D – Learning to run
“Free at last, free at last, dial-up is, free at last”
Some of you may be aware of the term “the Google stone” this relates to the weight gain experienced by Google employees as a result of the dietary regime at Google and abundant supply of food. There is no doubt that Google will not be out done in terms of food supply to employees but they were not exactly pioneers.
In our early months in Sheffield we would alternate between daily multiple KFC, McDonald’s and Burger King expeditions. This was used to supplement the never ending internal coffee production line. We soon added vending machines and then the big breakthrough, internal sandwich preparation with inevitable accompaniment of quiche and sausage rolls etc. This supply source combined with high stress levels and poor exercise created the perfect storm that drove significant weight gain for the typical Plusnetter 
The specific accelerant in this case was the launch of Free-Online.
By the summer of 1998 Paul Cusack and I had started to talk about the subscription fee for Dial up being commoditised down to free, by large PC retailers and content plays, with the remaining revenue being business subs, value added services and calls.
We did not have a problem with this as we were in a position to make money in such an environment because of our low operating costs and low cost marketing strategy which was becoming more and more about viral & referral activities. In fact we cost were banking on this development as we felt that our competitors were not offering good value for money and would weaken as this margin pressure increased.
I took a call from Gary Shaineburg at BT who said that they wanted to come and check us out and potentially talk about some of the things that BT were on with. A small delegation arrived and promptly said to us “we are BT, everything comes through us and we know how everyone is doing, you guys appear to be the most efficient operator in the UK, how do you do it?”
We walked them through our model and key processes and they seemed impressed, in fact they went on to say, we hoped that we would find what we have done today as we have a project that be of interest to you…………..you may have heard about Dixon’s (DSG) talking about getting into the Dial-up ISP game and making noises about charging £5 to £10 per month. You are proably also aware that we are about to launch BTClick which is a pay as you go offering that bundles the access and call fee together. Given this we are actually expecting DSG to offer their service subscription free and just make money off the calls. The reason we are interested in DSG specifically is that we are bidding to deliver the service and although we don’t think they will give us the business as our management teams hate each other (irony) in the event we do get the business we are interested in you helping us deliver the project – would you be interested in that and or would you be interested in developing a relationship with BT?”
I said “You are right to be nervous about DSG, they are going to kick your asses, you guys don’t understand the power of the PC retailers with regard to bundling internet access and I think they are going to get 100% take-up of any competitive dial-up product by bundling with their PC & modem sales.
We have a very good relationship with Telewest but that is not an exclusive relationship and we would be keen on developing dialogue with BT”. After the BT team left I called Paul Cusack and updated him and confirmed our suspicions about the demise of dial-up subscriptions and requested to meet up to discuss strategy.
The conclusion of that meeting was for me to go to Steve Potts at Telewest to request support for an improvement in the call share split based on us being more aggressive at marketing and for Paul to speak to Tim Crown about the opportunity to invest some of our profits in faster growth – oh and us committing to launch a subscription free brand.
That brand was Free-online.
The terms of the earn-out with Insight was that they would pay 6 times 1999’s full year operating profit before tax for the 85% shareholding in Plusnet. This meant that we had to get Free-online launched and moving under its own steam by the end of December 1998. Paul got Marco Potesta on the case to sort a marcoting push for the launch and I asked Alistair Wyse and Paul Crutchley to figure out what investment was needed to go from supporting a big uptick in growth and sized for up to 200,000 customers.
This compared to the approaching 25k customers we had and a growth rate pushing 700 net additions. David Potts worked with David Singh on ramping up our recruitment to cope with the additional customer support workload.
Things were very exciting and many an unhealthy snack was being consumed!!!
In early September BT came back and confirmed that Energis had won the DSG bid and had bought Leeds based Planet Online to deliver the service, they also told us they thought the brand would be called Freeserve but asked us not to tell anyone because it was very sensitive info.
