E – Insight Years PT I

“Times they are a changing”

At the tail end of 1999 Steve Potts of Telewest approached us and asked if
we would be interested in developing an extension of our Workplace platform
for Telewest to use. They wanted a better systems platform to push a
proposition into small to mid size businesses. We were only too happy to
talk and Telewest sent a team to Sheffield to evaluate our platform, left
suitably impressed and a contract to launch Telewest Bizexplore followed. We
Launched the Telewest service as a beta in Feb 2000 and soon thereafter the
project was closed down as a result of corporate structure changes in
Telewest. No-one like seeing a whole bunch of work going to waste and this
was no exception. Strategically it was quite unhelpful as this blow came
just as “the Americans landed” i.e. we came under the control of Insight.

February also saw us complete the financial audit for 1999. Our big scary
mega wealthy new American parent company brought with it a big scary tier 1
accounting firm in KMPG. Our audit partner was a guy called Adrian Stone. He
was from Sheffield which was a big plus, as I thought that we would be able
to communicate as I faced the interesting journey of describing a very
unconventional business to a very conventional firm. Adrian would go on to
be one of my most valued and trusted professional relationships and his
support almost certainly de-risked a lot of the practicalities of dealing
with Insight over the years and he was instrumental in our floatation
process in 2004.

This also prompted my first meaningful sit down with Tim Crown. 1999 was our
most profitable year and Insight ended up paying a little more than they had
planned for PlusNet and although they were quids in because despite paying 6
times earnings for all but my remaining 5% of PlusNet, Insight themselves
were valued at 20 times earnings. Nevertheless Tim couldn’t resist having a
friendly dig about our profit levels spiking in the year of the earn-out, I
responded by saying we weren’t as dumb as you thought when we were happy to
use a year when we knew we had the opportunity for significant growth with
predictable profitability!

He then asked what was going on and what was coming up on the horizon in the
world of ISP s. I told him that we were about to see a flip in the dial-up
access model from pay-as-you-go to subscription and that this presented both
risk and opportunity. The risk being that BT makes it messy for everyone
over a long period of time in order to stop the progress of Freeserve
threatening their voice business. The opportunity being to further progress
our position as the best ISP for discerning users as a result of our
operating model’s superiority enabling us to do a better job than our
competitors. I also told him that there was a second wave coming in a few
years called “broadband” and that was going to change everything…

Tim then told me that he liked me and he liked our business and was keen to
support me in developing PlusNet but that as predicted Insight’s
shareholders had not liked the surprise acquisition of an ISP in the UK when
he had come “shopping” for a PC business. He went on to say that Insight was
a big company and there were plenty of people in the corporate structure of
Insight that were against continued involvement in PlusNet and would favour
winding the business up if it did not remain profitable and or it could not
be sold off quickly. He concluded by saying “I really like you and what you
are doing and I will help you develop personally and develop the business
but I can only keep the Insight machine off your back if you stay very
profitable and we can give them comfort about working towards a positive
exit (sale) for Insight”.

Wow – no pressure there then – be rock-stars or we shut you down and or fuck
with you then shut you down. Be rock-stars and you get more than your fair
share of our time, access to world class business development support and
funding.

Tim then had a separate conversation with David Potts (a conversation which
he knew would be played back to me). He asked David about his ongoing
involvement to which the reply was that Lee was pretty much done with
needing his help. Then he told David that he would sell PlusNet tomorrow if
they were offered what they had just paid for PlusNet.

Talk about mixed messages – on the one hand you have unbelievable access to
and support from a couple of brothers that built a multi-billion dollar
business from the ground up and on the other we shut you down tomorrow if
you piss us off!

Before he left Tim said they were having a spot of bother [sic] in what was
Choice Peripherals and the German acquisition that they had made and
referenced Paul Cusack selling him one pup and one gem  . He mentioned
that one of his colleagues from Insight would be popping by to check us out
in the coming weeks and it was important that he was impressed, I asked
after the guy’s name and if he was old school or new school (pre-Internet
dinosaur or enlightened). Tim laughed and said his name was Mike Gumbert and
he was old school but very smart so be careful… Tim then concluded by
saying he would be back in a month or so with his brother Eric and some more
of the American management team members to sort out Insight UK and Insight
Germany (which they had acquired late in 1998). That this would give us the
opportunity to have a proper strategic discussion about PlusNet and told me
to prepare.

