Creating a unicorn by serving rural APAC with satellite internet- Christian Patouraux, founder of Kacific

Christian Patouraux, the CEO and founder of Kacific, a satellite internet startup that has raised $300M+ and serves some of the most remote markets in emerging APAC such as Bhutan, Papua New Guinea and Tuvalu, joined us for our first episode.

Visit Kacific at kacific.com and join our emerging markets community on LinkedIn at https://www.linkedin.com/groups/13949631/ . 

Transcript

Christian - Thanks, Nick. I'm Christian Patarow, I founded the Pacific broadband satellites in 2013. And I've been in the satellite industry since 1995. So it's been 26 years of experience, and INS EAD MBA O3D. So the idea behind K acific is really to provide high speed, low costs, and highly accessible broadband to populations in rural and remote areas for the time being in Asia and the Pacific, Southeast Asia and the Pacific. But We do have plans to expand the service outside of that coverage to other geographical areas by adding a fleet of additional satellites over time. So Kacific provides Satellite Broadband. To do that it has launched a satellite in 2019. The satellite was built by Boeing and is what is called the high throughput satellites. At the moment, we have several 1000s of sites that we are serving already. And we growing quite fast across the Pacific and in Southeast Asia. So in a nutshell, that's where where we are. It's been a very long and rocky road to put together a project nine days, of course, it's not cheap to do to achieve a goal like this. And we to To that end, we have raised 227 million US dollar funding over a period of you know, about seven years, we went on and raised all that funding. And we continue raising funds for, you know, trying to launch more satellites here in new

Nick: What was your journey was prior to Kacific and what the chain of events were, that led you to start the company?

Christian: Well, I guess I've always been attracted to entrepreneurship, I have a very typical entrepreneur, psychological profile, if you if you profile me, almost off the charts, in when it comes to entrepreneurship, I mean, as a, as a as a, I guess, I am entrepreneur in the entrepreneur category. You know, I like ambiguity, I see opportunities in everything, I touch everything I see. I am a very tenacious person, generally. So and you need that to venture into entrepreneurship, I wouldn't say that there is a, you know, audit and the usual family members, secretaries, there's no single mentor that I can point to, but they were people who kind of serve as catalysts in my life to get me to this place, you know, what is, I would say, some, some people, some professor, during college, some people like I can think of a friend who helped me, you know, helped me visit a factory, it was actually a repair shop for aircraft engine that gave me the taste for aerospace. So it was really a chain of events. You know, how I was one of the last one that had to do the compulsory military service in Belgium. It's, it's long gone, actually, it's just just after my batch, they closed it down. So it was, in a sense on lucky but it was a, it was a blessing in disguise, because I was assigned to the military academy. And I, that helped me I did some projects there that helped me go into the satellite business afterwards. So now it's just a sequence of events. And, and also, I mean, finally, get into Kacific itself, there was a my good friend Sebastian, here in Singapore, whom I took a took a bicycle ride with in 2013, on the east coast in Singapore. And when we discussed the idea of Kacific there, and he really, you know, thought it was a good idea. And it's really snowballed from that particular bicycle ride. So sometime, it just pinpoints how, you know, great journeys in life need to start from a spark. And that was the spark.

Nick: in our last conversation, you mentioned that you had a bit of a period where you went back to France and had the idea and you face, you know, it had to convince family and friends and all of this. I was just curious about if you go a little bit more into that, and also how you found your North Star to keep going and that you, you knew that you'd believe so deeply in it that it would work out.

Christian: Yeah, so yeah, I guess they're they always naysayers. But we do need to have that North Star. Of course, what one thing is that? I'm gonna say that if I had been probably 15 years younger, I may have given up because, you know, I would have been at the earliest stage in my career, and I would have seen a lot of senior people telling me not to do it, right. But as I was older, I suppose more senior people are more of my peers. And I felt like when I when they said it was madness, it actually emboldened me because I felt that, you know, I had a different perspective. I had better ideas than they had. And I had at least as much as good knowledge of them of the industry. When it comes to family Yes, of course my wife is not necessarily particularly happy to see me go into that space. You know, it's always good, she's risk averse and it's always good to have that risk averse angle to make you be careful where you where you set foot, really. But you know, I have this fire in me I have. Again, like I said they the profile Have an entrapreneur. So I saw the opportunity. And also I continued discussion discussing with that friend who had had, had had his bicycle ride with, who helped me incubate the business inside, he had a bit of an incubator, a small private equity firm. So he, you know, kind of nurture the business in the earliest stage. And then he also gave me one of his staff in the government. And that person now result is our chief operating officer. So he's and with with him, serial will really came into business, I would say, like a couple of months into the making, really helped us drive. The helped me drive the business helped bouncing ideas, and I would say like, he was almost like a co founder. In the early early stage. Yeah.

