September - 2001 - issue > Cover

Arun Sarin left InfoSpace seven months ago, after less than a year’s tenure as CEO of the now struggling company. Following his illustrious career as head of AirTouch, Sarin was supposed to spearhead InfoSpace’s transformation from Internet directory provider into wireless powerhouse. But his sudden departure became the feature event in InfoSpace’s dizzying fall from high-flyer to Wall Street victim. Sarin himself, because of his shell-shocked InfoSpace stock options, hardly benefited financially from his time at the company.

He reportedly assured InfoSpace chief Naveen Jain that he wouldn’t take up an executive position within six months of his departure, so he could continue to help InfoSpace with its development plans. But that time is up, and now he’s back in the driver’s seat — although not with another large company.

Sarin has assumed the CEO role at the telecom division of Accel-KKR, an investment/buyout joint venture between VC Accel Partners and private equity heavyweight Kohlberg Kravis Roberts. The new gig will likely be less visible and pressure-packed than another stint as CEO of a large company. But Sarin feels that both he, and the new venture, will be well-positioned for success in the Telecom landscape. If anything, Sarin will be able to stay in the game while recovering from a tough situation at InfoSpace.

Success will be a challenge. Technically, Accel-KKR Telecom is not a VC fund. The venture will do buyouts, or invest in later stage companies that need to be re-structured, using funds from the multibillion-dollar coffers of Accel-KKR.
As an example of potential investment targets, Sarin points to those large European service providers that have been burned on 3G licenses and need cash or direction to get back on their feet. Obviously, hundreds of mid-stage venture-funded telecom startups with good technology, but not a hope of success on their own, dot the landscape. And former telecom giants like Lucent and JDS are floundering in the downturn. Can these kinds of buyouts and investment opportunities provide huge returns? Or will they be a dead end? Sarin feels that the telecom sector is in a state of technology oversupply, but the overall growth opportunities for networking and communications that people raved about a few years back are still there.

“I’m not managing 50,000 people,” he says, but finds similarities between the new job and his previous CEO roles. “My skill set is centered around transactions,” he explains. “We built AirTouch through acquisitions from nothing to a company we sold to Vodafone for $75 billion.”

The idea is to use his experience structuring deals and acquiring assets to build a portfolio of works in progress, hoping to structure eventual success. It could work.

For now Sarin should be glad he left InfoSpace’s sinking ship when he did. As the VC industry experiences a massive shakeout, it will be creative investors doing the kinds of deals Accel-KKR Telecom hopes to do that may be best placed to make half way decent returns.