good morning welcome back to
entrepreneur country TV this morning I'm
really pleased to be with Malcolm Ross here
in the sunken garden at the Western
Dragonara in Malta good morning good
morning welcome to entrepreneur country
TV it's good to have you on thanks for
having me now Malcolm we go way back
we've known each other for quite some
time done some business together we're
going to talk about that in just a
moment but you have been here in Malta
as a resident for more than 20 years
yep more or less knows about that why
Malta how'd that happen well three
things that are very important in my
life I'm very passionate about that
mobile communications helping young
startups and the reason I'm here is
underwater photography underwater
photography exactly okay and imagine I
was living in Munich with a wonderful
city my favorite city but four degree
water you don't exactly jump out of bed
saying yeah I want to go diving today
well here even at this time of the year
coldest time of the year 17 degrees Wow so I
can dive the whole year keep in practice
and get very good shots excellent now
you mentioned you like you enjoy working
with entrepreneurs and I know a lot of
entrepreneurs that you've mentored and
they they found your mentorship to be
very valuable how have you found the
startup scene in Malta and of course
you've created you've helped to build
that ecosystem yourself how have you
found it and how's it developed over the
years well I give you one example you
know when I first moved here there was a
a thing going called startup Malta and
there was a similar thing going in the
UK and there was half as many teams in
Malta as they were in the UK and the
UK's 150 times higher population that
says something already - indeed - people
are very outgoing here and you do find a
lot of people of a very entrepreneurial
they do things and so it's not
surprising they also start lots of
businesses okay well that's good to know
because of course ariadne capital has
made a big commitment here too and we
hope back some of those those
entrepreneurs here now way back in two
thousand three or four we work together
on skype in fact when they remember the
skype founders were positioning
themselves to exit you did some really a
deep dive into the company and so forth
a little bit about that because you are
one of the veterans of the mobile
telecoms industry having helped to build
some of the big ones what were your
impressions of Skype at the time well I
could remember the amusing part of it
but I came back with I think it was six
potential business cases for Skype
and in fact none of them they ever
did but I came back to you and I said I
think this company could be worth
between six and eight billion and you
and Steve Mellish said you mean six to
eight million
and I said no billion! I was a
bit over the top I think it sold for
four point something but yeah they
excited me because they were shaking up
an industry but unlike what they did
with the music industry the same people
did with the music industry which they
basically tried to destroy they actually
improved the mobile industry yeah tell
us how you see that now with, with
hindsight yeah yeah well what they were
doing was basically offering free calls
between members of Skype now when you
think about that that's actually a
suicidal business model because if
everybody in the world is like that
Skype would make no revenue but people
very very rapidly realized that they
needed better communications facilities
in order to use Skype properly so
everybody upgraded to to broadband and
we in the industry had been trying to
push broadband for ten years and despite
our best efforts we got nowhere
Skype actually sold probably 150 to 200
million people worldwide on broadband
that is worth billions to the telecom
industry so they helped us maybe maybe
that was part of the the built-in
valuation that got them sold for a lot
of money. Yes so now you you started off
you have some
significant academic credentials you
then were headhunted into one of the
most important consulting organizations
and from that into some of the the
groundbreaking mobile telecoms walk us
back to Malcolm ... take us
through those early years because
you could say right place right time but
you knew what to do and you have both
the intelligence that you you focus on
things well I think you're going a bit
over the top there I don't think anybody
can foresee things like that but
sometimes you get some gut feels
about things and I was actually going to
win a Nobel Prize in nuclear physics
that's what I really believed at
university and my career's manager at
university said just in case you don't
get a good enough degree you should do a
couple of interviews now I did a gap
year which was very rare in those days
back in the 18th century and I had done
a gap year in one of Britain's leading
high tech companies called Elliot
automation working on one of the
first-ever transistorized computer at
the Elliot 4100 and I found the
environment there was very counter
entrepreneurialism what we'd now call
entrepreneurism dynamic and so on it was
pretty boring so the thought of
voluntarily spending the rest of my life
in industry was abhorrent and the
careers manager said well I'll arrange
you an interview with a company called
Cambridge Consultants and the guy turns
up and a guy called Rodney Dale who I
have always had a great deal of respect
from from that moment forward and at the
end of the interview I was hoping they'd
invite me for an interview and they did
and I turn up at the company and I'm
already thinking hey this is probably a
better idea than doing a PhD and we had
a wonderful interview very hands-on they
actually got me to setup their brand new
MIDI computer that they delivered and
moving things around and by the end I
thought yes I really want this and they
said we interviewed you for the wrong
job come back again and so it went wrong
I eventually joined there and they had
just been bought by a management
consulting company Arthur D Little and
after five years there in kicking things
making smoke getting stuff to work I
thought the time was right to try and
make money with this stuff for others
wasn't thinking about myself at that
time and that's when I moved into the
management consulting side in the Paris
office and you speak fluently? I speak
fluent French fluent German I'm very
embarrassed to say that I've learned
Italian twice and forgotten in life and
I know three words of Maltese because
everyone here speaks wonderful English
and it's a perfect accent and I've never
had the chance to really get into
Maltese so I I was in awfully little and
