Just Do It

If Nike hadn't already trademarked the slogan, "Just Do It" would make a fitting motto for LAN Systems' CEO Scott Frew. Within two weeks of deciding that he wanted to investigate the possibility of establishing a European distribution business, Frew had packed his bags and his family and had already moved lock, stock and barrel to Brussels. It's this willingness to "put it on the line" which has helped make LAN Systems the seventh-fastest growing company in Australia, according to BRW. In this final exclusive interview with ARN editor Philip Sim before heading overseas, Frew discusses the keys to successfully running a fast-growing business.

ARN: Why the overseas jaunt?

Frew: LAN Systems has obviously gone through enormous growth over the last four to five years. We're cashed up and stocked up and the senior management team is doing a great job of continuing down that path. As a result I'm doing less and less in the area of day-to-day management. I've been doing LAN Systems for the last five years and I need something different to do, even if it's just for a couple of years, because I'm starting to go stale.

We've been talking to analysts like Gartner and IDC and they're saying the channel services model we've rolled out over the last couple of years is unique and a lot of European distributors sell direct, so the channel integrity is not all that fantastic.

So we're going to investigate what opportunities are there. It's not to say that we're going to replicate exactly what we're doing with LAN Systems, because I think one of the biggest mistakes made by people who head offshore is that they have this predetermined model in mind that may not necessarily be applicable to that market. I'm going to go up there and live the market, start utilising my contacts and see what's missing or where the soft underbelly is.

LAN Systems will be shooting for $100+ million this next year. Now, I'm a really good start-up dude but I'll leave this stage of the business to the corporate players of the world. John Walters, our COO, will assume the role of general manager in August. There are totally different challenges going from zero to $60 million as there are from going to $60 to $100 million.

You just described yourself as a start-up kind of guy. What's the key to building a successful business from scratch?

There is no single key. I guess I don't believe in entrepreneurs - I believe in people who can do a better job, put their balls on the line and just do it. If you fail, you've learnt something and you can go back and look for something else. You can go out and start something, even if it's just a small operation. LAN Systems was just me for 18 months and then we gradually got a small team together and established our core values.

As you move forward with that, opportunities will arise. People say it's luck. It's not - it's something you've created that can take advantage of any opportunity you strike. And there will always be opportunities, it's just a matter of picking the right ones. We've picked good ones and we've picked bad ones, but the good ones have always outweighed the bad.

I was saying to one of my branch managers last week that if you stuff something up no problem, but if you stuff it up again then I'll be down your throat. Everyone here knows they can make a mistake. As long as they don't replicate it, we're happy.

Also, stick to your guns. I've been told value-added distribution was dead and that everything would be time and place, but we've built a pretty healthy business out of it.

You get very passionate about customer service. What is the key to that?

The key thing is service recovery. You will stuff up somewhere, because no one is perfect and when you do, what are you going to do about it? Are you going to walk away from the customer and tell them it's their problem or are you going to fix it quickly? We can't afford to do that - we have to fix the problem, because I'm dealing with resellers who give us recurring business.

We have a service recovery system and if a customer has a problem that is serious enough it goes into the system which automatically alerts all the appropriate people.

You also have to empower your staff to be able to solve problems. If staff can't answer a question immediately on the phone, you've got a problem because the customer doesn't want to wait for an answer.

You have a pretty good track record at picking up-and-coming technologies. What trends do you see over the next couple of years?

Voice and data integration is going to be a big thing, which is why we're offering the professional services to allow resellers to sell voice-based products. I also see security and products like Check Point and Network Associates as being a huge business for us going forward.

We're searching for IP appliances at the moment and our first foray into that will be the IP video camera. We've really locked in our plumbing vendor and what we're now looking to do is step up a layer and look for stuff that sits on top of the plumbing.

There's a lot of talk about direct strategies from vendors. How well placed do you think the channel is?

The channel's always supposedly in trouble. I've seen vendors going direct and the sky has been going to fall in since 1987, but they've always gone back to distribution.

Cisco is a case in point. Every vendor that hasn't sold direct into a market has an opportunity to do it, because they don't know it's wrong. I urge each and every vendor to try it because I know they will come back to distribution and the channel. We're cheaper, we can distribute products and reach many more end users through resellers. For the bit of margin they lose, they get a lot more than they can do themselves.

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