Sunil Sanghani is an accomplished International Business Development Executive who has served as a senior commercial leader for iconic brands, such as Tableau (a Salesforce.com brand), Microsoft, CloudVelox, and others. He has sat at the table with many of the world’s most influential business leaders.
Transcript
Maureen Farmer
The majority of business ventures will not succeed. In fact, up to 95 percent will fail. According to Sunil Singhani, international business development leader for fortune level companies. In episode 77 of the Get Hired Up podcast, Sunil and I discuss M& A due diligence and some of the more nuanced diligence considerations for a successful venture. We discuss M& A through both a sustainability and cross cultural perspective where relationships are the key factor in a successful joint venture. I hope you enjoy the show.
Sunil Sangani is an accomplished international business development executive who has served as a commercial leader for iconic brands, such as Tableau, a Salesforce. com brand, Microsoft, CloudVlox, and others. He has sat at the table with many of the world's most influential business leaders. His efforts have contributed to positioning organizations as market industry leaders by identifying, developing, and leveraging strategic partnerships. He is also known for his skill at creating commercial channels. Joint ventures, capital structures, and mergers and acquisitions. In his most recent role as the head of strategic business development at Tableau, Sunil led a team that grew market share by 25 percent through establishing strategic partnerships that introduced new business processes, culture, and customer experiences.
He has also delivered sustainable revenues by establishing strategic partnerships with AWS, Azure, IBM, Google, and Alibaba. Sunil, whose mantra is always be curious, is a creative architect who brings visions to life. Deeply committed to sustainability, Sunil is currently enrolled in MIT's Chief Sustainability Officer program.
Sunil, welcome to the podcast.
Sunil Sanghani
Maureen, it's a pleasure to be here with you.
Maureen Farmer
You're welcome. It's my pleasure. And as we had discussed in our pre call, we're going to cover a few timely and relevant themes with a global growth focus and include a few signature stories as well about Microsoft and Alibaba and your role in their industry expansion.
Before we do that, though, I want to read just a couple of quotes from a very recent World Economic Forum ESG data. readiness article. So the name of the article is ESG data readiness drives value for financial services firms. And as you know, Sunil, we work with a lot of financial services firms, FinTech, as well as a lot of technology firms. And so I think this will resonate Here are the quotes, 78 percent of investors are willing to pay higher fees for ESG funds driven by the potential for higher returns, ESG data integration enhances risk modeling, audit readiness and sustainable product credibility, advanced AI and data tools enable firms to accelerate ESG reporting and support client transition goals.
So this is interesting. The financial services sector is navigating a fast evolving landscape of ESG driven innovation. Green investing has become a focal point with 78 percent of investors willing to pay higher fees for ESG aligned funds, anticipating a better returns among younger generations, 85 percent of millennial and Gen Z investors prioritize using their portfolios to influence corporate environmental practices, even if it means accepting potential investment risks.
So I thought. I thought that those were interesting stats and given your experience with sustainability and some of the world's largest organizations, I would love to ask you this question. What is strategic business development to you? How do you define it and how does sustainability fit into the equation?
Sunil Sanghani
Yeah, Maureen, thank you for that sharing those statistics. I think those are really relevant. And, to me, strategic business development is the art of shaping relationships. That's really what it is. I would say that Many people will look at strategic business development from the lens of facilitating a transaction. And there certainly is a place and a time for that. But I would say that the broader aspect is truly about shaping the relationships and shaping the structure of what a union of relationships could look like potentially in the future. And so this is, we're not taking a transactional approach, and I love that perspective because, you know, long term relationships I really think is where the value is over time, obviously, that, that sounds obvious, but sometimes organizations take, more of a transactional approach.
Maureen Farmer
What are the primary differences?
Sunil Sanghani
Yes, I would say that my experience is having worked with companies, you know, that have done both. But for the most part, I see the technology sector taking a very transactional approach to strategic business development. And that means, Hey, this is who we are. This is how things are done. This is how we would like it to be done. And it's a take it or leave it. or let's quickly figure out what we can get done in the near term. And then it either works or it doesn't work. To me, that is really what a transactional approach is. And as a result, the majority of strategic ventures fail. I would say the failure rate is over 70 percent, you know, but maybe about a 5 percent success rate in the mid to long term. When you compare that versus a much more sustainable approach, as I call it, a sustainable approach focuses on making sure that the relationships transcend the short term challenges. And that means you have to build trust, you have to build credibility, and you have to be willing to rely on your partners to sometimes help you in times of need. So I feel that the long term viability is, is what a sustainable approach is to strategic business development.
