Nationwide Power Communications Ltd (NPC)
How I Started in Telecoms
In 1993/1994 I formed a new Telecoms company, using my investment knowledge and expertise, to raise approximately £400,000 from professional investors.
I presented the business to potential investors at one of the meeting rooms available in the large building known as Telehouse based in London’s new Docklands area.
Telehouse is a Data Centre specialising in providing secure and essential facilities for bespoke servers, such as internet access and power supply, with back up facilities to ensure maximum “up time” or uninterrupted service – particularly important for a telecoms business. It also provided easy access to other telephone networks.
NPC Rationale – Business Opportunity with Phonecards
At this point in time, the telecoms market in the UK was dominated by two companies – the long established National Telecoms Operator, British Telecoms (BT) – and the relatively new Mercury Communications part of Cable and Wireless. BT had effectively had a monopoly for many years, and Mercury was formed to break that monopoly. However, both companies charged high prices for phonecalls, particularly to international destinations,
Many calls were made using a payphone or phonebox which accepted coins (cash). However a new telecoms product had been developed some years earlier which was the Telephone Card, or phonecard, as it became widely known. Of particular interest to me was the prepaid phonecard using a remote memory system, which could be used in Payphones – or from any other telephone – by first dialling a Freephone or Toll-Free number.
In 1993, to be able to offer a phonecard service, there were three major requirements.
The first was to have our own “telephone exchange” or telephone “softswitch” and the most important feature of the “switch” – or computer software – would be the Billing system, which would ensure that the correct charge would be made for any call, and the credit balance on the prepaid phonecard carefully monitored. This crucial software solution was produced by Gideon Goldschmidt – see below for more info on Gideon.
The second requirement was to obtain the Toll-free numbers that would be promoted on each card, and would carry the incoming call to the server hosting our telephone softswitch, which would be situated at Telehouse.
The third requirement was to be able to connect the customer’s outbound call to the required destination, which meant that we needed agreements in place with Telecoms Companies (Carriers) who could provide such a service, either for national or international calls.
There were several businesses in the UK offering to produce or manufacture phonecard products – basically credit card sized plastic cards – which could then be branded, and carry the PIN (secret password under a “scratch-off” panel) together with the appropriate Freephone or Toll-Free access number.
The Unique Selling Point (USP) for the new business was that we could offer telephone calls far more cheaply than the established UK Telecommunication Networks – BT and Mercury – particularly calls to international destinations.
Our potential UK market included Tourists, Students, small businesses, anyone who did not have a landline available at home or indeed anyone who needed to make cheaper international calls. Two of our early customers were the Royal Air Force and the Royal Navy, for whom we produced special telephone cards depicting stirke aircraft and the famous carrier the Ark Royal. This of course pre-dated by 30 years the Mobile Phone, and Communication Services via the Internet widely available today (2021).
How I raised the Necessary Venture Capital
In the early ’90s, to encourage Investors and to help new businesses attract the start up capital or venture capital they needed, the UK Government had developed the Business Expansion Scheme (BES) – later known as the Enterprise Investment Scheme (EIS) .
For investment into new businesses that met the criteria, there were several important and generous tax advantages available to the investors, in particular, relief from Higher Rate Tax in the year the investment was made, and the removal of Capital Gains Tax on any subsequent sale.
I structured first Nationwide Power Communications Ltd, and some years later easy-dial Ltd, as BES companies. Another example of a startup business that later operated under the BES scheme was the RIverside Racquets Club.
Once I had decided on the structure of the new company, the bigger problem was one of where to find the potential investors and how to persuade them to become shareholders.
Matrix Securities Ltd
Matrix Securities Ltd was a company formed in 1986 and trading out of Vine Street in London. I believe the business was first drawn to my attention by my good friend Charles Sayer: it was of interest to me because it was linked to raising Venture Capital, and other ways of finding startup funding for small businesses, such as the new Telecoms business I had in mind, which was Nationwide Power Communications Ltd.
Matrix had accumulated lists of “professional investors” potentially interested in investing in “start-up” businesses where the risks of investing were obviously higher than average but conversely the potential rewards of owning shares in a business that went on to become successful were also higher. Potential investors on the Matrix lists were ideal prospects for me, particularly where the unique BES tax advantages would apply.
