The right combination of luck and common sense goes a long way in any industry, but can it really take you all the way to the Rich List? Charles Dunstone believes it can, but then he doesn’t even think he’s an entrepreneur. James Hurley meets him to find out why
Even the most conceited of tycoons can be curiously deferential to the role of good fortune in their success, but few go as far as Charles Dunstone. The company he founded in 1989 with £6,000 of savings, Carphone Warehouse, is now Europe’s largest independent mobile phone retailer, with a turnover of almost £4.5bn, but Dunstone remains self-deprecating to a fault.
“It wasn’t an amazing piece of inspiration,” he says of his early entry into an industry with such potential for exponential growth. “I opened a shop selling phones and was lucky to be in the right place at the right time. That’s all I’ve done really.”
Such diffidence could easily sound affected, but I get the impression that Dunstone genuinely regards himself – mistakenly, in my view – as a one trick pony. But I’m sure even he would quietly recognise the skill and vision he’s shown in building a retail business of such scale in a fiercely competitive sector.
The reluctant entrepreneur
Dunstone has been one of the most recognisable and highly regarded businessmen in the UK for years, but it’s telling that the 44-year-old still doesn’t call himself an entrepreneur. Without arguing about the semantics of a word that has been adopted by a huge range of industries and professions, and even forced into bizarre contortions – mumpreneur, ecopreneur and teenpreneur being particularly cringe-making examples – if Branson is the archetype, Dunstone probably has a point.
“I’m not a serial starter of businesses and 19 years on I’m still working in the only business I’ve ever started,” he says. To succeed over that long a stretch in such a large company, he’s proved adept at disciplines many owner-managers struggle with. Chief among these was the successful transition from private owner-manager to quoted company leader.
Countless entrepreneurs have had bruising encounters with the City and returned to private-company land with their tails between their legs. So why has Dunstone succeeded where the likes of Duncan Bannatyne, Philip Green and Richard Branson have felt constrained by the need to report to shareholders and a board that won’t let them follow their noses?
“Real entrepreneurs generally have bursts of driving a business, but perhaps lose interest after a while,” he says. “With a public company, you can’t do that or go off to do something else. I just run this business, so I don’t count myself as an entrepreneur.”
That might be the case, but surely his skill for expansion is inherently entrepreneurial? Carphone Warehouse now operates in nine European countries and has more than 2,400 stores. More pointedly, what about the diversification into telecoms with the launch of Talk Talk in 2003? “It’s the same thing – it’s just using the shops to sell fixed line as well as mobile,” he replies.
I’m not buying it. Just as Dunstone’s attribution of success in mobile to good luck and timing ignores the fact that countless other firms also predicted that mobile telephony would go mass market, but only he and John Cauldwell of Phones4U made an enduring success of it, his move into telecoms was in fact aggressive, potentially risky and decidedly entrepreneurial.
Back in the tube
Creating a mini-BT alongside a retail mobile phone business was an impressive feat, but Dunstone will only acknowledge applying good retail sense and spotting a gap in the market on price.
“Most telecoms companies don’t base their pricing on what it costs them to produce a service. They have huge amounts of invested capital that they’ve had for many years, so they price it at what they think they can get away with and make pretty big margins,” he says. “We came into the marketplace and priced not on what the market charged already, but on what we could afford based on our cost prices. That was seen as disruptive in telecoms, but in retail that’s business as usual. A lot of telecoms is about inertia.”
For all of Dunstone’s unassuming charm, at heart he’s an aggressive business builder and it got the company in serious trouble in 2006. In an effort to leverage the footfall in its stores to build up Talk Talk, Carphone Warehouse offered line rental and a generous call plan for under £20, with broadband thrown in for free. Dunstone had wildly underestimated the demand this would create. “It was terrible,” he admits. “We had a disaster.”
Once consumers had bitten Dunstone’s hand off, the company was left straining under the weight of a huge customer service backlog, massive installation delays and some very disgruntled customers. It was a chastening experience, but one that Dunstone says marked a turning point as the business moved towards maturity.
“When we get something wrong or got ahead of ourselves [previously], if we worked all night for a week, we could fix it. Here we’d done something so big and out of control that we couldn’t get the toothpaste back in the tube and it took a long, long time to sort out.” Eighteen months, in fact. “It’s about growing up,” he says.
Despite the tribulations, his company is now the third largest broadband provider in the UK, and while business has been hit by the slowdown in the housing market (people often change provider when they move house), putting telecoms into a retail setting has worked a treat in the long run. When he launched Talk Talk, he said he intended to gain 15% of the market, and he’s already reached 18%. So is he satisfied? “It’s enough, but clearly, I’d like some more.”
Broad shoulders
