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McGinn McFound

Light Reading
News Analysis
Light Reading
10/25/2001

The industry has been buzzing with speculation about the location of Rich McGinn, former CEO of beleagured Lucent Technologies Inc. (NYSE: LU), after he left Lucent in late 2000 (see McGinn: McGone) and Where Are They Now?). Had he fled to the golf industry? Taken up residency in Costa Rica?

Not exactly.

McGinn has popped up with a new job as senior advisor at Manhattan-based venture capital firm RRE Ventures.

In an exclusive phone interview with Light Reading, McGinn sounded ready to start afresh. In fact, he sounded downright perky… as if he hadn't even been at the helm of one of America's most widely-held public technology companies when it lost more than $100 billion in market capitalization.

How’s life in the venture capital business?

”It’s great,” said McGinn. “You know, I had 30 years in the communications industry, and 29 of those were great. This is totally different.”

McGinn, already living comfortably off a multimillion-dollar golden parachute from Lucent (see Fat Cats Feast, Despite Layoffs), will now be scoping out potential investments in the enterprise software market. But McGinn’s McMum on the names of any of the private companies he’s looking at. “I just arrived here, so I don’t really know [the specifics],” he said. He’s been working at RRE for one month.

So what about what’s happening across the Hudson river, where Lucent Chairman Henry Schacht is working on restoring Lucent to profitability? McGinn didn’t have too much to say about LU.

”I’m not close to it. I don’t have any tidbits.”

Did he have any regrets about what happened at Lucent?

”Not really. What I can say is the industry is in a strong downward cycle and it’s long-term. The scope of competitors has changed. If you look at the way financing has been pulled from alternative carriers, the vast majority of them are going to be removed. Given the economy, you’re in for a long period. We’re going to see a quiet period for a while.”

Indeed, the CLEC catastrophe was a contributor to McGinn’s ouster at Lucent. McGinn’s legacy was an aggressive strategy of lending to startup carriers that wanted to buy his Lucent gear -- and these large vendor financing activities figured prominently in Lucent’s financial debacle when the telecom market later collapsed.

So what’s different about enterprise software? McGinn believes it’s at the heart of productivity in corporate American, and is thus a good investment prospect.

”It’s an important place where companies are looking for productivity from their employees with software tools."

Yes indeed. And now it will be interesting to track the productivity of Richard McGinn, the newly minted venture-capital advisor.

— R. Scott Raynovich, Executive Editor, Light Reading
http://www.lightreading.com

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lightbfast
lightbfast
12/5/2012 | 3:52:08 AM
re: McGinn McFound
huh!
Belzebutt
Belzebutt
12/4/2012 | 7:40:37 PM
re: McGinn McFound
... I like the tone especially. I guess LR is not counting on another exclusive interview?
I'd be perky too if I had a 1 million/year pension as a reward for sinking America's biggest telecom company! It's no surprise he doesn't talk about LU, that was part of his package after all. Everything he says must go through the "dirt filter", so if he's not saying anything at all, that probably means he's got a lot he could say...
pastel
pastel
12/4/2012 | 7:40:36 PM
re: McGinn McFound
... Matros ... MIB ... has he been seen anywhere?
fhe
fhe
12/4/2012 | 7:40:35 PM
re: McGinn McFound
eom.
saucermen
saucermen
12/4/2012 | 7:40:35 PM
re: McGinn McFound
Who cares what he thinks. He spent $43M on a golf course for his pals while running Lucent into the ground. Payoff: Millions in severance and a million a year for life. Not bad if you can get it.

I see Carley joining Richard (her former boss) under similar circumstances after she ruins HP.

Only stockholders can demand punishment for incompetence. The rest of us can only gaze in wonder.
Twistall
Twistall
12/4/2012 | 7:40:31 PM
re: McGinn McFound
Eastman Kodak just announced big layoffs... Maybe Ms. Russo can work with Dick n Carly, too?

ex-LU sr. execs may not be able stop the ocean from coming over the dike, but you sure can't sink 'em!
Eye-in-the-Sky
Eye-in-the-Sky
12/4/2012 | 7:40:29 PM
re: McGinn McFound
I'd believe "ANYTHING" McGinn said..... " N O T "
fatchance
fatchance
12/4/2012 | 7:40:26 PM
re: McGinn McFound
What a clueless gas bag. When ego overruns reality the chickens come home to roost. Too bad he didn't ask the troops,oops, I mean the serfs, about lending money to customers with no cash flow. But I heard at Square D he could really sell those electrical sockets.
objectivity
objectivity
12/4/2012 | 7:40:26 PM
re: McGinn McFound
"as if he hadn't even been at the helm of one of America's most widely-held public technology companies when it lost more than $100 billion in market capitalization"

1. He was also at the helm when it gained $100B or more in market cap.

2. Comparisons are only relevant in peer groups - didn't Cisco lose a bit of market cap? Nortel? The only difference between McGinn, Chambers, and Roth is that McGinn has a new job...