Maureen Farmer
5 percent success rate?!
Sunil Sanghani
That is really what it is, and which is why a significant number of ventures. But irrespective of how they're structured, the success rate is very low simply because they have a very short term lens in terms of expectations on one side, if not on both sides.
Maureen Farmer
So you're saying in your experience that technology companies traditionally have taken a transactional approach to business. So, what has been the tipping point, I guess I would say, from the transactional approach to a more long term strategic approach?
Sunil Sanghani
The tipping point, Maureen, is taking a very customer focused attitude. So, for example, in a transactional approach, you want to get a deal done, you want to get a venture done, you want to get an investment done, simply because that's what you're measured on, and that's what you're being tasked with. You're really not thinking about How this is going to get operationalized and what the impact may be or not be in the mid to long term. In a sustainable approach, you really are taking a very customer focused approach, and a mindset which is saying, are we really solving problems by getting together? Or how do we do that? So it's less about corporate egos. It's less about what the entities stand for, but it's more about getting together because we believe that Together, you can solve customer problems in a much more synergistic fashion than otherwise possible. And so, for example, you could, you could do a venture in China, you could do a venture in India, you could do a venture in Latin America. But at the end of the day, what is that venture aiming to solve for and has that Has have the parties taking the time to go ahead and validate that even before putting the venture in place because that really is what makes it sustainable. And to some extent it slows things down, but it makes the venture. It makes the partnership mobile in the longer term. So I know on based on our previous conversation, you've had a lot of experience in evaluating and executing due diligence processes around certain deals.
Maureen Farmer
Would you like to talk a little bit about that and give us an example of when things have gone well, and maybe when things haven't gone well?
Sunil Sanghani
Say that as part of diligence in deals and investments, there are a couple of examples that I can share. One is actually, and, and both these examples speak to risk management as part of the process. I would take the example of, , where I represented a major software company in discussions with Enron back in their broadband venture days, and I came back and said, Hey, you know what? I don't think this makes sense for us. We just don't have the visibility we need into the product. questions we are asking into the details we need and are asking for. And as a result, my recommendation was that we walk away from doing anything, you know, with Enron at that point in time. And obviously a few months later, Enron collapsed. On the other side, I take a look at engagements in China with companies like Alibaba and the risk over there can be managed in a very different way, where basically you also take a look at building trust with the partner and take a look at them actually doing a lot of the heavy lifting for you from a product development and go to market perspective. So when you see that level of commitment, you realize that while there are market risks and while there are regulatory risks. it still gets offset if you have a trustworthy partnership in place and can scale that in, in somewhat of, in a more slow manner, if you will. So I would say those are two examples of where, you know, you have a entity that was based in the US that literally just blew up, you know, but had all the credibility behind it or so called credibility behind it. And on the other hand, you have an entity that is based out of China. And you can still do business with them because you realize that, Hey, you know, these guys are coming through for us with the commitments that we need from them. So I would say in my experience, those are a couple of examples that kind of transcend the spectrum of evaluating deals, not just based on upfront credibility, but also doing your diligence to really understand who the players are at the table and, and truly what their level of commitment is to the partnership.
Maureen Farmer
Thank you for that. That truly is very interesting and I'd like to go back to the Enron example and just paint us a little bit of a picture in terms of timeline and did you receive or feel you received any resistance from the senior leadership team around your decision not to move forward?
Sunil Sanghani
I would say that while the Company was under pressure to actually get a broadband deal in place. To the credit of my leadership team, I would say that they actually decided to pause everything and delay the launch of services, given that we did not feel comfortable with the lack of details that we were receiving as part of the diligence process. So I would say that there wasn't. pushback. But at the same time, I think there was a lot at stake, you know, if you will, in terms of having to delay the rollout of product launches and services that had already been broadly advertised in the market. I think the only thing I would say is that, or add to that is that the diligence, you have to follow the process, you have to do your diligence. And, and sometimes the answers are not what you expect them to be, especially in face of, all the public facing credibility that an entity has. So you might be an outlier, you know, at the start, if you will. So I think having faith in your due diligence process and being able to read the signals, the soft signals, I think are critical.
Maureen Farmer
Ooh, so tell me a little bit about Soft Signals.
