M&A: Selling your business to the right company, with Umberto Malesci, CEO and Co-founder of Fluidmesh

Episode summary

Umberto shares his motivation to build a successful business leading to its acquisition by Cisco

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Episode transcript

Philipp: Welcome, everyone, to another episode of In Your Best Interest, your personal finance and entrepreneurship podcast. I’m your host Philipp Muedder. Today I’m looking forward to having a fantastic conversation with an experienced entrepreneur about what it takes to build a successful business that recently got acquired by a large multinational.

Let's please all welcome Umberto Malesci. Umberto has been a co-founder and CEO of Fluidmesh networks, a wireless technology company headquartered in Brooklyn, New York with customers in more than 25 different countries. Fluidmesh was acquired by Cisco in July 2020, and Umberto currently leads the integration of Fluidmesh within Cisco.

Moreover, Umberto has been serving on the board of the Italian Institute of Technology since 2014. Umberto Malesci has been the vice-chairman of AvrioRMS Group and Pantascene, two technology companies acquired by Hitachi in 2014. Umberto obtained a Bachelor of Science and a Master of Engineering from the Massachusetts Institute of Technology.

During his career, he also worked as a research assistant at MIT Computer Science, in an artificial intelligence laboratory, and as a management consultant [02:00] at McKinsey & Co. Umberto Malesci authored multiple academic publications in the field of wireless networking and is a co-inventor in seven international patent and patent applications.

Umberto Malesci is a passionate aviator and sailor and the proud father of two boys: A six-year-old one and a one-year-old one. Umberto, that's a long list of accomplishments; welcome on our podcast.

Umberto: Thank you, Philipp.

Philipp: Very good; there's lots of stuff that I want to ask you about, just by going through the bio. But again, we really appreciate having you on here. I think for our listeners, we are both a personal finance podcast, as well as an entrepreneurship podcast. And we had a couple of entrepreneurs on our show already before. One is doing a microloan platform, a digital one here in Southeast Asia, and another one is doing a legal tech company.

But they're both still working at these companies; they haven't been to the exit stage yet. So, it's very exciting to hear from someone that actually exited the business before, so thank you for being with us.

And before we get into actually the business side of things, I saw you went to MIT, both for your bachelor’s as well as you for your masters. But before we even go there, how was life growing up for Umberto? I know you're from Italy, so mostly in Europe spent before going to the US for school?

Umberto: Yes, correct. I grew up in Florence in Italy, and I went there until the end of high school. It was until the end of high school, and then I decided towards the end of my high school program that I wanted to study computer science.

And I wanted to try to do it in the US. So, I had this idea of going to the US for college and then studying computer science. And so [04:00] essentially, I applied to a bunch of different schools in the US, and that was the beginning of the journey outside of Italy.

Philipp: Yes, absolutely. So that's a big step, right? Going from Florence, Italy. Trying to go study computer science in the US in college. What made you interested in computer science? And then obviously, I went to high school in the US for one year as an exchange student; I remember everyone taking the SATs, right? What's it like when you come from Italy?

Umberto: Very complex, actually, very complex, because it's a completely different system and particularly at the time, there was not much know-how in my community in Florence who knew about what the process was like to get into an American university.

And so, there was quite a bit of learning that I had to do, and actually, my parents had been very supportive at the time, and we were able to figure it out. I applied to a bunch of different schools. And initially, I got accepted to USC, so I’ve been a couple of years in LA. Because I applied to MIT back when I was in high school, but I didn't get accepted right away, and so I went to USC. Then in the meantime, my brother, Cosimo, got accepted at MIT the following year.

And so, I decided to reapply and try to transfer. And so, after I got accepted that time, and so after a couple of years in LA, I moved on to the east coast, and I got into MIT for my bachelors.

Philipp: Yes, you didn't give up, right? So, you still made it work.

Umberto: Yes, absolutely. You never have to give up; you have to keep trying. Sooner or later, you know.

Philipp: Yes, absolutely. And then so now you're at MIT, with your brother together, studying the same thing or did you study something different?

Umberto: No. Cosimo did ocean engineering [06:00] and naval architecture, so completely different topics and majors.

