UNDER THE RADAR:WARREN BUFFETT'S contrarian investment policy of being fearful when everybody else is being greedy and being greedy when everyone else is fearful can have lessons for other industries .
Just ask Shane Deasy and Alex French - they set up their WiFi network business when most investors were running from telecoms and technology companies after the dotcom bubble burst in 2001.
"Probably the best time to get into a market is when everybody else has given up on it," says French, finance and operations director of the company.
"In 2002, everybody looked at us like we were crazy when we said we were going to do a telecoms start-up. It was after the dotcom crash. Everybody was running for the hills away from telecoms. It was the best time to do it - staff were available, we didn't have a lot of competition, and suppliers were happy to deal with us because nobody was buying equipment or telecoms services in Ireland."
Deasy, who is managing director, hit upon the idea for Bitbuzz when he was involved in various high-profile WiFi rollouts for O2 and a WiFi network based in 3,000 pubs in the UK known as "the Cloud". He spotted a gap in the Irish market for the provision of a managed WiFi solution for bars, hotels and coffee shops and, along with French, developed the concept for Bitbuzz.
The difficult part was trying to convince potential customers such as hotels and bars of the need for and benefits of WiFi - technology that allows people to access the internet via a laptop at broadband speeds and without wires.
"We spent about 18 months educating the market in this area because a lot of people didn't really know much about WiFi," says Deasy. "We spent a lot of time trying to sell the concept to hoteliers and a lot of the time the response was, 'we already have facilities down in reception', or 'we have a wired service'."
They also spent a lot of time trying to get venture capital (VC) companies to invest in the business - to no avail. Many had already had their fingers burnt with technology start-ups just few years earlier.
"Raising money was very difficult after the dotcom bubble had burst," says Deasy. "We went to lots of VCs and got quite a lot of negative responses from them. We raised money through friends and family."
Overall, the business raised about €400,000 from a variety of sources to get off the ground, and French reckons that the failure to land VC funding turned out to be a blessing in disguise.
"It was probably the best thing that ever happened to us," he says. "Now we have a close group of investors, many of whom worked in the mobile industry and have a very good knowledge of how the mobile data business is going and could really see WiFi as a very important next step."
Deasy says the big breakthrough for the company was Intel's launch of its Centrino chip in 2004, which allowed wireless capability to be integrated into laptops, dispensing with the need to buy an external device. Demand for WiFi services shot up and the job of convincing the hospitality industry of the need to install WiFi hotspots became a lot easier.
"Hotels now realise they have to have WiFi if they want to be competitive and if they want to attract the business traveller and even leisure travellers," says Deasy.
And the days of just providing a WiFi service in the hotel lobby or in a meeting room are gone, according to French. "Guests expect their hotels to have full wireless coverage throughout," he says.
Bitbuzz now has about 160 hotels and bars on its books, including groups such as Fitzpatrick's Hotels, Quinn Hotels, Capital Hotels and the Lee Hotel group, as well as Kylemore Food Group, Coffee Society, and high-profile bars such as Ron Blacks, the Bailey, Cafe en Seine and the Market Bar.
Deasy and French expect turnover to top €1 million this year and are already looking at expanding into Scotland and England following a successful launch in Northern Ireland earlier this year.
ON THE RECORD
Name:Shane Deasy
Age:35
Family:Engaged with a baby on the way.
From:Cork.
Background:Went to Rochestown College in Cork and then studied at University College Cork and also at the College of Estate Management in Reading, England.
Inspired by:Richard Branson.
Who do you admire?Denis O'Brien.
Most likes to:spend time in the gym and is a fervent supporter of the Munster rugby team.
Favourite book:Robert Kiyosaki's book, Rich Dad, Poor Dad.
Favourite TV programme:a big fan of The West Wing.
Name:Alex French
Age:31
Family:Getting married this month.
From:Washington DC by way of Italy.
Background:Studied maths at Trinity College Dublin; started Ireland's first dedicated web design firm in 1998; worked for various internet service providers before starting Bitbuzz in 2003.
Inspired by:the power of the internet to change how we live and work.
Who do you admire?Michael O'Leary for his refusal to play by other people's rules; Steve Jobs for being the world's best salesman; Heston Blumenthal for his obsessive attention to detail.
Most likes:good food, scuba diving, juggling.
Favourite book/film/TV programme:Author Po Bronson; Kevin Smith's films; Lost.