Sunil Sanghani
So Soft Signals are about how open is a company as part of, you know, due diligence process? How is their engagement like? Are they overstating facts? Are they willing to be transparent about the market challenges they face? Are they upfront with customer testimonials and credibility? And are they willing to introduce you to customers to understand how they're perceived in the market and what that market opportunity for them truly looks like. So I think, understanding the management's reaction, engagement, participation, negotiation strategy, pressure tactics early on, and, you know, Transparency on customer validation early on, I think, becomes some of the critical soft signals that I look for and I've always looked for as part of my diligence and negotiation process.
Maureen Farmer
What surprised you most in that process?
Sunil Sanghani
I would say what surprised me most is there's typically, there's a lot of excitement, I would say, early on in the process. And sometimes that tends to mask the underlying problems that should be surfaced early on. And so I think most of the ventures, most of the deal discussions don't surface these issues early on, or at least early on enough to really slow things down and, and get a sense of, Hey, you know, does this partnership make sense to invest for the time in or not? And I find that a lot of executives and leadership teams will rush to structuring deals rather than actually understanding the execution part of that. and how and the why, the what and the how of execution in the marketplace would occur. So I think, I think the excitement tends to mask the reality many times. And I think, I think that is what has surprised me, given that for the most part, you have seasoned players on both sides.
Maureen Farmer
So do you think that this, this experience contributes to the 5 percent success rate?
Sunil Sanghani
I think so. I would say so. I think most ventures, as a result, end up either being dissolved or being unwound because expectations have not been aligned up front, the realities of the marketplace and customer needs have not been addressed up front, and as a result, company priorities change. You realize, hey, you know, we just can't continue to invest more resources in this particular venture. It doesn't justify it. And as a result, you know, unfortunately, many of these ventures are not set up for success from day one.
Maureen Farmer
What are the conditions or the condition that would set a deal up for success? Maybe we've already addressed them here, but anything else that, that you feel would be...
Sunil Sanghani
I would say number one is trust with your counterparts. You know, and if you have the trust, you know, you can reach out and talk about heart issues in a very open way. And you can count on them to socialize those issues and challenges internally with their counterparts so that you have a bridge to addressing these and somebody who you trust, who you can bounce ideas and challenges off. So typically I feel that there are challenges both internally and there are challenges externally, but having that trusted bridge, becomes very important, if you will. The second thing I think is adaptability and making sure that the venture is not set up or the partnership is not set up, you know, with very hard metrics and has enough room to incubate ideas and validate ideas before you go to launch or before you go to market in a full fledged way. So I would say that these are a couple of things, you know, that are. key nuances for a successful partnership to thrive over the longer term. And for the most part, even though the results may or may not be as phenomenal in the early couple of years, in a market like China, especially where things take a long time to develop, what it does is it lays the foundations of your network. And you get a chance to build the right network with the right trusted relationships that you can count on to help you succeed over the longer term. So I think what that also requires is a certain level of vulnerability on behalf of, you know, executives on both sides and leadership teams on both sides to say, Hey, you know what? We need your help. And I don't see that enough in the business world because of the egos at play.
Maureen Farmer
So now I would like to transition as a good segue into the opposite experience. So can you tell us a little bit about a project you worked on that, that worked out well, and was an exemplary example of what went well?
Sunil Sanghani
There are a couple of examples I can share you Maureen. So the first one is, you know, at one point in my career, I actually led an investment in the privatization of Korea Telecom and KT Freetel, which were both Korean government public entities and we're being privatized and I led over a 700 million investment in these entities back then. And, the commercial aspect of that investment that was joined to the investment was the opportunity to understand how broadband technology is developed in Korea and how services are rolled out and scaled. Korea, obviously, has always been about a decade ahead of the US in terms of broadband and cell phone services, at least a decade. And so being able to get that knowledge and know how, and then being able to leverage it in the US markets as the US markets evolved, you know, in the internet capabilities, I think it was a transformational engagement and an opportunity for the company at that point in time that I represented. The other one I would say is, you know, helping, one of my companies to actually expand in China and, going through a due diligence process, you know, engaging with different stakeholders and understanding the competitive landscape as we structure the partnership, was key to actually making sure that we were able to explore a couple of different avenues from a risk mitigation and market entry perspective before we launch to me. These are a couple of examples. Now China is a massive big data market. I mean, you're looking at this market being over 100 billion dollars over the next decade, and so being able to establish a beachhead over there and to lay the foundation through a, through a partnership and a strategic venture, you know, that gave us the opportunity to get in on the ground with our products and services and then work with a partner who's know how and reach from a go to market perspective, you know, with consumers as a leading player in the market, gave us the capabilities we needed to kind of understand how we needed to shape a product strategy over the longer term.