Philipp: Yes. And then you did your bachelor's, did you go to work outside after the bachelor’s? Or did you go straight for your master’s?

Umberto: No, I went straight to master’s. I did some internship programs in the meantime, but nothing extended. Because MIT has a program for its own undergrad students to have an expedited master’s program. It's a different track for internal students than for the students who applied for a master's from the outside. And so, I decided just to use this accelerated program.

Philipp: No, absolutely, it's great. So, you've done your master’s, now you go straight, you go actually go work somewhere? Or did you immediately say, hey, entrepreneurship is for me, let me go out there?

Umberto: So actually, I started Fluidmesh while I was doing my master’s at MIT.

Philipp: Oh, that early, okay, wow.

Umberto: Yes, very early. Because now there is a big push at MIT to start companies. They start telling you that if you put together all the companies who have been started by former student alumni of MIT together, you would create the 24th economic power of the world. You would have a GDP that is higher than Denmark.

And so, with this approach, they really push a lot to start companies. They make you meet many successful entrepreneurs, many people who have been successful, also many people who failed a bunch of times, but they really push you very hard. But actually, we started Fluidmesh not because we had this big idea or this big dream of being an entrepreneur and starting a venture company.

We just wanted to participate in the annual business plan competition at MIT. [08:00] There's an annual business plan competition that back then was called 50k, because the first award, the first price was $50,000. Now, it's called 100k because they give you twice as much.

But we wanted to have the experience to put together a business plan and apply to the business plan competition. So that was really the initial goal. So, we came out with an idea just to put together the business plan; it wasn't that we were really seeking to start a business.

Philipp: But it's great, right? So, they do instil quite a lot of entrepreneurship attitude already to every one of the students that are working, going to school there.

Umberto: Absolutely, they definitely do that, and they definitely support you through the process because they give you the ability to meet, to get mentors. To get an understanding on how to do it. And so that's definitely the reason why we did it.

Philipp: Yes, and you won?

Umberto: No, actually, we got kicked out at the first round in the business plan competition. The interesting story is that the competition didn't go well at all, because our idea and our business plan, because the judges, the committee that is judging business plans, they didn't like it at all. So, it's sort of a tournament.

So, you have the first round, second round, semifinals, finals, and we got kicked out of the first round, so it didn't go very well. But while we were putting together the business plan through the process, we had the opportunity to interview a bunch of potential customers of this technology we wanted to market.

And these potential customers, these prospects, were very excited about what we had in mind. And so that gave us a lot of energy and all the motivation to say okay, ‘Let's go; the business plan competition didn't go well, but let's keep doing it anyhow for a few months; [10:00] let's spend the summer on it and see if we can build something for real.’

And so, we started from there, you know, okay, let's spend three months, and then let's spend another three months, and then let's spend another six months. And then, after 15 years, we sold the business to Cisco.

Philipp: Yes, there's a lot to be talked about in between, right? But that's an amazing story, though. So, you did this with how many people? How many people were starting the company?

Umberto: So, we were four founders. It was my brother, myself, and then two friends of ours from Italy. So interestingly enough, Cosimo and I were at MIT, but the best guys we found to start a business together were two old friends of ours from Italy, from the Polytechnic of Milan.

Philipp: That's awesome. That was four friends actually in the end?

Umberto: Yes.

Philipp: That's amazing. So, before I want to get more into this, actually, and kind of obviously the acquisition and the post-acquisition process. But before I do that, can you maybe tell, it might be very technical, but like a one-minute elevator pitch. Tell us what Fluidmesh is all about.

Umberto: Sure. Fluidmesh manufactures wireless products that are used for mission-critical applications. We've been very successful in the public safety sectors when you have a large city, and you need to put a bunch of cameras spread around the city, for example. We've been working with the largest cities in the world and the most advanced police departments in the world to deploy public safety systems across large cities.

That's a big area of our success, where we have a strong leadership position in the specific market. Another area that brought us a lot of business particularly the past 5 to 6 years are mobile networks. And with mobile networks, I mean networks where you have vehicles, very often autonomous vehicles [12:00] and robots moving around, and they require constant connectivity.

So, automation and autonomous vehicles are becoming more and more reality, particularly in heavy industries. If you take rail, if you take mining, if you take ports, these systems are getting more and more autonomous. And so wireless technology is a critical enabler for this level of automation.

