Malcolm and PCCW
My time at PCCW
It’s funny because you never know who you are going to meet. I ran into a guy on the street in Hong Kong while visiting there from Tokyo where I was living at the time. That guy, Kenny, introduced me to my first business partner at NetNoir, the guy who mentored me and recruited me to co-found PCCW with him, and many other lifelong friends. Kenny was sort of a hero to me in that I was this geeky kid who like computers, while he was a this international fashion model and DJ who happen to be African and Swedish and had pretty much been to every country I could name. Turns out, he and I were neighbors in Tokyo and after meeting randomly in Lan Kwai Fong in Hong Kong, we became great friends. And when I came back to the states, his introductions to friends would change my life forever.
After running NetNoir for several years I reconnected with some friends Kenny introduced me to. I had some notoriety and had been featured in many magazines, newspapers and even several TV shows. Due to my success, Kenny’s friends, Gregory and Michael, asked me to come to dinner. It was a great time to be an entrepreneur in San Francisco but I had no idea what it meant to take that success to Asia.
At that dinner at the Stanford Park Hotel, Greg and Michael told about how they had built a satellite company in Asia and sold it to KS Li, the richest man in Asia. That company became AsiaSat. Then Michael worked with KS Li’s son, Richard Li, to build what became StarTV. The team sold it for nearly a billion dollars to Rupert Murdoch. Since their 2 year non compete was about up, they were thinking about to do next. That’s why Michael wanted to talk to me. He was the visionary who never took no for an answer. I was the technologist, who also never took no for an answer. It was a good match.
So I scrawled on the back of the napkin my idea for what a true broadband company should be. It involved using satellite as a delivery channel, creating content for both television and web simultaneously, and producing content based on the audience (user generated content, UGC). Those ideas may seem commonplace today, yet back then it was revolutionary. I knew the production model could only work from an business standpoint if you could make content for multiple platforms with one team (i.e. broadcast, broadband, and low bandwidth internet). So I designed an object oriented production system with a team of developers I knew well in San Francisco. The UGC part was also key because it assured that the ideas were produced were following the trends of what actual internet consumers were interested. This is the basis for why social media is so interesting to us. My premise was simply that it reflected our own interests back to use in an easy to consume format.
Back in those days, most people accessed the Internet through dial up. Now we called broadband “the internet” because it just wouldn’t do most of what we are used to doing without high bandwidth. Those days we dreamed of a day where you could look at photos, listen to music, or even watch video through internet connections. Today that is standard but at the time, the idea itself held great promise.
Within 9 months not only did we design a system that could product content quickly, but we produced a demo of our consumer product. Working in nondescript offices in Santa Clara with some folks from Intel who were interested in our project, I took a store bought Sony viao desktop computer and had a fully functionally interactive TV demo running 24 frames per second (fps). 24 fps was pretty much magic in those days because it assured the video was smooth, not choppy. Most computers could not handle that kind of video and certainly not full screen.
We showed our demo to the Intel team had been monitoring our project. They were fascinated by the idea that we would make high bandwidth services that would require their very fast chips to run the computers for the Asia market. When they saw the demo, they were flabbergasted. How could we product a demo with smooth video on a computer we bought from Fry’s? Well, my secret was video compression and a way to make the response time very fast for the interface. At the time Intel was trying to do some thing similar with Linux based set top boxes and their labs had not produced a demo as easy to use and beautiful as ours.
And with that they invested over 10 million of dollars. What they didn’t know is that it would grow to be worth more than 300 million dollars in just a short time.
We moved operations to Hong Kong and my desk was right next to Richard’s. It was a daunting because I didn’t really know many people there but was comfortable because of my earlier times there after graduating college. Kenny’s wasn’t there to introduce me to people, but working with Richard Li was sort of a calling card that allowed me to go anywhere I wanted.
The company was called Pacific Century Group and was a private company. We ended up buying a shell company that was publicly traded and then did a reverse merger. When the deal was going down, I remember how we came up with the name PCCW. It stands for Pacific Century CyberWorks. The idea was that we needed a name that captured the lineage of Pacific Century (i.e. the next 100 years was all about the economic power of the Pacific countries, i.e. Asia) and new technology. CyberWorks was, well, the kind of name that made people cringe, but given that it was Hong Kong, no one was ever ever going to say that word. They were just going to abbreviate it. And thus the name PCCW came about. After so many names on that whiteboard we finally settled on it. The legal counsel did a name search and voila, press releases started rolling.
The stock immediately went up. And up. And up. Then we did a roadshow, taking my demo from country to country showing investment banks, joint venture partners, and people we were trying to hire. Before we knew it, we had raised over $4 billion in equity and the market cap of the company was $38 billion USD. We had no revenue and no product — yet. However Richard Li was considered a golden child, son of a tycoon and the whole world was in love with all things internet.
9 months later, we had a live working broadcast that was sent over AsiaSat to most of Asia. We created a channel called NOW (Network of the World) and I felt very proud of what we had done. Our online content was dynamic and sync’d with the broadcasts. We made new shows from scratch they were driven content from the internet.
Then two things happened that were like tectonic plates shifting. Cable and Wireless was selling its stake in Hong Kong Telecom (HKT) and it looked like SingTel was going to buy it. However we had enough of a marketcap to swoop in last minute to keep HKT owned by locals. Well, that’s what we did. While I was focused on building the product, the team simultaneously raised $12 billion in debt, bought (or merged depending on you look at it) with HKT and suddenly we had massive revenues, infrastructure, employees, and international businesses). And it happened overnight.
Then by mid 2001, the whole market reset. By reset, I mean crashed. And by crashed, I mean, anything that was not making money had to be cut. So our $300 million annual operating budget was slashed and slashed again. And the whole market turned against the growth of internet possibility and back to basics. What makes money today? How do we service debt? How do we cut costs?
After 4 years and lots of international travel and a lucrative IPO, I finally left PCCW and went back to California to take a few years off. I spent my time investing in companies, gardening and doing martial arts. It was a great time to take a breather while the whole tech industry got ready for Internet 2.0.