Nick: Very cool. And I was wondering if you could tell me a bit more about the the fundraising process and what you learned from it, like how you started, if there were, you know, if you learned and improved, and how you were able to raise such a huge amount of money?

Christian: Yeah, so the fundraising is, is, of course, very daunting. At the beginning, when you see you have to reach such high amounts of money. I had worked for a year and a half, two years in another startup where they had raised close to a billion dollar for a constellation of satellites. So I had seen and learned there how what are the elements to put into place to raise that kind of money. I felt like it was possible. And in a sense, you know, what was $200 million compared to a billion so but still, it was it was Yeah, it was very daunting. 

So the way you do it is by snowballing the project and you take the first step, by raising Angel money, then you will, and you evangelise the markets, and you try to get off takers in order to, you know, I guess solidify, establish the business around a few telco or, you know, General off takers, Internet Service Provider contracts, that, in a sense, promise you that they will take the bandwidth. And for whom you're going to, you're going to bring great value once you get the satellite going. And then, after this, you raise more money off the back of that, then you will get more takers. And you snowball the project like this. And then along the way, of course, you have some industrial milestones where you buy a satellite, of course, you start you signed a contract for the satellite, then you sign a contract for all the ancillary equipment around the satellite, all the antennas, teleports etc around the ground, you buy the rocket, it's another great milestone you buy the insurance for the whole project. So I would say that, yes, it seems it seems very, you know, very far off when you start and you almost feel it's impossible. But along the way, I must admit that, you know, I can deliver the project, maybe on a slower pace than I had originally felt. But pretty much with the same format, the same process that was originally set up so yeah, it's like, like, no great long distance adventure. I think I mentioned last time when we talked about this guy who went across the south pole that, you know, was was quite interesting for me when I heard his speech on how he did that. And in fact, you know, when I asked him, How did he manage to cross the south pole solo, and especially he did it with like, equipment from the 1800s to prove the point something. And he said, it's just just one step at a time. It is just everyday, everyday as you as you walk in through this journey. And it's this hardship that you impose on yourself. You just set yourself a goal. It's not the end goal, you can never set the end goal as the main goal that is going to drive you every day. And that's very much the same, you know, in an entrepreneurial journey.

Nick:  Are there any habits or practices in your daily life that remind you of that goal, or, you know, that's how do you implement that sort of a marathon mentality into your day to day actions. 

Christian: it's actually a very good question. How do you motivate yourself? One big motivator, in fact is, is that failure, although fake failure is a friend, every day, you you, you know, you will see failure, you see failure face to face basically, it's it's, you know, success comes in, in small increments. But But failures come in big blow, right? So, you you bet you know that failure is not an option, we don't want it as an option, you know, it's there. Yeah, this strange relationship with failure more than with success, right? So every time you take a little step, a little success, you know, you, you just wants to hang on to that. You hang on to your last little success. And then you were because the next level of success is inside. But it's really a question of personality. Some people really need that great excitement in life, right? So they need that in order to help them move forward, you need to be excited by great success by everyday having your dose of adrenaline. And with intrapreneurship, you will hardly get that it's a fairly dull life. It's very much that crossing of the salt pool. And it's, it's a very lonely journey. And so yeah, and it suits me It suits my personality. I'm generally more like, I have more dope personality. I mean, I'm not saying I'm completely though, but um, I can deal with the dullness of the day. And I don't need that that constant excitement actually, when I like, as a hobby is like long distance cycling. For Allah, I love. I love swimming, where I get my introspection. And I, you know, I'm alone in my own little microcosm proposal. So yeah, it's a really I believe it's a question of personality and every entrepreneur to be a one of the needs to question themselves, if they are up to that challenge, you will find that traits among very many entrepreneurs that they have that personality where the they can deal with grids more than other people can. And it's not a criticism. It's just a question of personality. The world needs all kinds of people. But I don't think that everybody is made by foreigners.

Nick: Sure, no, I think that's great advice, especially helpful for a lot of the graduates on now who are ending up in this COVID environment. Switching gears a little bit, I want to touch on the fact that this is the emerging markets podcast. So I'd like to know why you chose to operate in this part of the world. And also, what your experience has been getting business done in these emerging market countries. You know, particularly as your business is subject to regulations, and, you know, working with some of these big telcos so pretty broad, but just curious if you've seen differences from country to country and how that experience has been in general for you.