And so, the need for reliable wireless connectivity has brought us a lot of business because we had a specific technology based on our IP and based on our patents that is able to perform high-speed mobility very effectively. So, without those disconnections that you typically experience with standard Wi-Fi or with cellular technology when you're moving around.

Philipp: Yes, amazing. And you started this in 2005, right?

Umberto: Yes, we started in 2005.

Philipp: Very early on, okay. It's super interesting; we talked about what it's about. We kind of saw what the inspiration for the business was. We had the competition at MIT. So, let's go a little bit more into some of the challenges you faced while building your business; what are some of the key challenges that you remember going through?

Umberto: So, I would say that challenge number one in any business is finding the first customer. The first customer is very hard because nobody wants to be the first customer. So, I remember very well how long it took us to get the first customer because everybody can be very interested in what you want to sell them.

But as soon as you tell them that he or she is the first, they were never going to trust you. Particularly if in the B2B segment, like where we were searching for opportunities in the public sector space, where we'll be selling our technology into. So, finding the first is very challenging.

We've been very persistent until we found one customer with a small city in Italy. They probably just forgot to ask us [14:00] who had bought that prior to them.

Philipp: Which is normally a question you get, right? Always.

Umberto: Yes, exactly. And as soon as you say no one, you're out. And so, you need to be persistent and lucky until there is someone who forgets the question and so they just place the purchase order.

Philipp: That's so interesting. So, getting the first one is one of the challenges, and what other challenges did you face when you kind of started growing as well, right?

Umberto: Yes. I would say hiring people has been the other biggest challenge that has been constant. We knew the first customer was a challenge back in 2005-2006, but hiring has been, retaining the right people has been a challenge across the entire life of the company. It's hard to find people; there is a lot of competition for talent.

It's hard to be the best of the best so the people want to join you. So, we had, having the credibility to be an employer, it's a big challenge. And it really depends on the geography and where you work. We've been hiring mostly in the US and Italy; these are the two areas where we've been hiring.

Very different cultures, there are big cultural differences in terms of work culture in the two countries. The challenge in Italy is having the credibility to be an employer. People want to work for you, they want job security very often, and in a small company, a small start-up doesn't offer that type of stability for people. And so, at the beginning, it's very hard to be credible as an employer.

In the US, the challenges when you compete with the other start-ups is being the coolest. Because there is a community of employees who go from start-ups to start-ups, and unless you are always you know the best, they're going to leave you for someone that is the new shiny object. And so that's another challenge.

Philipp: No, absolutely. What about, I was just thinking about it. [16:00] Because you were telling me two other co-founders were in Italy, you and your brother were in the US, one of the challenges is hiring. But then also, how do you run a company in these two countries simultaneously? How did you guys split up the responsibilities?

Umberto: That has been another complex piece in our company history. Because when you are a multinational company with two different locations so far apart, it's hard to run the business. The three founders, initially the way we split, is that three of us focus on selling the product, and one focuses more on the development of the product. And that's how we initially split responsibilities.

But it's been a constant challenge to keep the two offices in sync. Italy has always been the office that was developing the technology, where we kept most of the R&D, the product development. And the US was mostly the office that was selling the product because most of our customers historically have been based in North America.

But communication has been a problem when particularly you're a small company. And so, you don't have all those processes and internal machinery that makes communication more effective like large organisations have.

Philipp: Yes. So, what was one of the ways you overcome that? Like what was working for you guys?

Umberto: So, at the beginning, when the team was very small, it wasn't a major issue. Because when you are four, five, six, seven people, below ten, you know the communication, even if you are widespread into different locations, communication was really easy on phones, Internet everything. So, the challenge I felt, the maximum challenge when we were between 10 and 30-40.

So, in that, you're not that big to really have a structure to have company meetings, to have middle management. [18:00] But you're still very small. So that was when things were sort of going a little bit in random directions all the time. And then, over the years, we try to create a structure. So that clearly you can create communication opportunities, where different functions, organisation are sharing information with different people. And the other challenge was cultural; in cultural, I mean creating a single company culture.

