I Built My Life Chapter 2

“I Built My Life”

by Dr. Thaksin Shinawatra (Prime Minister of Thailand, 2001-2006)

Chapter 2 (Tuesday, February 2, 2010)

Let me return to my life story. People who have listened say that the stories permit them to see how a life is fought. Not so different from now. How did I transform my life from a tiny firm to a public company, with so little money in hand? Well, with some brain and knowledge, we connected with people and walked…

My life was changed from silk and movie businesses…into computer sales. Khunying (Potjaman), my wife, told me to make use of my knowledge. There was a market opportunity for computer sales. “You go ahead”, she said. “I will take care of the money problems”. The interest rate at the time was as high as 3% to 4.2% per year. We fought together all along.

No personal or micro computer was present at the time. Only Membrane available at the size of a small bedroom, and its capacity at only 1 Megabyte. There was no Nanotechnology. Miniaturization was not conceivable. A huge machine with only 1 Meg. or half that (512k) cost millions. Up to 7, 8, 10 millions. So expensive. Nowadays, one with much more capacity costs only 100,000. See how fast technologies have advanced. They are so fast-changing but some people are still stuck in their out-of-date thoughts.

It was a time when IBM was God. Everyone else was miles away. Only Membrane, too, and nothing else. Their mimi-computer cost 2-3 millions, and in no way to compete with today’s regular PC. Today’s PCs are much smarter. So is Blackberry. It was a time when large-sized computers ruled. Disc had to be taken with you. Only 70k, you had to carry such weight. A little larger later, 256k or something. 70k and cost a million Baht a piece. Today you can buy 8 Gig. 32 Gig. and you spend only thousands. What a change.

IBM at the time insisted on using their standard contract for any buyers. It was what they called “World-Wide Policy”. In Thailand, the government contract was also insisted. It was a legal document approved by the Office of the Attorney-General (Public Prosecutor). The talks went nowhere. IBM started to lose its sales to other competitors. There were several, then, and they sold. Everyone else lived with the government contract. IBM didn’t.

That was how IBM and I met. They asked to see me and sought my advice. I was some kind of a trouble shooter at the time. IBM finally came up with a new policy of selling their products to the third party, and the third party, contracted with IBM, can do whatever they wanted with those things. I asked them about after-sales services. They said they would do the same, so the customers wouldn’t feel the difference. IBM would not be responsible with any lawsuits at the time. That was how hard and inflexible of the big player of the day.

IBM was lost in its competitiveness because of the narrow mindedness. It was in the business of the 21st Century, but the mindset was back in the 20th Century. IBM at the time was really the giant. With labs and the scientists. They didn’t realize that the shut-in policy, forcing everybody to abide by IBM’s rules and copyrights, was the contributing factor for the excluded ones to join hands. You set IBM apart and separated, and it was attacked in all directions. IBM became weaker. See? From a giant to a weak one. Finally, Chairman of Massbridge, the bread seller, was made IBM’s top boss. IBM admitted to the loss and to the fact that only big clients could not possibly help them. PC was born and growing fast. IBM must make big sales. A salesman was needed. IBM was gradually in a better market position. This proved the danger of adapting too slow. Even IBM was on the brink. See, this is the importance of one’s adaptation to a new situation.

Back to the point. IBM asked if I was interested in being the third party for them. That meant to buy IBM products and to re-sell or rent them to government agencies, with added values. The deal was called a turn-key. We would do wiring, setting up ACs, and all heavy duties IBM wouldn’t do. I was indeed interested. But with no money, how? A package cost us 10, 15, 20, 100 millions. The one for the military’s Supreme Command alone was more than 100 million. No money to advance. How to do? I decided to exercise a method which is called today as future incomes. I talked to the banks, explaining to them how secure my deals were. Government agencies were solid and reliable. They would pay rent and service fee. The banks inquired about IBM taking of the after-sales services. I said yes. They asked about if there was a fire. I bought insurance. They asked again, this time most heavily, what if I died? I told them I would sign for stock transfer. If I die, they own it. The banks said it was not the stocks that they wanted. They didn’t know how to do the job. It was me who knew how. How would they get the money back? I finally had to buy them a life insurance on myself.