Christian:Right, um, I guess, yeah, I guess what I'm about to start with, I'm a big fan of the Blue Ocean Strategy from from inside, right. So I like I like to make competition irrelevant. I like value innovation. I like to really try to fit the business into a market that does not interest anybody. When I started Kacific, I actually went around and started and talked to a number of people. And to tell them look, I'm interested in, in serving remote areas, rural areas, potentially islands, or Highlands as well. Too difficult terrain, not very affluent people. And everybody from the industries believe that this was, you know, madness because those people don't have money they live on subsistence. Why would you go after a market like this when you can go after big, big corporation? Like everybody does? Why don't you go after the military? Like everybody does? Why don't you try to connect airlines or do broadcast television broadcasts and serve affluent people like everybody does. And just the fact that everybody wants wanting to do what everybody does, it's it really, you know, the, the blue ocean resonated with me at that point really made me realise that I was on to something, I needed to build a business that could go and serve a, a poor, and I guess, in non affluence, not necessarily, for poor, not the right word, but a market that had the modest disposable income. And I needed to build the company around that, streamline it, focus it, in order to serve people who didn't have a lot of money. Give them real value, that's really the notion of value innovation, give them real value, of course, get paid for it, and then use the money of investors and give that money to them. So it's really a money, it's really a system that basically takes money from the poor gives it give it to the rich ones, but at the same time, there is a great value to the less affluent, so that they can grow and themselves, become richer, become wealthy. And it's a real Win Win system that you can build around that. And it's spot on the the blue ocean strategy. So, so that actually creates a wonderful, competitive moat around the business. Because it's not very appealing market generally. And And believe me, that's a question we get from investors all the time. Why would I invest in you? If you're serving those markets, where people don't have a lot of money? Yes, it's true. But the good thing is, because you asking me that question, it means that very few people are interested in this market. Second, is because not many people are interested in this market, the volumes are very large, very, a lot of people do not have service given to them. And they are, they are, you know, potential customers that do have money in those remote areas, you have government operations in those in those areas. You have oil and gas, you have mining, you have plantations, you do have your processing plants, primary industry. So those exist, you do have a real need. So that's, that's really the reason why I chose those markets, because the need was there, the need was addressed. And, you know, blue a was it was exactly spot on blue ocean. 

Now is there are there different differences between countries. They are cultural differences. When it comes to contractual engagement, for instance, when it comes to speed of business of doing business, it's you have some differences. But in general, you know, especially in all fields, it's all very similar. People need internet wherever they are. There's nothing really specific about a market or how they use internet, why they use internet, what system they want compared to what choices they have. It's very, very similar ways. You talk about the Philippines, Indonesia, Papua New Guinea, Fiji, etc. But in some countries, you have more money, like in New Zealand, so New Zealand, for us, is more residential markets, where you know, people are so that's very different than the rest of the markets. But that so that's just one country, one affluent country that we have in our coverage. All the other countries are developing developing countries and to us, they are very similar all of them and I'm sure if I was to expand as we expand our coverage into Central Asia, Africa, etc. We'll find a lot of similarities in the need for the internet.

Nick: For that very interesting on what has been the most difficult part of operating in these developing countries less affluent markets, other than getting investment and I guess the second part of that question is What advice would you give to someone who wants to start a business in one of these countries and is looking into it, but not sure where to start.

Christian: Um, I would say they are probably three pieces of advice or three general trends that you will see in these markets. 

<Issue with payment>

The first is, whatever people tell you as a, as a businessman wanting to enter the developing world. Money is always calls in those places, it's not a commodity, it comes hard, right? It's it doesn't, it doesn't come easy, you always have to fight for money. So if you ever contract with someone, whether that is money will come late, when money will come bit by bit, and may, money may not come home, you may have pieces missing. So you have to be prepared for that and build your business around, you'll have to fight for every dollar you get, even if you have delivered the service, it's always good to get to change your business plan and the business model and, and get more cash on delivery is always better. So that's the first one. 

<Longer timelines>

The second one, I would say is about timeline, everything takes longer. And generally people are less efficient. They're less driven, they communicate less also, that in your day culture or simply a lack of infrastructure. You know, if you talk about papua new guinea, we could have smart people, you know, well educated people there. But if they have to go to a place, they may have to travel a very long time to get there. And sometimes have no communication. in Vanuatu, for instance, of business there with a number of, of parties. And sometimes the principal would disappear for four or five days. And when they reappear, you know, everybody understands that you'll reappear after four or five days, you'll be out of comms, for all this time, because you have to do business in a remote village somewhere. So everything takes time plus decision making takes time, primarily because of the first consideration I mentioned, because money is usually lacking. So you know, budgets are set up slowly. And sometimes budgets are set up, and they don't hold together. So yes, even though people will tell you to rush, rush, rush and tell them and and give them proposal quickly. You know, you have to be prepared for substantial delay delays beyond what you could possibly imagine. Right. 

