Siemens hired me, along with many other Irish engineering graduates, in the mid-1980s. I spent six years working as a robotics and automation engineer in Germany and Japan. In 1991 I returned to Ireland – I just did not want to spend my whole career in engineering – and joined the MBA course at Trinity College Dublin. The university had recently connected to the internet but had not yet begun to issue e-mail addresses to postgraduate students.
I met Samir Naji through one of the other members of that MBA class. He headed the Horizon Computer Group, which had recently become Sun’s distributor in Ireland. After finishing the course I went to work at Power Products in Cork. But I stayed in touch with Sam.
In January 1995 he introduced me to Paul Kenny, a director of the NCB Group. They spoke about their plans for an internet service that would take a more commercial approach to the business than the existing ISPs. They had to explain to me how the internet was evolving. I had seen it for the first time in Boston a couple of years earlier, when an American colleague with a laptop called me over and said ‘Look at this’. But I had not followed its development. Sam suggested, however, that I could get the new business going.
Paul was the strategist behind Internet Services Ireland (ISI). Horizon would hold 60% of the shares and he would own the other 40%. I was appointed as managing director and joined the company officially in June. So did Chris Higgins, our main technical guy, who came from Quay Financial Software. Sales and marketing manager Barry O’Connor was another early recruit. We worked out of the Horizon office in High Street.
The initial strategy was to go after the consumer market with the HomeNet service, charging users £12.50 a month. We would piggyback on top of PostGem’s network infrastructure and leverage Horizon’s technical resources. We did some newspaper advertising, appointed over 70 retail partners around the country and made an agreement with Frank Quinn at Computerscope to produce marketing packs. ISI launched HomeNet in September and got ready for the Christmas season. Multimedia PCs with speakers were expected to be big sellers that year.
Our model was to win market share, then look for a trade exit. We never intended to run the business ad infinitum. We knew that we would have to burn cash for a time and started with £100,000 in capital.
Then Indigo came along. It emerged shortly after our launch and also targeted home-based customers. Indigo appeared to have much bigger resources than we did. Ireland On-Line also upped its game significantly that Christmas. The competition grew intense and HomeNet did not perform as well as we had hoped.
Chris Higgins, David Mee and Barry Rhodes at EUnet Ireland in 1997
This led us to focus on corporate customers – large companies rather than small firms – in early 1996. We looked into promoting ISI’s services through the Horizon partners who sold Sun computers, but the potential revenues were too small to interest them. We had already introduced InterWeb, a web site hosting service, but did not want to get involved in web content development. We would also need to invest in infrastructure.
After the change in direction Barry Rhodes, who had spent two decades selling computers to Irish businesses, joined us as sales and marketing consultant.
EUnet Ireland was the strongest internet service provider in the corporate area. It ran its own network operations centre (NOC) in Westland Square. Paul started discussions with EUnet about joining forces. In order to take over the company, though, we would need to find another investor. Tony Kilduff, chairman of the computing services group Reflex, came on board. EUnet Ireland’s owners agreed to sell their business and we announced a merger between the two ISPs in May 1996. I became managing director of the new EUnet Ireland operation.
This combined organisation had over 20 leased line customers – most of which were big names in the IT industry – and more than 50 corporate customers with dial-up internet access. We also introduced OfficeLink, a service package with up to five individual mailboxes, to cater for SMEs. But we stopped marketing HomeNet.
There were only half a dozen people working in ISI before the merger. The original EUnet had more employees, but most of them drifted away. We hired a new team, including sales manager Richard Cooke, who came from Lake Communications, and sales specialists who had previously worked for photocopier companies or other office technology suppliers. In general, the people we attracted were pioneers and risk takers. They wanted to explore, experiment and innovate in ways that they could not do in other companies.
We spent a lot of time trying to figure out our place in the market. We didn’t put the wires in the ground. We didn’t do web design. We weren’t experts in encryption or security. But we could pull all these things together for a customer.
Barry Rhodes started work on indirect sales through web development companies like Interact and Webfactory and through mail and security applications suppliers like LAN Communications and Entropy. These resellers, especially some of the web companies, were able to develop vertical markets such as publishing and hotels faster than we could. The partnership model was a differentiator for us and had a reasonable degree of success.
Most of our differentiators, though, were technical. Our international bandwidth to Amsterdam and the US was always key to the business. The concept of contention ratios became important. And Chris Higgins started to explore tools to improve the NOC. We made a commitment to the customers that we would never max out the capacity on our international lines. Chris also looked for more cost efficient ways to manage the InterWeb service. At one stage he had around 200 web sites running on a single server. Ryanair’s site was one of them !
The commissioning of INEX in 1997 had immediate benefits for the NOC and took a lot of pressure off our lines. We had always known that a lot of our international capacity was consumed by traffic destined for recipients in Ireland. The country needed a national exchange. We felt strongly, though, that this should be independent from all of the ISPs. In the end everyone got together in the same room, decided to do it, went out to tender and Cara won. Nick Hilliard, who had been in EUnet and then moved to Indigo, provided technical assistance to Cara and the switch was set up very quickly.
Denis Curran from Telecom Eireann was also involved in the creation of INEX. But I never got the impression that Telecom Eireann as a whole had a strategy for working with the ISPs. The company was tough to deal with and the waiting time for leased lines was two to four weeks. We knew that we were a significant customer for Telecom, but no one ever came into us and said ‘Here is what we can do for you.’
We saw huge growth in our traffic levels in 1996 and 1997, due to a combination of new connections and increased usage by existing customers. Our revenue increased to £1.5 million. But EUnet Ireland was still not making money and we had to make additional cash calls to our shareholders. Finance was the first item on the agenda of every board meeting.
Our objective of achieving a trade sale still applied. The only questions were about valuation and timing. We could see that things were moving very quickly internationally and that other EUnet companies were being acquired. We kept investigating our options.
One of the companies that we had a preliminary discussion with was Esat. At that time, though, they were not interested in running an internet service. Later on, however, Esat announced its plan to introduce one. We knew that they did not have the technical capacity, but the company’s clear intent worried us. In 1997 Esat poached Barry O’Connor from EUnet, then tried to recruit more of our staff. Paul Kenny approached the company again and negotiated acquisition terms. In the end we reached an agreement very quickly.
The value of that deal has never been disclosed, but all of the EUnet shareholders made a profit and the key staff benefitted financially. Afterwards, however, we concluded that the price would have been higher if we had waited for another six months.
Most of the 30 or so EUnet Ireland employees stayed on when the company became Esat Net. They knew that the business was now well funded. The NOC increased its capacity and moved out to Dundrum. The workforce doubled in size. Under the terms of the acquisition I joined Esat for one year. Then I moved back to Horizon and Richard Cooke took charge of Esat Net.
Avnet acquired the Horizon Group in 2008 and I am now vice president of operations in EMEA for Avnet Technology Solutions.
Last edit: January 2016
© David Mee 2016