That turned out to be almost 200 million Baht for loans. Several bank accounts. I won a lot of contracts. I had to complete the goal of 200-million insurance coverage, to be sure I could pay it off if I died. Insurance companies were all connected. They all knew who took out from whom and for how much. They all feared a suicide. I could, to the best of my ability, sought a little over 50 million. Mr. Utain Techapaibul, one of the richest men back then, took out less than that. I did my best. The banks finally gave in, saying that I had proven my self-determination.

I used the bank loans to have the machines installed and collected money right after. However, collecting from government agencies took time. After installation, there must be inspected and approved. The process sometimes took several months, at least 5-6 months. We already paid the bank and couldn’t collect from the clients. Banks required the interest payment. I was then exchanging cheques as I wanted a larger business to pay back the past defunct ones and to enhance my credit.

I finally had concluded my deal with the banks. Entered my first bidding with not so much money involved. Bidding was not so costly at the time. But it took a lot money to put down once you got the concession. Bank guarantee was needed. One day, a guarantee of 10 millions was required. I had no collateral. I told you that I still had no home after coming back from the US and we stayed at my father-in-law’s. Nothing to put down. Coincidentally, I met a friend who traded lands. He had in his possession some idle lands. I asked him to help by putting down his land for a bank guarantee. Money wouldn’t be spent. It was only for guaranteeing. When I had some money, I would take it back. This kind friend of mine agreed to help.

It took a lot to obtain that particular bank guarantee. I remembered it well. This one deal was with the Railway Authority of Thailand. The committee members were already present in the room, but the bank guarantee hadn’t arrived. I spent a lot of time discussing with the friend, processing the mortgage, going through the measuring of the land, locating the loan clerk who went out to lunch. So much to do in order to get it. Here what we had to fight through.

The Railway Authority deal, after all, was tough. The rent of over 200,000 Baht per month, bank payments, costs of maintenance to IBM, insurance fees concluded and I was left with 30-40 Baht. How would we pay salaries of 30,000-40,000 Baht? I had to march ahead and seek several more deals. We won 8 concessions that same year. Over 200 millions at each place. After all expenses, 400,000-500,000 was left. Not enough to pay for debts. Only interests were afforded. We actually did a very good job of selling. 8 deals a year was not bad. But it was not enough. I was consumed with worries, not knowing where to turn. I had several failures to my record.

Then there were some Americans coming my way. An American phone company, based in San Francisco, signed a contract with the Telephone Authority of Thailand or TOT. TOT at the time opened bidding for phone-line centers. It would take a lot of money to venture. Anyway, we lost it.

Entered communication business. I wanted to develop a business of paging. At that time, a pager actually voiced out of the machine. Real radio it was. That was why it was called radio pager. It would say, “please call back so and so number”, loud enough for all your friends to hear.

Later, the Communications Authority of Thailand (CAT) said that the technology was out of date. They wanted a digital one, with numbers or message in English alphabets as no Thai was then available. They opened a bidding for it. If memory serves me right, CAT earned yearly 200 millions from the paging business. I and my partners teamed up and won the concession. Our offer was slightly over 470 millions. The business went well. But I became conflicted with Pacific with its American style of wanting all control, though we were a larger stockholder. I concluded that it wouldn’t work out. My stocks were sold with not so much in return.

Out of the blue, a Singaporean firm approached me on a paging deal with the Telephone Authority of Thailand or TOT. I entered the race. The then famous Packlink offered 1,400. I 1,300. Packlink people asked me how I would do it. They predicted my failure. I expressed confidence. Right after that, I was off to technology trade fairs around the world. Switzerland’s Geneva, Germany, Hong Kong, Japan, Singapore. Without so much money, I had to travel Business Class to preserve good image for my counterparts, as Economy not so impressive and First Class unattainable. Hotels were of good class for the same reason. With high costs like this, we finally discovered a superior technology to beat Packlink and to enjoy more earning than the 1,300 cost.

