Saturday, July 4. 2009Has Your Company Had A Near Death Experience?.....John Linton ......this was a question from a survey a magazine was doing for some sort of article on "Smart Companies" which they consider, presumably, Exetel to be one. I would think that it's the norm rather than the exception for any start up company to experience more than one such event in their early years which almost always goes past "near death" and becomes commercial oblivion. Certainly Exetel experienced four such events in its first few years courtesy of our 'major' suppliers but there is no doubt about what I consider to be the most unprincipled set of actions ever perpetrated in my experience in business by one company against another - the other in this instance being us. I will never forget that terrible 14 day period in April 2005 when Exetel came within a hair's breadth of ceasing to exist. I have reproduced below how I responded to that survey question and as I wrote it all the anger and personal hatred for that total ***hole of an apology for a human being (may she rot in Hell for eternity) came flooding back. Yes, Exetel has had a near death experience and it taught me lessons I never wanted to learn. It also showed me how fantastically well a group of people can perform, day after day, at a level of pressure that would normally cause them to physically and mentally collapse within a day or two. From early February 2004 to late February 2005 we purchased the base level Telstra customer connections ('tails') not directly from Telstra Wholesale but from another company with whom we formed a relationship on the basis that by pooling our start up buying (we started in business in the same week) we could much more rapidly reach a significant volume discount that was in place at that time and mutually improve our profit margins. In exchange for this risk (on behalf of the other company) we gave them an enormous amount of direct assistance in providing our early automation code and processes as well as providing them with a complete copy of our web site and because they had no suitable arrangement with their bank we even processed their direct debits for them. We also provided almost daily consulting and advice and guidance as we had a lot of experience in providing ADSL residential services while they had none. This worked well for six months and our business grew rapidly. The other company’s business didn’t do anything like as well although they operated in multiple States while we confined ourselves to NSW. By November 2004 it was clear that they were in an increasing amount of financial trouble and they began behaving erratically and telling us that our success was stopping them making a success of their business. Several times they refused to process the orders we sent to them and increasingly made suggestions that we should sell them our business on ridiculous terms. We began to become truly concerned and approached Telstra to provide a direct relationship asap but it was a slow process with Telstra Wholesale telling us that it would take 2 – 3 months and with Christmas approaching it could take much longer. We did our best to keep our relationship intact with more and more demands coming on an almost daily basis and threats of “cutting you off to teach you a lesson” entering the conversations in late January and continued throughout February. Their statements also started to become based on their fears about our financial solvency and they demanded that we stop adding new customers and ‘sell’ them our customer base for a trivial sum of money to be paid in some distant future. Fortunately at this time in late February Telstra finally approved our application and we got a separate direct connection and provisioned all new orders direct while at the same time progressively transferring the old customers away from the indirect connection and signing them over to the new direct connection. We saw this as essential but it was expensive as each transfer cost us $25.00 and at that time we had over 13,000 customers. We believed this action had addressed the other company’s concerns about us going broke and leaving them to pay our bills but it soon became clear that they had only wanted to force us to sell them our customer base and on the evening of April 13th they began cancelling our customer’s services. We found this out over dinner that night and immediately telephoned the owner of the company we dealt with but her mobile and home telephone didn’t answer and she didn’t reply to our frantic emails. By 9 am the next morning over 1,000 customers had been disconnected and all our telephone lines were ringing off the hook. As the day progressed a further 1,500 customers were disconnected and it was clear that the remaining almost 8,000 customers still connected via the other company’s infrastructure would go the same way. It was also clear that we were likely to go out of business before the end of the month with amost 70% of our customers suddenly disconnected and therefore no cash flow from them and an enormous bill from Telstra for the early cancellation charges that we had no hope of paying. We were effectively out of business and with personal guarantees we would not be able to meet we were also personally financially ruined. I had been calling a quite senior manager at Telstra Wholesale since 10.00 pm the previous night and he came up with both a strategy to deal with the disconnected customers and also put in place additional personnel resources to make a manual reconnection system work albeit with significant time delays in getting the customers reconnected. However it was the Anzac Day long weekend and by then we had over 9,000 customers with no internet connection on a long weekend and unable to get through to us via telephone adding to their concern. We had 12 personnel at this time and they worked on the telephones from 7 am in the morning until they literally dropped from exhaustion sometime towards midnight over a 14 day period. The company's directors, literally spent 18 to 20 hours every day answering emails and posting replies and explanations on our on line forum. Over that 14 day period I personally replied to over 8,000 emails and made over 3,000 forum posts. Thanks to the initiative and dedication of Telstra Wholesale and an unbelievable amount of sustained effort by Exetel’s few personnel and the understanding and sympathy of the majority of our customers we survived that terrible two weeks – but only just. We ended up losing almost 20% of our customer base and, even at highly favourable 'forgiveness' rates from Telstra we ended up with a bill for over $500,000 in charges for the re-connection of the customers that had been terminated – it took us over 15 months to find the money to pay this huge unexpected expense during which we struggled every month to cope with paying our bills but never once failed to do that. Our new customer intake also slowed dramatically for several months due the considerable uncertainty that was cast over Exetel’s financial standing by the public statements of the other company on public fora and of course what was reported in the media and because 13,000 people went through a very, very bad experience and made their experiences widely known to their friends, associates and relatives. We took legal action against the other company but it went bankrupt before the action was completed. Trackbacks
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Oh how I remember that experience - it wasn't great getting disconnected that's for sure. But the way Exetel management handled it made me an even more committed Exetel customer. I can proudly say that leaving Exetel at that time did not even cross my mind.
