Ernest Cu: When timing is everything

By Karen Flores, abs-cbnNEWS.com

Posted at Jan 19 2010 12:43 PM | Updated as of Apr 21 2010 07:12 PM

Ernest Cu: When timing is everything 1MANILA, Philippines – If Apple Inc. has Steve Jobs, Globe Telecom Inc. has Ernest Cu.
 
But they differ in many ways: Jobs, 54, has a demanding, erratic and temperamental personality. At one point, he has been notorious for firing employees he met in the lift or on the escalator. 

Cu, 48, is direct and has a "very sharp tongue," but is known for treating his staff like equals.

At present, Jobs heads the firm behind some of the world's most powerful brands--Mac and iPod--whose customers have an almost cult-like loyalty.

Cu, on the other hand, leads the telecommunications firm that currently places second in the local market. Globe Telecom Inc. zoomed ahead in the early years of mobile phone service in the Philippines but was eventually surpassed by Smart Communications Inc., the mobile arm of Philippine Long Distance Telephone Co. (PLDT).
 
Still, the 2 executives have several key things in common: they are both entrepreneurial, they are good at turning things around, and they know the importance of good timing.

Cu may not have the much-publicized love-hate relationship with a firm, fans and critics, as Jobs. His story, however, is just as inspiring.
 
Turnaround man
 
For Cu, the road to Globe has been long and winding.

He jumped ship from SPi Technologies Inc., where he worked as president and chief executive officer. PLDT bought SPi, now a powerhouse in the business process outsourcing (BPO) industry, from the Ayala Group.
 
SPi is one of the companies tucked in Cu’s belt that he has turned around. He honed his restructuring and re-organizing skills in other companies based in the United States after finishing his MBA in Kellogg Graduate School of Management in Northwestern University.
 
He first worked with the biggest restaurant chains in California, which housed some 100,000 employees. Years after that, he was part of the IT department of another restaurant empire, which had a chain of 5,000 stores.
 
"At that time I thought, man, this is great. Things went my way the whole time. I even have a job in a nice company," Cu narrated to abs-cbnNEWS.com.
 
In 1986, he became his own boss. He operated a franchise of Alpha Graphics, a desktop publishing company in the US, and managed to buy 3 more branches in 5 to 6 years.
 
"I had 3 stores in Los Angeles, and one in Vancouver. They were all doing very well. I turned them all around," he shared.
 
His idea of making tons of money was to wait for “the perfect exit,” a trader-entrepreneur’s lingo for selling out at a price level that assures a fat profit margin for the likes of Cu, whose main goal is to turn the business around or grow it exponentially to attract investors.
 
The owner of Alpha Graphics eventually sold out when he thought the business has reached its full value. Cu stuck around and waited.
 
Perfect timing
 
Timing is key to a perfect exit. But Cu’s timing was poor.
 
In 1991, the California recession came. Print shops were closing down one after another on slower demand. The value of Cu's companies dropped. Eventually, he sold his franchise at a loss.
 
"My dream was shattered. Things were going well for 5 to 6 years. Then they were all gone in a year. I had to start all over again,” he recalled.
 
“Until that point, I've never done anything wrong in my life. I realized I was actually vulnerable," he lamented.
 
Cu’s business judgement was costly. He lost $600,000 to $700,000. He was 28, married and had 2 children then. With wobbly finances, he considered going back to being an employee again.
 
"It took a matter of months. It was more difficult to decide to look for a job rather than finding one. But I made my decision to go forward, not to look back," he said.
 
Cu got an offer from Crestech, a Japanese printing company. He started off as a consultant who re-engineered the company's printing processes.

He must have done something right. After 2.5 years, he was asked to take over the business and work full-time.

To anyone, it was a juicy offer. But Cu did not take it.
 
"I felt that the company had limited growth opportunities. It was not something I wanted to do long term. I already turned the company around, so my job there is done," he said.
 
He did not regret his decision. Not long after, his good friend and then SGV & Co. chairman Cesar Purisima urged him to return to Manila, where he took over the helm of SPi.

At the time, outsourcing was not yet a buzzword as it is now. Cu hoped his timing was better.
 
Big move
 
Moving to SPi proved that timing—or even luck—was not enough. To bring SPi to greater heights, he revolutionized the company from inside-out.
 
Cu had some rough points in his first few years at the company. For one, he laid off some 600 project-based workers in his first year as part of his restructuring program.
 
It was a hard decision. But Cu decided to push through with it in an effort to make SPi a more stable company.
 
"I wanted to shift from project-based revenue to a ‘continuity’ business," he said.
 
From a plain data entry firm, SPi leapfrogged into a global partner that understood business risks. It provided multi-country delivery platforms and branched out into specialized knowledge-based services such as legal outsourcing.

His company was performing well, it was at the top of the market. Upon realizing this, he decided to sell out.  
 
"People always say to me, my timing of exiting SPi was perfect. I did it at the right time," he beamed.
 
Idealistic to practical
 
Cu stressed that it was his bad judgment call that honed his "business intuition."
 
"I used to let opportunities pass because I was too idealistic. Now, I'm more practical. I used to look for a perfect exit, but there isn't one. Now I have an internal sense of timing on when to enter and leave a company or business," he said.
 
How long will he stay at Globe then? "I'll stay here until the job I need to do is done,” he shared.
 
The tasks ahead are tough. His rival company PLDT, which houses Smart and mass-market brand Talk 'N Text, is miles ahead of Globe both in terms of revenues and subscribers as of end-September 2009.

But Cu said he is not expecting to catch up with PLDT in terms of mobile revenues anytime soon. Rather, he is eyeing to make the company number one in terms of broadband services in the next 3 years.

 "I think we can be number one in broadband in 2 to 3 years," he said.
 
He also wants Globe Telecom to be remembered as a strong brand just like Jobs' Apple Inc., especially as mobile phone firms struggle to make prepaid users spend more on top-ups amid the economic slowdown. (Read: Getting to know the 'sophisticated' prepaid user
 
Apple is said to have established a unique reputation in the consumer electronics industry. The brand itself, not just its products, has a strong following not only in the US but in several parts of the globe.

Last year, Fortune Magazine named Apple the most admired company in the world.

"Our ambition is to be the Apple of the telecom world," he said.