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Of Banana Milkshakes and Barbers: Naeem Zafar , Serial Entrepreneur

Naeem-Zafar

 

The oldest child in his family, Naeem Zafar felt destined for the greater things even at the early age of 11. He topped his class in Matriculation and in FSc (Pre-Engineering) and had big dreams for his life. His cousins were visiting one summer and mentioned the SATs and Ivy League Schools over banana milkshakes; terminology Naeem had never heard before, nor had any idea about. Concepts that sent Naeem’s mind whirring with ideas and made him realize that he had to apply to the best schools in the world if he wanted to become an engineer.

“I always wanted to be an Engineer but the road from Lahore to MIT wasn’t a direct one for someone with my socio-economic background.” In those days, in fact, it was quite unusual for a student from an ‘Urdu Medium school’ to make it to the US.Fortunately Naeem was driven, did well in school hence and got opportunities for scholarships.

It was this drive that landed him in the Middle East Technical University in Ankara, Turkey. The University had been taking two transfer students to MIT since 15 years and so that became the game plan: Lahore, Turkey, United States. “As luck would have it,there were 3 other students from Pakistan with the same plan.” Four students who are still friends even today, competed ferociously for the two transfer slots; all had 4.0 GPAs and almost perfect SAT scores. As fate would have it, Naeem didn’t land the transfer but the persistent young man with a can-do attitude didn’t give up that easily. He applied to two of the oldest Engineering schools in USA and landed a full scholarship to attend Brown University in Rhode Island; only a one-hour drive from MIT in Boston.

Next step? Graduate School and a job. Though Naeem had a place in Stanford, the University of Minnesota accepted him on scholarship and he landed a job at Honeywell designing chips. The dream was beginning to come to life.

The macro view on Naeem’s life looks something like this: he became a serial entrepreneur because he found it more challenging and impactful than being a small cog in a large wheel. Over the years, he transformed companies making them more profitable and increasingly desirable for acquisitions. With the wealth of experience he acquired through his successes and failures, his ability to make people understand complex technology, put him in a unique position. Naeem was not only able to create change, he also positioned himself to share the experiences with entrepreneurs around the world.

Despite having more than two million miles across various airlines and being part of companies who have a combined worth north of $400 million, Naeem Zafar explains, rather humbly, his best work is yet to come.

Growing up

Hailing from the city of Lahore, Naeem is the older of two brothers. His mother was a homemaker and father was in Government Service with WAPDA. His father had 6 siblings,which made Naeem the oldest among the 17 cousins.Theirs was an average, close-knit family struggling just to get where they needed to go. His childhood was a combination of school, a lot of tutoring and riding bicycles in the Lahore heat.

It is said that you become a product of the sounds around you; of what you read and what you and what you hear. “We were not surrounded by people who traveled overseas nor studied in fancy schools. We were a very simple lower middle class family, but I always felt I was destined for something great. When I topped FSc., I had the proof I needed. It gave me a sense of purpose even as a  15-year old, which continued to be reinforced as I grew up. When scholarships and opportunities come your way, there is also a great emotional burden for you to come through, so you tend to grow up quickly and take it seriously.”

Naeem’s decision to leave Pakistan was not a slam-dunk decision. “I recently found a  journal I used to keep and re-read the entry I put in when I got accepted to Ankara. I was doing well at UET Lahore as a first year student in Electrical Engineering at the time. I talked to a lot of people and did a lot of soul-searching before accepting the opportunity. My family somehow believed that I was going to fly away and make my own life and they encouraged me to pursue my dream. That’s encouragement I find surprising even today because today, I would want to be more actively involved in the decisions that my own children make.But at the time,  everyone around me was sure my plan was just meant to happen.”

The Roadmap

There were a lot of lessons for the aspiring young engineer to grasp along his journey and the ride was anything but smooth. He did his Masters by night and designed electronic systems and chips at Honeywell Research by day. Having a grand salary of $2000 a month, the newly minted Electrical Engineer was supporting not only himself, but also his family back home. “The idea of the eldest son supporting the family started early and it made me work even harder.”

Naeem talks about how he got his first business idea. “It was 1985 and we were designing chips but had no tools to determine whether the chip would work if it was manufactured. Software simulation was available but was too slow. It would take years of computation to simulate a minute of processing. The life of a designer was very frustrating.”

It was this problem that Naeem and three others from Sperry Univac teamed up to solve at XCAT. They developed a special purpose computer, a hardware accelerator, which would help verify the chips behavior. “Just to be clear, I wasn’t pulled into it because I knew anything about entrepreneurship –I could barely spell it! I was there because I knew how to design chips and the hardware.” That, along with his motivation of wanting to have the title of ‘Vice President’ after his name, at the young age of 26. “XCAT was born and we raised half-a-million dollars from a local investor. It took 3 years to build the machine and though we had only a few clients, the company didn’t commercially succeed. We eventually sold it to a company in Massachusetts.”