<Contract

And then the last piece of advice is about contractual engagements. Very often, you know, we use in, by the way I come from in Europe, contracts mean a lot, you know, you can enforce contract very easily. in the developing world, it's a lot less so. Contractual engagements are very fluid. You can enforce it, but it's going to take a lot of time and money. Sometimes, it's probably better to just work on a on a handshake, or a piece of napkin where you put your foot the terms you sign it, and that's it. And that will save you a lot of legal fees. Because, you know, some of my best contracts that I have the best customers I had a very short and nice little contract with very little skin in the game and orders even from big companies or sometimes governments with you know, completely galvanised watertight contracts on notes do not materialise and are not delivered some having not paid for. And And so yeah, I would say that those are probably the three most important piece of advice. <follow up question suggestion for future: It sounds like you’ve had some interesting unexpected encounters with regards to contracts, could you share an incident where contract wasn’t upheld and one where a handshake worked out, just to illustrate for our listeners how it’s like to do business, and the business relationship format in the market.>

Nick: Great and just out of curiosity, what sort of clients have been your favourite ones to work with or who have turned out really well? And then alongside that, what what are some of your favourite parts of working in the emerging market countries?

Christian: Well, then the clients typically are. It, I can't, I can't pinpoint a country, I can't pinpoint a culture. But it's the people I have enjoyed working with the most are people that have built a relationship with personal businessman that, you know, you see are have something different and, you know, a streak of loyalty, of integrity. It's, you know, it depends what culture but in many other developing world, you know, integrity can be fluid. But it's the ones I have worked the best with, typically, people that resonate, resonated with some of my values. And that, you know, those are the people that, you know, not necessarily the big companies, not the big names. This, it usually boils down to one individual that you trust, and, and that you feel that you want to go with, it's, it's not easy, especially if you come from Europe, US, you know, Australia, the developed world, and you want to venture in the developing world, you know, there's going to be a layer of distrust. Always. You're going to feel like and the other way around as well, right. So there's going to be this cultural barrier. It does take time, but you're going to probably have some signs of people who will show interest genuine interest in what you're doing, will see the value for their country, and will want to build a relationship. Also, it's always a good sign. If a If one of those those customers or business relationship, bring the lawyer with them, for instance, or ask you to go and sign a contract at one of their lawyers. That means then they place some value in the contractual engagement.

Nick: Very good. And finally, do you have an ultimate goal for Kacific? And if so, how far are you from hitting it?

Christian: It's a, it's an interesting question. It's, it's really a balance between how much is enough? That's one thing you have to set your, your target in life. Second, is, is probably how far are you, um, I prepare to go physically, because running a business like this with, you know, a lot of financial responsibilities like this is very taxing health wise, you know, it's very tiring, it's, you know, the stress level is very high, or can be very high. The End sometime you have, you know, long sleepless nights of work. So, that is balanced between that, and also the desire to achieve something, right, the desire to push the envelope, and do something that nobody has ever built before. So, my personal plan would be, you know, without any consideration for the first four hills, or how much is enough, just for the goal would be to create a global constellation, cover Africa, or South America and the islands of the planet, Central Asia, Middle East, and the whole of Asia and, and connect every village in the world. So when am I going to be able to achieve that? Well, I hope so. I'm definitely going for it at the moment. And the great thing also is the company is growing, we have 60 people at the moment. And by bringing more people in the company, I'm also bringing more supports smarter people in their fields. You know, when before we had one person doing it all we can actually have people who are specialised in their field rather than having more generalist, which is I guess, how to build up cooperation right how to question of Organisational Behaviour and how you build your organisation, but I do see that perhaps on a small scale at the moment, we’re only 60. But I can see a way forwards where, you know, we can build it into 500 or 1000 people cooperation with with 1020 satellites in space.

Nick: Great. And I actually have one last question. We can edit it out if you don't have an answer, but I was wondering if you have any advice you'd like to give, or message you'd like to share to the the current INSEAD students?

Christian: Well, um, yeah, I guess I would have one piece of advice is that you have to cherish and nurture the INSEAD network. What I'm doing today, here, and what I'm doing regularly, in contributing to that network coming to give speeches and spending time to nurture the various cohorts and help professors or whoever is active, and enthusiastic in clubs, etc. is actually to nurture that network. And to give back what that network has given me. I don't think that I would have been able to put together the business I have put together so far without the support of INSEAD network, notne of INSEAD itself, although inside is a great school and certainly is always willing to help but of the network. And so I think everybody at INSEAD, who's currently a students should take the time and ponder and whether they have already started doing that, and whether they're planning to add holiday are planning to do that. Whenever I get an email or LinkedIn message, and I see that the person is an INSEAD alum, or an INSEAD student, I'm always more inclined to give my time to that person, then then other people. And I really invite students to do this.