The Angel Investor: Asghar Abubaker


Mohammad Asghar Abubaker applied to universities in the United States whilst applying to NED in 1967. It was the turbulent time in General Ayub Khan’s era and Asghar wanted a backup incase he was unable to complete his Undergraduate degree in Electrical Engineering from Pakistan. Things somewhat stabilized and he graduated in 1970. He went to UCLA for his Masters and has been in the California area since.

He was the first to leave the nest and used his technical knowledge and the vast business management experience, to manage multi-million dollar funds at Intel Capital.  Intel was only the second job he ever did and he there for 24 years, working his way across various functions of the company. Even after retirement, he continued to evaluate startups for a Venture Capital firm until he became an Angel Investor himself.

His love for engineering and business was further nurtured during his 24 years at Intel and positioned him where he is today. He works with startups and works closely with youngsters to put the ‘business’ into their ideas. “There is so much competition out there today, yet a startup that can communicate their ideas to the market will translate from a company to a business.”

Asghar has always loved driving fast cars and motorbikes and when he arrived at UCLA, he fell in love with Los Angeles. It was the first time he saw the wide and open freeway and had no idea how symbolic this feeling of liberation was – he was in a country in which he would build the rest of his life.

Humble Beginnings

Originally from Junagadh, his father ran an import-exports business and moved to Karachi in 1944, before partition. Though he would have liked Asghar to join him in the family business, Asghar’s interest in engineering led him down a different path. He had an excellent teacher for Physics and Chemistry in the 9th grade and he was hooked. He fell in love with the transistor radio his teacher had in class, and spent all his pocket money on buying transistors from Regal Cinema to make his own radio set. He would go through the electronic magazines at the US Embassy and find blueprints to build the sets.  This is also where his appreciation for Urdu classical music stems from.

He enjoyed collecting stamps, a hobby that began because his father engaged in a lot of international correspondence. Asghar grew up doing all the things a young boy in Karachi did: street cricket, playing carem, and cards and pulling stunts in classrooms when teachers were not teaching well enough. He was always a fast learner and a brilliant multi-tasker. Drop him in any situation and he would figure a way out. His life is one that is rich in experience but based on strong basic values and lessons. “My father always said to live within our means because you don’t know what the future holds for you.”

His father could only support him through a few semesters during UCLA, so he worked 3 jobs just to able to pay the tuition. And he didn’t shy away from the doing the odd jobs at the Laundromat or being a helper in a Vice Chancellors office making tea and coffee. “We’ve all done jobs like these just for the sake of our education. We had our priorities in order.”

Asghar was in the US with a newly completed Masters, with a thesis in Semiconductor Physics, a Green Card and no job in sight.The Vietnam War was just ending and because Los Angeles mostly had Defense companies, for which a US citizenship was a requirement, jobs were hard to come by. He had heard about the Bay Area and so began looking at companies there and landed a job at Fairchild, the mothership of the Semiconductor areas in this area. “They made transistors in those days – similar to the transistors I worked with back home. (He) started in the Silicon Processing and then joined the Controller Chip testing group; from the processing to the hardware side.”

Intel was the up and coming company and it took Asghar two attempts to get in. “I got in at a more junior position than I was at, with Fairchild, but within three months, I got promoted to the Supervisor position because my boss left.” Despite this being a time when the Valley was buzzing and company hopping was the norm, Asghar stayed at Intel for 24 years, working his way up through various ranks. He was one of the first engineers to work on the 8080 chip that eventually went into amateur PC.  Having worked for at Intel for  5-6 years, he moved on to became the general manager of the Static RAM business group. “It was a significantly smaller group that generated about $50 million in revenue and it was my task to wind up this business unit.” Asghar successfully ran the business with 20% net profit in a commodity business which was unheard of at that time.

Though Asghar was very good at engineering and number-crunching, his family business background helped him learn a lot about business management. “In the Valley, the kind of business and management I saw was quite different from what I had experienced in Karachi, but at least it set my foundations right.”

In order to run business units, Intel needed someone who had strong engineering expertise and exceptional business management skills, and Asghar had both. Intel knew and trusted Asghar’s ‘engineering management’ capabilities in how he managed the teams and got what needed to be done. “After the initial days of doing ‘core engineering’, I got into the management side of things.”

Intel had already established itself in the Microprocessor space, and was on the look out to start business units that would add value to its overall business. Once more, Asghar stepped up to start a PLD, Programmer Logic Devices, business within Intel. They built the business from the ground up, re-located resources from within the company and made it profitable within 3 years. Unfortunately Intel needed to pull all its resources into its main business and couldnot share the resources, so, sold off this newly successful unit..

