The Megabuyte Interview: Bob Falconer
Now that the IPO is over and done with, Bob Falconer is keen to get back to the business of running Gamma Communications. “It’s been quite a good experience so far,” the CEO says about the transition to life as a public company. “But to be frank, after an IPO you come back into the business and realise you must have been out of it for the best part of six months. You think you’ll have a rest, but it’s actually the opposite: I haven’t done this! I haven’t done that! There’s a huge period of catch-up.”
We’re in Gamma’s London offices in the City on a cold winter morning, in sparkling white surroundings in an eye-catching Grade II-listed building. The CEO is cheerful and casual in a striped shirt and no tie, surrounded by papers strewn across the table. This meeting room is called ‘Heron Tower’, which indeed caused some confusion when Gamma first moved in, Falconer laughs: the real Heron Tower is close by so you have to be specific about which one you mean. The CEO spends most of his time at the company headquarters though, in Newbury: “There’s another little telecoms company in Newbury you may have heard of? It’s the second telecoms company there, alongside Gamma.” He laughs: Vodafone is a big presence in the Berkshire market town. On that note, Gamma’s well-received IPO has done a lot for the company’s name-recognition factor: “I don’t have to explain who is Gamma, which I had to do often in the early days!” October’s IPO, which raised no new money, ensures more freedom of choice: “It helped enhance our brand in the marketplace, and ultimately that was the primary reason for doing it.”
Leading a new industry
Gamma’s industry-leading levels of organic growth has proven a popular addition to the AIM market. As the telecoms services specialist competes against much larger players, there’s a couple of reasons for its success, says Falconer, who’s been in charge of Gamma for ten years: “Where we can compete is by being quicker to market with interesting and innovative services that operate well.” Right now the hottest acronyms are SIP trunks (voice over data circuits) and cloud PBX (hosted voice), brought to the business masses via 650 channel partners providing the boots on the ground.
The strategy is straightforward: continue to grow the company as quickly as possible, especially with the new generation products where there’s lots of opportunity to grab market share. Then, create more integrated products: “Most companies want to increasingly buy their comms from one supplier, so to provide a complete set of communication services to a business is an objective.” Of the 550 people at Gamma, over 100 work in development, making it an R&D-intensive operation.
But Gamma wasn’t always a bet on next generation communications: “The business started in 2001 by buying distressed assets from the dotcom crash, and we were a late entrant in a declining marketplace.” Gamma did okay selling traditional cogs wholesale for a few years: “But growing inside a declining envelope is not the best business strategy. Eventually it’s going to catch up with you.” A decision was made to invest £10m, a lot of money for the company at the time, on what was then called next generation networks. “We calculated, or gambled, that we could do this quicker, faster and better than BT could. Not because we had more resources, but because we had a pretty clean set of assets and weren’t burdened with legacy. That gamble moved us from being a late entrant to a sunset industry to being in a leading position in the new industry.”
Today, Gamma prides itself on being the disruptor, “looking to displace the old with something a bit more exciting, and hopefully more helpful to businesses”. Not to mention that selling software has a higher margin than commoditised services: “Telecoms can be described as a utility, but in reality it’s a high tech, rapidly changing industry. People tend to think of telecoms as potentially being dull, but I think it’s one of the most…” He starts again: “I’ve spent my career in a tremendously exciting industry, and it’s only dull when you can’t think beyond the obvious.”
Falconer grew up in Edinburgh, Leith to be exact – “Leithers are always distinctive” – in a working class family. “I left school at 16. I thought I’d failed my O-grades. I hadn’t, as it turned out, but I thought I had so I got a job.” Falconer became an apprentice at the Post Office (now BT), where he earned a grant to study Electrical and Electronic Engineering at Heriot-Watt University. “I gained a tremendous amount of practical experience in those four years. Got myself into trouble once or twice” – Falconer was the burglar alarm expert for the Post Office in south-east Scotland for a while, and every Saturday night an alarm would go off all the way out in Broxburn. Fed up with having to go and reset it, young Bob figured out a way to stop the problem from recurring. “I won the Postal Service Innovation Prize for that, as the problem was happening all over the country. But I was shunned by my colleagues because the fix was well-known, and everybody loved it because it got them overtime! I’d ruined the whole damn thing by being a smart little arse of a 19-year-old.”
