In a West Coast private equity scene dominated by technology-oriented firms including Francisco Partners and Silver Lake, Warburg Pincus has maintained a low profile. A recent hire, however, could change that. The New York-based firm last month announced that it had snagged Cisco Systems Inc.'s M&A chief, Charles Carmel, to join its San Francisco office. The 10-year Cisco veteran led more than $20 billion worth of deals at the acquisitive networking equipment giant, including some of its most important: teleconferencing leader Tandberg ASA, Internet communications company WebEx Communications Inc. and set-top-box maker Scientific Atlanta Inc.
Warburg's tech dealflow is a bit tamer. The firm has announced a smattering of deals in recent months, including an agreement to buy, alongside Providence Equity Partners LLC, Ericsson AB's telecom software business, Telcordia Technologies Inc., for $1.15 billion. On the investment side, in August it led a $9 million Series B round for electric vehicle technology maker Mission Motor Co.
For Carmel, whose first day was Sept. 6, Warburg Pincus presents a chance to fulfill a long-standing yen to work in the private investment world. The 37-year-old will report to Pat Hackett, the global leader of Warburg Pincus' technology, media and telecommunications practice. He works alongside one other managing director in San Francisco, Mark Colodny, also a corporate development expert -- he was head of M&A at online and print publisher Primedia Inc. before joining Warburg Pincus.
The Deal recently spoke with Carmel about his new job.
The Deal: How did this job change come up? Were you actively looking, or did Warburg Pincus approach you?
Charles Carmel: I was at Cisco for a little over a decade and had a wonderful experience there and a great overall career run. I was fortunate enough to climb up through the organization to eventually run all of corporate business development globally.
For me it was really about what I wanted to do long term in my career. I was always interested in going full-time in the investing world. I had reached the top of the corporate development pyramid at Cisco, but I wasn't actively looking for a job. I had developed some relationships with Warburg Pincus over the years. It developed into a dialogue, and as I got to know more about the inside of the firm, it became the perfect way for me to move into the private equity world.
Will we see an increase in tech investing and buyouts from Warburg?
Warburg has a very long, successful track record as a TMT investor globally, but here in Silicon Valley and San Francisco, it's still a very small group. I think my hiring is a statement about their intention to grow that presence. There is a very specific ecosystem here, and having a 15-year career and a set of relationships is a strong addition.
What areas of technology does Warburg Pincus specialize in?
The best way to think of Warburg is as a top-tier global private equity firm with a successful track record and $30 billion under management. They've got the scale and global reach to compete with anybody in the PE industry. What really attracted me to the firm is that it has built a track record as a growth investor at scale. They cover multiple industries and look to invest at various stages of growth all from one fund. The firm has the ability to do more growth venture-style investing all the way through buyouts. That focus on growth is key. In Cisco corporate development, we also focused on the full range, from growth venture investing through to acquisitions. I liked that idea about the Warburg platform.
What will be the biggest change? You were managing something in the neighborhood of 43 people at Cisco.
Certainly there's a change in terms of working outside of a corporate environment with regards to the management responsibilities and the connection to the operating side of Cisco. While Warburg is a large firm in the private equity context, it will be a very different dynamic than at a 70,000 person company like Cisco.
Clearly, in private equity, the main focus is on being a good investor and generating returns for the LPs.
What's your proudest accomplishment while at Cisco?
If you look holistically over a 10-year period, when I joined Cisco it was coming off an amazing run in the '90s, when it had focused on growing to become a leader in the networking business, specifically switching and routing.
The broad focus when I was there was to leverage that platform into adjacent markets. In total the strategy was very successful in helping Cisco to diversify. Today these new market adjacencies now make up about one-third of the company's revenue, from basically zero when I joined.
What will be your biggest challenge moving into the private equity world?
Anytime you make a career change after a 10-year cycle, there's certainly a transition period as well as a learning curve. I'm confident I will be successful, but I need to be patient and learn from the inside what has made Warbug Pincus what it is today.