I spoke to Paul Cusack shortly after and he filled in the gaps – Choice had
indeed been sold just in time and Paul wasn’t going to make much out of that
business and was thankful that he made a fortune out of his investment in
PlusNet, he also remarked about how Insight had bought their German business
from a set of crooks/psychos and that it was going to take some serious
management overhead. He then went on to say that he was going to carry on as
a consultant for a while but was already planning on a start-up. He said
that what we were doing at PlusNet in terms of automation and self serve was
how he wanted to have another crack at the PC reseller business and that he
was talking to Tim about launching it as a consumer proposition, Insight no
longer sold to consumers.

I then sat down with Dean and Al and told them about the discussion with Tim
and shared my excitement about the challenge.  This news was met with a big
chunk of apathy, which was both depressing and frustrating. I asked them
what was wrong and they said that they were disappointed with what they had
made out of the bonuses that Paul Cusack had paid them and questioned why
they were not better rewarded through equity holdings. Dean went further and
said “if it wasn’t for me then PlusNet would not have survived 1999″ [ping].
I was furious and told them “this is a team effort and not just about you,
and you two are fuckin unbelievable, did either of you join this business as
co-founders?, did either of you even join this business based on an
expectancy of getting any equity??? Paul’s bonus was offered to you
unprompted by you guys and you confirmed you were happy with what was
offered and you got what was offered. You have no idea how out of order it
is to be pissed at not getting something that you never had any claim
over!!!!!!” I told them to piss off and think about how immature they were
being and to come back when they were ready to discuss the future.

When we reconvened they apologised for their prior conduct and claimed that
they were really concerned with being rewarded fairly as as we moved
forward. I told them they had to be realistic and pointed out that Insight
used share options schemes and that they ultimately wanted to sell PlusNet
and that I hoped that they would therefore put an options scheme in place to
lock all of the Plusnetter’s in and incentivise them to maximise Insights
exit value. I concluded that the key was to impress the Insight guys over
the coming months.

“Time to grow up”

I asked Dean and Al to work together and produce a technology roadmap overview highlighting key trends in our industry. I told them that I would work on describing our business and business model and a strategic plan showing what we would do going forward and how things would play out in the ISP space in the UK.

Describing our business and business model presented an interesting challenge and also an interesting point of reflection. We had an incredible fast moving innovative business, with an average age in the business of just over 23. All of the processes and procedures and general operating practises designed and implement by me, with non-standard control mechanisms in that our controls were all wrapped in our web based collaboration system known as workplace. All of the technology that supported this activity was designed by two university graduates with no prior employment supported by a rag tag bunch of graduates, drop-outs and never made it to University types . While we were creating magic every day our business was immature still and as such was not capable of self maintenance i.e. if the key operational drivers disappeared it would fall apart.

It’s really interesting when you finally stop and think about what you are doing as opposed to running at a million miles an hour with an incredible winning streak.

Never the less I was determined to meet this challenge as one of the first points of reflection was recognising that everyone was looking to me to protect their interests. Everyone was real busy doing what I had asked of them and that was focusing on internal interactions supporting our customers. It was down to me to manage our external mechanics.

So I was psyched and focused n the task but I just had one distraction to deal with and that entertaining some old corporate dinosaur from Insight that was probably just on some sort of travel the world jolly………

The day of Mike Gumbert’s visit was upon us and I had asked Dean and Al to walk him through our infrastructure build and workplace systems after I had had a brief chat with him, the theory being we would be done in a couple of hours and then we could get back to work.

