18 October 2009

I was asked at a How-Do discussion group recently where I was part of a panel of experts [if there is such a thing], do you diversify or is it better to specialise?

Great question, and there is no right or wrong answer.

I explained that I have tried and failed many different things. The important thing in my opinion as an entrepreneur is to dust yourself off and have another go. Great entrepreneurs are resilient, they don’t know how to give up, they are prepared to push the boundaries and if they fail they do not see this as a negative emotion. In fact failure to a receptive mind means you are learning.

If you are going to try something new I think it should compliment what you are doing in other areas. Venturing into completely unknown territory carries more risk and therefore should warrant more research.

I enjoy new challenges, however I don’t see myself as a big risk taker. I have never had the luxury of huge sums of money to invest in new projects so the downside to most of my ventures is never a particularly alarming one.

We are currently venturing into the data centre arena, and although this now does involve millions of pounds of investment, it is a “related area” and therefore compliments what I already do elsewhere in the dedicated hosting industry.

It actually not only allows us to improve the quality of the service we currently receive, it also saves us millions of pounds each year of money which for the past decade has been growing some very happy businesses in Manchester and London.

I am not sure my current suppliers of data centre space will share my excitement. UKFast makes a very attractive anchor tenant however this sort of diversification is one I wholeheartedly recommend.

If you can provide a service where you are already paying considerable sums to a supplier and in our case competitor to boot, this should help you in your decision of where to diversify.

We once diversified in to the mobile phone arena specialising in Orange phones. We were good at it and we got about 20,000 customers in our first year trading. However it was so far removed from our hosting product. We were selling Oranges network when we had our own UKFast.

We got out of this industry after Orange put pressure on us to stop bulk text messaging to win business. Companies like Carphone Warehouse and other high street retailers were complaining that we had an unfair advantage. Our route to market was incredibly effective and hit our customer right at their heart. A simple text message encouraging them to use UKFast was all it took.

It worked famously until one day I received a phone call from my distributer saying that we had just inadvertently sent messages to the board of directors of Orange themselves during a board meeting. The message said, “upgrade your mobile phone with the latest Nokia on the Orange network, call UKFast now to find out more.”

Orange were fuming, mainly because they hadn’t thought of this themselves. They switched us off.

I could have targeted them and switched hundreds of thousands of Orange customers to other networks who our distributer put us in touch with, however this wasn’t our style.

We had invested huge sums of money and a great deal of time. We weren’t just the fastest growing supplier of Orange phones back in those days, we were the best. Each customer of ours also received confirmation text messages with Royal Mail special delivery tracking codes so they could know where their parcel was. Royal Mail even printed UKFast on the special delivery bags next to their name as we were shipping so many. They even sent us our own van each day.

Quitting whilst you are ahead is not quitting. Ironically Orange came back to us weeks later and asked me personally if I’d redesign their systems and manage their call centre. Someone had produced a report comparing all the dealers, distributers and Orange themselves. UKFast came out above everyone for the best customer satisfaction and retention rate.

The mess Orange are now in is indicative of their poor management and decision-making ability.  A decade on they still are not using the technologies that we brought to that industry. Shortly after we left, Oftel banned the use of direct text messages as a form of introductory communication as too many businesses jumped on our “banned” wagon: A shame really as they were exciting days. We would send out 20,000 text messages in a morning and sell 250 phones. The inbound phones went wild. If you were a visitor, staff member of a different division of UKFast or a prospective supplier, and were in our building when we pressed send, you were given a pad and pencil and told to answer the phone. Some of my funniest memories of this time include 2 bank managers caught up in the frenzy for a couple of hours locked in my office taking orders.

This was one example of diversification that was too far from our comfort zone, however I wouldn’t change this chapter for the world. We learnt everything we know now from this era.

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