Backtrack to how XCAT got its principle investor and you get a snippet that makes you appreciate the power of human networks. “XCAT’s President, Jacob Elziq, was telling his barber about how we were starting a company and needed money. This was also the same barber as Dean Scheff, the CEO of CPT, inventors of the Word Processor Systems. The barber told Dean about Jacob’s idea, Dean was intrigued and wanted to meet and invest.” The investment allowed the team to create the first machine and take it to a trade show. They raised a further $2.5 million of venture money and grew their team to 44 people. “We were clueless about marketing, we fumbled and didn’t know much about sales or business in general. We got to a million dollars in sales but didn’t understand how to scale up.  “We made a first-time entrepreneur’s mistake: we remained in stealth mode until we had the product ready. We were so scared of letting our idea leak, we didn’t talk to a single potential customer to find out what they needed.” Hence they designed the system based on their own past experiences rather than from the user perspective. “In fact, the first machine we sold was to Honeywell.”

There were so many things going wrong but the biggest problem was that they were based in Minnesota and it was hard to reach investors from there. The team split into several different factions and everything that could go wrong with the startup, did. “We ended up firing many people. One of the co-founders, Charlie and I shrunk the team down to less than 10 people and sold it to Gateway, which was eventually bought by Cadence Systems, a billion dollar company, that ensured the technology would survive a long time.”

With the benefit of hindsight, Naeem says you have to talk to customers while you are still in the design phase you can assess whether they will buy what you are developing. “If you do, you still have the flexibility to incorporate feedback and develop a better aligned product than you would have otherwise. Our approach was completely backward. You have to conduct market research. You simply cannot design something based on your own intuition; unless of course you’re Steve Jobs.”

There were more critical lessons to learn on the way; lessons in areas such as people management. For people who spend their time building machines, figuring out how to balance team dynamics is critical and it’s usually the first thing that is messed up. “We got a high speed education on how to motivate people and manage the office politics.”After every crash or failure, it became increasingly difficult to come back and start something but Naeem knew that if he wanted to continue engineering, he had to stay in Silicon Valley. “This is where everything was happening!”

Enter the Valley

Naeem finally came to California in 1988 and joined a company called Quickturn Design Systems that had invented a new technology called hardware emulation. They were doing something similar in terms of hardware design, things sounded exciting and he joined as a Senior Hardware Designer. Starting at the bottom of the rung allowed him to connect with the team and understand the organizational and behavioral dynamics. Despite being part of a small team of 10 people, he found good people to work with and mentor under. He was designing systems and showing them to people. “I was doing quite well when one day, our CEO, Phil Kaufman called me over and told me to start the Marketing Department. I was a bit stunned and told him I knew nothing about Marketing – He looked back at me and said ‘what you’re doing IS marketing. You explain things to people so they understand!” And so Phil became a mentor of sorts and though he was very tough on Naeem, he knew Phil cared enough to teach him the ropes. “We grew from a 10-person company to a 400-person company. Five years into working at Quickturn, we were ready for our IPO and I became the Vice President of Worldwide Marketing. Quickturn was ultimately acquired by Cadence Design Systems for about $250 million a few years later.”

The Fingerprint Game

After the acquisition, Naeem felt the need to go back and build something else. “At the time, Quickturn founder, Michael D’Amour, had just become the CEO of Veridicom, a company that was making fingerprint sensors. He recruited me as VP Marketing because he trusted me from our earlier work together. The premise of the company was that if Internet and ecommerce were going to be prevalent, the need for digital signatures were going to be the next big thing.”

Veridicom had their sensors built into Fujitsu and NEC laptops and things were looking promising, except the company was a bit ahead of the times. “People couldn’t fully appreciate how to use the Internet for ecommerce or transactions, and didn’t understand the need for digital signatures. The cost of the sensors was quite high and they weren’t as robust as they should have been. We would have overcome all these issues because we had raised about $38 million dollars and a couple million in sales when we got hit by the dotcom crash of 2001.”

Even though money evaporated from Silicon Valley,Mike and Naeem knew they were onto something. Despite the Board’s instructions to fire everyone overnight, they kept a team of 17 people and bought themselves some time. The bank gave them two weeks to figure out how to sell the technology and clear the loan.

They took their assets to their competitors and asked them to make bids. After two weeks, they somehow managed to get 6 bids on the table. They received $250,000 in an old insurance claim, which they used to get the bank to give them some breathing room. “We learned how to take a company that was out of business and motivate a team to keep working while selling the assets.” Not only did they finally sell the assets and repaid the $6 million they owed the bank, they also got a group of Korean investors interested to put in another $4 million to restart the company.

