Many people who set up companies have grand ambitions for their firms right from the outset. But Paul Lees “never thought” that the conference-calling firm Powwownow would be “as successful as it turned out to be”. Working as a project manager for BT during the late 1990s, Lees was able to take full advantage of free conference-calling facilities.
But when he later moved to other firms, he was shocked by the expense of the various services on offer. Since conference calls were becoming a key business tool, he set out to discover if there was a way to make them more affordable for smaller companies.
Lees learned that there were companies in the United States that allowed firms to host a conference call at a much lower cost than the services available in Britain. These companies saved money by renting dedicated lines from the telecom company, the use of which they would then sell to companies through a premium-rate phone number. Lees worked out that he could fill a gap in the market by setting up a similar service in the UK.
Thanks to the success of a prior venture, which sold a telephone survey tool, he was able to fund his new company with his own money and that of co-founder Andrew Pearce.
After setting up Powwownow in 2004, Lees admits that it took some time to iron out all the technical issues vital to delivering a seamless service. However, after about two years these were fully resolved, allowing the number of dropped calls to fall to virtually zero.
Another major technical challenge came when Lees stopped renting lines from external providers and started operating them directly, turning Powwownow into a telephone company. While it turned out successfully, the planning for this nail-biting move took several years, and kept Lees and his team awake at night. As he puts it, “you can test all you want, but it’s very different when you put something into practice”.
Another problem was convincing customers to choose his service. The service’s low price and simplicity raised suspicions about its quality and hidden charges. Initially, Lees tried to attract customers through the use of highly targeted direct marketing. However, he realised that the large number of small users (the average amount being spent was £40) meant that he had to improve the company’s overall brand.
Of course, the lack of a direct link between spending and sales made this approach more of a gamble. The firm also used guerrilla-marketing techniques, such as gate-crashing the launch of the ‘Boris Bikes’ in 2010 for its cheeky “Up for a Threesome?” campaign.
Despite these challenges, Powwownow has prospered, and was sold last year to PGi, Europe’s second-largest independent conferencing provider, for around £36m. Turnover is on course to hit an estimated £16m this year.
Lees believes that the main lesson he’s learnt from his success is the “importance of building a great team”. In his case, key people were co-founders Pearce, Martin Rai and Michael Kemp. While personal leadership is important, “no one can run an entire business on his or her own”. Budding entrepreneurs need to learn how to “share responsibility around”.