Appearances gave nothing away, despite my preconceptions I wasn’t exactly expecting anyone to turn up in a suit as everyone from Insight wore chino’s and shirts as their staple uniform. Mike was pleasant and asked what he was to expect and I told him talk – walk round the building – systems demo – server room walkthrough. Mike said that this was good and we proceeded. I asked him was where he was from and what he did at Insight and was told he was from Texas and he ran Insights sales operations, the manner it was put across in was very much downplayed and he then said that he was just interested in me and what I was up to at PlusNet – score 1 for not playing “the big I am”.

Now I had already done my preamble quite a few times before and within it were number of key flags at which point it became evident that the recipient was not getting it and everything was going over their heads – no such luck, this old dinosaur picked up on every single one and interrogated each one until he was satisfied. WOW Tim you slick fucker you set me up and I was fool enough to fall for it!

I was dealing with someone with great insight [sic] and a disarming manner and clear ability to understand the mechanics of a business. It became evident that Mike was evaluating me / us and the surprising bit was he seemed to be impressed.

An hour or so later we started walking round the building and soon thereafter we were sat with Dean who was going to demo our systems. As Dean worked through the demo a smile spread across Mikes face and a look which he would later explain was pleasure at seeing confirmation of what we had discussed earlier. Again all key area’s were challenged until he was comfortable and this time I got to enjoy seeing Dean be surprised by the questions coming from this supposed Dinosaur

Same thing happened when we met up with Al and walked through the infrastructure piece.

There was one funny thing that I nearly missed the context of at the time. Mike made reference to “Insight being pleasantly surprised with what PNT actually was and their original rational for the acquisition no longer fit”. Later when I asked Mike to clarify he outright said that Insight expected Pauls side project (PlusNet) to go nowhere and be shut down!!!!! This fit with a bunch of comments that had been made by Paul Cusack (“Insight wanted to buy PNT as well to lock me into delivering the integration of choice Peripherals”) and various other senior Insight people. Imagine that ~ a large corporate buys something for specific rational and through sticking together, working hard and executing acquired entity forces large corporate to change its plans for said acquisition………….these are the things that you would think that people would fall back on having experienced it first hand.

When it came to wrapping up Mike said that he was very impressed with what he had seen and particularly that we had figured all of this out ourselves, developed the commercial model and created a whole new operating model based on combining web based interaction leveraging use of open source software and viral / community based marketing. That we had a great buzz about the place and a bunch of people that were working together in a fantastic fashion. That we had done all of this was remarkable but then also to be holding our own in the market competing with some very powerful companies and then to top it all we were generating cash and real actual profits! He said that we were a tomorrow business operating in a world of yesterday businesses and that we should not be persuaded by anyone to change what we were doing as we had a future and they did not.

Mike finished by saying That we had his full support and if that he would help us in any way that he could as Insight had a knack of getting in the way of some things. I replied that I was keen to get to know him better and learn from him if the chance arose.

After Mike left I sat with Dean and Al and all I could say was “well Tims smart and Mike smart – I suppose we should have expected them to have some smart people if they built a multi billion dollar business up from nowt! It really was a massive confidence boost to have experienced the feedback from Tim and then Mike.

Right now down to work preparing for Tim’s and Eric Crown’s visit. What are we? how do we do stuff? where is our industry is headed? where we are headed? when / how will Insight sell out? what do we do in the long term?

Dean & Al came back with another iteration of their technology roadmap and this one seemed spot on for our needs. Plenty of good stuff in there and some controversial stuff. Open source kills proprietary software, web access become ubiquitous driven by broadband over fixed lines and latterly over mobile networks, this would drive the consolidation of the fixed line and mobile propositions and voice revenues would be commoditised through the adoption of VOIP and electronic messaging.

Software and associated applications are mostly free and any revenues are extracted by way of rental charges on a pay as you go basis. Oh and Content would be mostly if not completely free.