Asghar learned a lot about management at Intel, particularly from the founding CEO, Andy Grove. “Intel was extremely hectic but disciplined, which is what made it be so efficient.” Asghar considered Andy a role model and emulated much of what he learned. He recalls a tactic Andy used during orientation once as a disciplinary measure. “All the new hires gathered for the orientation and after about 10 minutes, he locked the door. Now imagine if you were the new guy stuck on the outside and unable to attend the orientation session – you would never be late again.”

Time management and efficiency made up the core culture at Intel when Asghar was there, and that’s something that has helped him throughout his life. “These are building blocks that make people successful”, says Asghar.

When Andy Grove left Intel in 1992, Asghar decided to get more into the non engineering side of things. Intel had a group that used to invest in small companies. The idea of this group was to fund companies that were the application development and other areas of the ecosystem that would ultimately result in increasing the demand for the PC. Asghar couldn’t join the group because they were just in the infancy stage, but through a contact in the Legal Council, he joined the Legal Department. Asghar built an Engineering Department within the Legal Department who would look at products that were infringing Intel’s patents, negotiate terms of royalty and in some cases, develop the lawsuits against those companies. For Intel to build an airtight case, the company had to be infringing not one, but at least two of the giant’s patents. Asghar led the charge on a lot of companies but one stands out even today.

“There was a Taiwanese company that manufactured PC Memory called UMC and had started to replicate copies of the Intel Microprocessor. But because they didn’t sell to the US market, we went and collected evidence as to which parts of the world they were selling in and sued them in 4 jurisdictions: Britain, Germany, Singapore and Hong Kong.” They chose these countries for efficiency of justice: three of these countries were Commonwealth countries and the same laws were applicable in each, which meant if they won in one country, they won in all. “We chose Germany because it had a very streamlined and swift legal system.” Intel won the suit within 6 months of filing causing UMC to not only pay their dues, but also changed their business model from product development to foundry, making use of the Fab they had. “Ten years later when Intel needed more capacity, they actually went back and used UMC’s Fab.”

By this time Asghar went back to the Venture Capital Group, Intel Capital, which had started to gain some traction. Asghar managed a $300-400mn portfolio of the group’s total VC $3 billion fund. Intel Capital was one of the first to invest in companies like Blackberry. But DSP Communication and Marvell Technology, were two deals that Asghar had helped identify and helped to broker. “DSP Communication was in the cell phone chip manufacturing space, an area Intel was really getting after since the time they felt the ‘Brick’ was part of an emerging market. That particular deal was valued it about $1.6 billion.”

Evaluating a company with $1.6 billion at stake was cause for a lot of stress, but the result was very satisfying. “I remember the negotiations went on till 3am and we had to release the announcement before daylight and lock the deal on public record. That particular one was exciting in many ways.”

With small companies, the level of excitement is completely new. Take the case of Marvell. What they were doing was so new that their technology needed to be evaluated as well as their business side. “In the case of DSP, they were a public company and already had competitors, so we were well aware of what the technology was. We did most of the due diligence on the business side.”

The 90’s were a golden period for companies like Intel, Microsoft and Cisco. “The amounts by which their stocks increased, very few of the companies today have experienced wealth like it. From 1987 until 1999, Intel’s stock would double on average every 30 months, increasing its value more than 20 times in less than 10 years. The rule for retirement was: if your age plus your service time is 75, then you get access to additional benefits. He was 52 and had worked at Intel for 24 years, so he cashed in his 20 cent stock options at $71 per share and left.

“The business culture at companies like Intel”, explains Asghar, “has always been incredible. Which business in the world will let even the most junior employees have stock options? They made millionaires and billionaires.”

Venturing the Future

Asghar wanted to stay in the field of Venture Capital funding and joined Horizon Ventures and set up his own Angel Investment fund called K2 Ventures. At Horizon, Asghar would identify, evaluate and due diligence of new startups and bring the qualified companies onto the firms portfolio. They funded companies like Palm, Right90, and PhotonDynamics.

For startups, Asghar looked closely at the people more than anything else. “If the startup is working in a completely new space and has generated no revenue, the VC has to be sure that the team will be able to come through.” Founders who are very possessive about their company will probably not be able to attract as much outside investment, than founders who are willing to tap into the VCs management expertise. “Startups know their technology, but they probably do not know about the market and lack the experience to know how to scale up. And that’s why at times, the VC will either bring in seasoned management or ensure senior representation on their Board.”

He recalls the case a startup that had developed a new technology based on the concept of PLD Systems. “Their product was half the price and more economical than what was available in the market. Though the idea was really good, the founders were engineers with no business experience.” After mulling over the decision to invest, the Managing Partner at Horizon told Mohammad that they would invest if he would become their CEO for 6 months. Mohammad joined and strengthened the business, created a syndicate of investors and raised almost $2 million. 16 months later, Mohammad was steering the company, helped raise $9 million in their second round of funding and left.

