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Fidelity Investments' Former CIO Joins VC Arm Don Haile Spots Business Needs: Security, Compliance, VOIP & Simplification February 1, 2006 By Russ Garland Fidelity Ventures, which already has an inside perch in the financial services industry, has boosted its expertise by adding the former chief information officer of its parent, Fidelity Investments, as a part-time venture partner. Don Haile has spent eight years at Fidelity and before that, 34 years as an executive at International Business Machines Corp. As a venture partner, he will tap his experience and network, both inside and outside of Fidelity, to vet potential deals and help sharpen the strategies of start-ups backed by Fidelity Ventures. The ex-CIO remains plugged into the business side of Fidelity as general manager of the Fidelity Investments site in North Carolina's Research Triangle Park. The newest of Fidelity's regional sites, it houses the company's employer services group, which manages health, payroll and retirement programs for other companies. Haile is no stranger to the venture firm. "When I was the CIO, there would be ideas flowing out of here," he said in an interview at the venture firm's Boston headquarters. Fidelity Ventures specializes in what it calls "go-to-market capital," preferring to make its initial investment after early product development work is done and a company is ready to court customers, although it will invest earlier. The firm operates independently of its mutual fund parent, but is financed entirely by it. Fidelity Ventures' current $250 million fund, its fourth, comes from the corporation, not its mutual funds. According to Haile, there is still no end of opportunities for start-ups to tackle problems besetting large enterprises. Security tops his list. "The big guys aren't going to solve every single problem," he said. In fact, one of Fidelity Ventures' latest investment was in a security company, Verid Inc., Fort Lauderdale, Fla. In August Fidelity Ventures and CIBC Capital Partners co-led a $13.2 million later round for the company, which sells an identity verification service to large companies. Another big opportunity Halie sees for start-ups is helping companies comply with laws such as Sarbanes-Oxley Act and Health Insurance Portability and Accountability Act of 1996, or HIPAA. As Fidelity's CIO, he worked with Qumas Ltd., an Irish company that Fidelity Ventures along with General Catalyst Partners financed in last May, to help it get a foothold in the financial services industry. Already profitable, Qumas got its start selling compliance-management software to pharmaceutical companies. Fidelity and General Catalyst were new investors in a $10 million fourth round for the Cork-based company. "One of the things regulators want to understand is that you have well defined processes and that they are managed and controlled properly," Haile said. Qumas can document the details of something such as processing a stock trade "and then help you control any changes in the processes." he said. A third major issue for enterprises, Haile said, is simplication. Fidelity Investments, for example, has more than 10,000 servers and more than 50,000 desktop computers. "Understanding what's there is a real problem," he said. And server consolidation is "so far from done...I left with a glimmer of hope. It had become pure blocking and tackling. The glimmer of hope came from virtualization." Virtualization enables a single server to function as several. Because of it, Fidelity has been able to eliminate several hundred test and development servers, which are greatly underused, Haile said. As manager of a Fidelity Investments operation with hundreds of telephone representatives, Haile also is very interested in Internet telephony, or VOIP. He said there are opportunities for real innovation in corporate telephone networks as well as call centers. Fidelity Investments is testing VOIP on a substantial number of its phones and is taking a hard look at its call centers, although a decision on whether a complete switch to VOIP is warranted is about two years off, Haile said. But the mutual fund company already is experimenting with technology that allows customers to click on a computer icon to establish a voice connection via the Internet with a Fidelity representative. While Haile was CIO, Fidelity Investments started to look at using open-source software to build an Internet-Protocol-based phone system. That project led to the creation of BlueNote Networks Inc.

Fidelity Investments' Former CIO Joins VC Arm

Don Haile Spots Business Needs: Security, Compliance, VOIP & Simplification

February 1, 2006

By Russ Garland

Fidelity Ventures, which already has an inside perch in the financial services industry, has boosted its expertise by adding the former chief information officer of its parent, Fidelity Investments, as a part-time venture partner. Don Haile has spent eight years at Fidelity and before that, 34 years as an executive at International Business Machines Corp.

As a venture partner, he will tap his experience and network, both inside and outside of Fidelity, to vet potential deals and help sharpen the strategies of start-ups backed by Fidelity Ventures.

The ex-CIO remains plugged into the business side of Fidelity as general manager of the Fidelity Investments site in North Carolina's Research Triangle Park. The newest of Fidelity's regional sites, it houses the company's employer services group, which manages health, payroll and retirement programs for other companies.

Haile is no stranger to the venture firm. "When I was the CIO, there would be ideas flowing out of here," he said in an interview at the venture firm's Boston headquarters.

Fidelity Ventures specializes in what it calls "go-to-market capital," preferring to make its initial investment after early product development work is done and a company is ready to court customers, although it will invest earlier. The firm operates independently of its mutual fund parent, but is financed entirely by it. Fidelity Ventures' current $250 million fund, its fourth, comes from the corporation, not its mutual funds.

According to Haile, there is still no end of opportunities for start-ups to tackle problems besetting large enterprises. Security tops his list. "The big guys aren't going to solve every single problem," he said. In fact, one of Fidelity Ventures' latest investment was in a security company, Verid Inc., Fort Lauderdale, Fla. In August Fidelity Ventures and CIBC Capital Partners co-led a $13.2 million later round for the company, which sells an identity verification service to large companies.

Another big opportunity Halie sees for start-ups is helping companies comply with laws such as Sarbanes-Oxley Act and Health Insurance Portability and Accountability Act of 1996, or HIPAA. As Fidelity's CIO, he worked with Qumas Ltd., an Irish company that Fidelity Ventures along with General Catalyst Partners financed in last May, to help it get a foothold in the financial services industry. Already profitable, Qumas got its start selling compliance-management software to pharmaceutical companies. Fidelity and General Catalyst were new investors in a $10 million fourth round for the Cork-based company.

"One of the things regulators want to understand is that you have well defined processes and that they are managed and controlled properly," Haile said. Qumas can document the details of something such as processing a stock trade "and then help you control any changes in the processes." he said.

A third major issue for enterprises, Haile said, is simplication. Fidelity Investments, for example, has more than 10,000 servers and more than 50,000 desktop computers. "Understanding what's there is a real problem," he said. And server consolidation is "so far from done...I left with a glimmer of hope. It had become pure blocking and tackling. The glimmer of hope came from virtualization." Virtualization enables a single server to function as several. Because of it, Fidelity has been able to eliminate several hundred test and development servers, which are greatly underused, Haile said.

As manager of a Fidelity Investments operation with hundreds of telephone representatives, Haile also is very interested in Internet telephony, or VOIP. He said there are opportunities for real innovation in corporate telephone networks as well as call centers. Fidelity Investments is testing VOIP on a substantial number of its phones and is taking a hard look at its call centers, although a decision on whether a complete switch to VOIP is warranted is about two years off, Haile said. But the mutual fund company already is experimenting with technology that allows customers to click on a computer icon to establish a voice connection via the Internet with a Fidelity representative.

While Haile was CIO, Fidelity Investments started to look at using open-source software to build an Internet-Protocol-based phone system. That project led to the creation of BlueNote Networks Inc.