I opened the doors at Ireland On-Line (IOL) on 15 May 1992. Originally operating out of the back room of my house in Galway, the aim was as simple as the name suggests: I wanted to put Ireland online. To bring the world to Ireland, and Ireland to the world.
This wasn’t the first time that I set up a business. Born in Canada, I had moved to Donegal at 13 after my father had been lost at sea competing in the Single-Handed Trans-Atlantic yacht race. After my mother died a few years later, I left school, deciding that I was better equipped to see to my own education. I was 16, but felt that I was being taught a lot of things which I did not need, and missing those that I did.
One of the things which I had not been exposed to at school was computers. This was the early 1980’s, and the Sinclair, Commodore and other computers were starting to hit the market. I decided this was something I needed to know about, so I bought a Dragon 32 and proceeded to get my head around it. Shortly afterwards, I opened my first business, Swilly Marine – a sailing and windsurfing company on Lough Swilly in Donegal. This was a fantastic education, and hands-on experience in the realities of running a business – particularly as it was during the deep recession of 80’s Ireland. After struggling for 5 years to make a living at this, I decided it was time to move on. It rained a LOT in the 1980’s in Donegal. I had learned many valuable lessons which have guided me since, the most important being: Don’t rely on the weather! The next business I set up I will make sure that the more it rains, the more business I will do!
In 1988 I moved to London, and began working with my uncle who was a sculptor. That was where I got into the bulletin board system (BBS) scene – sharing information and downloading files and all that. I had used an Amstrad “Joyce” CP/M machine to do the accounts, etc in Swilly Marine and when I began working with my uncle had upgraded to a Toshiba luggable. Nat West bank had just released Modem Banking, and I used this to manage my uncle’s banking. We traveled quite a bit, so this was very useful in enabling me to be anywhere in the world yet still be in touch. I then decided to purchase another modem-equipped PC at our London office, and now I could dial into it to transfer documents with the secretary there no matter where I was.
The power of this technology really struck me. I didn’t need to be in London at all. My family was young, and we preferred to bring them up in Ireland. Not only did this technology mean that I could live and work in Ireland – if it were more widely available, then other people could also live and work in Ireland instead of having to emigrate. So we moved back to Ireland in 1991. I knew nobody in Galway. We just moved there because it wasn’t Donegal and it wasn’t Dublin.
But the problem was how to get people connected? How can I enable someone in the USA to communicate with someone in Ireland? One of the primary things was that you couldn’t ask them to dial long-distance. They had to be able to get to a local number. I didn’t know how that would happen. Another problem was how to get paid.
I bought a big yellow book, John Quarterman’s The Matrix – the bible of computer networks at the time, and the book that changed my life. It went into depth about the glitches, the fixes, the Compuserves, the AT&Ts, X.25 and a little section on the internet. I pored through it from cover to cover.
Then, in about October 1991, on the Late Late Show, Telecom Eireann announced the Irish version of Minitel. They were going to provide a network on the French model and get terminals out there as a way for people to connect. They would collect the money for you and send you a cheque at the end of the month. Great! So I immediately phoned up Minitel Communications. It was a whole bunch of French guys in Ballsbridge. I said, ‘I want to provide a service on Minitel. How much does it cost ?’ And they told me that I’d need about two hundred and fifty grand! At a time when my only working capital was my credit card! I asked them to send me the protocol specifications, deciding I would see if it could be done on a lesser budget.
Then, at the end of 1991, it was announced that the National Science Foundation (NSF) had lifted the restriction on commercial use of the internet. Up to then, the internet backbone, run by the NSF, strictly forbid any commercial traffic. It was purely an academic and military network. As a result of this restriction I had only skimmed that section in The Matrix. So I dug out my Quarterman book and read again about the Internet, and the Internet Protocol (IP). Having studied the Minitel specs and X.25, TCP/IP looked like it was made for what I wanted to do. Now the plan was coming together!
To get things started, I launched Galway On-Line as a local BBS in January 1992. It was extremely difficult to explain to people what I was doing so with Galway On-Line I had something to show. It was also a way for me to learn and test ideas before launching the real thing. I learned a lot from running that bulletin board. It was a great feeling to sit up in the middle of the night, watching people use this service that I had built. But my plans were never limited to Galway. And the new company was incorporated as Ireland On-Line.