The point Asghar makes is this: startups must have a business roadmap. It is their idea and technology prowess is what makes them unique; the business is what allows them to grow. In Asghar’s experience, more than half the startups remain small and just go out of business. “The balance between technology and business must exist in order to let a company survive the test of time.”

Asghar’s passion today is to keep the Pakistani culture alive, which is why he and fellow engineer Farrukh Shah Khan, run the Pak American Cultural Center. The idea here was to have an active physical location that could share the culture of Pakistan through the community. “It’s really a little Pakistan at the heart of the Valley. We host weekly programs, everything from celebrating cultural days to Urdu poetry readings. The PACC’s mission is to promote the real image of Pakistan and that’s what we do.”

An interesting project that Pakistani American Culture Center of California got behind was the production of a documentary film entitled, ‘The Other Face of Pakistan’ is a documentary to showcase the side of Pakistan that the world does not know about. It is currently making the rounds across the Web. “It’s important for people to know that Pakistan is as modern and progressive as any other country, with its share of problems. That’s why we created this video. There are many stories of people like Shahid Khan, the 122nd richest man in America. Or the countless stories of technology entrepreneurs right here in the Valley who have made incredible contributions to the world as we know it today.

If investment into the infrastructure of technology foundations would have been made back in the 70s and even the 80s, Asghar thinks Pakistan would have been a different country. “If the Army or the Defense Ministry would have set up, let’s say, Fabs back then, they could have not only produced the components that had to be smuggled in for years, they would have also had an amazingly well-trained generation of engineers.”

According to Asghar, the curriculum of what is being taught in schools and colleges hasn’t changed much over the years. “Children are the hope of the future of Pakistan.” Asghar and a group of technology entrepreneurs actively support non-profits like TCF and DIL, and have setup a scholarship for NED called Koshish. “Tuition is a big challenge for many bright students and Koshish, which means ‘effort’ in Urdu, was our way of making sure that the most deserving students have their chance to shine at NED. Our investing in the scholarship is one way we keep reminding ourselves of the hope we have for Pakistan.”

If Asghar could, he could set up a department in his alma mater, he would do so in the fields of Bioengineering in the Medical arena and Wireless Technologies. “Countries that have growing ageing populations will be the biggest customers of Bioengineering. With the massive number of young people in Pakistan, there is a huge workforce that can actually be working to engineer innovation and service this area, in a significant way. Wireless technology is what the future will be, what with wearable devices and technology interfacing with the environment.” These departments will remain applicable and ‘hot’ for at least the next 30 years, which is the longevity Asghar thinks an educational institution should have.

Asghar also think teachers are part of the problem now. I don’t hear of students speaking fondly of their teachers or if a teacher inspired a student to shape a student over the years. “If I can have anyone today talk about one of their teachers as fondly as I remember mine, I will be very happy. But I just don’t see the connection happening anymore.”

“But solutions to all problems don’t always reside in complex technology.” And at this point, Asghar shares a joke. “There was an automated soap factory in Japan where the soaps would get packaged and boxed. But because this entire process was automated, sometimes a soap would not make it into the wrapper and get missed in the entire process. The engineers put up an infrared machine costing $60,000, while the soap factory owner in Ahmedabad solved the same problem by setting up a high-speed pedestal fan on the assembly line, which would whisk the empty wrapper away. The solution was the same but required nothing more than a little innovation.”

While students in Pakistan may complain of limited resources, it’s the same lack of resources that helps to nurture their ability to think out of the box, not solely depend on technology tools and hone their innovation skills. “After all, necessity is the mother of invention. That’s why our engineers are so much better than others who come from the other regions.”

From an investment perspective, Angel or otherwise, the ecosystem in Pakistan is completely missing. “The business psyche is so different and the investment environment and legal system is just not investor-friendly. For people to become investors, you need technology people. People who have the vision to build something that might be huge 10 years down the line. But the average maturation cycle for such startups needs to be about 7 years.” Asghar feels the investor community just doesn’t have that kind of patience nor do they have the tolerance for failure. “Until that changes, the investment culture for technology businesses will not grow.”

Despite doing everything in a high-pressure environment, Asghar has one philosophy in life: Time is always in your control. “I can manage my 24 hour day if I know what my priorities are. My life is my first priority, because if I am not here, I am no good to anyone. Second is my family and third is my job. It all comes back to everything I learned at Intel. There is a time for everything and you have to give everything the focus and respect it deserves.”

Pakistan is a very small part of the sky, something he realized only after he started at UCLA. If someone had asked him 5 decades ago if he could imagine his life today, he would have just laughed.

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