The sharks are coming for Australian consumers but they are not in the business of taking an arm and a leg. In fact, the founders of amaysim have built a business model on doing the complete opposite.
The founders of amaysim describe themselves as a “low cost mobile service provider and is dedicated to delivering simplicity, fairness and low prices to mobile consumers with its customer-centric mobile services and low cost guarantee”.
Their competitive advantage is wrapped up in their mantra that defines the business.
“Customers will only ever pay for what they use,” explains Rolf Hansen, the company’s CEO. “Amaysim is a SIM-only product that has no complex price plans and no recharge fee with simple low rates to any network at anytime and no minimum term contact or flagfall Australia-wide.”
The business is the brainchild of local, Peter O’Connell, who is chairman, and German e-commerce and telecommunication entrepreneurs Rolf Hansen, Christian Magel (chief marketing officer), Thomas Enge (chief financial officer), and Andreas Perreiter (chief operating officer).
But this has not just been a business play, it has also been a sea change for the four German founders.
“We saw an immense opportunity to bring the low cost mobile concept that millions of Europeans already enjoy to a market that traditionally pays high prices for mobile phone calls,” says Hansen. “In addition, as entrepreneurs we wanted to start and grow a business and blend this with a lifestyle change that allowed us to bring the families of the four German founders to a new country and all the excitement and challenges that brings with it.”
The bells started ringing on this phone play in 2008 but the company did not launch until late last year.
The founders have used their specialist technology investment vehicle – Shark Holding GmbH, a Düsseldorf-based investment company – to nurture this start-up operation.
But in true German fashion, they have come prepared and so there is monetary muscle lined up to make this business dream become a real success with Australian and European-based private equity funds and technology investors all a part of this attack on the mobile phone market.
But this is not a shot in the dark hoping to hit a target as the Germans previously had been a part of a European equivalent – simyo – which proved the model.
“Launched in 2005, it was quick to become the world’s largest online-based mobile virtual network operator (MVNO), becoming a market leader in its category in Germany, Spain, France, Belgium and the Netherlands,” says Hansen. “simyo was awarded ‘Best Mobile Discount Brand’ in 2006, 2007 and 2010 and ‘Best Innovation’ in 2007 by Europe’s leading telecommunications publication, Connect.”
But wait there’s more.
In 2009, simyo was ranked number one for customer satisfaction and the ‘Best Website of the Year’ by marketing journal Best Research.
However, like many dot com entrepreneurs, there have been lessons learnt the hard way, though it was a valuable experience.
“My biggest failure was probably my involvement in LetsBuyIt.com in the early 2000s – an ecommerce portal where consumers would group together to secure bulk discounts on products,” Hansen admits. “With presence in 14 European markets and listed on the Frankfurt stock exchange, it failed to gain sustainable traction in an early ecommerce environment and while it was an investment where I lost a lot of money, I also learnt a lot, both from an ecommerce perspective and a management viewpoint.”
Peter O’Connell also has a dot com past.
“My biggest failure as a businessman was probably Scape, which was a joint venture entertainment portal between Channel 10, Austereo and Village Roadshow,” he recalls. “The fundamental differences between the organisations meant that the concept, while having inherent `value`, never really got off the ground.”
On the plus side, he founded the Chic Group with Ursula Hufnagl in 1992, which managed the careers of some of the world’s leading names in modelling, Australian sport, television, movies and theatre.
“Chic has grown significantly and is now recognised as one of the world’s most respected modelling agencies,” he points out.
In many ways, the approach these guys have taken to their business is nearly a blueprint on how to plan for and to create a winning business.
They have started with a proven model from overseas, which many entrepreneurs have used as a blueprint for success. Then they have researched their target market and this outlay or investment has given them insights that will help them cash in on their competitive advantage.
“When we initially did the research on the market we were astounded by not only how large the usage was of mobile phone services in Australia but also the extremely high prices people here were paying for their service,” Hansen reveals. “We also saw that people often felt trapped by their mobile phone providers.”
He says research commissioned by amaysim showed that two thirds of Australians are dissatisfied with their current service provider, with the most common gripes including high costs (30 per cent) and poor customer service (23 per cent).
The contract trap, confusing cap plans and the complex pricing methods were additional frustrations with Generation Y appears the most concerned, with three in four claiming to be unhappy with some aspect of the service they receive.
Clearly, it has looked like a solid plan backed up by insightful research, so what has been the growth story so far?
The team are not revealing numbers yet, as they really only have been up and running since late November 2010 but they are geared for growth.
“When we started we had one employee plus the five founders,” explains Hansen. “Now we have almost 40 working for amaysim and approximately 50 in our customer service centre.”
So far so good but what have been the challenges for the group and how did they beat them?
The first was that old entrepreneurial chestnut – raising capital.
“We launched our VC raising during the depths of the GFC,” Hansen recalls. “We overcame this challenge by doing our research on the venture and maintaining our professional approach while working our networks and personal relationships, talking to people who had watched us and encouraged us through previous ventures.”
But the barriers to success were not just the hard metrics of business.
“Another big challenge is adapting to a new environment, culturally,” Hansen admits. “It’s hard work moving four families halfway across the globe and settling in to a new environment. But had we known how welcoming and genuine the Australian people were and how great the lifestyle was here, we would have all moved years ago.”
And then there has been the sceptical Aussie hurdle to get over.
“Another challenge we face and will continue to face is the inherent scepticism of Australians for new products,” O’Connell explains. “It’s a challenge that is ongoing for us but we have made great progress so far by investing in building the brand and local customer service as well as taking a great concept and localising it for the Australian market.”
Asked what the duo thought was critically important to growing a business, planning topped the list along with identifying a business model that really works.
“For us, true success means having a product that anyone will be interested in so mass market appeal is very important,” Hansen insists. “Niche for us wasn’t an option – the constant search for scale and relevance is key.”
Equally important to the success story are the customers, the supporters and then there is the F-word – focus.
“It’s important that you listen to your consumers and do your research on the market or product you want to get into,” O’Connell advises. “Team up with the best partners, whether that’s investors, colleagues or staff – the best people will help you reach your goals faster, and you really need to stay focussed and execute.
“And don’t be distracted by different opportunities too early.”
In terms of the future the pair are locked into making the plan produce the results but that should not surprise anyone, given the meticulous planning that has gone into this business.
“In the short term there is a lot of work involved in executing our plans for the one product we have launched,” O’Connell says. “We need to work hard every day to deliver on the brand promise.”
Not surprisingly, Rolf Hansen, was singing from the same hymn book.
“For us the immediate future is about consolidating growth for the amaysim brand here in Australia,” he says.
In all my years in writing success stories, I have never wanted to conclude a piece in a Kevin McCleod-style of the television program Grand Designs, but it seems so appropriate.
This shared dream between an Aussie and four Germans is more than pipedream – it is master plan based on the key elements that explain the success of so many businesses that I have analysed in the past.
However, this is not a done deal – it is a work in progress. That said, if this business fails to make the big time, it will raise questions over the time honoured building blocks of business success, though I suspect amaysim will be an amazing success story.