That left me figuring the other stuff out and these were my conclusions; consumers awareness will enabled by the internet and as a result mass market approaches would be undermined and so called brand values would be found out. Successful propositions will be driven by viral / referral marketing. We were NTL & Telewest would go bust and merge and Bt would slam the brakes on Freeserve and the rest of the free dialup providers by switching the model to subscription and this would be a painful period and then BT & the combined NTL/Telewest would roll out broadband and that would be our opportunity to shine. that our mission was to build the most efficient platform for service provision in the world and in falling short from that goal we should be in good shape. That this platform would help us survive BT screwing with dialup and position us for when broadband comes, we prosper and sell insight out and then we go on and rent our platform to any service provider that wants to replicate the efficiencies that we achieve in PlusNet. That we needed to build a relationship with BT in order to navigate the infrastructure path over the coming years. All of this value will be created by the current and potential additional PlusNetters and therefore we would need to implement an options scheme to secure the plan.

Well that sounds easy – let’s do it………….:-)

Tim returned with Eric, well sort of, Tim said that Eric would follow and asked that I take him through whatever we prepared. He then said that we had really impressed Mike Gumbert and that it took some going to impress that particular old fucker. That this was quite important as Mike was going to run all of Insights worldwide operation and PlusNet would fall under his remit. With Mike’s buy in anything we wanted to accomplish would be protected from the sometimes complicated experience of dealing with the Insight mother ship.

We went through the stuff that had been prepared, Tim was happy and said that he would be interested in Eric’s take as Eric was “the smartest of all of them” but he was confident in how I / we would fair. Eric finally turned up we talked for a while and then we talked with Dean, the entirety of the conversation was much like the experience with Mike Gumbert in that the talking was all about the key mechanics and Eric clearly was able to pick the points up quick, challenge and add value.

Eric closed off by saying he would chat with Tim re his thoughts and that our challenge would be to grow the business and keep the value drivers working.

I met up with Tim again and he said that Eric was supportive and that if there was an opportunity to invest in growing PlusNet then Insight would do so. There were strings attached though, Tim said that we needed to recruit more talent and more management as although it was clearly working so far,  Insight would not sign off on investing in something that was premised on everything flowing through and therefore being dependant on  me. I pressed the issue of implementing an Options scheme and he asked that I take that up with Mike Gumbert when he returned. Tim finished up by said that I had built a fantastic little business and that now it was time to mature it and enable it to become self sustaining in order that I and the key team could focus on growing the business.

“BT Corporate arseholes”

Fate has played a big role in this story and never more so than what happened next!

I got a call from a guy at BT who said his name was Danny Sullivan and that he was

In charge of the Service Provider Group (looked after all the ISPs in the UK) and he

Wanted to come and talk to me about an opportunity.

Danny arrived and we did the dog and pony show for him. Duly impressed, he started

Talking – he said “I am told you are a plain speaker, well so am I – so I will be

frank, you have made quite a name for yourselves within BT based on what you’ve

achieved with limited resources”.

He then asked if the systems that he had just been demo’d were real or vapourware

to which the answer was this is our live platform and actual customer transactions

were brought up and shown. He then said “it seems that you have cracked the model

and we have a project that we are interested in you participating in. As you guys

know we fucked up by not getting into the ISP model early and it wasn’t until

Freeseerve launched that we started to take notice of this place at a senior level,

we have been working hard this past year or so to break the relationship between

Energis and Freeserve and haven’t had much joy so far. Now you may be thinking why

should I care, BT is full of corporate arseholes that haven’t got a clue and you

would be right – but there are a few of us that are allowed to do stuff and we are

very keen to sort our position in this space. You may be aware that we have set in

motion something to stop Freeserve in their tracks with the stuff we have been doing

with the interconnect rates and encouraging a shift to an unmetered model. Well what

comes next is the unmetered product that we are going to launch is going to push

people back towards BT cause we are going to launch something that is tied to the

BT blue bill and it will be called Surftime. You will pay BT for the unmetered calls

to your ISP and you then pay the ISP for the internet access and value added

services. The reason I am telling you this is we want to do a deal with our friends

at Freeserve and we want your help in doing it and you guys can benefit.

