21 Şubat 2008 Perşembe

The Story About The Company With 3 Employees That Sold For £1.6BN

I attended an interesting talk last night by Ajaz Ahmed, the Founder of Freeserve, which is the UK's largest ISP. (Currently known as Wanadoo).

Ajaz was amazed when he bought a Personal Computer at PC world in the UK that nobody in the store could tell him how to access the Internet. He finally figured out how to go online and was amazed at the volume of content available. He was convinced that the Internet was the future of communication.

After a great deal of barracking his bosses at Dixons with his idea of providing an easy access for all ISP (Internet Service Provider), Ajaz helped his employer launch Freeserve in September 1998. Freeserve quickly became the UKs largest ISP in three short months. It was sold to the French firm Wanadoo for about £1.6BN in December 2000.

The most incredible aspect of the Freeserve story is that at the time it became the biggest ISP in the UK it had only 3 employees. In addition, the investment required to achieve its success totalled £240,000. It sold for SIX THOUSAND times the investment level in just over two years.

What are the lessons we can learn from Freeserve?

1) Outsource anything that isnt your core skill

Freeserve recognised that their core skill wasnt technology. They had the business idea that had the potential to give the Internet to the masses. They knew that if they spent time implementing the technical infrastructure then they would have become bogged down, spent too much money and allowed too many competitors to overtake them.

2) Form strategic alliances and think WIN-WIN

Freeserve not only outsourced to save money, they ensured that their technology partners had a financial incentive to ensure the overall success of the business idea. Ajaz pointed out in his presentation that there is little need for SLAs (Service Level Agreements) when all parties involved have the same end goal. The increased amount of administration levels that SLAs create often wipes out any upside.

Although it can be argued that Ajaz was extremely fortunate being in the right place at the right time, the reality is that the Freeserve concept was executed in exactly the right manner. How many other people would have chosen to press ahead with the idea after being told no by his bosses for 12 months? How many other people would have started Freeserve with such an extremely small budget?

The success of Freeserve embodied all that is great about the best online business models. It automated as many of its processes as possible and made a tiny profit from millions of individual users. As Ajaz pointed out � Whos really concerned about spending less than a penny?

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