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As a complete novice in regard to business practices i am constantly amazed how cut throat it can be.Just reading todays entry i had no real idea of what goes on behind the scenes.
Reading this blog on a daily basis has certainly opened my eyes to the world of business.[Kinda scary really] I've been a customer of Exetel since almost the beginning [apart from 1 X 6 month break] & for hopefully a long time yet. Cheers Joe Comment (1)
Reading of this "event" in Exetels early life, clearly shows why you still like to micro manage Exetel and may appear to be cautious in implimenting changes and improvements.
This approach obviously works. Comment (1)
I guess survival through that period was in part due to the support of Telstra Wholesale, I wonder if you would have been lucky enough to have survived had the time lines been different and you had been dealing with the more recent version of Telstra Wholesale
Certainly not a situation I'd like to have to deal with Comment (1)
John,
it was such a tumultuous period and I remember it well . at one stage I believe, the world famous "calliope" or one of the identity morphs, called it as almost game over.. I must say it knocked me for six at the time. I had been with Exetel for some time then, and was actively mustering everyone I knew, to follow me to the promised land. The whole drama was handled superbly by you John -- you kept us all informed as to what was happening at every step. This was the time I actually realized I was dealing with a straight shooter who calls it as he sees it -- Comindico / Dataco / Dart / Veridas and many others ----- you’ve thrived where these others have faltered - Well done John -- the others all lived in the past , Exetel lives in the future. cheers bill Comment (1)
Without the support we received from customers like you we would have never survived.
I aways remember that support. Comments (2)
I remember i had a line fault that occurred at the same time, so i presumed it was caused by Lorraine. It turned out not to be the case but the support from both you and steve at the time was great.
Comment (1)
I take it the lady in question was in England at the wrong time and was suffering from Mad Cows' Disease. Her actions defy logic!
Admittedly I suspect they would fit perfectly in the realm of psychiatry as a case study. Comment (1)
I was a subscriber of the "other" ISP.
We were fed a lot of BS at the time - and I had no reason to not believe it..... .... but after a while, some inconsistencies appeared between "words" and "actions".... and the "penny dropped". So I left them for another provider. A few years ago I decided to try Exetel... and have been happy ever since! I have heard that "you have not been in business until you have had (unwarranted) legal action taken against you"...... I'd like to think that is BS too... .... but in my 20 odd years of business consulting, I have come across few successful businesses who have not had such a "learning" experience. Harry Comment (1)
I guess you probably don't really want to remember, but for the record, I think you'll find that the disconnections started on 13th April, not the 22nd.
I know, I know... I'm a pedant. I've never said it before, but congratulations on the dignified way you (and Exetel) conducted yourself throughout that very trying time. Comment (1)
It's a credit to you that, despite being treated so shoddily, you have remained, by all accounts, ethical in all your business dealings yourself.
And Exetel aren't alone. Other ISPs have had their share of near-death experiences too. Simon Hackett, MD of Internode, talks about a "mistake that nearly cost him the company" in this article: http://www.theage.com.au/news/Next/Never-be-afraid-to-succeed/2005/04/25/1114281483507.html "I promoted a person to general manager who wasn't up to it. Six months later they had nearly destroyed the company. We had to cut the head off the company and start again. I had to let six people out of 10 go, and spent the next six months micromanaging the books just to stay alive." Scary stuff, I imagine, to see everything you've so hard for evaporate before your eyes. Comment (1)
Thank you - I've correctd it.
Now you remind me her first attack started on the 13th which we managed to subdue when they reached aound 5,000 disconnections by putting all the remainder of services on churn which meant they couldn't be cancelled. She eventually realised that we had got round her attempt to destroy us so she came up with her second attack. On 22nd April she then null outed all of the remaining services meaning they were still physically connected but couldn't access anything. Comments (2)
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