While more and more people had PCs at home and work, they could not use my service without a modem. Getting modems was still a big problem – they were expensive and slow. A 2400 bps modem at the time cost £400. It also needed type approval for use on Telecom Eireann’s networks. I started importing 9600 bps modems from California, buying them for $99 and selling them at £199. I bought a big roll of brown paper and tape and labels and stuff, and my wife and kids would help to wrap them up. It was a good business and kept the family fed over the first few years.
All my eggs weren’t in the one basket yet. I was working on other business plans as well, having decided that whichever got traction, I would go with. I also volunteered to work with the Western Alliance Association. This was set up by Pól Ó Foighil, a Fine Gael senator, who was trying to get the European Commission to support an economic development plan for the western region. In those days the Commission was still treating Ireland as a single region for funding purposes, and money tended to not make it out of the Pale. I went to a couple of the association’s meetings. One day Pól came to pick me up and saw what I was working on, in my back room with kids running around my feet. He said ‘You can’t work with all these distractions. I have an office in Spiddal with computers, printers and faxes. I could use a hand. If you want to come out there, you can use all the facilities.’ So I headed out to Spiddal, helped with his constituency work and finished off the business plan for IOL.
Pól also introduced me to Michael Grealy, who was about my own age and worked in Digital (DEC). He read the plan and offered to put some money in. Michael invested £20,000. By the start of 1993 I had stopped selling modems. And Ireland On-Line moved out of my back bedroom into office space in Furbo, again thanks to the assistance of Pól Ó Foighil, one of my all-time heroes without whom IOL might have never happened.
My next need was internet access. Quarterman’s book listed a phone number in Trinity College Dublin for the internet in Ireland. I called Trinity and spoke to Mike Nowlan. This was the first time that anyone had suggested to the company that wanted to resell its internet service. So I went to Trinity and came away with an agreement. I hung four modems off the terminal server there, connected it to Galway over a 64k line and assigned IP addresses to all the serial ports on the PC that ran the BBS. When the users dialled in now, they could either log into the bulletin board or connect to the internet for e-mail, newsgroups or Gopher.
In early I 1994 licensed a Windows program called Pipeline, created by James Gleick (author of Chaos: Making a New Science) that talked to gopher servers and had a nice user interface for Gopher, email and Usenet News. This meant that I could give a disk to a client, let them load it up and log in without any technical knowledge. When the Pipeline software was ready to go, Colm Grealy – Michael’s brother – came into IOL as sales manager. He was based in Dublin, working full-time as a teacher in a special needs school. But he loved technology and he knew how to sell. It was a perfect match. Colm and I hit it off immediately, and our strengths were completely complementary.
I was still looking for investment and there were small bits and pieces coming in. We raised £150,000 in total between 1992 and 1996. With that money we built a business with 20,000 customers and 40 employees.
We were one of the first companies in the world with an infrastructure that relied entirely on Linux. It was all that we could afford. But it worked!
Pipeline convinced me that a single-disk installer was the key to getting more people online. From a marketing perspective, we needed to have something physical that people could buy in a shop, take home and plug in. When the first usable web browsers came along in the middle of 1994, I spent many hours bundling them with Trumpet Winsock (Windows at the time had no TCP/IP stack) and Eudora Mail on a single floppy disk. I wrote an installer for these applications and we phased out Pipeline in early 1995.
The IOL bundle included an early beta version of Netscape Navigator whose license allowed it to be redistributed without restriction. However, when Netscape released version 1.0 they changed its licensing to forbid re-distribution. People from Netscape came to visit me in Furbo and expressed great admiration of my single-disk installer, asking if they could take a copy.
Later, they contacted me again and insisted that we must stop distributing the browser unless we licensed it at $10 a copy, plus $10,000 for the copies we had already distributed. I had no choice but to comply, but I told them that Netscape would lose its monopoly before long. “Somebody else will come along with a decent browser, and when they do I will drop Netscape immediately”. That came to pass with Microsoft’s release of Internet Explorer in 1995. IE3 was a good browser, and Microsoft offered us a tremendous deal. As a result, Microsoft’s share of the browser market in Ireland went from nowhere to 73% in a single month! Revenge!
Things really started heating up in 1995. You began to hear people on the street and in restaurants speaking of “email”, “the web”. The internet industry was uncharted territory. The only certainty was continuous change.
We ended the arrangement with IEunet at the start of the year and switched our international traffic through Pipex (UK) instead. We also opened a Dublin office in Amiens Street and took on a couple of people there. We had a great IOL User Group now, with 300 people showing up for workshops and talks. The fact that all these people were turning up for something I had done was humbling and really scary. It was also one of the great strengths of IOL, and one of the reasons we were able to continue growing in the face of much better funded competition.