We looked up the domains and saw that the freeserve.net domain had been registered recently along with its variants and concluded that was definitely going to be the brand given hat it was now being hosted by Planet online. Paul, Marco and I sat down and talked about brands and we ended up settling on Free-online.net. We figured that we would get some brand read-across from Freeserve to Free-ionline i.e. their advertising would work for us and that we would be the only alternative offering a subscription free deal for a few months. Marco had put an advertising plan together and Paul shared the good news from Tim Crown that Insight were willing to support some spend in early 1999 without it negatively impacting the earn-out!!!
So – we needed to complete the network upgrade, create the Free-online branded website and CDroms and confirm the advertising schedule.
Everyone was working the asses off to make this happen.
I took another call from BT and was invited to meet one of their senior people to talk about Freeserve. The meeting was with Dave Hughes who was in charge of the service provider group (UK ISP market) and was to be held at Telecom Tower in London. I was advised that BT management was “very corporate” and I might want to curb my approach. I sat down with David and he said “I hear you have strong views about the wannabees at Dixons” – it was no use, I said “yeah, they are going to fuckin murder you guys and it’s
what you deserve, you have done nothing to drive internet access take-up and they are going to march in and clean up” to give him credit he managed not to puke at such a blunt view, collected himself and asked why I believed that DSG could execute at scale. I replied “do you know how many PCs DSG ships per month? do you know how many modems they ship? do you know how many they have shipped in the last 5 years?, they will all be Freeserve Subscribers within the year because the customers will pay not attention to
the call charges and will buy into “Free” Internet”. Then Dave hughes surprised me by saying “I agree with you as far as the sales strategy goes but we don’t think they can support the growth operationally or at Energis”.
This was the first time I gave someone senior at BT frank views that questioned BT’s strategy but it would not be the last and ultimately it would cause me a bunch of pain.
So Freeserve launched late in Sep 1998 and went off like a rocket, as we heard about their numbers our excitement about the potential of Free-online was ramping – the applicable phrase I think here is “be careful what you wish for”
In November 1998 Free-online added 20,000 customers. In December 30,000 and it just kept going. By July 1999 Freeserve had 1.5m users and Free-Online had 300,000. We also saw a big up-tick in business accounts paying subscription on our Plusnet brand on the back of Free-online and a slight growth on the Force9 subscription consumer offering. In Jan 99 we also launched another Free brand in partnership with the PC reseller Dabs.com (now owned by BT (sic)) called Dabsol which added 30,000 users. We had also improved our deal with Telewest resulting in us getting 70% of the revenue. This all looked fantastic but it did not tell the whole story………..
Going from 700 a month growth to 30,000 a month growth was something that we were never going to be able to cope with. But we didn’t half give it a go. We had miracle workers in networks and customer services busting their guts trying to keep pace. The good news again was that Tim Crown was happy for us to invest as he knew that he was going to get a business that was going to be worth more if it was more succesful.
In the middle of all of this excitement and pressure our business had its magical breakthrough. The walking dead that were Alistair Wyse and Paul Crutchley were being asked by me not for the first time in the past few weeks “there must be an answer to our problem, we must be able to improve our automation ’cause its the manual interventions that are killing us” – they gave up what I call techie lock* and said “yeah it’s simple, we need to hire a bunch of programmers and automate the product provisioning in our
database and then build customer self serve tools”
Allllelluujaaaaah!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
What kind of skills do we need? answer = MYSQL & PHP
Where do we get em? answwer = the two Sheffield universities
Which one should we prioritise? answer = better people at Sheff UI, can get em quicker from Sheff Hallam.