He went on to say something that blew me away – this senior manager from BT actually

said next “we want to go to Freeserve from a position of strength so what we want

to say to them is that we have put into you guys the necessary connectivity to

support a huge growth spurt and we will bankroll the marketing campaign needed to

crush you if you don’t give us your business”. I asked him to clarify what exactly

he meant and he said “we will run redundant fibre into you and build out 50,000

dial-up ports worth of network capacity to you, we will not bill you for usage

until you have established your customer base run rate and then we will also give

you a couple of million quid to spend on marketing. If Freeserve do a deal with us

then we will stick to giving you the infrastructure and a smaller marketing budget

to spend and you will be able to use whatever capacity you need for free until you

have established a customer run rate and then we will decommission whatever capacity

is spare and ship it just up the road to Leeds”.

Wow………………………..

I asked him why BT thought we were right for this play and he said that BT did not

Believe that they would be allowed to be predatory at a retail level from within the

BT group, that he wanted to see with his own eyes that we had cracked the ISP model

and then in addition to that comfort being confirmed being backed by Insight then we

would be able to scale operationally. I told him his timing was good as we were in

the middle of strategic discussions with Insight at the very highest level, that this

would give him the speed of execution that he clearly needed and that I would get

back to him.

So much for it going to be hard work to build a relationship with BT

After trading a couple of emails I held a conference call with Tim Crown and Mike

Gumbert who both remarked on how fast I had brought them something to talk about

and laid out the opportunity – they both saw a massively de-risked opportunity to

grow PlusNet with BT’s subsidy based support and were keen to grab this opportunity

- I was the one urging cautious optimism based on what I saw as being a bumpy ride

with unmetered dial-up with the real prize being the soon to arrive broadband

proposition. Mike said we should get back to BT and tell them Insight are fully

behind us on this and that he would be over in a few weeks and had chosen to live

in Sheffield (Insight UK was based in Worksop) and would support me however he

could to take PlusNet forward. I said that we would work on the operational planning

and the thing I needed sorting was the options scheme for PlusNet. Mike said that

doing this was a no brainer and they would get straight on it and emphasised that

we needed an operational plan highlighting the requisite investments ready for his

review ASAP and to see how fast BT wanted to run.

I reported back to Dean and Al and also got back to Danny Sullivan at BT.

We got on with reviewing our operational set-up and looking at what needed investment

and changing our development roadmap to support a major product launch.

By the time Mike Gumbert arrived we had ramped up our recruitment activities but had

held back on hiring and we had taken a look at our hosting infrastructure. Mike and

I met with Danny Sullivan and his boss. We walked away from that meeting knowing

that we had a bunch of work to do and that we would not know which marketing plan

we were going with until the very last minute.

Mike asked me how I thought things would play out and I said that I thought this

was a genuine opportunity but given this all being a prelude to broadband rollout

that I did not think we should over extend ourselves. I told him that the BT

relationship was important because through it we would get unprecedented access

on the inside at BT which would enable us to plot our own route through whatever

path BT drove the UK market down. That this project was more about how we execute

than the result as that would inform us whether we had a business to be built on

or a business to be sold. He then asked me if I thought BT would be the acquirer

of our business and I said given the current course I guarantee it my task is to

fly close and try not to let them close the deal for a very long time if ever

(ever meaning past a point where we could stand on our own two feet for the long

run). Mike said “well don’t be so candid with some of my colleagues at Insight

as they would rather sell you guys sooner rather than later……

That same day Mike and I also met with some people at the regulator Oftel

(now Ofcom) and the take away from that was that they were still committed to

regulation at the wholesale / infrastructure level and not at the retail level.

That reinforced the argument that BT would not get away with completely flipping

the industry overnight into a proposition that was tied completely into the BT

blue bill.

On the train coming back Mike asked where my thoughts were at in relation to

Evolving the businesses operational model. I said that I recognised that we

needed to move beyond the “owner proprietor model” which meant that I had created

or significantly influenced every single process and methodology within our

business, and empower people to take this process creation and evolution function

onwards. That I did not believe that we need ever move away from high levels of

automation exposed to front line employees and customers, web based action and

reporting or web based communication between customers, partners and employees.