We still needed a national network. We had modems in Dublin and Galway, but for the rest of the country these would be long distance call charges. One day I received a call in Furbo from the regional manager for Telecom Eireann asking to meet me. We met in Barna and he revealed the reason for his request. He pulled a spreadsheet from his briefcase and told me, “These are the highest revenue generating phone numbers in the country. At the top is directory inquiries…and here, number two, are your numbers – What is it you do exactly?” We accounted for 12% of call revenue!
I suggested that we would very much like to talk with TE, and asked if he could set up a meeting.
A few weeks later myself and Colm Grealy headed to TE’s St. Stephen’s Green HQ for a meeting. I told them it would be easier if I simply demonstrated what it was we do, and asked if they had a phone line handy (to much amusement!). I plugged my laptop into the phone line and fired up IOL and off we went (Colm did his sending an email to the President stunt of course!). The reaction was priceless – they really were quite amazed that you could do this over a normal phone line. They asked what they could do for us, and Colm then drew a map on the whiteboard, showing TE-provided modem banks throughout the country, allowing people country-wide to dial into Ireland On-Line through a local number. The TE reaction was “Yes, but if we did this for you, we would have to allow it for anyone”. We said that sounded great to us, and they said they would take it away and get back to us.
Eventually they used pretty much the same map that Colm had drawn when they launched their own competing service (sharing the network with nobody), although they had the good grace at least not to use the name we had suggested for it. Opportunity for the country lost.
Eventually we did get what we wanted from PostGem, an An Post subsidiary. Colm and I had met PostGem’s sales guy, Barry Collins, at a conference in the Burlington Hotel where we were both exhibiting. PostGem had leased lines into every post office in the country, and the network was under-utilized – particularly at night which was our busiest time. In no time at all we did a deal. PostGem would put more modems onto their network and manage internet access for us, all for a monthly fee.
At this time all our servers were still in Furbo, and needed to be re-located to the PostGem data centre in Dublin. So at one o’clock one Tuesday morning myself and Ronan Mullally shut them all down, bundled them into the boots of our cars and high-tailed it to the PostGem data centre in Dublin where we racked them and booted them all up again by six o’clock.
Having space in retail stores was also key to our plan. We had pioneered the starter pack in Ireland, but it was time to up our game. Coming up to Christmas 1995, we saw HomeNet’s new customer packs, which were really well designed. So we introduced new boxes, new manuals and a pre-paid system that gave you a serial number and let you go online immediately. We gave these packs to retail partners like Compustore, Xtravision and Easons and said ‘Put them beside the till for an easy sale.’ Then we heard that Indigo was entering the market and had serious money behind them. Indigo planned to go live on 8 December. We knew, however, that the shops get all their Christmas stock before that date and that Indigo wouldn’t have a retail presence in time for its launch. In addition, Bill Clinton was in Dublin on 8 December and the entire town was being shut down for his visit. We made sure that the IOL packs were delivered to all the shops on time, with the whole company working for 40 hours straight copying disks, stuffing boxes and then delivering the packs by car, bus or on foot!
Indigo had claimed it would have 10,000 customers within the first three months, and IOL would be gone. As it turned out, Ireland On-Line gained 10,000 customers between Christmas 1995 and April 1996. It was a very tough fight, but everyone, and in particular Colm, never wavered in their determination and it paid off.
By then we were holding talks with PostGem/An Post and Pipex (UK) about investing in IOL. We needed investment and we hadn’t been able to raise it elsewhere. Venture capital was in its infancy in Ireland at the time, and the VCs who did exist had no understanding of the internet. If we had been able to get a million quid, the story would have been totally different story. But in the end Pipex pulled out, and An Post acquired Ireland On-Line in early 1997. Unfortunately, they then allowed the brand to wither and the buzz in the company to die. On the upside, An Post received £120 million when Esat bought PostGem in 1999. My gift to Ireland!
The ISP business, if it’s done right, is a boring business and should be run by the accountants. It’s the services that are interesting. That’s still true today, with companies like Google, Amazon, Stripe and all the great Irish companies operating in the space.
With IOL, I had the privilege to be instrumental in the creation of an entirely new industry. An industry which has impacted all aspects of modern life. If I hadn’t done it, somebody else would have. But I DID do it. That’s pretty cool.
Last edit: June 2016
© Barry Flanagan 2016