And in line with Naeem’s track record, they sold the company to a public entity, allowing the Korean investor to reclaim their investment. And soon he left to do something more useful with his life.

Learning to be a CEO – The Training Wheels

By 2003, while everyone was still trying to recover from the nuclear winter of the dotcom crash, Naeem got an offer to be CEO of a Silicon Valley-backed Israeli chip design company. “They wanted to transform themselves from a services company to a product company and since I had a strong background in Electronic Design Automation (EDA), I got the job.” The team spanned across the US and Jerusalem with Naeem frequently commuting to Jerusalem. “I sold off the pieces of the company that were not relevant, built a new team, raised $10 million of new capital from VCs and restructured the company as a product company. Here again, the lesson learned was managing remote teams and earning the confidence of new people.” As expected, once the transformation was complete and Naeem had worked his magic, they wanted an Israeli CEO who was physically closer to the team, and off Naeem went again.

By this time, Naeem had the experience of a few companies under his belt and joined a Texas-based venture-backed company called Pyxis Technology in 2005. The three founders from IBM had built a prototype and approached Naeem to help them scale up. He replaced the founding CEO and quickly had to earn the trust of a team who, let’s say, were fonder of their founding CEO. “Earning their trust was a big step and a great challenge, especially since I was commuting from California to Texas every alternate week,” he recalls. But he raised $9.5 million in new money from VCs, transformed the company after which a member from the Board took over the leadership role. “Remote CEOs aren’t good for the startup company in the long-run,” explains Naeem.

When the ride at Pyxis Technology came to an end in 2007, Naeem did some more soul-searching. He had run three companies and was looking for something that would continue to be meaningful. “I made a matrix: one axis had all my strengths and the other axis listed all the things I enjoyed doing.” Naeem was good at explaining things and presenting ideas to people and he enjoy traveling and talking to people from different cultures. After studying this matrix, a Eureka moment happened: “I could be a traveling professor!” That job would have been perfect except for one minor detail: he first needed to be a professor.

“Once you have clarity of what you want to do, you start seeing the doors in the walls. If not, then you’ll keep walking past them,” he laughs. Through a quick chat with Haseeb Budhani at Idris Kothari’s home, Naeem learned about an entrepreneurship class at the Haas Business School in Berkeley. Professors invited seasoned entrepreneurs to be‘class mentors’ who could advise students on their projects. He spoke to the professor, Jack Fuchs and was invited to join the program. As with all the things Naeem does at full throttle, he joined the program and began mentoring not just the 3 teams assigned to him but all 12 teams… simultaneously! He was upgraded from class mentor to co-instructor after two years. A few years later, he was invited to design and teach his own course. “I took three years to write five books all while consulting, speaking and teaching. I started going to Pakistan thrice a year teaching at LUMS, NUST, UET and other places and the US State Department began flying me around to give lectures in Brazil, Turkey, Columbia, India.” Naeem Zafar had become the traveling professor he envisioned himself to be.

The Byte Bug Bit

There is always a turning point; the point you realize that you got the entrepreneurship bug. For Naeem, that point was right after Quickturn. He realized the value he was able to make creating a company where he could gauge the impact and help shape the direction. “It was a lot more fun than working in a large company where you’re being small and myopic – you don’t know what the impact is in the larger scheme of things.”

In a small company, you can see the impact you’ve had on the organization’s revenue, on the people and on your customers. “Seeing that reaction and being part of something so much bigger than yourself brings a great deal of satisfaction. That’s what makes entrepreneurship so exciting. The satisfaction of seeing how you made a difference with something you built.”

But would he have had this much exposure had he stayed back in Pakistan? “Maybe not at the same pace or magnitude and scale, but I think things would have been exciting. I see evidence of this when I see my friends who have created businesses in Pakistan.”

A lot of the ingredients of success reside within your ecosystem, your role models and the opportunities presented to you. “It doesn’t matter where you are. At the end of the day, it’s the innate ability to develop a strong work ethic and make the most from those opportunities.”Naeem built his work ethic while he was still in Pakistan – it was merely reinforced when he started work in the US. “Even if you throw me in the Gobi Desert, I will have a business up and running in three months, selling something to the locals. I have been through so many situations, I am quite innovative with the resources I have around me.”

What is the measure of success for Naeem? For many, it is defined in terms of making money. “My metric,” he confesses, “is whether or not I knew more smart people at the conclusion than at the start of a company. In that way, all my companies were successful.”

A Perfect Landing in 999 Days

Mobility is hot in enterprise computing. Security in the mobile space is even bigger. Solving the problem of how employees can be securely connected to their workplace through a mobile device is something a handful of companies have been working on.  After all, with the power of mobility, you should be able to contribute to the workplace regardless of your physical, geographic location. “The promise of the mobility revolution has been around since the Internet first came. The security aspects have been the challenge,” explains Naeem.