Customer facing people to be the most important people in our business and

management functions existing to support do’ers as a opposed to use do’ers or

even as is in most cases exploit do’ers. My primary concern being that I did

not believe that there was a such a thing as a ready available pool of managers

with the skills and experience in working in this “new way” and that we would

have to gamble on bringing people in and get rid quick if they don’t work out

and be patient on developing management skills internally. That I had identified

a bunch of people internally in addition to Dean and Alistair that I believed

had the potential for development and that I would move into a mode of

developing them all and communicating through them so as to build their internal

brand (letting them take credit for everything) and build their confidence

levels (from nervous and inexperienced to assured but not arrogant) and thus

create the ability for myself, and also eventually the likes of Dean and Alistair,

to work on external aspects of our business.

When we got back to Sheffield we walked through our operational plans which had

identified customer support and hosting infrastructure investment requirements

and the need to leverage our old free marketing resource which was now sat with

Insight UK i.e. Marco Potesta and team.

Mike was happy with our plans offered the view that we should also recruit some

Management people to keep certain back office people at insight out of my way

(at the time we did not have a proper Finance Director). He also asked if we

thought we could cope with ramping up our development resources and put more

effort into developing some of the applications that we had created.

The message was received loud and clear on the FD side and I knew how fill that

slot. I called Adrian Stone at KPMG and asked him to look at their network for

a candidate or two.

We then talk Tim through the ops plan and he was happy with everything but the

plan to launch the new residential service off the PlusNet brand – he hated the

domain name we were using and in stereotypical brash American fashion declared

“let’s find out who owns www.plus.net and lets buy the domain!!!!”

Well that domain was acquired with a degree of not letting the seller find out

an ISP owned by a mega rich NASDAQ business was the buyer and a small matter

of a $50,000 payment

Marco was tasked with planning a two track marketing launch and we ordered the

kit but held off on the customer service expansion based on my reticence to

allow operational activities to run ahead of us in case either they were not

needed or ramping up to fast would cause a management melt down. I got the

feeling that Surftime was not going to be what BT hoped.

—

“Theres gold in them thar hills – no really there is”

The problem with the Surftime proposition was that it was another classic case of BT denial. Yet again BT was bending the product to match its own internal view instead of being its internal operation o match the product that the customer wanted. There was talk of major objection to the product from Freeserve and AOL as the product forced people to keep a relationship with BT retail as part of their internet access product. This strategic mistake would have far reaching ramifications for the development of the Internet in the UK up to and including today.

From our perspective it kinda did not matter as we were building a relationship with BT and they were looking at product development at the network layer, and as they were the only game in town given that the cable guys were busy going belly up, this meant opportunities to innovate. So long as we stayed true to the principles of our model then we would be able to navigate the waters ahead.

When I got back to Sheffield I sat down with the senior guys and briefed them, I apparently bored them to tears by giving a reprise about my long term history and drove home the point about my desire to build a team that stuck together through thick and thin and my plan to create financial upside for the participants over myself. I finally reiterated that there are two ways to do business one which creates value and one which destroys it – the later being based on lies manipulation and deceit and no long term vision (classic old economy) and the first being based on trust, integrity, a credible long term vision and a team that manages its weaknesses and builds on its strengths. I then told them about our interaction with BT and then shared the biggest news. Insight had agreed to my request to implement a long term incentive (LTIP) scheme based on share options. That we would be able to issue 10% of the companies stock with 5% initially and 5% distributed over time. The guys had been giving me a hard time about giving them their own heads and I told them this was the chance, that I wanted them to come up with the distribution levels and I would then review and send up the chain to insight for approval and implementation. I told them that I would be putting my faith in them by delegating a whole bunch of stuff that I had kept a tight grip on based on them committing to personal development (ie. taking on, risk responsibility and developing our team). I also told them that unlike in most cases I would not be participating in this scheme and that I was happy with my 5% shareholding in the company and that I wanted all of team PlusNet to be the beneficiaries of this scheme.

They all woke up at this point

I said “I told you we were building something interesting form both a technical and financial perspective and that this would be recognised. Based on this development we are now on a track to create value for shareholders and you all would become shareholders and benefit as well as opposed to just being employees”. I asked them to think carefully about long term value when developing their carve up proposal and to brief the next layer down about this game changing development.

