A: When the whole dot.com phenomena started, I was totally out of tune. When I started as a young entrepreneur, there was a premium on experience, on revenue, on profits. All of a sudden you have this new breed of entrepreneurs who are young and inexperienced, seeing no revenue, no profits. I had problems with that.
People were talking about retiring at the age of 30, and I started to speak-as early as 1999-that this is all nonsense. This will not last. How can you run a business without revenue and profits?
And of course, it didn't last. When things really started to head for the south, my message to entrepreneurs was, "this is the best time to be an entrepreneur." The best entrepreneurship happens at the bottom of the economic cycle.
Look at Intel, Microsoft, Apple, Cisco-they all happened at the bottom and rode the market back up. After preaching that for a while, I thought maybe it's time for me to jump in. This is the best time.
The other thing was that during the last ten years, I had become physically unfit. I had put on a huge amount of weight. The lunches, the dinners, the meals - there wasn't much physical activity, since I was traveling a lot.
So at the end of last year, after September 11, I started to take stock of myself. I said, I'm only 56, and I'm already so unfit, by the time I'm 65 I'll be in a wheelchair. I had trouble with my knees and trouble with my back. For a smart person, I was pretty dumb.
Q: Did the board feel that the company needed a change at that time?
A: Everybody on the board felt that was the case, including Rosen. We needed to bring in somebody with more experience. Rosen is less than 30. He was part of the entrepreneurs who were young, rash, not experienced, not financially savvy. So there was a sense that Ensim needed to become a more traditional startup.
Q: What do you see in Ensim that shows we can win?
A: Lots of smart people. Young, but lots of smart people. We still have money in the bank, so it's not as if we don't have resources. Customers have been buying from us, but we haven't priced it right. We haven't serviced our customers right.
So when I look at the smart people, the technology customers are paying for, and the resources, we should be able to put it together in a more productive fashion. How do we understand our customers and their needs more precisely and align our resources to solve their problems? Customers pay good money to have their problems solved.
What is your focus as CEO?
A: I am not a technologist. I haven't done any technical work in almost 15 years. So I'm not bubbling with the technology ideas. [I won't] come down from the mountain and say, "I have a new idea. I have seen the new wisdom." I'm going to focus on process. We need to identify the customers we're going to serve-listen to their needs. I won't be doing that myself. It needs to be done by marketing people - by sales people. Then we synthesize that into a clear plan and work the plan.
I always think of business as a mathematical exercise. You have to make your business math work on paper, in the marketplace. And this is something new at Ensim. If you're spending a million dollars a month, you have to ask, to what end? What should a million dollars a month produce?
If you spend a million dollars a month and don't produce any results, you're not in business. There's a notion of investments ahead of revenue, but we've been doing that for four years. If Ensim was to go back to investors right now, there is no way we would get any more money.
And then I have a notion of sewing and harvesting. You can't be sewing all the time. You have to harvest. If you spend millions of dollars worth of R&D, that R&D must reap a value.
The whole mindset that the dot.com phenomena had-that was not a viable model.
Q: Do you think Ensim has been in that dot.com mindset?
A: Oh yes, absolutely. If you look at the free stuff in the cafeteria - free candy, free soda, free lunches on Tuesdays and Fridays - and the mindset with customers - free service, free support, free this and free that - that was the dot.com mindset. And you know, sooner or later, the money will run out. Last year, we did 2 million dollars of revenue, and we lost 10 million dollars. You can't spend more than you make for very long.
Q: What does that mean for individual Ensim employees?
A: We are living on borrowed money - borrowed time. We have to start thinking more clearly, and justify every expense we have in the company. How will this improve my revenue prospects? You need to make sure all your activities drive your revenue.
About Ensim corporation
in 1998, Ensim® Corporation is the leading software provider to the Web
hosting industry. Ensim provides a comprehensive product line of management
solutions for each stage of the hosting life cycle. Based on award-winning
technology, Ensim solutions have become the industry's standard, as more
than half of the top U.S. service providers rely on Ensim to efficiently
deliver hosting services to their customers. With a seasoned executive
management team and strong backing from leading members of the investment
community, Ensim has the products, technology, customers, partners and
resources to lead and deliver the next generation of hosting management