We got the job adverts sorted and I sent David Singh to the two Unis to stir up interest and told him to focus on Sheff Hallam. Those of you that don’t know David Singh the best way to describe him is as a lovable Michael Myers
The stand out candidate to lead our developer strategy was a guy called Dean Sadler, in the initial chat he said “I am willing to come and work with you guys and sort your problems and then you are going to let me do what I want to do to make a load of money” I said what do you want to do” he said “build an ecommerce proposition and clean up”. I thought to myself that based on his clear intellect, drive and energy that this was our man and then said “you haven’t got a fuckin clue what you are talking about but you have talent and energy and I will be willing to let you work here, show you what you don’t know and then you can go on and do what you want – Oh and I will pay you £28k per annum and you start in next week”, he said “what makes you think I want to or even can start next week” and I said “cause you aren’t in work and the job needs doing next week”, He said “I can start in two weeks time not next week” and I said “done”.
Wow I found another Nick Lott but this one can communicate and has more energy – I just hope he won’t be as difficult to deal with as Nick was…….!!!
* Techie Lock is the description of super techie behaviour with regard to sharing knowledge and communicating honestly with each other and especially with other groups (customer services / marketing / management ).
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Eureeka!!!!!
Words can’t do justice to the evolution that our business was on the verge of.
Prior to this point we had a common ambition for the business to succeed but there was conflict between the departments fostered by the arrogance of the techies who treated the guys in customer support with disdain.
We also had fundamental problems with the operating model, such as having a paper based escalation systems from customer support to our networks department, poor automation, manual billing, minimal customer self serve capabilities and nothing either systems-wise or process related driving community based interaction with our customers.
As a result our model was not scalable because growth equalled pain and cost.
Notwithstanding pleas from me for a change of mindset and the pressure being borne by the like of Alistair Wyse & Paul Crutchley because of Free-Online’s growth it was nevertheless very brave of Al and Paul to effectively give up the super techie custodianship of the key to the technology and acquiesce to a collaborative approach between a development team (to be formed), network operations, customer services and management. If they had not made this leap of faith we would not have been able to achieve what we subsequently did.
Also important was Dean Sadler’s willingness to engage in a process that was collaborative and effectively put those in our customers services department at the top of the food chain.
On Dean’s first day I sat him down and told him the following;
“We are a young business operating in a market with guaranteed growth ahead of it and relatively few real competitors. I have no doubt that with decent performance this business will be bought for more than Insight will be paying at some point in the future, but if we can solve some of the problems in the operating model that maybe we could build a business that could make the breakthrough both financially but also in terms of disrupting its industry and if we achieved that then we could all have huge opportunities ahead of us.”
“The key to this is to abandon the historical techie culture of mistrust and non communication and to bring all of the stakeholders in the business / project together to solve its problems and to develop the business / project thereafter. You then have to invest in positive thinking and honesty because techies will just gravitate back to their old ways otherwise (sic).
We have a moment in time of buy-in from Alistair and Paul and a huge appetite to learn, develop problem solving in our customer support team and we need to make quick progress and cement this new way of working.”
Through this journey I would prove to him that value is created in two ways: product and business process. Given that we are not creating any technologies or services then it is all about business process i.e using
technology to make things easier for customers and customer facing employees.
I then told Dean to get with Paul & Al and get them to do a brain dump sharpish and to spend time with our support guys to understand the key processes that needed supporting with software.
From this point forward I witnessed the miracle of a team of people working their asses off coping with the now and at the same time putting the building blocks in place to move forward. This was truly a thrilling and inspiring experience.
All smooth sailing????
Not on your life!!!
People started asking about what happens after the earn-out as they were understandably worried about the future. No promises had been made by Insight other than they wanted to make more money out of selling PlusNet than they paid for it and the only other comfort being they had no one in their management team that could manage PlusNet. I sat down with Paul Cusack and shared the problem and told him that the best approach would be to align the interests of the key people with the earn-out and to build trust by
being transparent about everything that was going on. Paul agreed and suggested that bonuses be paid to the top team by him personally as a % of his earn-out payment.
I sat down with Dean, Alistair, Paul Crutchley etc. and told them about Paul’s bonus plan and confirmed to them that from here forward whatever we knew, they would know. Everyone was happy as nothing else would have been expected and asked for and so on we moved.