This problem-solving attitude set the tone for Falconer’s work history, though. He spent 12 years at BT Research Labs in Martlesham, “where I met my wife”. At that time, research labs where dominated by “pointy heads”: “The company had a problem in that it did research but didn’t do manufacturing. It was a complete disconnect: how then do you turn this research into something practical?” This feeling eventually triggered a career change in 1987, when he became global telecoms manager at ICI: “That had great appeal because you could run your own show.” Falconer learned a lot about management from John Harvey-Jones, the famous industrialist: “I learned about the importance of product quality and staff communication, about taking very complex issues and turning them into relatively simple messages.” He remembers Harvey-Jones having a knack for translating business messages into language that could penetrate an organisation of 100,000 people: “Everybody was talking technical jargon, and he just cut it right down: ‘The centre provides a record player, and the businesses choose the music.’ What he was really saying was, you run the infrastructure, they choose the software, and they run it on your infrastructure. People got that.”
After ICI came Racal Electronics, where Falconer biggest challenge was overseeing the integration of British Rail’s telecoms division. Then the founders of Gamma asked him to run the company. “What gives me the greatest satisfaction is being able to do it properly, do it well, and run a good service. Getting good feedback from customers is great. I have a folder of commendations and complaints in my inbox, and the ratio is about 20-1 of positives to negatives.”
Then there’s the fact that staff at Gamma are happy to work there, and Falconer has the charts to prove it: satisfaction is high across the company. “We hire good people; we trust them, we delegate to them, and they seldom let us down. We like to create an environment where it’s hard work, absolutely, but it’s challenging, it’s interesting and there’s a lot of scope for development and growth.” Falconer thinks office politics are damaging and Gamma stamps down hard if it emerges; the same goes for disruptive members of staff: “Experience [shows] that bad apples in a business really do pollute very widely.” There’s also no “them and us” structure at Gamma: “People attend on the basis of their contribution, not their hierarchical position, so it’s quite egalitarian in that sense. We give people a lot of headroom.”
Family and cycling
It’s clear that the happiness of Gamma’s employees are central to Falconer’s motivations, as he talks at length about the company’s culture for nurturing talent. “I’m not particularly driven by simply making money. It’s about pleasure, really: running a business well, having that recognised by 550 people who for the most part think this is not a bad place to work. That’s quite a nice thing to do,” says Falconer. “And to be frank, if you can poke a stick in the eye of some of the big boys that dominate the market, that’s quite fun as well!”
Falconer (63) lives in Winchester with his wife Sue. There are four kids – all girls: “My eldest has a learning disability, she is semi-independent. My second is a lawyer in the City, she’s doing well. Number three has got the grandchild, a one-year old, she’s working part-time. The youngest is in 6th form college. It’s a well spread out family. Fantastic fun.” Falconer likes to keep active and is a keen cyclist: “I did a charity run to Monaco just before the IPO. It was about 900 miles over about the same number of days, from Winchester to Monte Carlo. That’s a bit of cycling. And over the Alps! But we raised £50,000.” There were about 50 cyclists, with Falconer and the rest of “Dad’s Army” tagging on the back: “Sometimes we overtook the young guys when they got lost. We were a bit more careful about navigating – we couldn’t afford to go wrong!”
While he admits the tinkering is part of the appeal of cycling, Falconer still only has “a couple of mountain bikes and a road bike”, that is all: “Oh and I have an old bike from 1960-odd.” That is from Falconer’s first career: climbing the fence of the local rubbish tip to look for old bicycle parts, turning them into new bikes and selling them for pocket money. “That’s recycling, isn’t it! It was illegal then, the police used to come after you. I still use that old bike to go to the train station, because it would never get nicked.”