The mission of Going Global, which appears on ePrairie on most Tuesdays, is to educate and inform Midwest technology companies on what local technology companies are doing internationally so other firms can learn from the successes of like-minded peers.
CHICAGO Ė Prior to establishing Daitan Labs, James Bergamini was employed for 20 years at Lucent Technologies.
At Lucent, he held various executive positions including vice president of international sales and marketing for voice messaging systems and convergence solutions in Latin America. While heading Lucentís Central America and Latin America switching solutions group, he served as president of two telecom companies in Brazil called Batik and Zetax Tecnologia.
Prior to living in Brazil, he served as director of Lucentís switching joint ventures in India, Taiwan and Indonesia. He also lived in Japan and managed a number of wireless and wireline projects.
Bergamini received his bachelorís of science degree in finance from Illinois State University, his M.B.A. from the Kellogg Graduate School of Management and his executive program certification from the Wharton School of Business. He is a member of the AICPA.
In part one of a three-part Q&A, Bergamini sat down with international expert Michael Muth to discuss current and next-generation telecom.
Michael Muth: Is telecom different in different parts of the world or is it the same everywhere?
James Bergamini: From a service provider perspective, telecom is the same everywhere as far as offering reliability in their networks. Regardless of where you are in the world, service providers demand reliable networks. Whatís different is the consumption of services.
End users are different from country to country. VoIP has been present in Europe for years. Skype is headquartered in the Netherlands. Text messaging is big. Weíre just getting on board with that. Itís a cultural thing. Kids move along the keyboard with their thumbs just like a typewriter.
If you are communicating over DSL or high-speed cable, you have one number that will follow you globally. You saw it at SUPERCOMM and Cannes. The usage is earlier than in the U.S. Weíre later adapters. We just wanted solid dial tone. Now we want new features.
MM commentary: I spent seven months in Poland 10 years ago. When it rained, the phones went out. They prioritized the international connections first, regional second and local third. Many other countries are still trying to get to reasonable reliability.
MM: Whatís coming in telecom?
JB: The world is moving toward complete convergence between wireline and wireless.
In the U.S., wireless subscribers just passed the number of wireline subscribers (86 million to 85 million). This is monumental in that it speaks volumes about our appetite for be connected anywhere and at any time. Service providers and vendors serving end customers will need to provide complete transparency of services, reliability and affordability.
I said 10 years ago that we need think about telecom as an entertainment industry. When you think about morphing communications, itís also entertainment. Itís really both the pipe and content managing disparate networks to different end-user devices.
Different service providers have different views of what features will be demanded and the way those networks are envisioned to run. Itís not just communications. Kids communicate in ways we never thought theyíd be communicating. You donít grow up with technology.
My kids donít see instant messaging, gaming and iPod as technology. Itís a different mindset. Vendors need to think of it that way.
MM: The U.S. Department of Commerce says Brazil has the most advanced Internet and e-commerce industries in Latin America. Why?
JB: That doesnít surprise me. There are 185 million people there. This translates into a very large market that requires up-to-date solutions. Their advances arenít restricted to Internet and e-commerce. Brazil has world-renowned universities and has been investing in its own technology for decades.
Take, for example, its electronic banking system. Brazil has had a best-in-class electronic banking system for more than 20 years. The country is also strong in medicine and genetics. Brazil is also the fifth-largest telecom infrastructure in the world. This all drives the need for a solid Internet structure and e-commerce.
Above all, when you get to know the Brazilians, you see they are very focused on what they want and they have a very good entrepreneurial mindset with a strong teamwork mentality. Itís a much more robust economy than many people think.
MM commentary: Brazil is a mirror image of the U.S. below the equator. Its resources are immense. What Iíve heard is that Brazil is the country in Latin America with the most potential and always will be. If the country can harness those resources, maybe it can fulfill its potential.
MM: How did the recent downturn in telecom affect Brazil?