You have essentially a team in Italy, a team in the US, and a bunch of these people never meet. And so, the risk is that you might end up creating two companies with two different completely different cultures. And so over the years, we realised that we had to really make an effort to try to build one single company culture across all the different offices.

Philipp: Yes. I think that it's super important. I’ve seen it too, and at StashAway, we've grown quite a lot right now, going into different countries as well, and we're placing a lot of emphasis on this. Because especially like you said, also the selling team is in the US mostly, the product team and R&D is in Italy, they still need to speak, right?

And you still need to have an open channel of conversation. So that's super important; I totally understand that. So, from the initial start, you get your first customer in a small municipality in Italy. Did you get any angel investors into the business? Or was it all done by the four of you to start with?

Umberto: So, at the beginning, it was an only by the four of us. Then we got a bunch of grants from various government-related agencies in Italy that they typically fund early-stage R&D projects.

Philipp: Do they take any stakes, these grants?

Umberto: No, they don't. Sometimes there are loans that you have to pay back over a period of time; sometimes, they are grants [20:00] that you don't have to pay back. So that little cash we got initially was helpful. We were also fortunate that our product, we were able to sell our product with a very good margin. So, every time we were selling a project, thousands of dollars of gross profits.

Philipp: Okay, right from the beginning?

Umberto: Right from the beginning.

Philipp: Oh, wow, okay.

Umberto: So, the product was expensive and very profitable. And so that was cash that was coming in to pay the expenses initially as well.

Philipp: So, when you like build it organically almost the whole business? 

Umberto: Yes, it was. The beginning was a very frugal company, very efficient. And a little bit of cash from us, a little bit of cash from these government grants, and then cash coming from the customers on the initial project that funded the initial development of the company.

Philipp: So then, well, let's fast forward a little bit because now we get to the point of the acquisition piece, which we really want to talk about today is selling a business and what it takes, right? So, we fast forward from 2015 to probably, I’m not going to 2020 when the sale went through; it probably started earlier on than that. But let's say 2018, 2019, or somewhere like this; you can correct me later. But how did you know that it was time to sell?

Umberto: You never know. You can't know if it's time to sell. So, let me add a little bit of colour. So, in 2011, so 6 to 7 years after we started the business, two private equity firms bought a stake in the business. There was a big change in the company because we went from a company owned by the four founders who were running the business to a company with institutional investors in.

And with these investors from Chicago, we've been growing the company essentially for almost ten years. Then we got to a point where the company has been very successful in entering these markets [22:00] that involve automation and robotics, and pharmaceuticals. And many large companies we started building relationships with very large multi billion-dollar companies, including Cisco.

So, Cisco has been a partner for Fluidmesh 4 to 5 years prior to the acquisition. So, we had the opportunity to know each other very well, we had the opportunity to work together. And it got to a point where they realised that it made sense to own the technology and the intellectual property and the team that we had, that the kind of partnership we had in place was not enough for them, and they wanted to do something more serious and more long-term.

And we realised the combination made a lot of sense, because well, we were the typical technology company that developed an amazing niche product. But is one component in a large system. And customers and clients in this space; what they want is a solution. A solution involves many different products. We were selling one product, and Cisco was selling a bunch of other products together with us, many of these projects into many of our customers.

And so now, having everything under one company makes out of natural sense from a business perspective, so that's what drives many of these acquisitions. Many of these start-ups develop one specific component that is a missing piece into a larger portfolio.

And then their large partner that makes the rest, the other 80% to 90%of the solution, realises that it makes sense to acquire them. So, I would say a very natural and common process.

Philipp: Very natural and common, and it's a great illustration for the listeners there. So then, what was the actual process of selling the business like? Like how did it all start, like the first conversations? Did they again come very naturally? Or is there like a real process [24:00] to it that you can maybe share a little bit for the listener?

Umberto: Yes. What I would say is that it's important to realise that when you are a small tech company like we were or start-up, it's harder to get into an M&A transaction without long-term relationships in place. And so, at least, this is one of the lessons learned by me of the process.

So, Cisco bought us, but we had a long-term relationship with them. We knew many of the people that were involved in the transaction for many years prior to the acquisition. And so those relationships are very important, that makes these transactions possible. And so, it's hard.

