To the edge and back

By being willing to take risks and back his judgement, Damian Kay and his partners have built a fast growing telecommunications franchise business that is planning to grow its international presence. By Andrea O’Driscoll.

MOST ENTREPRENEURS have taken risks in the course of their careers, but Damian Kay of telecommunications franchise, Telcoinabox, has taken more than most people would be comfortable contemplating. But his unwavering belief in his ability to succeed and in the talents of the people around him has resulted in an $80 million business with offices here, in the UK and in NZ, and ambitions to go further into the global market.

Kay was originally inspired by Richard Branson’s autobiography Losing My Virginity to abandon the security of a career in sales and strike out on his own. “That book was the catalyst for me to leave my full-time job and go it alone,” he says. “I threw caution to the wind and just resigned.

“I had nothing to go on but my faith in myself. But that is the fundamental thing that has built this business – an undying belief, to the point of distraction, that we would be successful. You do sacrifice a lot. I lost some friends and I even lost my marriage for a short while, but I always knew the business would make it.”

While Kay was sure of his ability to succeed, he was less clear about the type of business or even the field best suited to his talents. He had worked for Colgate Palmolive, Mars Inc and Bonlac Foods, but his last job had been at telecoms giant Optus. “It was in the middle of the tech boom and it was a really exciting industry to be in,” he recalls. “I was working in the pre-paid mobile area and that was growing at a rate of 200 per cent a year.”

But according to Kay it wasn’t the size or potential of the telecoms space that finally made his mind up, but a fateful meeting with fellow entrepreneur Damien Gould. “It was never a case of I’m going to build a business in telecommunications,” he explains. “It was more a case of, I’m going to build a business; I wonder what the right business might be.

“I did a little bit of work for some of the customers I’d had at Optus and through one of those guys I came across Damien. He was running a company called Number Kitchen, a small independent dealer that earned upfront and trailing income by signing customers up to a number of carriers. After meeting him about four times, I had a really strong gut feeling that we would make great business partners.”

Not for the first (nor the last) time, Kay opted to go with his gut feel. “If there’s one thing I’ve learned,” he says, “it’s to trust my intuition.” He borrowed $20,000 from his best mate and offered to invest it in Number Kitchen in October 2001. The next month they opened an office in Sydney’s George Street and Kay began looking after the company finances.

Just a few months later, he orchestrated a deal that would see Number Kitchen partner with a Swedish reseller. “In the December I came across a small telecommunications reseller that was part of the Swedish company Universal Telecom,” he explains. “It was being run (very poorly) by the founder’s brother. After a couple of weeks of negotiation we took over the management of the business and secured a 10 per cent ownership stake. As part of the deal Universal Telecom agreed to fund the expansion of the business to the tune of $250,000.”

But while Kay kept his end of the deal and threw himself into growing Universal Telecom – via extensive telemarketing marketing and by setting it up as an additional provider for Number Kitchen – its Swedish parent company reneged on its promise to offer financial assistance. “By June we were $150,000 behind in our payments to our major supplier RSL Com,” recalls Kay. “We had no way of paying this money back as the growth we were experiencing had yet to cover the expenses we incurred in getting that growth.”

With his back to the wall, Kay had no choice but to sell the apartment he shared with his wife and inject that $120,000 into the business. But even that didn’t get them out of the woods completely. “The problem was that even though we were relatively debt free and turning over about $200,000 a month, we had no expansion capital,” he explains. “I ended up applying for seven credit cards, which together with the one I already had gave us a limit of around $90,000.”