Matrix Securities Ltd offered an in-house service, which included mailing the names on their private contact lists with details of a new business: at the time, there was no email listing, which would have made the process a good deal simpler and less expensive!
I put together a Prospectus, detailing the company business plan and the members of the management team, which was proofed and agreed by Matrix, and this was mailed out to a suitable list of prospective investors in 1993/1994. The Prospectus contained a postal “reply slip” with a FREEPOST envelope to indicate further interest, and any responses were sent to me.
Because my own expertise was at the time related to running financial businesses, I realised that a Team was needed with sufficient expertise in Telecoms to persuade investors that the new company had a chance of succeeding.
Gideon Goldschmidt – Technical Consultant
Gideon is a very talented software programmer and was the designer of the bespoke software that was used to provide the company’s unique telephone service. At the time he was involved with another entrpeneur, Adam Toop, who ran a business called Adam Phones, based in Chiswick, London, close to my home.
Gideon and his son – another talented software engineer – worked together as a team on various software projects.
Russell Mcanulla – Managing Director
Now apparently working in a small family business called Sheldon Reed, I have no recollection as to how we met. I see from Companies House records we were both directors in a company called Telefriend, but I have no idea why, or what it did. I remember meeting his wife Dianne and being invited to their home in Fleet. He obviously impressed me, because I offered him the job of Managing Director in my new company, only to be well and truly shafted after six months.
Gary Sheppard – Director
Again I have no clear recollection of how I met Gary Sheppard, except that he was working with BT at the time and had the requisite experience in the Telecoms business. He may even have been one of my customers from Merchant Investors. Suffice to say that he was eminently fogettable, but fulfilled a role briefly as our Telecoms Director.
Ken Orrell – Sales Director
I cannot even now remember where and how I met our sales director: he was ex-army and a good salesman, and I offered him a job when he badly needed it.
Jacqueline Peat – Office Manager
The one good thing to come out of NPC was Jackie Peat. Born to Jamaican parents and brought up in Lewisham London, at the time Jackie was unmarried with one daughter. With strong opinions, and an equally strong work ethic, she ran the office administration extremely well, and was very loyal. She later moved with me to the next telecoms company I formed which was easy-dial Ltd and carried on in office administration and customer relations. I owe her a great deal.
So What Went Wrong? Betrayed by "Little Shits"
After six months or so trading from 63 Duke Street, and starting to market the products and form the customer base for the new Company, Messrs Mcanulla Sheppard and Orell, the three musketeers – or “little shits” as I refer to them now – decided that the Company did not require my services, and they launched a Boardroom Coup
To be fair, Jackie Peat had tried to warn me on several occasions, but I had not heeded the warnings, and had assumed that there was not a serious problem. Of the three, I was the most disappointed in Ken Orrell, who seemed to me to be a decent bloke: they owed me a great deal, and all three were drawing generous consultancy fees from the new business.
I was of course very angry and disappointed: this was a major betrayal of trust. In truth, none of them were necessary to the Company, and I had only appointed them to strengthen our Board of Directors in the eyes of the Investors – our Shareholders. The only essential member of the Company was our technical Consultant, Gideon Goldshmidt, who developed and maintained our Telephone Exchange, or SoftSwitch. Unfortunately, they had “got” to Gideon, and I could not rely on him for support.
An EGM was called, with Telehouse as the venue, attended by a large number of Shareholders, who were faced with a simple choice – to either support myself or “the others”. I addressed the meeting, and warned them that, in my opinion, leaving the business in the hands of the little shits would have disastrous consequences for the Company and their investment. Unfortunatley, the Shareholders were persuaded otherwise, and in a vote, I was removed from the Board of Directors and effective control.
Some six months later, I was proved 100% correct: the company was milked dry of funds, and wound up, with Investors losing their money. As far as I know, there was no subsequent investigation of malpractice or negligence, but in my opinion, the little shits were no better than opportunistic thieves, and should have been prosecuted.
For me, this betrayal had serious consequences: apart from the damage to my own reputation, and losing my consultancy fee from NPC, the principal tenant at 63 Duke Street had disappeared overnight, which led directly to major difficulties with the Landlord and my subsequent Bankruptcy.