So, I think I’ve seen transactions happening where it's different, where you get approached by someone who you never work with, they want to buy the business, and in a few months, you have a deal. But I would say most commonly; the most common setup is that it's a transition of an existing relationship that turns into something different, into a full acquisition.

Philipp: When you look back though now or like even other options that you might have, you know as a founder of a company, right? You also have the option of, hey, continuing to do it, especially if it's making a good amount of money; maybe you just want to keep it always. The other option is taking it public. Were those ever options that you had on your mind as well.

Umberto: Absolutely. We had those options open. Our company was very successful, very profitable and so we didn't have to sell. It was a decision that made sense for the shareholders because of all the details of the transactions that made a lot of sense. So, Cisco made a lot of sense because it was the right strategic partner for us. And that also made the founders very happy too.

And we knew, the other important piece [26:00] is that there is a human factor into this, it's not only purely finance. The human factor is if you're a founder, you want the technology, and the people or the team that you've been hiring and putting together over the years goes somewhere where they are able to make good use of that talent and that intellectual property in technology.

And Cisco is known to be an amazing acquirer. So, they really have a very fine-tuned practice in acquisition. We were, I believe, the 273rd acquisition that they've done in the history of the company. And they do between five to ten acquisitions per year, almost one per month. And so, they're very good at it, and they're very good with the people that they hire through acquisition.

And that was also a very strong motivation. Because if we were selling to someone who was going to very likely destroy everything that we've built, I’m not sure if the decision was to sell. Because as I said, we were not in the position that we had to sell, because we were running out of cash or something like that.

So, we had all the options available to us. But selling to a company that is so successful in acquiring, like Cisco, was great, was very appealing. And also, selling into a company where they fit, the strategic fit made a lot of sense.

Philipp: And also, for your existing employees like you just said, right? So, I think after 15 years of working together at some of them for a long time, right? That also has like this relationship that you want to look back and say, hey look, I took care of everyone, right as the owner?

Umberto: Absolutely, that they played an important factor in the decision making.

Philipp: So, Cisco is a great fit; you sold the company to Cisco overnight, [28:00] you now sold the company. To listeners, what are the options after the acquisition kind of? Do they make you stay on? Do you just pack your bags and leave? For people who are not used to selling a business, what's the process like?

Umberto: So, in the high-tech space where we play in, it's you stay on and usually stay on for a fairly long period of time. Because the reason why they buy you, and I mean Cisco or all the large acquirers in the Bay Area. Typically, they have very well-crafted programs to keep all the key talent on board.

Because a big portion of the reason why they buy your business is because of the talent. And so, this concept that you sell the business, and you go away, it might be true in other segments, other industries, but definitely, it's not true in tech. In tech, actually, it's pretty critical that you stay on in order to sell the business.

It's typically a requirement in the program that you commit to stay on, and the majority of your team stays on. So, it's not only the CEO or the founders; it's the entire team, they want to ensure that the team stays together because that's the value that they're paying for.

Philipp: Yes. So, you're still at Cisco right now, then?

Umberto: Absolutely, I’m at Cisco right now; I’m in charge of the integration of the business. Integrating a business like Fluidmesh into Cisco is not a 30-day process; it's a multi-year program. And Cisco has an entire team that is in charge of; I mean integration into their structure.

And what I do is I work with them every day with all the different functions of the company, of Fluidmesh and of Cisco, [30:00] to make sure all the different processes are integrated in an effective manner into the company.

That's a very interesting piece; I would say because I never had the opportunity in my career to see that portion of the M&A transaction. Because I had sold another business, but I didn't go with the business because it was more of a portfolio company that we sold to Hitachi.

And so, I’ve seen the M&A portion, but I didn't see the integration side later on. And so now it's for me the opportunity to see the integration that actually is where many M&A transactions fail, is because the integration is not correctly planned or executed.

Philipp: You hear that all the time, right? When people buy business, all of a sudden, they have to write them off after a year, especially the bigger companies when they're not doing a good job of integration, right?

Umberto: Exactly. It's very tricky, and I’ve noticed how a serial acquirer like Cisco bought more than 200 companies, how they build really a practice. They have really a team of full-time people dedicated to that, and how much these people are able to go over red tapes and resolve issues, thinking out of the box. Because it's very complex actually, it's more complex than what people think.

