Today, businesses and individuals are grappling with AI agents and applications and coming to terms with the fact that these rapidly advancing technologies will upend ‘business as usual’. As ever, forward-thinking organisations have already been experimenting with AI pilots to improve operational efficiencies, lift margins and boost the user experience, while others may just be getting off the starting blocks. Either way, it is surreal that it’s only been about 30 years ago since the world was facing another massively disruptive force that would upend daily life and most business activity– the internet. Back in the early 1990s, the first impetuous commercial dot com startups were emerging into the early light of a new era of connectivity.
Remember Napster? MySpace? Ask Jeeves?
Many of those brave pioneering businesses don’t exist today in their current form. Of course, some collapsed spectacularly as the tech stock bubble burst in 2000-2001, while some of the luckier founders cashed out before.
One of the bigger success stories from that exuberant time is IT managed services provider Claranet, which today serves eight markets in Europe and is rapidly growing in Brazil and the US. While the firm has evolved considerably from its early mission – to offer Australian travellers in the UK low-cost calls home – Claranet, which launched in 1996, remains privately owned and its founder Charles Nasser is as involved as ever, as CEO. It’s just that Claranet is now a business with over 3,000 employees and reporting annualised revenues of more than 600 million euros.
As Ben Hardy, Clinical Professor of Organisational Behaviour at London Business School, pointed out at the latest Summit Series event, it is rare for founders to experience every stage of running and growing a business, from concept to startup to scaleup to multinational company, acquiring and selling businesses along the way and that makes Charles’ insight into his real-world experience highly valuable.
Speaking to an audience of future founders and London Business School students and alumni, self-proclaimed ‘techie’ Charles, who is an LBS Masters in Finance alumnus, reflected on an almost two decade journey of running Claranet and some of the secrets to Claranet’s continued success.
Below are some of the highlights of the discussion.
On how the idea for Claranet came about
“I was working as an IT consultant figuring out what I wanted to do with my life and after a few years I worked out that there were a few things I loved about my job and a few things I hated. I hated that my clients would be constantly changing and I’d have to hire new people depending on the skills required for every new job. I didn’t have continuity with my clients or my team and I didn’t enjoy that, but I was independent and I did like that.
On 1 January 1996, I made a New Year’s resolution that I would start a business that had something to do with the internet. I did some market research, especially looking at the US market which was a few years ahead of Europe. I came up with two ideas. One was a dating site, and one was an internet service provider (ISP). The first because I was keen to meet women, and the other because I saw a swell of demand coming and I thought I could ride that wave and it would take me somewhere.
We ended up being the first pre-payment call provider in the UK. That was one of my first valuable lessons – if you can, use your customers as a source of working capital.”
The effects of financial restraint
“In the early days, we didn’t have much money. I put all my savings into the business as seed capital and we never had large sums of venture capital. In hindsight, for us, this was positive. It made us creative and productive.”
Navigating the shift from entrepreneur to manager
“From about 2011, we knew we needed to scale in a meaningful way and that’s when we started making acquisitions that had a material effect on the business. Fortunately for us, the entrepreneurs in those businesses stayed with us, which has helped keep the culture of Claranet dynamic and agile. Hiring the right people is always key. Better to have a hole than the wrong person. There is a big opportunity cost of having the wrong person in your business, especially in the senior ranks.”
Creating a good culture
‘Don’t underestimate the value of giving your employees the opportunity to get together in a social environment with no work agenda. This doesn’t get talked about enough. Events like this create bonds that support a more meaningful work place where people enjoy being together. What culture is not is post its on the wall telling you what your values should be.”
Parting words
“Always understand the risk-reward ratio of your business decisions and recognise what drives you in your founder journey. That will help you remain committed to the business – or realise that you should be moving on to something else.”