David Williams: Reaching for the stars
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Over the next two years, David Williams, who is founder and chief executive of Avanti Communications at just 37 years old, has €110 million (£66.2 million) to spend on launching a 2.5-ton satellite the size of a Land Rover Discovery.
Over the next two years, David Williams, who is founder and chief executive of Avanti Communications at just 37 years old, has €110 million ( £66.2 million) to spend on launching a 2.5-ton satellite the size of a Land Rover Discovery.
Williams believes that for the 15 years of its service life, his satellite will snatch the lucrative market for corporate data from slow-moving rivals locked into Europe’s huge demand for satellite TV.
According to industry figures, there are between six and nine million potential users of these services in Europe. ‘We only need 300,000 to fill our satellite and make more money than we could dream of,’ says Williams.
‘The economics of space are exceptional and closely resemble those of the oil business,’ he continues. ‘It’s difficult to get a licence to drill for oil in a great place, but if you get the licence and sink the well when the price is high, you’ve got it made – you’re Cairn Energy. I’m the lucky guy who got the licence to build the satellite in an area where there is undersupply and high pricing.’
Such stargazing was not Williams’ first ambition. Born in Cardiff to rowing parents, the family moved eight times while he was growing up, until his mother and father eventually separated acrimoniously. The experience, he says, left him with a refusal to trust anyone and a somewhat belligerent attitude.
In 1987, he escaped to university at Leeds to read economics and pursue his real ambition in rock music. He became lead singer of The Watchmen, who played some big gigs and put out several singles, but never quite landed a recording contract.
A stage mentality
‘Being an entrepreneur and a lead singer are very similar,’ he says. ‘You’re the guy who gets booed off stage if it all goes wrong, but you’re also the one who gets all the plaudits if it goes well.’
When the band fell apart he ended up working in a bank in London in 1991. He then trained as a risk analyst and spent most of the 1990s writing business plans and providing debt finance for telecoms companies. Stints at Chase Manhattan, Canadian outfit CIBC and merchant bankers Babcock & Brown saw him advising cable TV and mobile networks, and working with big names such as Alcatel and Marconi on financing satellite projects.
‘Senior debt might not have been the most exciting end of banking, but it was a fabulous place to learn how to build a business,’ he says.
By 1999, a number of pennies were beginning to drop. ‘I realised that I was a dreadful banker,’ says Williams. ‘I was no good at corporate politics and I can’t take orders!’
He’d also had the foresight to spot satellite as an opportunity. In analysing risks in the telecoms market, he knew that terrestrial networks were never going to be able to satisfy the leap in demand for data that everyone was predicting.
‘Satellite is much better at pushing high rates of data around,’ he says, ‘but in the late ’90s it was a bad place to be because silly money was being spent on trying to create mobile networks.’
He then heard an investment pitch from David Bestwick, an astrophysicist. ‘It wasn’t very good, but his core skills were fabulous,’ Williams recalls. Bestwick was running a small consultancy firm working with the space industry to develop operational applications of satellite technology. Instead of renting bandwidth, it soon became clear that it might be possible to acquire a government licence to design and launch your own satellite.
‘I decided to jump overboard, joined forces with David and started swimming,’ says Williams.
The first five years were tough times spent swimming against the tide. After raising £540,000 in seed capital in March 2000, the bottom fell out of the technology market and Avanti was turned down by a grand total of 234 venture capitalists for its next round of finance. ‘
We were trying to operate in new markets, we had a technology that hardly anyone understood or liked and we were in a capital market that was bombed out,’ says Williams.
To keep the business going, Williams remortgaged his house for £500,000 and used 12 different credit cards to pay the monthly bills. ‘When I proposed to my wife, I was an affluent banker,’ he says. ‘The day I married her, she took great delight in saying that I had become a bankrupt entrepreneur.’
Growing the business
The strategy that Williams and Bestwick pursued was to grow a business that could justify having its own satellite. Creating applications and renting bandwidth would be the first steps towards becoming an operator. ‘It was a lot harder than we ever imagined,’ Williams recalls.
The opportunity they identified was beaming television into shops to promote goods at the point of sale. In 2003, retailers finally began to accept that installing these plasma screens could lead to a sustainable increase in sales, and the business took off. As well as running networks, Avanti Screenmedia now sells advertising and makes content. This year, sales of £12 million are expected with profits of £3 million.
Williams never lost sight of his main objective of acquiring a satellite licence, and admits that Screenmedia was an accidental business. ‘I am not a media guy,’ he says. ‘We just stumbled across an opportunity on which we capitalised. I always felt a bit like a fish out of water.
‘What I learnt is that selling a new product to a new market is virtually impossible. Your success is utterly dependent on the quality of people you hire and how you lead them. To recruit them, I had to sell as hard as to any customer. Once here, you have to keep selling to them. You lead from the front, delivering a constant sense of passion and commitment.’
By 2004, when Avanti floated on AIM raising £3 million, Williams had started to refine his pitch to City investors. As a debt banker, he might once have appreciated in-depth detail, but what the equity market wants is simplicity and focus.
‘Quickly summarising a message is not my first instinct as a Welsh windbag,’ he declares. ‘Less is more in the City. Focus ruthlessly on your best product. Focus on the part of your customer base that is most likely to buy. Cut extraneous people out of your life.’
On holiday in Portugal in 2005, Williams received a call that surprised even him. After six years of negotiation, the government was going to award Avanti a licence to operate a satellite – for free, forever and with €35 million in support. Williams had finally won his argument that space was a growing industry and of strategic national importance. It took him two days to raise the extra €75 million required in the City.
‘Our investors already knew about our satellite vision,’ he says. ‘But I kept the licence a secret from virtually everyone, even at the IPO, because I knew that if I’d said “give me money to put tellies in shops, then in a couple of years I’ll need £100 million to fly my own satellites”, they would have thrown me off the roof. I had to keep it quiet until it was credible enough.’
Demerger makes sense
Suddenly, Williams found himself running two growth companies simultaneously. In January this year, he took the logical step of demerging and refinancing them.
‘It is a bit of a relief,’ he says. ‘I can really focus on what I know and care about. The media company can be run by people who really know the business. We are through the stage when I have to hold it together with brute force; it now has everything it needs to succeed. I am happy to entrust it to the new management.’
Williams intends the launch of the satellite to be just the first step of a journey for Avanti Communications. In the next five to ten years, he wants to build a host of satellites to cover an area from Ireland to India and down to Africa. It’s a vision that he aims to start realising this year.
‘We are pursuing a licence to cover the area with several satellites, and it’s my hope that we can turn ourselves into a transcontinental satellite operator,’ he says. ‘The demand in North Africa, the Middle East, India and Central Asia is large enough to justify a dozen satellites. My ambition is to create a top-three global satellite company.’
It is not entirely in his hands, as his share has been diluted to six per cent. ‘But if shareholders do want to cash out, then I might try to buy their holdings from them,’ he says.
Williams certainly has no interest in leaving the company. Like the true rock star he was originally going to be, his exit plan is ‘to continue to be fabulous until I die’.