Then the most memorable of bumps in the road was teed up and knocked out of the park by the law of sod. The launch of the new database and associated functionality was timed for Dean’s birthday. So the plan was to turn up, roll to live make sure everyone was happy with the new solution and bugger off and enjoy ones birthday.
Apparently it was all going to plan until Dean hit the enter key – then it all went to shit. No new and no old and soon the phones were ringing.
Once again techie arrogance wins over sound process and the result – not nice. Not for the first time I found myself asking, where is the documented plan and where is the check-list that we are working to in order to control the process???
In the latter part of 1999 we recruited additional developers as part of what was clearly going to be our biggest go forward focus i.e. setting up a fully functioning development department and this recruitment drive would establish our second crop of Plusnetters.
The second half of 1999 saw the pace of development accelerate and the culture within our business start to emerge and establish. There is nothing more rewarding than watching a bunch of people from different backgrounds and with different skills working together on something that creates value.
Unfortunately one person could not keep up, Paul Crutchley was visibly struggling with openness and collaboration of a large scale. It was a case of old dogs and new tricks – at least he was honest about this and a managed exit followed. Thanks Paul, if you had not supported Al, we would not have survived and subsequently not have been able to make the business model break though.
The second attempt at rolling out the new platform was accompanied with a plan and a check list. We then made real progress on the journey of automation and self service, initially through the new Force 9 portal, which was re branded to “F9″, and subsequently our other brands. We also moved to 24/7/365 cover in the customer support centre.
The second half of 1999 also saw BT reacting to the ass kicking that primarily Freeserve and other free dial-up offerings had inflicted on them. They started to complain to Ofcom (back then: Oftel) about how much money was being made by the ISPs and demanded a change in the model.
This resulted in downward pressure on the unit value of each call which also resulted in the possibility of offering dial-up access over freephone 0800 numbers. This was the industry’s first exposure to unmetered services which would herald a new industry term: the “piss-taker”.
Piss-taker = ISP tag assigned to greedy customers knowingly abusing network capacity and therefore being uneconomical to serve and or detrimental to general customer experience
Piss-taker (alternative) = evil ISP tag for customers that do no wrong other than reducing profits of greedy ISP.
We launched F9 Premier, delivered over 0800 numbers, in Oct 1999 and relatively quickly gained a couple of thousand subscribers. This service worked well for us and customers and in fact we had no problem with
piss-takers, we only had the odd customer that forgot to disconnect who we helped re-configure their systems.
As we closed out 1999 we had effectively automated all aspects of an ISP and given control of most of these functions directly to customers and we had started talking about developing the applications that made our business tick and offering them as an ASP service to business customers.
So, we have figured out how to be an ISP, we are thinking about webservices and we are mostly wondering what Insight ownership would bring……….
Taking nothing away from everyone else that played a key role in our businesses success, the most important dynamic was the collaboration between me (strategic thinking / product development / business process focus), Dean (software systems / development process focus) and Alistair (hardware / network architecture / product delivery) through which we were able to solve any problem and also were developing ideas that would create huge future value.
Don’t get me wrong though it was not all smooth going, my low boredom threshold and ability to confuse by talking in conceptual terms would often kick in, Dean’s arrogance and lack of interpersonal empathy would kick in and Alistair would retreat to the atypical negative / weak super techie of old. That being said on a bad day I would want to work with these guys and the other Plusnetters over most anyone else and on a good day it was pure magic!!!
As I mentioned earlier we added another bunch of people to our roster of Plusnetters, here’s another set of nominations as at Dec 1999:-
Ross Bray
Simon Bedford
Ashley Etchel
Jack Howard
Dean Sadler
Matt Grest
Paul Neale
Neeraj Patel
Adam Ashmoore
Matt Francis
Russ Brown
Matt Walton
Nigel Wood
Neil Davis
Mark Loveley
Nigel Airey
Neil Minor
Nick Silverwood
Mark Wheeler
Again I could have added a few others but am unsure of start dates so give me a prod if you think I have missed anyone.