Philipp: Yes, this is great. And a US company is buying a US/Italian company. And you already said there were some, early on, that it was at first difficult to build one culture when you were still young. How has the process now been since the buying with the US parent company coming in to buy those pieces?

Umberto: Now, interestingly enough, Cisco is a US company, but it's a truly global company. They had hundreds and hundreds of employees in Italy, more than what we had, and they have employees everywhere. We had employees, I believe, in six or seven different jurisdictions at the [32:00] time of the acquisition.

And all those people were able to be hired by the local legal entity of Cisco, who has employees, tens, or hundreds of employees in every country in the world essentially. So being bought by such a large company, it's a company that is very engaged with employees, very careful in creating a global culture that is one culture for the entire organisation. They have amazing resources spent exactly in that direction.

And so, the onboarding of the employees who I think was a fantastic process, I think it was really best in class. I was extremely pleased and extremely surprised to see how many people and how many hours were spent in planning and in communicating with our employees through the entire phases of the acquisition. Constant training, constant communication from human resources, from executives to our employees. So a very well thought and planned process.

Philipp: Which is kind of interesting because that's just some of the things you mentioned before. When you said, when I asked you, you know when it was time to sell or what's the right way of selling. Going public or going with the company was very natural, always with Cisco. And I think now, after the purchase, it seems like they kind of followed up on everything you thought it would be, so that's always great to hear, right?

So that's a great story. So, if we move on then, it's post-acquisition. You had a few months now of having the business sold. Some lessons and reflections, what is your biggest takeaway from the last 15 years of running Fluidmesh and now being part of Cisco?

Umberto: So, the takeaway is that things take much longer than what anyone expects plans for. Both bad things and good things, so things take a long time. In the start-up community, [34:00] I believe there is this myth that stuff happens overnight. And instead, those are the exceptions. There are probably companies where you know that they grow really quickly, where things move really fast.

But most of the businesses, in reality, even the successful ones, I would say, like Fluidmesh, which has been a successful business, are grown slowly one step at a time. And so, I believe for people that want to join a start-up or build a start-up from scratch, be an entrepreneur. It's important that they plan a long-term career and that they're able to stay on and not give up because it's taking much longer than what they originally believed.

So, it took us 15 years, so it's 15 years, it's much longer than what most people think. People think it's a start-up, I build it now either fail in 12 months, or I’m going to sell it for zillions of dollars in three years. Those are the exceptions.

Philipp: Those are the stories that get highlighted maybe too many times.

Umberto: Too many times. Yes, it happens very often as you go by, even with the highlighted story. When you read about this acquisition company going public, I usually spend time reading the beginning and seeing how long did it take them? And very often, we're talking about decades. Yes, we're talking about one decade, two decades. So, this is very common.

Philipp: And a lot of times, how many times has the entrepreneur actually failed before that one, right? Maybe that business is sold quickly, but it's a process to get there.

Umberto: That's correct. So that I would say, it's definitely a lesson that I learned.

Philipp: Absolutely. And then what's one thing you wish you had known when you started your business?

Umberto: How to sell. [36:00] So, selling is a very important portion in every business. And there is no program in academia, in schools that talks about selling. And when you go even into the best business school, and you talk to them, I was at MIT, so probably the best of the best in the world.

There is not enough focus on selling. And in a business, in a new business, there are two kinds of things you need. Someone that builds a product, and someone that sells. And selling is such a critical portion in the success, and people start business, and usually, they visit a technical background or a business background. But very little know-how on how to sell. And selling into complex situations, into large organisations is complex, and there is a lot of know-how that you need and that we were missing at the beginning. So, we literally learned that on the job, making many mistakes.

Philipp: Yes. I was going to actually ask you early on because you said four engineers, right? And you come from that background. And then I was going to ask you actually who was doing the selling in the company. But it seems like you guys, all three of you, were taking the charge there and learning on the job.

Umberto: Yes. Fortunately, we were engineers who were willing to do it because that's the first thing: You must be willing to do it, and you must like it enough to do it. And you also have to realise that selling is where you spend most of your time. And so out of four people at the beginning we were four, developing the product was comparably easier, because it just required one person who could do a lot of work.

