Sramana Mitra: What strategic moves are worth discussing in your business-building process that people can learn from? What are some of the moves that you’ve made that have really worked or have not worked? What can we learn from that?
Rizwan Kassim: One of the most interesting points of a prepaid model is you effectively get a float. If someone pays for wireless service on January 1st, its cost is paid later in the year. You get a float from your subscribers and that’s allowed a certain amount of growth as long as you continue growing. You don’t need much capital. That was a huge part of being able to grow, because you could lose money and still be fine from a cash flow basis. That allowed forward pricing. In businesses like this, your core profitability metrics have everything to do with how many subscribers you have and how much leverage you have with your carrier. If you price safely so you make money on day one, you’re probably not going to get as many subscribers.
We’ve always been successful at selling things as a good quality service for a cheap price. We are not born marketers. Finding a need and providing it cheaper has been our specialty. Given that, we focus on providing the lowest price and take the risk of forward pricing, which is nerve-wracking. You look at it from a cost of goods basis and you say, “Are we making money right now?” The answer is probably no.
As one of the managing partners in the company, we have a very strong leadership team that has a number of creative disagreements. We will debate till we turn blue trying to figure out the right course of action. We have some very different people in our managing partner team. It’s been astonishing to work together and have those creative conflicts. Having a group of people that you trust but you disagree with frequently has made us a better company. I don’t think we could have built Ultra if we had not built another company beforehand because we needed to trust each other and move fast.
Sramana Mitra: Where to from here? Is this something that you want to take public?
Rizwan Kassim: We’re in an interesting phase as the entrepreneurs within the company start to look forward to what’s next. We’ve taken the last year and a half looking for new deals or new opportunities to bring back to the company, and we’ve hired professional management. That has been the arc of the last couple of years, which have been very interesting as you start to let go. We are a profitable concern. Going public carries a lot of regulatory burden. For us, it’s still about growth. A lot of that will be through acquisition.
Sramana Mitra: You want to eventually sell the company?
Rizwan Kassim: You’re always having the conversation but there’s no rush to sell the business. It’s a business that we like and want to continue running. Our general feeling is that we should continue to operate and retain the ownership until something great comes along.
Sramana Mitra: Great. Thank you for your time.