Taking Advantage of the Opportunities
K. Paul Singh, Co-founder, Primus Telecommunications Group
Six years ago, I co-founded Primus Telecommunications Group with John DePodesta, who was counsel to my last two companies. Today it's a global organization, with annual revenue of over $1.2 billion. That amounts to total growth of 71,000 percent! What makes Primus different from other telecommunications companies is that we own all of the wireline networks we use, providing domestic and international voice services, Internet access and wireless, as well as Web design and hosting. We are trying to be a one-stop shop for businesses and consumers.
In the past, to be a global company, you had to make deals with the monopoly that controlled telecommunications in the country you were interested in. Primus specifically targeted countries that have deregulated this industry, so we could establish our own service. As a result, we are now established in Australia, the United States, the United Kingdom, Canada, Japan, Germany, France and Italy.
When we began in 1995, we had a bigger business in Australia than we did in the United States. Our focus has always been on the global market and managing global expansion. Being successful at it means taking advantage of opportunities as they present themselves. And, in my opinion, building a billion-dollar business also requires three basic things: strong capital investment, firm financial discipline and good people.
Build Your Management Team
Our formula for moving into new countries is pretty simple. We run the business as a local company, competing with the local players. It pays to be very selective about the person you put in charge of new operations. We try to put in a manager whom we trust, then hire all local talent to achieve the goals we set. One of my colleagues from an earlier business, who had extensive experience, happened to be Australian, so when we moved into Australia, we put him in charge and he hired his team on the spot.
Our managers all have extensive international experience, as well as strong local backgrounds, so they know what to expect. Also, most have business as well as telecommunications experience. I think that avoids major mistakes. Make sure the people in power know about the technology they're developing and selling, but they should also know how to run a business.
Another key is giving managers some independence. I've always tried to avoid having "yes-people" around me. We welcome and value different opinions and ideas and insist that people have mutual respect for one another, even if they don't agree. This mix of ingredients has helped us develop a strong management team.
Time Your Moves Carefully
As countries moved toward deregulation, our goal was to be an early entrant, but never to be the first one. If you're first into a deregulated market, you end up fighting with the regulators for years and spending unnecessary money. We picked countries where we thought deregulation was firmly in place and the rules of engagement were clearly decided. That means we could go in and focus immediately on our customers. We knew what the costs and the laws were, and we zeroed in on the market.
Canada is a good example of what can happen if you go in too soon. Many companies rushed into Canada when it deregulated in 1996-1997 but, as it turned out, the government hadn't entirely finished tinkering with the rules. Some lost all their money because the costs were not fully determined. We waited, entering the Canadian market only two years ago, and reaped the benefits. Primus is now the second largest alternative carrier there.
It's also a matter of expertly modeling your business plan and, where possible, knowing what to expect before you enter a market. We have always been careful and thorough, so as to go in with the resources and organization to be there for the long term.
Make the Right Acquisitions
Buying the right local company can really speed up entry and growth in a new country. It's much easier to acquire a company with 50 people than to set up your own organization. So far, we have acquired more than 20 companies to enter a new market or to add a new product, service or customer segment in one of our current markets. Knowing there are risks whether you build or buy, we've made it a priority, and have substantial experience in building our own operations, as well.
You may encounter cultural difficulties in buying a local company. It can take some time for an acquired company to "jell" with yours. We tend to look for businesses that are well organized, well run financially, and that have good entrepreneurs as managers. We've found that good business people can grow a company faster and stronger than technology-based managers. Primus is a service company, after all, not a tech company.
It's also important to make sure everything is "clean." We write down all agreements no verbal agreements. We pride ourselves on running our business in as professional a way as possible. And, we don't get into situations where we need something from the government or any government agency.
Taking advantage of opportunities as they arise also applies to acquisitions. Sometimes, even though a company may not be doing well, if your management team believes it is a worthwhile investment, you need to just do it. This approach has allowed us to pick up some great companies for next to nothing and then turn them around.
The global telecommunications market is valued at $300 billion. That's a big market! It's sometimes very tempting to chase all that money and move away from your core business. I prefer to put all our resources in a relatively narrow market segment and be good at it, rather than spread them around. Primus tries to focus on providing services for the customers we've identified as our most valuablethe ones who have an international focus and can take advantage of our global networks.
That also applies to individual operations in each country. They are all connected to our networks, which give them cost benefits, but otherwise they have their own budgets and objectives. That way, they maximize their own growth possibilities and don't rely on someone else to do it.
As a result, we keep corporate headquarters small. Our function is to manage the larger-scale financial picture and, because we are a public company, to assist with any major acquisitions and act as a kind of coordinator. While we help local operations share information, they need to focus on their own turf and their own competitors. As we get bigger and attract bigger market share, we will start moving staff around the world to give them experience and reward their efforts.
Work Toward Long-Term Success
Personally, what gives me the most satisfaction is team success—bringing out the best in people. We're not obsessed with hierarchy and structure—it's exciting for people to work in our U.S.-style culture in countries where it's not usually as informal. Having proved that it's possible for a start-up company to be a major player in global telecommunications, we want now to build market share and range of services in the countries where we operate.
To be a major player, we have to grow even bigger—which is a challenge all of us are looking forward to tackling. Even in the short time we've been in business, we've seen economic good times and tougher times. This company will survive the tightening capital market because we believe in being fiscally disciplined and responsible. We are all working toward making Primus successful.