Maureen Farmer
So tell us about that experience. I mean, you say that it takes a lot longer to establish market presence and, and build trust in these markets. Tell us a little bit about that. China is certainly a bit of a mystery to a lot of people. The markets are very different and I've worked with a number of individuals who, oversee operations in China and I know that the regulatory landscape there is very different.
Sunil Sanghani
Sure. So I would say that the first thing as regards to China is that you really cannot control or own the entire venture in that way. region. And that's simply because of the Chinese government laws, which stipulate that 50 percent of a joint venture needs to be owned by a local partner. So I would say that there are some well founded concerns around how intellectual property can be shared or protected in China, if you will. And I think that is clearly one aspect of risk that needs to be considered and, and looked into more deeply depending on what exactly you're offering in the market over there. But I also think on the other hand that the Chinese market, is highly competitive. The local players innovate at a very rapid pace. The market is highly value sensitive. I wouldn't say price sensitive, but value sensitive. So when you take a look at Western brands, even in the technology space, you take a look at Western brands trying to enter the market and offer their services or products. And the challenges you take your typical products and portfolio of services that you have in Western markets, and you just take throw it into the Chinese market and you realize that you're barely getting two to three percent penetration at best. So I think the assumption that the majority of brands make is that, Hey, you know what? We are a premium brand, we can enter the market. We are going to get a good foothold. And the answer is it just doesn't work that way simply because the level of innovation by the domestic players is extremely high So you run into a competitive situation and/or a beachhead if you will very soon In the process and you realize hey, you know what? It's not a cakewalk. So I think understanding the market understanding the value sensitivity of customers and consumers over there Understanding the system dynamics and what it takes to build a network of players partners and distributors in that area and why that is so important. That, that becomes very important. And then obviously, you know, I mean, getting to a reasonable level of scale, takes a certain level of investment and a certain level of time, which is at least three to five years, before you can say, okay, we, we now have, a reasonable presence in the market.
Maureen Farmer
That's incredible. That is truly incredible.
So if you could tell us a little bit about taking a technology company into China and what the process looked like and, and who was involved and what your overall experience was, I'd love to ask you that question.
Sunil Sanghani
Sure. So I would say that in general in China, the few ventures that have done over there, the diligence process requires A few folks at the table and typically you'll find that it's a combination of the company executives and, and if you're in the media business, you also have to be engaged with the Chinese government state on media executives. So it's a combination of executives, that are from the private sector, as well as I would say from the quasi public and government sector that are represented at the table. This is super important because you need to get a sense early on whether they view your entry favorably from a category and sector perspective or whether they do not. So as an example, big data is one of the key strategic initiatives for the Chinese government. And so, the data sector You know, for example, is viewed very favorably and the players in that sector viewed very favorably because it adds to the capabilities that the Chinese government is looking at fostering, you know, in, in the country across its businesses. But at the same time, if you're coming from a media company, the negotiations with the quasi public, officials and, and the public sector, if you will, but CCTV, which is Chinese own state television, if you will. There are a lot of regulatory hurdles and licensing hurdles and ownership structures that have to be sorted out up front before you can proceed forward, even with discussion around the MOU or a term sheet. So I would say that understanding how you're perceived by private and public players is really important. in the region and then what does that mean at a macro level for your market entry strategy and the feasibility of that is super important before you get down to and you know, to discussing more details.
Maureen Farmer
So, we've been talking a lot about Korea. We've spoken about China. I'm sure there are others from a due diligence, not so much from a due diligence point of view, but from an execution point of view, Sunil, can you talk a little bit about cross cultural alignment and how important that is or is not in a deal like this?
Sunil Sanghani
Yeah, I think it's super important and I think that's overlooked a lot of times because Many times when American companies go into international markets, there's a certain level of arrogance that comes with the approach saying, Hey, you know what? We are tier one players and it's a take it or leave it. And this is the way we do deals. And I think I think the approach rather by contrast should be one of saying, Hey, we are ambassadors at the table and we need your help to understand how we can best partner to enter this market together. So I think taking a more collaborative a more systems design approach, where you see yourself as part of a system and a network, rather as being the front and center of everything, I think is the way to approach international collaboration, international ventures, you know, towards better understanding how cross cultural collaboration can impact your efforts, I would say, in a more positive way.
