Tech innovation is under threat
Published: 01 Nov 2006 10:30 GMT
Eric Benhamou, former chief executive of both 3Com and Palm, has just joined the board of Finjan and taken a minority stake in the web security company through his venture capital fund, Benhamou Global Ventures.
The fund, which is intended to give high-tech entrepreneurs a helping hand, was set up in 2004. This was shortly after Benhamou had stepped down from the chief executive position he held for two years from October 2001 to October 2003 at mobile device specialist Palm, where he remains as chairman.
But Benhamou also acts as chair for 3Com which he joined in 1987 when it acquired Bridge Communications – another networking company which he had co-founded six years earlier. He eventually took over the helm of 3Com in 1990 and within 10 years, he had grown 3Com from a $380m company to a $5.8bn one. He eventually moved from 3Com to helm Palm which he spun off from the networking giant in 2000 and floated on the Nasdaq stock exchange.
Technical innovation is not as healthy today as it was a decade ago because we don’t have the right policies to nurture it
Eric Benhamou
These are not the only strings to Benhamou's bow. Not only is he chairman of a third company, Cypress Semiconductor, but he is also on the board of a host of high-tech companies, including RealNetworks and GO Networks. He also serves on the boards of three academic institutions: the Insead School of Business in Fontainebleau, near Paris; the Ben Gurion University of the Negev, which awarded him one of his four honorary doctoral degrees; and Stanford University's School of Engineering in California. He gained a Master's degree in engineering and computer science from Stanford in 1977 and also teaches a six-week course in entrepreneurship there each year.
Other activities, meanwhile, include membership of the board of Washington DC-based think tank, the New America Foundation, and serving on the executive committee of high-tech lobby group, TechNet.
Not bad for a graduate who obtained his engineering degree 30 years ago from the Ecole Nationale Supérieure d'Arts et Métiers in Paris, after moving to France from Algeria during its war of independence in 1960 when he was five years old.
Why did you decide to invest in relatively unknown company such as Finjan?
Finjan is just the right type of company for me. It focuses on network security and they're technical innovators who have discovered very sophisticated algorithms to assess the security of websites. So if you want to access a website, their technology can tell you whether it's okay or not and whether you run the risk of being infiltrated by malware such as Trojan Horses. Today, the internet is no longer built on the trust model it used to be, so it's important for people to have the technology to keep them in safe zones.
Also, Finjan is at the stage where it's clearly got good technology and products, it's got a good customer base and it's ramping up. But it's at a phase where I can help the chief executive to build this foundation into a successful company.
Another thing is that Finjan has a good management team and that's part of the package — you can't just take what you want and reject the rest. But I like the chief executive, who's called Asher Polani. He's not a newcomer — he's been in the industry for 20 years, but he hasn't yet really built up a company to a certain stage as chief executive. So there are a few things I can coach him on. For example, most of the company's experience has been based in Europe and Israel, but the big market is the US. So I hope to help in giving him a few pointers on how to build up a salesforce in the US.
After you established your venture capital fund, why did you decide to continue being chairman of three companies and on the board of others?
I wanted to have a balance in my professional life and I didn't think I would be satisfied just working with young start-ups. I still wanted to be exposed to large publicly traded companies. They've been through a momentous period over the last few years with deep governance reform and the way a company is run at board level now is very different to 10 years ago. So the job of chair is far more challenging than before and more interesting, which is why I choose to spend a third of my time on that type of activity.
What was your best and worst moment running large, publicly traded companies?
My best moment was probably just after I became chief executive of 3Com. I was brought in to do a turnaround in the early 1990s and I was betting the recovery of the company on a new router — NETbuilder — which combined Risc processors and Asics for the first time. I remember visiting the labs in 1992, having discussions with the engineers and realising that the product was going to be a winner. It was a moment of exhilaration, realising that it was going to work and get the company back on track.
As for the worst moment, I don't really have one because difficulties are all part of life. But a very intense moment was on 1 March, 2000 when Palm went public at the peak of the dot com bubble. We'd made the decision to IPO in May 1999 and by 1 March, we were ready to go. The trading on the Nasdaq was over 5,000 and the IPO offering was over-subscribed by several hundred times.
I asked the bankers to increase the price of the offering, but it was a very difficult choice to make because I knew the market had gone crazy and the value attributed to the company was untenable. But it wasn't for me to tell the market…
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