by chance
got into telecommunications from about
1984 through to the early 90s we got
involved in that period when the
monopolies started to fall and so every
country had at least one or two new
mobile operators and this is very
relevant to what's happening today in
telecommunications but also in general
in the ecosystems that Ariadne is
working with now I'll tell you why
the incumbents so Deutsche Telekom
British Telecom Telecom Italia France
Telecom
they were very innovative with their
names as you can imagine they found
themselves competing against the
newcomer and in some countries we were
working with the newcomer to help them
win the licence and out of 28 license
bids we are clients 120 so we were
involved in those startups and then in
other countries we were involved in the
Goliath the ones that were defending
their site so I remember visiting the
offices of what's now Vodafone which was
regular electronics in those days when
there were four people in the office and
they were still painting the walls and
we help them with their launch strategy
I helped with a plus in Germany orange
and and many of the newcomers Wow and
then with some of the old guys British
Telecom Deutsche Telekom and so on and
when you look back at it now and you are
in the business of investing in startups
these were all startups and by accident
all of those goliaths started their
mobile operations at arm's length
for silly reasons it's things like we
can't fit mobile customers into the
billing system so we better have a
separate billing system oh that means
we've got to have a separate Department
of it we just down the road but Mobile's
going to be so small it's not going to
be important and a regular electronic
studied Vodafone totally new business
management and automotive components
company started what's now Vodafone
Germany and they were all arms-length
and so both sides were startups now this
is the mind blowing thing 100% read my
lips 100% of those startups all
succeeded all became billion-dollar
companies in just a few years well I
know what to attributes' add to exactly
why well it was at the separation well
you know I've got a crazy sense of humor
my crazy sense of humor is despite our
best efforts to fail we didn't so for
example I give you just one of the many
many examples of what I call the SPO
that was the most innovative part of all
these operators the sales prevention
organization so you went into a store to
buy a mobile phone we're in a store
would you get them so you go into one of
the big department stores the only part
of the department store that was
flexible was the toys Department because
the toys department gets a very big at
Christmas very big at months where
there's lots of birthdays like April and
empty the rest of the year and so that
was the department where you also got
your adult toy called a mobile phone yep
and for the children's toys at the cash
register there was batteries not
included and you'd find a rack of
batteries for the mobile phone the
batteries were not charged and you got
home with this exciting thing and it
said charge for 16 hours imagine if you
were a kid you would quickly go off that
toy so despite our best efforts to fail
there are more mobile phones on the
planet today than there are human beings
despite all those ways of doing it so it
is more to do with the demand the poor
all than it was to our push some of the
things we tried to stop like SMS became
our biggest profit winners interesting
well you know that whole incumbent
Challenger space very very well and I
think I've even quoted one of your kind
of Maxim's here on entrepreneur country
TV about when a challenger wins compared
to an incumbent you know the rule that
I'm talking about there the 3x rule talk
to us a little bit about how you came to
how much of that a science how much of
that was your instinct and share again
with the audience at entre country
actually you know it it was instinct and
it wasn't just my instinct it was my
colleagues at artfully little but I
believe there's some science behind it
and I'm starting to articulate that now
and when you do that you realize is
actually probably four parameters okay
and it looks like if two or more of
these parameters are true then there is
a possibility the newcomer will win okay
and if only one of them is true then
it's likely the Goliath will win and the
three parameters are does this new thing
mobile phones for example does it create
a market three times bigger or more than
what went before with mobile phones
clearly by number of phones by revenue
by minutes abuse however you look at it
certainly three times more secondly is
is the performance at least three times
higher now performance in terms of voice
quality no but in terms of you can use
the phone anywhere you are yes
definitely much much better than call
forwarding and all this terrible stuff
we had in the days of fixed phones so
again performance is much higher cost no
we spend more on mobile phones today
probably three to four times more than
we ever spent on fixed phones right and
then there's another parameter which is
how quickly does this thing develop now
clearly if if something develops very
very fast so if the market penetration
gets to fifty percent in three years
right then the David has got the
flexibility can probably win if it's
seven or eight
years like glass can react in that time
right right and here's the zinger you
know I was involved in many of the
market research programs back in the
late 1970s on mobile phones and we found
8 out of 10 people wanted it and they
wanted it now despite the price being
very very high
however despite that and I suspect it's
because we slowed it down
we weren't supplying as quickly as we we
could've because we didn't believe the
market was going to be that big yeah it
took 8 of 10 years to greet 50% market
penetration that's easily time for the
glass to catch up and so we stand to the
notice two out of my four parameters are
true until or not so what you find is
all of the Goliath's one and all of the
David's one okay so I think that's a
pretty good indication that this there
is something behind these four rules and
if that is the case you know other
industries and even in the telecom
industry we should look at things in the
future and say how many of those
parameters are true that will give us
some indication is if we're investing in
a David should we be looking to dress
the bride and sell it to a Goliath right
or could it be a unicorn or what I call
a breakthrough there are two or three of
those parameters correct and therefore
the newcomers will win so now we're
going to flash those parameters on