JB: Though Brazil wasnít insulated, the country probably survived better than many. Broadband and cable still needed to be consumed.
Local vendors and service providers were able to maintain the necessary economic robustness. It wasnít the death spiral like in Europe and the U.S. There wasnít the same overcapacity in Brazil. Penetration rates needed to be improved. There wasnít the precipitous decline like in other economies.
MM: How did your relationship develop with your partners south of the border?
JB: Rewind back to 1999. I was in M&A with Lucent. We were looking for companies to acquire in Brazil. Brazil privatized in 1998. That was an inflection point when things got competitive. Our targets needed to have sizeable market share and excellent technology. We stumbled upon Batik and Zetax.
They were acquired by Lucent. The co-founder of Zetax is now my business partner and co-founder. Zetax was a $50 million business in Brazil. They competed against the big guys (Siemens, Alcatel and Ericsson) in hardware and software. It was a complete company with 200 people including 40 people in R&D.
When we bought the company, I moved to Brazil. Management said Iíd be there six to nine months. It ended up being 25 months. I was the president. We integrated the company in post-merger integration (PMI). I met my current partner. He moved to Naperville, Ill. as a vice president at Bell Labs and served in various roles.
After six years and Lucent, he and I broke off and started Daitan Labs. We brought in others at the directorís level who worked with him for 15 years. Lucent brought more R&D to Brazil than to India and China. The PMI was similar to a domestic company except normally 80 percent to 90 percent of the people leave.
We bought the company with the intention to enter the Brazilian marketplace. I wanted to keep as many people as possible. I wanted to embrace and maintain the mindset of the R&D guys. Though we think we know whatís best, the reality is we can learn from our acquisitions. We learned how to compete globally.
We had R&D in Poland, China and the U.S. My partner said: ďLetís have a competition within our own company. May survival of the fittest win. Who could develop this box with the best set of features and most competitive cost structure and velocity to market? We then give that business to that entity. Create that environment within your own company.Ē He grew his R&D team from 30 to more than 300.
MM: Brazil is a $9 billion software market. Half of that is produced locally and only 2.5 percent of that is exported. What do you see that others havenít?
JB: Brazil is indeed blossoming in that direction. Though country was a closed market 20 years ago that allowed the creation of its own technologies to support its internal market. I can mention e-commerce, banking, telecom solutions and airplanes as examples.
Many executives who work with Brazilian companies talk about their differentiators on entrepreneurship, flexibility and quality deliverables. They indeed stick to processes. The size and quality of the Brazilian labor pool is something thatís catching a lot of attention as better than alternatives such as India and China.
A key point for technology work is about retention. Brazil is one of the top three countries when it comes to retention. This is paramount for protection of investments and IP. My partners at Daitan Labs in Brazil have a track record of 99 percent retention for the last 17 years.
Though the absolute numbers are small, the growth is big. Outsourcing is a $130 billion business and $20 to $30 billion of that is telecom. Thatís what we address. Brazil will get on the map as being tech savvy. A couple companies are replicating our model in other areas and cultivating business.
MM: You say that entrepreneurship is a country characteristic. Where?
JB: Brazil. A study was made by Global Entrepreneurship Magazine and Brazil did very well. Twenty years ago, Brazil was a closed market. The country set up its own businesses. You couple that with its universities and you have highly educated people who have the right entrepreneurial mindset.
My partner said: ďSell in the morning, develop in the afternoon and deliver in the evening to put food on your table the next day.Ē Brazil was influenced by both European and U.S. cultures. The country is an absolute melting pot. Whatís neat is that Brazil truly does have a multi-ethnic cultural society. Most educated people speak three to four languages.
MM commentary: Companies in countries like Brazil are entrepreneurial because they must be to survive. Brazil isnít alone in that regard.
Tune back in next Tuesday for part two of this Q&A.
Michael Muth is managing director of GATA, an international business development consultancy that helps technology companies build international partnerships. He can be reached at email@example.com.
Click here for Muthís full biography.
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