I concluded by saying that Mike Gumbert would be spending some time in Sheffield as he oversaw the clean up and development of Insights European operations and would also be spending time with me / us exploring where we could take our applications and business model. Finally I confirmed I would be flying to to Phoenix to meet up with the other senior people at insight who would need to be onside and supportive of our business and that that Mike would attend a rally style meeting in Sheffield where we rolled out the paperwork for the options so they all had to get a move on.

They promised to go off and brief the rest of the key guys who would in turn roll out the good news across the rest of business. They also committed to turning the share option allocation proposal round.

The proposal arrived in my inbox and I sat down with the senior guys and queried certain elements of the proposal and asked them to go away and produce another version. They did – we met again and I sent it off and then jumped on a plane.

The journey was a nightmare, I got no sleep but I ate and drank well

The scenery coming into Phoenix and flying over Scottsdale was spectacular and I had a short cab ride to the hotel that had been recommended. I slept as best as I could and then it was on with the big day. I went into Insight’s head office and met with a bunch of people then did a whole bunch of waiting around and then ultimately had a meeting with Tim Crown and  guy called Stan Laybourne who was group CFO of insight. Now Stan just creeped me out if you have never met him he comes across as Mr Burns playing Dracula..(yeah I know this is a cheap shot but in this case it is entirely justified)………..his opening gambit was I hear you have a great business are we gonna make loads of money from it???

I replied that you already were in the form of our cash generation and profits which was underpinning all of the perceived success in insight international rollout and that I was convinced that that were one or more liquidity events in the future of PlusNet.

The conversation turned to the LTIP strategy and I stated I was happy with the quantum’s that had been proposed and I asked what they planned to do to incentives myself, Stan replied that they thought it unnecessary to do anything for me, ahh the old good cop bad cop routine – I said that was OK and then requested confirmation that the scheme would be against insights holding and I would therefore not be diluted by this or future schemes. They confirmed this was appropriate given my holding of only 5% would be materially impacted by any dilution. Tim said that I would need to think about how certain influential people in Insight were incentivised to support the investment in PlusNet and I said well that would come through the insight share options surely. Tim then said that he had reviewed the numbers and would give feedback shortly – meeting over.

The update from Tim changed only one value but it dramatically impacted everyone’s. His proposal was that Dean Sadler would revive a significantly greater amount than that had been proposed and given that we were capped at 5% this had a huge effect in reducing everyone elses. I called Tim and said that this would be a huge mistake for two reasons 1] Dean’s impact was not proportionate to the amount proposed in respect of the contribution of others and 2] dean had two weaknesses – greed and lackc of empathy and this might set us on a course which would create problems in the future. He then said that as far as he was concerned Dean was key and that I had to trust him on this one as he had been here before and that in this respect I was learning. Decision made.

On the 18th of May the big day arrived and we all walked across the Victoria quays pub for the rally.

I introduced Mike and he spoke openly about how impressed he was about what we had and what we were developing and the bright future we clearly had. He was excited for us and knew this was a big day. Now all my guys and gals have always been a bit reserved but there was something not quite right in the atmosphere. Everyone in attendance was asked to come up and collect their paperwork and there was a reasonable amount of excitement.

After I sat down wit the senior guys and asked them what the problem was and they all just shifted in their chairs, I asked if people had been properly briefed about everything and was confronted with the answer of “sort of”. I asked if they get all the key people in a  room and communicate what I had communicated to them and they said no.

So fuckin pissed off was I.

I asked them to get all of the key people in a room and told them that I would brief them all again.

When we sat down I asked round the room what people thought of what had just happened to our company and got a typical reply along the lines of so Insight like us then well at least they are not gonna close us down then”.

Wow

I told everyone that I believed that this was a massive development that needed to be embraced positively. That not only did Insight like us but believed at the highest level in our business model and wanted to invest in us in order to create long term value for themselves.

