From telco to techco by a techco doing telco

If you cannot see change you should be worried.

Change is happening quickly, even if it does not feel like it or you cannot see it. When it appears it will have rocket velocity and will escape any resistance from status quo. Like a stone skimming over a pond there is a journey the stone follows and there is a journey the pond follows as a result of the stone. Those ripples cause change to what existed before.

Both are important to see and understand. It is important to look through the right lens when viewing the stone and through another lens when viewing the ripples.

Telecom is having to ask itself fundamental questions and Rakuten joined telecom to accelerate different answers, to improve connectivity versus cost for all people and to improve the business of all companies providing such services to those people.

When companies like Rakuten do join an industry they change dramatically. To date Rakuten has fundamentally changed over 70 different businesses by applying the latest technology to disrupt the status quo. This is what a techco does, uses technology to run the business rather than people and then use people to build and run the technology.

The 70+ businesses show telecom is not unique being disrupted by new technology. The answer, how to become a technology company yourself is also not unique to telecom. Rakuten is applying the same approach it has used in all other businesses and applying it to telecom and it is offering telecom the opportunity to collaborate in reinventing.

So - what is a techco and why is it different and how can a telecom become one?

If you are in London November 7th and want to learn the latest on what Rakuten and guests are thinking Nastasi Karaiskos is again hosting thought leaders at the Rakuten UK HQ in central London. This is where we will share the change that Rakuten and others are seeing, both directly and indirectly. Please reach out to Nastasi Karaiskos if you would like to join, the venue is small and seating is limited, so apologies if there is not enough room.

I can offer to try and meet one on one as well. To decide if interesting please read the below.

Introduction

If you cannot see change you should be worried. Change in the one constant since the beginning of humanity. And it is why those who adapt survive and those who don't die.

The challenge most humans have is they focus on what is obvious, the decline of the status quo. We have measured the success of the status quo, we measure people's success in the status quo by the metrics that become defined to measure status quo performance.

Change always happens slowly then all at once.

The ecosystem surrounding the status quo does not help. It is rare true change is detected in the commentary surrounding the existing paymasters. When attending a Gartner event in 2016, Gartner told all CIOs present they were the reason of all the social disruption happening around. This could not be farther from the truth, the disruption was being led by the internet companies that did not attend, and the audience were the victims of the change not the drivers. Cloud would never be good enough, cloud would never work, cloud was an experiment.

Cable companies knew streaming existed but it would never be good enough to replace "the bundle". When word of mouth became common enough, it was too late for cable to hold onto any reinvention.

All technologies entering telecom now are a factor of simplicity and accessibility improved and are design to increase the opportunity for seamless operation, all the way from eSIM to software defined cloud native networks.

When businesses no longer require speaking to a human to get something done they start to move a machine speed rather than human speed and traditional approaches cannot compete. This is what the internet did first to newspapers and this is what technology is starting to do to everything. Networking is the last of the triumvirate to be integrated into the total developer app experience, compute and storage are already there. The only question is who inserts it.

Seeing the signals and understanding new success metrics is hard. The new success metrics when first appearing, are never as big or as impressive as the existing metrics. So those that cannot adopt use this as a reason why they don't need to.

In change size is not important, trends are...

A tale of two ways of thinking

In a favorite podcast there was a discussion about Brazil and the operators launching a Sim Swap app that to date has generated 25 MUSD in revenue. The discussion was negative on this saying the amount of money was not "going to move the needle".

Unfortunately nothing starts at peak revenue. Nothing knows what peak revenue will look like when it starts. Zero revenue is the only guaranteed revenue if not starting at all. 25 MUSD return from nothing is a pretty good signal something is there. If it is not enough then discover more by digging around what has worked and doing more. This is the other choice...

If we take a parallel. Before 2008 there was little money in mobile apps. That did not change when the iPhone App Store opened on July 10, 2008. But it did start to change as Apple iterated on different payment and enablement mechanisms. It led to Google launching what it called the Android market, which is now Google Play.

Who knew mobile apps would change the world. Mobile apps were not new, they had never changed very much prior to this point. We can explain all the reasons why Apple and then Google were different, we can always do this after the fact. One thing we do know is true. Apple and Google would not run app stores if they had not chosen to start, try, learn, change, iterate.

How did telecom react to this? Vendors tried to sell empty app stores to mobile operators. Let's not do this again.

Amazon.bomb

"The idea that Amazon CEO Jeff Bezos has pioneered a new business paradigm is silly"

Sound familiar? Jeff Bezos sent this letter to shareholders in the year 2001. This is interesting to read because of the trends Bezos highlights rather than the traditional KPIs. He is showing us the hidden signals.

Rakuten Signals

Here are some signals from Rakuten public presentations that should give food for thought...

From MWC BCN 2023 Mickey Mikitani

From 2024 Rakuten Overview Presentation

Money is not created it is moved. As spend on mobile games and bling increased, spend on sweets and chocolates declined. We as an industry created the value but did not capture any beyond more connectivity. A new wave is happening and it is day 1. We do not have to miss this wave. In a future AI world where new experiences, trust and financial integrity will increasingly move online and be valued at a premium, where populations will continue to age and need more and better local support they can trust, we could not be better positioned to participate and deliver.

If you remember nothing else...

Rakuten is a techco who has successfully transformed 70+ businesses and has consistently grown revenue for 27 quarters doing what telecom wants to be part of. This is why Rakuten is so interesting. It is a techco that chose to do telecom. It is doing telecom not as a telco but as a techco. This changes everything. The opportunities are there if the change is willing...

To close, see a more structured explanation of Rakuten's insights on what is required to move from telco to techco given by our CRO Udai Kanukolanu .