screen so that people can take take
those in as they're continuing to to
listen to talk in the in the world of
mobile telecoms of course a lot of
people would say but not you I don't
think but correct me if I'm wrong that
the the Facebook apples the Amazons and
the googles are leading the mobile
telecoms industries and those those
incumbents the Vodafone's the oranges
and so forth that they're playing
catch-up and some people would even say
they're on their way out cuz you know
Facebook tries to recreate the global
cons industry with aquas issues like
what's up how do you look at both with
your early stage building of mobile
telecoms hat on is with your Arthur D
little consultancy hat on with your
mentor to entrence how do you just look
at that landscape that market landscape
who's going to win and how do you assess
the potential winners between the gaffer
companies and the mobile telecom giant
what does this next decade look like
very good question I wouldn't even
attempt to seriously answer that
question even for very very high fees
but we are having you at our followed
entrepreneur investor summit here in
Malta on the 10th of July and you are
having a future of connectivity panel
and Senator correct will you be touching
on done and I will do I will indeed and
what I've tried to do is get somebody
who's representative of a David somebody
who's a representative of Goliath and
then I'm going to be playing my for
parameters against them on several of
the things that we see coming along my
gut feel is that there's a next big
thing out there and in telecoms we
always named everything with three
letters so it's going to be the NBT the
next big thing I have no idea whether
it's Internet of Things or 5g or virtual
reality or AI or a mixture of all those
but my gut feel is that is going to be
still with the Goliath
okay I suspect the Goliath will will be
mergers but I think it will be with the
Goliath and then there are things like
the person I'm going to have on for the
David or was one of the founders of
Bluetooth chips Wow and that is
definitely a David that made it big
that's still a Donovan fellow Donovan
yeah who was the founder a CEO founder
see it was founded on then CEO who's a
co-founder and is the CEO and then they
exited one point four or something
billion came back welcome okay Cambridge
silicon radio exactly came in silicon
radio excellent yeah we're very much
looking forward to it solo Donovan is uh
no he's he's a star now we've been very
fortunate
Ariadne after some of the work that
we've done together over the years but
to formalize us into a senior adviser
role very fortunate to have you spending
some of your time with us at Ariadne
tell us why that seemed to be a natural
fit for you why was this kind of in line
with some of the other things that
you're doing and kind of talk about what
you do today
I've been systematizing with a process
I'm calling smarter start and you've
heard me systematize with my
time's market three times performance
one third of the price three times the
speed and so on so I like systematizing
things systematizing soft processes and
what we're trying to do is get the ratio
of startups that get to the stage of
being fundable to increase so today for
every thousand or more startups perhaps
ten of them will be accepted by venture
capital and of those one one two or
three will exit big we're trying to get
that thousand down to 10 ratio much much
higher like 80 percent I know you think
that's crazy but that's what we're
trying to do and we will be launching
that probably in Singapore later this
year it's a totally different discussion
why Singapore I can go into that but
let's leave that to another session Pat
okay so on so working with startups and
helping them really improving their
chances and the probability of success
with the understanding that many of
those startups are going to be working
with Goliath on some level and there's
an interaction and I think that's it
that's one of the big the overlaps in
our thinking and so forth now we are
here in Malta what what are the
advantages of Malta as a startup
location
what does malta do well in the broader
innovation space is there an opportunity
for large companies here or is this just
a great place for hey you got tech
startups in Israel and San Jose so it's
another warm location or is there a
bigger thing to do than just startups
here well I think in terms of a location
to rival many of the other incubators
around the world I'm not sure that that
would be a reason to come to Malta I
think that much much more important is
Malta is a small place but it's a real
country you know we have a very small
army but we have an army you know we're
talking about a place that I mean I was
jokingly say you know the populations
about the size of Watford but Watford
doesn't have a military we have several
TV production companies
doing videos like this but also national
television and so on there is one of
everything in water or more than one of
everything in order so whether it's a
Goliath or a David they want to try out
the operations they come to multi it's
very easy to do you want to meet the
Minister of Defense it takes an hour on
the phone and in London it would take
you several months if ever that you get
to that person and so it's very
practical to get things done very very
quickly from a qualitative marketing
point of view it makes sense because we
have lots of expatriates and we have the
language schools so you can very easily
get a panel session together of ten
people from virtually any any section of
the community that you want by
nationality by race by gender whatever
the population is really too small to do
systemic market research but if you've
already got your qualitative stuff right
and got your operational stuff right
then you can go to your big target
market to Germany or the UK the US or
whatever and and launch there but here's
a good test bet fantastic excellent and
we'll be doing test piloting absolutely
through entrepreneur country very very -
welcome thank you for sharing with us a
bit about your past your present in your
future
if entrepreneurs and for that matter of
businesses on the island and everybody
watching entrepreneur country on this
broadcast want to contact you are you
being contacted are you willing to be
engaged and so forth around Forex send
me an email only Ariadne fantastic
excellent and we'll we'll invite you
back but it's been wonderful to have you
on board and to share some of your ideas
about mobile telecoms about Malta and
about being an entrepreneur thank you so
much thank you
you
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