CNBC Business | Declan Ganley

Declan Ganley

Declan Ganley’s astonishing rise shows a flair for locating the next big idea and then creating the market conditions for take-off. By Richard Lofthouse

Late in 2001, Ganley drew together a management team from his previous telco ventures, and two years later Rivada had a sophisticated product and a ream of patents protecting the intellectual property. As he readily confesses, the Motorolas of the world stalk the horizon and are a competitive threat, yet they are also benign allies of a sort, providing off-the-shelf hardware that Ganley could never have developed under his own steam. “We’re a hybrid of Vodafone and Lockheed Martin – a telco plus defence contractor,” says Ganley.

Despite a tight schedule, Ganley is still a reservist with the Irish Army, going on manoeuvres last summer in County
Wicklow, Ireland A Rivada handset can still operate with various legacy systems while possessing many new capabilities, “turning what was a basic walkie-talkie capability into a powerful voice, data, video, position location, force tracking and intelligence gathering and distribution tool.” And then there are base stations small enough to fit into the back of a Chevvy Suburban or be flown to a disaster site by helicopter, allowing a fresh network to be installed within hours of a major natural disaster or terrorist attack with handsets given to different parties using the same, specialised frequency.

The intellectual property consists of what Ganley calls “the membrane around an amalgam of existing elements”, the whole as opposed to the parts, which employed numerous experts and took some serious investment by Ganley, who owns 80% of the equity, the rest reserved for senior management.

Getting multiple public agencies to agree to a new generation of technology while tapping Federal funds? Impossible without 9/11, and almost impossible after it. But doable, especially with someone like Declan Ganley behind it. Ganley’s strategy for Rivada results from what he calls his “well-established mantra of investing heavily on pre-start-up research and diligence of potential entrepreneurial opportunities rather than trying to plug holes and gaps after the fact”. The first rule of becoming a billionaire rather than a millionaire, in other words: locate the next big idea and then bend the world to your will, creating the market conditions for take-off. Enemies scoff, cynics yawn and investors shrug their shoulders, then five years later you wipe the floor with them.

How Ganley ended up eating US army rations and living in a Louisiana trailer following Katrina is a fine story, but not as good as the hair-raisers that define his earlier career and explain his entrepreneurial philosophy. Ganley’s family moved back from Hertfordshire, England, to the very rural village of Lisheenaheiltia, County Galway, in the early '80s when Ganley was 13, at a time when the Irish economy was in a terrible state. Even so, he rented a bank of turf, the traditional fuel of rural Ireland, cutting it himself and selling it at the local market – 90 trailer loads per summer, he reckons. “I used to work 18-hour days, but I would end up with a couple of grand over the summer, which was great in Ireland back then.”

With his aversion to whiskey (Ganley is a life-long teetotaller) and traditional Catholic upbringing, Ganley nonetheless made an arrangement with his headmaster allowing him to walk to the local bank to place buy and sell orders on shares in the lunch hour, admitting that it was “trial and error but great fun”. Balanced by his decision to join the part-time Reserve Irish Army Regiment, the Fifth Field Artillery, Ganley’s Janus-faced disposition was already visible: work versus adventure and duty versus risk.

Ireland was suffering economically, however, so aged 18 Ganley followed in the footsteps of millions of migrants before him and left for London. Once there, he started work immediately as a steel fixer on a building site working long hours, supplemented by bar work at a rough Cricklewood pub and another in Brixton. So far, so ordinary, the story of any immigrant anywhere. And it was clearly a low point for Ganley, who admits to shedding tears of frustration at his failure to break into the bright lights of the City.

But then, get this: He responded to a newspaper ad for an office boy at a marine insurance brokerage house, and by delivering the tea, charmed a partner into listening to Ganley’s Big Idea. It was 1987. The previous year Nasa’s Challenger space shuttle had blown up, but Ganley had read in a German technology magazine that the Soviets had a good track record for satellite launches. Why not offer to insure Western communication satellites launched on Soviet rockets?

The idea was madder than a box of monkeys, and all this during a Cold War that hadn’t yet thawed. But it was the episode that launched Ganley even if it launched nothing else. He started by looking up “soviet” under “s” in the Yellow Pages, finding the trade delegator and arranging a meeting. Amazingly, he then arranged a trade delegation to Moscow early in 1988, aged 19, resulting in a contract to launch a satellite – except, of course, that the Americans stepped in and ended the party.

“It was my first trip to the US. I was met at JFK airport by a US Air Force Space Command general and a US Air Force Space Command colonel who asked: ‘What the hell is going on here?’” He obviously assumed that the Russians would promptly swipe Western satellites for their own use. The only alternative was that Ganley’s charm had melted a hole in the Iron Curtain, but of course it hadn’t. Russian openness to Ganley’s satellite idea was Glasnost speaking, only the West didn’t know how to respond. “I was so naïve I didn’t know what you couldn’t do. I didn’t care, I was having a good time,” recalls Ganley.

A sequel to this venture shows that if your timing is wrong, as Ganley’s was in 1988/9, you either quit the arena and do something else – not Ganley’s way – or tighten your grip until a new opportunity emerges. Ganley is brilliant at turning over stones until he finds gold, and on this occasion coordinated the stones by organising a conference at the Institute of Metals in London in 1990 called SOVMAT90, an exhibition of Soviet alloys, ceramics and other technologies, and out of it ended up exporting Siberian aluminium to the West via Latvia.

The metals business never acquired a name, and it was risky “but didn’t require any start-up money.” Why? Because it was a classic exploitation of a spread, the difference between the buying price and the selling price of a commodity. Soviet aluminium, billed as low quality but actually higher, was being sold in roubles, then a collapsing currency. Then it was being shipped to the West via Latvia and sold in Rotterdam. Payment terms of 90 days meant that the spread grew as the rouble collapsed. In effect, Ganley was buying for $30 a tonne and selling for $300 a tonne, and because he never had to pay upfront there was no capital requirement. It was how some of the current Russian oligarchs made their money; Ganley was just a dabbler, but got himself started with a few hundred thousand euros net proceeds within a few months.

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