From zero to 60 million ARR in 3 years

 

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At Kabel Deutschland (KDG), Germany's premier cable operator, I was hired with the formidable challenge of pioneering an entirely new internet business division from scratch, following KDG's divestiture from Deutsche Telekom and acquisition by three private equity firms. The company's sole focus had been on delivering analog TV services to 15 million households across 13 states, with only minor forays into internet capabilities through two nascent pilot projects.

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Despite the burgeoning potential of the broadband internet sector, the private equity partners initially favored expanding digital TV services. There was no business case in place for upgrading the cable infrastructure to provide internet services. The task was further complicated by a highly fragmented access to end customers and the dominating established internet service providers rolling out DSL access to their installed base. Additionally, the company lacked the necessary talent for venturing into this new domain.

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With a strategic vision spanning three years, I launched a comprehensive plan of attack: This involved terminating the preliminary tests in favor of a Minimum Viable Product (MVP), repositioning the pricing, and adopting a more stable and scalable technology stack. The new technology foundation allowed for telephony services as a second line of business and significantly increased average revenue per customer. I recruited the leadership of a dedicated management team, putting in place the organizational structure, staffing, compensation plans and support model, all within a newly established matrix organization. Multiple new selling motions and channels were introduced step by step.

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The first year was a year of strategic recalibration, de-risking the business and securing the confidence of the private equity shareholders, resulting in subsequent investments to the tune of €500 million for infrastructure enhancements over a multiyear period. This foundational shift catalyzed the launch and exponential growth of the internet business, reaching €60 million ARR with over 150,000 Revenue Generating Units (RGUs) in just three years. The transformative journey from zero to a staggering 1.8 million RGUs by the end of 2009 not only redefined Kabel Deutschland's market presence but also laid the groundwork for its successful IPO in early 2010.

This article was first published on LinkedIn on April 2, 2024.