And selling takes much longer, and it's a much more inefficient process because you have to fly around the globe, meet with people, convince them to buy [38:00] the products. So it is a very inefficient, very long process. And so, we needed three people spending their time on that, and one, spending his time on developing the products. Just to give you an idea of how the selling portion was complex and time-consuming.

Philipp: Yes, that's a great thing to know beforehand. So, selling, people, you always need to sell your products. If you have good ideas, you still need someone to help you or do it yourself, as you heard from Umbe here right now. And what do you think is a unique skill that has helped you become successful, or helped you become where you are actually today. What do you think is like one thing that you really liked throughout life or something that really helped you?

Umberto: So, I’m not afraid of confrontation. I think that's an important skill that when you run a business, you need. So, if you are too afraid of confrontation, it's hard to lead. Because when you're leading, you must be fine saying no to people. You must be fine saying this deal is not going to happen under these conditions; this is what we need to make this deal happen. You must be able to go to someone and say this is not fine; you know we need to do it in a different way. And so, you need to be comfortable in quick confrontation, be comfortable with the concept that people might not like you and might not like what you're saying. Otherwise, with customers, with suppliers.

And this doesn't mean being bad or being nasty, actually quite the opposite. You know I just said that selling is very important, building a relationship is important. But you cannot be in the position where they always, everybody will like what you're saying, [40:00] and everybody will like what you are thinking.

So, you need to be okay with sometimes they're going to like what you're saying, sometimes they're not going to like it. And this is true with everybody you know suppliers, partners, customers, employees.

Philipp: Yes, everyone. And I think that's a very unique skill, and I think a good one for people to take away. So, we wouldn't be a personal finance podcast if I didn't ask you any personal finance questions. You sold the business; how has being an entrepreneur, working for yourself has changed you now that you have sold a business.

And I assume I don't know; we don't need to get into detail what the number is that you've got from selling the business. But I assume if it was a great business, it probably made you very financially free. How does this change your personal finances in terms of what you invest in or save, or did you buy yourself something as a present?

Umberto: So, present, no, not yet. I haven't bought anything meaningful yet. And actually, the other piece of the story is that we sold the business in the middle of a pandemic; we didn't talk about this.

Philipp: Yes, that is very true.

Umberto: We are in 2020, we sold the business, we were supposed to announce the transaction at the end of February, then the negotiation went a bit longer, so we announced it at the beginning of April. But at the end of February, it was when Milan got hit by COVID-19 in the worst possible manner.

And so, this is creating a sort of a very weird scenario just to give an idea, we didn't have any celebration dinner yet, neither with Cisco nor with my team. So, I haven't met many of the people in my team yet, and we are talking nine months into the transaction. No, not nine, but six months into the transaction. So, celebration has [42:00] been essentially zero, just some online stuff. Minimal online stuff.

I didn't really have much time either to take significant vacations or go do something because of the amazing situation we're in. So anyhow, that's just a bit of context. The strange times we're living in. In terms of finance, yes, financial freedom is definitely interesting. It's definitely a great achievement. And I’ve been very, I would say, inclined into studying finance and interested in finance for many years.

So, I’m not those kinds of entrepreneurs who see their personal finances as something different from their business. I believe that if you are a businessperson if you're an entrepreneur, finance and your wealth is part of the machinery, is part of the success. So, it's the same thing. I’m not ignoring the financial side and focusing just on the technical side, I’m a high-tech entrepreneur, but the cash is what makes business possible.

And so, I’ve been studying, and so based on the know-how, I’ve now been investing based on what I’ve been studying over the years. And so, what I’m trying to do is invest in not only what I know very well because otherwise, it would be very concentrated in technology. And so, trying to create diversifications must be possible, and invest in asset classes that are ideally correlated from each other, so that they can survive crises and changes that are probably around the corner.

Philipp: Yes, absolutely. No, it's super interesting. So, have you used a financial advisor [44:00] most of the time? Or do you pretty much do all the research for yourself? Because you said you're pretty interested in it, right?

Umberto: Yes. I essentially do all the research myself. I have some advisors on some very specific asset classes that I invest into, and I trust their know-how in certain fields. But definitely, I don't have one guy that tells me what to do in every possible segment of finance.