Bitzer, Naeem’s most recent startup, developed a mobile security solution that puts all corporate data in a virtual secure container within your smartphone or tablet. “When you log into the container, you have access to your work files and applications. We think that this will have a profound impact on how people work in the future and how much more productive they will be.” Naeem gives the example of a doctor who, for example, can look at a patient’s file while he is still at lunch, away from the hospital, without compromising privacy. “There isn’t a wait or a backlog. Just because you’re physically away from the office doesn’t mean decisions and actions cannot be real-time.”

Naeem hooked up with an Enterprise Architect Ali Ahmed in 2010 and started this company named Bitzer Mobile. One of the few startups in the BYOD (Bring Your Own Device) space, Bitzer started off with a venture backing of $6 million with a team of 40 people spanning around the world; US, Canada, Pakistan, India and the UK. The roadmap of the company, according to Naeem, was to grow and become a significant player in the BYOD space. “It’s a hot market and several acquisitions will take place and there are lots of customers in the space already. The likes of IBM, Oracle, SAP, Citrix – they need this technology under their belt because of the customers they serve,” explains Naeem.

In fact, Bitzer Mobile was so hot they were acquired by Oracle in November 2013 on the 999th day of their operations. They now operate within and will exist as part of Oracle’s Fusion Middleware products, and expected to be a core component to its mobile security strategy. According to the announcement on the website, Oracle and Bitzer Mobile are ‘expected to provide organizations with a comprehensive solution to further manage security of enterprise information held on personal and company-owned mobile devices. According to Naeem’s tweet after the acquisition, “The Journey took 999 days exactly and came down with a perfect landing – happiness at Bitzer Mobile.”

About Pakistan

As with most things, Naeem’s optimism shines through the topic of Pakistan. “I am hopeful about the country despite all the challenges.” And exuberantly, he explains why:

A Smart and Connected Population

Look ahead to 2050 and Pakistan will be in a unique position where it will have a large English speaking, Internet-savvy population that can be exported. “This can be very well aligned to what the world will be like in the next 30-40 years, and it’s not something that will be very obvious for the next 10, even 20 years.  Since the population in the Western countries will be in serious decline, they will be competing to import a smart labor force.”

Access to Online

Naeem finds that the youth has no historical baggage (unlike their parents and grandparents) and is eager to learn. “Add to that, the low cost of Internet access, and the impact it has caused in the last 10-years is huge. More than 100,000 new businesses sprung up because of more affordable Internet access since 2000 in Pakistan. This connects with another trend called EdTech: Last year alone, five online universities went live offering courses to students around the world. So the content available online, coupled with global awareness and social interactivity, is reason for hope that good free education can now be available to students in Pakistan – starting with www.KhanAcademy.org.”

The Involvement of the Private Sector

Naeem sees a shift in the attitude of the private sector where they are stepping in to provide services which the government is unable to. “Just look how resilient the people are. Despite all the challenges, the economy still grows at 3-4% for the last several years in Pakistan- imagine what could happen if ecosystem and infrastructure was in place!”

The Future of the World

For someone who has spent so much time with students, his insight into what makes the youngsters tick, is important. “In the US,” he begins, “students question the status quo. They aren’t frightened to question the norm so they can enhance their own understanding. Here, the teacher’s role is to provoke thinking and its okay for students to challenge them. That’s not always the case in other parts of the world I have taught.”

Yes, the students in the US will be more inspired because they have the means to do those things. “They have access to the ecosystem, capital, talent, infrastructure and more. But people in other countries usually have more hunger to do what you teach them, so they overcome the lack of resources. I’d equate it as the lack of passion and desire versus the lack of resources.”

Naeem teaches entrepreneurship and innovation. “It’s a way of looking at things, enabled to create opportunity with very little resource. The concepts are applicable everywhere. The examples would be different and contextually relevant.”

A CEO’s life is very turbulent where there are more crises than victories and you learn to appreciate both. “I feel I am still building the foundation for my greatest contribution. I have absorbed much from my surroundings in my first 45 years and I have only been putting the pieces together.  Now I think I am wise enough to see what is possible.”

We live in a time when everything is being re-engineered and transformed. “There are going to be some amazing opportunities coming up in the years ahead. Look at Big Data and Analytics, Education, Healthcare, 3D printing; everything we know is going to go through innovation. Am I in a position to take advantage of the opportunities based on all my experiences? Only time will tell.”

The peaks and the valleys are all part of the game and, according to Naeem, you have to extract the learning, sleep it off and move on. After all, it’s not the win, but how you win that matters.

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