3. Market cap is nothing but a side-effect of a bubble, and no one - at least not me - can predict when the bubble will burst. My degree is in Business, not Mass Psychology. Op Cit "Incredible Popular Delusions and the Madness of Crowds."

4. Scapegoating is typically based on A) displaced anger; B) a feeling of helplessness or the sense (justified or not) that one has been betrayed; C) ignorance of the fact that causes, effects, and correlations can be diffcult to pin down; D) an inability to understand the concept of "gray areas"; and E) an easy target, particularly one who is weak and prohibited (e.g., through legal consequences, such as the details of a severance agreement) from defending themselves. I did take one Psychology course.

Anyway, if it works for you, go ahead, bash McGinn.

Full disclosure: I never owned Lucent stock. I met Mr. McGinn a few times. He was likeable and intelligent and, like many of us, may have made mistakes. I never worked for him. I did work at AT&T (when Lucent was part of it) some time ago, where I found management to be well-trained and very professional; I don't know what management is like at either firm currently.

You can't always get what you want, particularly when what you want is fast wealth without working for it (my personal definition of market bubbles).

While there may be a sucker born every minute, buying panics have limited lives.

Have fun.
jj388
jj388
12/4/2012 | 7:40:24 PM
re: McGinn McFound
Wow. A McGinn apologist. I mean, I expected to see bin Laden apologists rearing their little commie heads at universities across America, and sure enough they haven't disappointed. They will latch onto anything that is anti-American, while they happily feast on the wealth America offers them. (Can we round them up and have them shot now, please?) But I NEVER expected to see a McGinn apologist.

Objectivity notes: "Didn't Cisco lose a bit of market cap? Nortel?" Well yeah, Nortel is run by as big a pack of nitwits as Lucent (same DNA), they just ran their game a little longer. But the diff between Cisco and Lucent is that Lucent ended a run of incredible success with something like zero dollars in the kitty, while Cisco ended a run of incredible success with billions.

The difference is the quality of management. When the telecom gear market went to hell, it went to hell for everybody. But the test was what went on when the going was good. Cisco made and saved money, tons of it. Lucent grew fatter and fatter and layered itself with useless do-nothings. They couldn't even integate purchased companies into their email systems, for god sakes, and they ran an organization that was about as efficient as your local motor vehicles office.

McGinn was, and is, a jerk. The rumors about him abounded at Lucent, and I never found out which were true and which were rumor. Things like he divorced his wife and married his secretary -- twice! -- was the going rumor. The other was that he divorced one wife and married her sister. I always liked that one. No idea if it's true, but lots and lots of people repeated it. And one story I got firsthand was that the guys flying the Lucent jet (one of them) said that mostly McGinn used it to go visit his dogs. Whatever the hell that meant. Certainly, McGinn was infamous for apparently never showing up at a customer site.

Nobody at Lucent respected the guy. I didn't meet one person that said a good word about him. I bet you have to look hard to find a Cisco employee that will slam Chambers, but every Lucent employee you can poke will have nothing but disdain for McGinn.

All of Lucent's vaunted success came down to one thing: right place, right time. The dial-up internet exploded, phone lines got jammed, and Lucent sold endless tons of expensive 5E ports to meet the demand. Meanwhile, while the money poured in, they did nothing to fix their sclerotic backoffice systems, cut overhead, reduce useless levels of "offer management" teams that overlapped each other by the thousands. (Another rumor was that one year in to a major introduction of some new back end system -- Peoplesoft or something, the mind grows dim -- McGinn pulled the plug on it in order to shift to a competitive system a buddy of his was selling.)

Well that's all blood under the bridge, as Richard Burton said in "Who's Afraid of Virginia Woolf." We all got bigger problems now. But just for the sake of historical accuracy we can't let the notion that McGinn was a victim of circumstances stand.

And Objectivity has to also learn that the "market bubble" was popped not by inevitability, but by very stupid government decisions. Thanks Alan!

If anybody wants to understand the current economic climate, read this:

http://www.gilder.com/American...

It even mentions Lucent!
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