Philipp: Yes. I tell people it's okay if you want to use an advisor if you're not interested or not so. But I think you should always be your personal CFO. You should always think about your money as it's your money, and the person that cares most about it is going to be yourself. It doesn't matter what other people say, right?

So, I think that it's a good way to think about it. Not just if you have a windfall like you did, but also people working and saving money and investing their savings, right? So, I think it's always very important.

Umberto: At the end of the day, you've been the CEO of a company. You've been managing the finance of your companies, have been in charge of the money of your company. And so, your money is exactly the same. You know you need to use the same level of care, and you need to focus and understand the details because you are in charge of it.

Philipp: Yes, no, absolutely. And I think one thing I do would like to see is because I know you're in the tech space, and you probably come across super interesting investment opportunities.

But is there one particular investment that you would like to share with the listeners that would be super interesting to hear about? Like something that maybe they haven't heard of to invest in, or anything like that?

Umberto: Oh, good question. What can I think of? So, for example, what I’m looking at right now that I feel it's an interesting segment in general, and it's overlooked [46:00] is the natural resource sector. So right now, everybody is looking into technology. But in reality, there is a basic commodity space that makes the technology possible.

And one interesting data that I’ve been reading about recently is how commodities are at historical lows right now, and technologies are historical highs. But essentially, to make all this amazing tech that we sell, you need some basic commodities. So very interesting you probably have read about Elon Musk, who's been so clearly a high-tech entrepreneur, and then probably the most successful one of our times.

He has been pushing the mining industry to build nickel in a sustainable manner. Because essentially, to build these amazing electric vehicles, they need some basic commodities like nickel and lithium. And there is a major sustainability issue in the mining industry, and actually, Fluidmesh has been quite active in bringing wireless technology into mining.

And so that gave us also a view on this very traditional space. But it's a very traditional space, many people in tech probably don't see that as very sexy, but it's critical to then deliver that amazing innovation that a technology company can deliver like Tesla.

And so, it was very interesting how Elon Musk was bringing out the issue of mining and sustainable mining in the nickel space in order to enable the transformation and the transition from petrol to electric vehicles. And so that I think it's an area where people inclined to finance should look into, I believe in the coming years, there will be some interesting development in that area.

Philipp: That's super interesting; thank you for sharing that; [48:00] I really appreciate that. I’ll do some additional research on that as well. So, before we then say goodbye for today, and I think the listeners learned so much, and they will be very thankful for hearing about your journey. And also, your lessons of reflection. I think there were a lot of things to take away from. I want to thank you for that. Anywhere if people want to learn more about Umberto, is there anywhere they can follow you or LinkedIn or anything you want to share?

Umberto: Yes, absolutely. I’m on LinkedIn; if they just Google Umberto Malesci on Google, they find my LinkedIn page very easily. They can find my Twitter account, it’s @UmbertoMalesci, so my Twitter account is easy. And then, if they want to learn more about Fluidmesh, they can visit the Fluidmesh website, fluidmesh.com. Or they can jump on the Cisco website, where very soon we're going to have a lot of content about Fluidmesh. It's not ready yet, but it's going to be there soon.

Philipp: We will watch this space. And again, Umberto, thank you so much for talking. I think I have so many more questions about what you're researching lately and what you're looking into investing. But that maybe is for a second episode in the future sometime.

Umberto: Absolutely.

Philipp: For today, thank you so much for your time; appreciate it. I know you're very busy, and I wish you all the best for the transition.

Umberto: Thanks Philipp, thanks for the opportunity, and it was great talking to you.

Philipp: Thank you.

[End of Recorded Material]

Episode notes

What does it take to sell a company you founded? And what can you expect after it sells? Philipp sits down with Umberto Malesci, CEO and Co-founder of Fluidmesh, a company that Cisco recently bought, to talk about how to build a business from the ground up, what actually happens when your business gets bought by a multinational corporation, M&A for small companies, and managing culture in a multinational company.

For past guests, visit stashaway.com/podcast

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Episode contributors

  • Philipp Muedder (Head of Financial Planning at StashAway)
  • Umberto Malesci (CEO and Co-founder of Fluidmesh)