I then proceeded to bore these guys to tears reprising once again my long term history and everything that I had communicated to the senior guys. I confirmed my commitment to focus purely on making everyone else successful and ensuring they were protected and rewarded financially as the company moved forwards in the knowledge that I would benefit if they did so. I confirmed that I would stand behind them and guide them as we moved form a model of everything going through me to creating one where we create a blue print and build that into our automation and then mature our model through them supported buy some recruitment. That they would get all the credit for whatever we did going forward and I would protect them from threats from the outside world and be there to make all the really hard decision whenever necessary. That the burden of responsibility for protecting our business internally would transfer to them and the reward would go with it.

Now the room was buzzing!!!!!

I asked them all to go out and spread the word as we were about to hit the nitrous button and we needed everyone focused, excited and hungry.

—-

“Great project delivery – crap product proposition”

The project that delivered the plus.net brand as part of our Surftime launch was a watershed moment for our business. This was a huge project that engulfed everyone in an environment where we still had to work hard supporting existing customer expectation. This really was a point of maturation for everyone. The network platform was rebuilt and significantly upgraded. The portal platform was developed significantly to being a multi brand proposition versus a separate implementation per brand. We interfaced to BT systems for the billing tie in, we developed new processes and procedures which touch customer services and accounts and we launched a new marketing campaign all on resources that were sized to support our existing customer needs.

This truly was a mammoth effort by all concerned.

From a balance sheet perspective the project was very interesting as we got a whole bunch of free kit that was going spare from insight and we got a nice little marketing subsidy from BT which ran into the hundreds of thousands. We even had Tim pushing us to shell out $50k for the plus.net domain name!!!

The downer was that Surftime was doomed to failure from the off.

The week before the launch Ofcom (then Oftel) announced that they would be forcing BT to create a clean wholesale dialup product called FRIACO and would allow service providers to offer unmetered dial-up without the consumer being forced into a partial billing relationship with BT retail. We also got the early briefing about this new product that BT were planning to develop over the next year or so – something called “broad ~ band”

These developments were report to Mike and Tim and I was asked what I thought of the situation. I told both of them that we had played it smart by not exposing our balance sheet or P&L to the project, BT had by that time not only given a marketing subsidy but had also given us a to be defined period of time where we would not need to pay for our wholesale capacity under the guise of bedding down the new product in order to allow us to build a base of customers. The majority of the cost of infrastructure was effectively zero cost as it came via the transfer of tin based assets from Insight. so we had no downside and more importantly we had come through a massive proof point showing that we could take our innovative disruptive approach and deliver something in a much more robust / scalable and mature way – PlusNet and BT were the only companies to be ready for the launch of Surftime and PlusNet was the only one to do so in a fully automated fashion.

I confirmed that I believed that this would stand us in good stead as unmetered dialup causes a shift in the model under the FRIACO product and that will all lead into a full shift to broadband and that br9oadband would be our big opportunity to leverage our platform to beat our competitors, create a consolidation play and ultimately lead to a situation where we could sell our platform as a service to any service provider in the world.

When Tim asked where I saw Insights exit point and to who – I said broadband and BT. He asked why not FRIACO and I said that FRIACO would be a painful transition and when BT got broadband right enough for resellers to deploy it we would be the principle beneficiaries because of the efficiency of our platform – efficiencies which we had just cemented.

When he said that some people in Arizona might be disappointed because the Surftime opportunity had not materialised I said it’s a good job we are generating cash and profits then isn’t it To be fair to Tim he said that he would handle any grief in Phoenix and that he believed in what we were doing from an application development perspective and directed that we ramp up recruitment to explore what we could achieve through software development.

So Surftime failed because BT tried to protect its legacy business model first instead of delivering what the customer / market clearly needed, wanted and could get its head around. In doing this BT stymied the development of Internet access take-up in the UK. It then compounded this by launching a product called BT click that undermined its own billing relationship as no one had to register to use the service, you just dialled a phone number so in absence of breaking regulatory rules about mining BT’s database it was impossible to determine who was a BT click user

Instead what it should have done was say OK I am not executing as well as some of you guys at the retail level – here is a game changer at the wholesale level done right from the off in FRIACO now I am going to get my product delivery and customer experience right and beat you all in a fair fight.

More in this section coming soon…….