In the meantime, before Phonelink produced some profits and during the red, I struggled for some new ways to do business. I discovered and finally hired a group of new graduates, who taught me a lot of new technologies. They developed a circuit for pagers in which you pushed one button at the center and it went to thousands and thousands, even millions of the machines. The question was: how to make the little personal machines to call back to the center. That was the task. I went ahead to launch a project called SOS, which called out to ambulances, police, and alarm systems. We developed it here at our Ratchawat office and had a factory built them. It proved to be ahead of its time. Our technology was not strong enough. I was again in red. Nothing was substantiated. Selling computers brought in too little profit. Not enough for our debts. Packlink was sold out because of the conflict. Simple trading was not enough for me. I figured out how to be sustainable long enough to enter the stock market. I came up with SOS, but it was not popular.

Someone told me again about a technology. At the time radio frequencies were all fully booked and there was more demand. They didn’t know where to go. There was a suggestion about this new technology of small radio stations attached to large stations. I decided to do it on public buses. A big investment indeed. Finally, we found out that this didn’t fit with moving vehicles. It was like a scientific project. Testing. Risking. At the end it didn’t work out because the buses moved. With buildings blocking the signal and thin signalling, sometimes 5%, at times, music on it proved more annoying than entertaining.

Radio operators in Thailand were not highly disciplined. Around the world it was agreed that one’s broadcasting was not to exceed 80%. The Thais went for 120%. That killed our in-between signal. Failed again.

My period of failure now was lengthening. Starting to suffocate, I talked to Phonelink and got interested in the business of mobile phones. When it got to action, someone in our company had discreetly convinced my wife not to do enter the business. I was worried, having failed in so many projects. Old debts still persisted. Family owed money, too. I decided to do it secretly. I went abroad and started laying ground for mobile-phone business.

While rolling the ball, I came back to Phonelink. When the numbers started to show some prospect, I came clean with my wife. I told her we needed this business. Our manager didn’t realize there were more debts. Out of Phonelink, we got immediately into mobile phone or AIS today.

A lot of trips abroad. International negotiations. Dealing with foreigners produced fruitful results for me.

That got me into telecommunications. It was and is a high-cost business investment. Overseas funding was always sought out. How to do this without being dominated or taken over? They had more money. Better technologies. A big homework indeed. I can’t tell all at this time. I will tell next time how I managed technology to prevent foreign domination. What to do when you had no money and a business that required thousands of millions of Baht? How to raise fund? How to pay back your debts and to be left with hundreds of millions in cash? How to make the first one hundred millions? A thousand millions? A ten-thousand millions? I had done all this in steps.

A story here. During my entrance to telecommunications, I read a book by Andrew Grove, the founder of Intel, whose microprocessor was put in every PC. He wrote that he had a board of directors full of decent people. One day, he proposed that Intel stopped the business of semi-conductor completely and focused on one particular business with advanced research and all. The entire board raised objection, reasoning that it was still good. But Grove saw it through. He knew that semi-conductor were easy to be imitated. Full of competitors. Marginal profitting. He insisted on focusing into CPUs of Intel chips’ processors. And he did. Several models were developed.

Andrew Grove finally had the whole board dismissed. They were good people but lacking of vision and behind the global trend. He replaced them all. Newcomers were not so astute but in better understanding of how it went and went along. In my case, the top manager tendered a resignation, so upset that I didn’t buy into his idea. This man asked to be put back later. We must think all the time. We must match current incomes and debts. I lost a manager the same way Andrew Grove lost his entire board.

Grove wrote the books called “During the Crisis” and “Only the Paranoid Survives”. He pointed out that one must be aware of his competitors all the time. How would they come? Where would they go? How would they set a trap? How would we? How to flee? How to advance? One must be meticulous indeed. That was Andrew Grove’s thinking. I found myself in the world of telecommunications.

All this is with absolutely no cheating and corruption. I guarantee it. If I was to be a cheater as alleged, I wouldn’t have come this far. Our success came through hard works and tough fights, based on lessons and past mistakes. I would not and will not betray a person to reach higher, and another person to reach even higher. Not me. My success was and is based upon knowledge.

That was how and why I and my family had more than 70,000 millions. We fought hard together. I will tell you how to invest in big projects without money. How, without money, one could bring his company into the stock market? How stock prices keep raising to the point of being wealthy?

More stories to be told.

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Chapter 1