FACE TO FACE : 0800 Chairman: Nick Gordon

In 1995 Nick Gordon started what was, to his mind, hobby company. He called it TelWord 0800. Today it is Zintel Group and, following key acquisition in October, will have turnover in the coming year of around $60 million.
Through series of company acquisitions and name iterations in the late 1980s and early 1990s, Gordon set up and, in 1993, sold out of office technology products company Advantage Group. It subsequently, became ProvencoCadmus, now in receivership – but that’s another story.
Advantage, though successful business, relied on selling more capital product every month. If he was going to build another business, Gordon wanted new model – company with recurring revenue stream – nice, steady cash flow.
TelWord seemed to offer just that. It mimicked the American 1-800 WordNumbers telephone numbers business, for example 1800 FLOWERS or 1800 PLUMBER. “No one had launched word numbers in New Zealand,” Gordon recalls. “TelWord established that concept in this market.”
And it worked. The problem initially was because there were two delivery keypad standards, the word letter and number matrix was sometimes wrong. With words not necessarily translating into the same numbers, potential customers were resistant.
TelWord resolved the dilemma by marketing the WordNumbers initially as just 0800 numbers, with an 0800 prefix to number which would, as key pads upgraded and one standard was adopted, translate into word.
In fact, TelWord never actually sold words, it sold something even more valuable – air time. The company, renamed Zintel in 2000, sold telephone call time instead. “We buy multi-millions of minutes wholesale each month, from various telecommunication carriers in Australia and New Zealand and then sit between the carrier and the business customers using the 0800 numbers,” Gordon explains. “And the only way we can successfully do that is by adding value to the customer.”
The company adds that value by providing comprehensive billing and reporting services including statistical analysis, such as call origination, call abandonment, engaged or busy line overloads, redirections and host of other invaluable customer relationship data. It’s complex product with the value embedded in the software and intellectual property rather than any expensive capital equipment. “I have philosophically resisted becoming carrier or having to build our own network,” Gordon explains.
Gordon’s company was more than just hobby by 2000. That year it acquired Swedish technology company Ericsson’s enterprise business in New Zealand and took the TelWord model to Australia. “But the name TelWord didn’t fit so we changed it to Zintel,” he says.
In 2003 Zintel listed on the New Zealand Stock Exchange 2nd board (NZAX). In October this year it bought Cogent Communications for little short of $2 million and almost doubled the size of the business. Gordon’s telecommunications company had, overnight almost, become “communication business” with around 250 employees across Australasia.
Gordon’s family trust owns almost 60 percent of Zintel. That will change little when former Cogent employees take up to $1 million worth of fully-paid shares. Some of them attempted management buyout when private equity investor, Archer Capital, decided to sell Cogent.
So what drives Gordon if, as he concedes, he doesn’t have to work in the conventional business-building sense? He had, after all, sworn to never again employ more than 20 people when he set up TelWord. “I guess it is now about creating employment opportunities for people,” he says. “True, I don’t personally need the money. But it is about bringing something to fruition and growing it and providing opportunities for employees to invest in the business.”
His current moves are not, he hastens to add, part of personal “exit strategy”. But he is impatient to grow the business. “This is what I want to do now. I am not trying to roll it up over the next couple of years and then flick it off,” he adds. The company has been accumulating cash and now plans to take advantage of opportunities its board and management have identified. Those opportunities include Zintel’s just-acquired bank certification of its eftpos terminals, deal Gordon is very happy about.
But buying Cogent was the big prize. “It is very complementary to our business,” he said when announcing the purchase back in September. Now, month and half after the acquisition, he is even more enthusiastic about what the deal will mean for Zintel.
What kind of business has he created? “We are not telco,” Gordon says emphatically. “We are an information service provider. People may not believe or understand that, but it’s true. People businesses don’t care about how the voice is carried so long as they get good quality service, connection and price. But what they really care about is the information we provide. Information is about business outcomes, not telephone calls at 9c or 10c. And with telephone systems, it isn’t about the handsets, but about the software and applications that are behind them.”
Gordon was, he concedes, determined to succeed. “There was no silver spoon. I have worked for whatever I now have. I was ambitious and driven in my late teens and through my 20s and 30s. What gives me lot of pleasure now is watching similarly motivated individuals coming through the enterprise and moving up or on to other things. Perhaps starting their own businesses.” He likes to do his “little bit” to make the world better place.
His leadership learning is that “people make the difference” in successful enterprise and he doesn’t care that it sounds like cliche. “It is true. It takes time to realise just how true.” And recruiting, he says, is “critical to an organisation”.
In that respect, the past two or three years have been difficult. The steady move from handful of employees to more than 100, and now 250, delivers new realities. The impersonal, political and cultural realities of size change the ball game. Keeping and attracting good people has, Gordon admits, been testing. He accepts that building positive people culture will become increasingly important.
His personal ethos is simple. “My word is my bond. If I promise something I will do it, even if it is to my own disadvantage.” It is lesson he learned when doing business in Japan. “We did some very significant deals on handshake. I have highly developed sense of obligation. I think sometimes I carry it to an extreme, but that’s how I do business,” he adds.
Gordon is not company executive. He is chairman of the board. He might not “get paid for turning up to work each day” but, he concedes, he’s spending “an awful lot of time at the office”. The management team is now being reconstructed. “We have been under-resourced at both middle and senior management level,” he says. “But now we are putting lot of effort into structure and strategy.
“Putting the right people in the right roles is our priority now. If we don’t get the people thing right, this acquisition won’t work,” he adds. But he also believes he learned important lessons about the difficulties of mergers and acquisitions when he was on the Advantage board. “We bought too many companies too quickly and paid the price,” he says. “I won’t repeat those mistakes.”
Zintel’s purchase of Cogent, he says, is more likely to succeed because it is synergistic and it’s “not hostile purchase”. He accepts that the “next 90 days” will be critical. It is time in which the companies must move to “seal the gaps, put the structure in place, communicate well and get the branding right”.
On the governance front, Gordon thinks Zintel is probably “over-governed” for its size. “We have always run the business as if it were public company. We have high standards of risk management, audit controls and so on,” he adds. “We take this approach because I am not an executive director and it helps ensure strong integrity. Besides, we always intended moving to full