How to Transition from Startup to Multinational Enterprise: A Conversation with Augie K. Fabela II

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Augie K. Fabela II, Co-Founder and Chairman Emeritus, VimpelCom, Netherlands.

Photo courtesy of the World Economic Forum

Augie K. Fabela II, Co-Founder and Chairman Emeritus, VimpelCom.

Although many North Americans have never heard of Russian-based telecommunications service operator VimpelCom, it has more subscribers than AT&T and Verizon combined. In its short history, it has seen staggering growth, going from 13 to 60 000 employees in only 22 years.

VimpelCom Co-Founder and Chairman Emeritus Augie K. Fabela II was a keynote speaker and mentor at the World Economic Forum Annual Meeting of the New Champions in Dalian. Despite his busy schedule of coaching sessions, regular participation in press conferences, and an early afternoon flight departing on the second day of the WEF, he was one of the promptest to reply to my email and schedule a coffee chat 20 minutes before appearing on stage. Perhaps he remembers all too well how he felt as a young Stanford graduate setting out in one of the world’s most challenging sociopolitical climates.

“I don’t like to look back, which is why all the mentoring I am doing for WEF feels a little strange,” admitted Fabela. But pushed to reflect on the factors that have contributed to VimpelCom’s success, Fabela offered six key takeaways for aspiring entrepreneurs:

1.   Don’t dread differences

Fabela contradicts the commonly held supposition that executives need to work exclusively with people who share their values and vision. As an American entrepreneur, Fabela’s background differed significantly from that of Russian co-founder Dr. Dmitri B. Zimin.

“[Zimin] spoke absolutely no English; I spoke no Russian,” explained Fabela. “I was 24 years old; he was 62 years old. I was a young entrepreneur; he was a very seasoned scientist responsible for designing Moscow’s anti-ballistic missile system.” Fabela believes these opposing perspectives expedited Vimpelcom’s growth. “It’s the conflict around how you achieve your purpose that hones your skills and gets you different ideas along the way.”

2.     Know when it’s time to go

During his conversation with Teymoor Nabili, Executive Editor of Channel News Asia, Fabela highlighted the necessity of establishing accountability systems early on and only retaining workers who demonstrate high growth potential. “Sometimes people just reach their ceiling. I’ve seen that a lot,” said Fabela. “[With VimpelCom], some people could learn [how to scale through additional training] and some couldn’t or quite frankly didn’t want to. They wanted to do it how they had always been doing it, and that’s when you have to recognize that these are not the type of people who are flexible enough to adapt and change along the way.” Fabela added that as an entrepreneur, he had to also recognize the limits of his executive team and decide to bring in a professional manager to replace Zimin as CEO.

3.     Look beyond university pedigree and degree requirements

With a BA and an MA in International Relations and Policy Studies, Fabela does not fit the mold of a typical C-suiter in the telecommunications industry.

“I think not having an MBA helped me because it put less restrictions on the traditional way of how you’re supposed to do things,” said Fabela. Companies can teach technical skills, so managers should hire primarily on leadership potential and the ability to learn.

4.     Focus on more than financial returns

With everything from energy-saving data processing centers to an Eco-Office program that encourages employees to reduce on-site waste, sustainability is a core focus area for VimpelCom. Fabela sees environmental consciousness as essential to his company’s global growth.

“Energy consumption is probably our biggest single expense on the operational side,” Fabela commented. “In countries like Pakistan and Bangladesh where energy is scarce, we use innovative technology and alternate power sources to consume as little energy as possible. What energy we do use, we try to share with other communities. In many countries, there isn’t a strong network to provide energy and we are able to assist when emergencies arise.”

With today’s increased emphasis on corporate social responsibility and community investment, global expansion requires soft skills – that is, the ability to build fruitful relationships with all stakeholders. To this end, one of Fabela’s proudest accomplishments is enabling Bangladeshi farmers to track market trends through their mobile devices and better manage their supply chain.

5.     Find mentors to guide and inspire

When asked to describe the primary obstacles he encountered when transitioning to a multinational corporation (MNC), Fabela laughed.

“It’s a gigantic list,” he said. “We faced everything from regulatory and market shareholder issues to financial issues. We faced crises such as the 1998 financial crisis where we lost 60 to 70 percent of our cash overnight; we faced threats of our license being taken away; we faced the risk of our market being [overrun] by a competitor with very aggressive pricing.”

Although he serves as a mentor for Global Growth Companies, Fabela admitted that he did not have any mentors of his own when starting out.

“It was very much make it up as you go.” Although trial and error worked in Fabela’s favor, he acknowledged the value of soliciting advice from people with more experience and forging mutually beneficial partnerships with companies that have similar goals.

6.     Balance global and local

VimpelCom currently covers a population of 753 million with nearly $6 billion in quarterly revenue and operations in 17 different companies. At first, expansion feels golden; however, as many corporate leaders alluded to at WEF, exponential growth presents its own challenges.

As an MNC, VimpelCom pursues a decentralized model in order to preserve the startup atmosphere and adapt to a changing cultural landscape. “When we decided to go global, we set up an entirely new headquarters in Amsterdam,” explained Fabela. “Today, to truly be global, you have to be local. Of our 160 people in headquarters, we have 30 different nationalities. That was on purpose. We wanted to have a very diverse company.”

VimpelCom’s challenge of balancing global ambitions and local responsibility corresponds with the WEF session “The Local Multinational,” in which leaders in business and government discussed how enterprises should behave across geopolitical contexts. Lord Nat Wei from the United Kingdom emphasized combining expats and locals in both foreign and home offices, diversifying board members, and partnering with regional governments.

After successfully growing VimpelCom into a multibillion-dollar operation, Fabela recognizes that the time has come to heed Wei’s advice, flip the equation, and anchor his international brand in local tastes, customs, and values.

Fabela at his session, "The Sustainable Start-Up".

Photo courtesy of the World Economic Forum

Fabela at his session, "The Sustainable Start-Up".

One thought on “How to Transition from Startup to Multinational Enterprise: A Conversation with Augie K. Fabela II

  1. Startups surely have come a long way and have turned out to be a phenomenal event, bridging the gaps between countries and connecting entrepreneurs !

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