Maureen Farmer
So when you're going into a new market, how do you understand or come to know about the culture? Do you immerse yourself in it? Do you spend some time there? How do you, without giving away your secret sauce here...
Sunil Sanghani
I would say, Maureen, my secret sauce is sitting at a local coffee shop or tea shop and talking and talking with locals and observing people. That is where you're The secret sauce is it's not in the conference rooms and in the meetings with the executives or the leadership teams. I would really say the secret sauce is, because, because what do you really get in the coffee shops or the tea houses in Korea, in China and India is an unfiltered view of how people live their life on a day to day basis. You know, you get an unfiltered view of how they view you as a foreigner. You, you get an unfiltered opportunity to engage with them in conversation where literally, you know, there's a level of courtesy that is extended, but at the same time, you also have an opportunity to understand what lies behind that level of courtesy, you know, and what they truly think about you. So, I think, I think the secret sauce is really spending time over there for me at least, you know, and I've always taken that opportunity to engage with locals and conversations, you know, and introduce myself because it gives me an opportunity to understand their dreams, their aspirations, their daily challenges, what their passions are about, what do they do for work and so on and so forth. And what it does is it really gives you an opportunity to understand that I'm building a bridge. is much of building, you know, people talk about deals and that's okay. We live in the business world, but I think building bridges is way more important than building deals. So I think the secret sauce is that, but in terms of business discussions, I think being upfront, laying out hypotheses.
You know, I think the best way to start, and I learned this from an AWS executive, the best way to start is actually laying out the hypothesis for what, what we think the partnership would aim to achieve and what problem we are solving together. So once you start with that, what it does is it, it removes the the focus from deal making to the realities of the marketplace and understanding how can we work together to solve the right customer problems. And so the focus becomes more on getting excited about creating value for customers in the market together, then understanding can we do it better together than individually. And then the question further. You know, two clicks down is how do we do it? What do we bring to the table? Who are we, you know, and a lot of times Not a lot of that is spoken about. It's kind of flushed under the table, if you will, to let parties discover on their own who the other party is. But I think who, who are we is a very important question because if your partner doesn't understand who you are and you don't understand who your partners are below the surface and below the market credibility or presence, who the people really are, then, having a discussion on whether you're capable of doing something together becomes relatively meaningless, other than putting together a term sheet and a contract or a deal together. So I think the why, the what and the how becomes important, but starting with customer problems, laying out a couple of hypotheses for what you think you can accomplish together and why it matters is really the secret sauce to a lot of these deal and venture discussions.
Maureen Farmer
Would you say that values alignment is important in these deals as you're going into discussions or pre discussions for a potential venture?
Sunil Sanghani
Oh, absolutely. I think value alignment is critical because at the end of the day, both sides are extending their goodwill and there's individual and personal goodwill on the line, let alone corporate goodwill, you know, and trust. So I think values alignment becomes very important and knowing what the values of your counterparts are on the other side And can they be trusted to be transparent with you, you know? And can you pick up the phone call your counterpart in china or india or korea or latin america overnight and say hey I have a problem internally and I need your help to kind of try and work through some things Become super critical. And if you don't really You know have that alignment early on, you're not going to be in a position to do that later on, or you'll find that, you really haven't built those bridges or understood, you know, where you're aligned and how you're aligned on values and what you can depend on, if you will, on your counterparts on the other side to come through for you. And in many respects, you know, it reminds me of the cold war where, you know, diplomats would count on diplomats on the other side to send messages behind the scenes. to get issues resolved. And that's exactly what a lot of this is. In Asia, the deals are never done in a conference room. The deals are done behind the scene. So when you come into a conference room, parties can save face because things have already been agreed upon rather than arguing about things in front of each other when people lose face in Asia. And so having that trusted bridge or set of bridges where you can communicate, you know, messages and communicate, you know, what you're trying to accomplish or resolve issues behind the scene, whether it's in a deal discussion and negotiation or in resolving an ongoing operational strategic matter, whether it takes a level of investment on both sides, that is, that depends on values alignment and and the trust that you build with your counterparts to be able to get that done behind the scenes because typically if it comes to a point where you have to address it in a conference room, that tells me that it's over.
Maureen Farmer
Right. Right. And I love the focus on, you know, what you're doing. The courtesy and what's behind the courtesy and the collaboration and serving as ambassadors at the table. I think that is so differentiated in terms of approach.
