Born on the 21st November 1964 in Essex, Charles Dunstone is most famously known as the co-founder and current CEO of the mobile phone giant, The Carphone Warehouse. In a familiar rags to riches story, Charles Dunstone grew his successful telecommunications empire from virtually nothing.

Indeed, The Carphone Warehouse had a modest start to life with a personal investment of £6,000 being used by Dunstone and his business partner, David Ross, to sell car phones from their London apartment. Whilst this venture would ultimately launch Dunstone into the upper echelons of business success, there would also be a number of disasters along the way.

The Carphone Warehouse was established in 1989. It was essentially a very small business at the outset. As with many of today’s high profile businesses, however, it enjoyed enormous growth, By 2007 the company had appeared in the FTSE 100, the share index of the top one hundred companies in the UK listed on the London Stock Exchange. By any measure, the FTSE 100 is an indicator of great success for any business able to break into its closely knit ranks, although maintaining a spot on the index is certainly not easy. Indeed, The Carphone Warehouse is no longer listed in the FTSE 100, which for Europe’s largest independent mobile phone retailer is not a positive.

At the beginning of 2006, business was going very well for Charles Dunstone, who had, several years earlier, expanded his empire to include telecommunications and broadband retailer, TalkTalk which also includes the subsidiary AOL Broadband. Listed in 64th position in the Sunday Times Rich List (UK) 2006, it was estimated that Dunstone had a fortune of more than £1 billion. However, a series of declines in the telecommunications markets, the ubiquitous credit crunch and a number of fundamental business errors have seen Dunstone’s financial worth dwindle over recent years. Indeed, subsequent Sunday Times Rich Lists have shown that Charles Dunstone’s fortune may have shrunk from as much as £904 million in 2008 (ranked 83rd) to “just” £300 million in 2009 (ranked 178th). Whilst many entrants on the most recent Sunday Times Rich List have seen a marked decline in net worth as a result of the global recession, one of the more significant causes of Charles Dunstone’s relative decline also happens to be the primary reason behind his success.

Having dropped out of a business degree at Liverpool University, Dunstone has several A-Levels and GCSE’s to his name. Notwithstanding this, the unbridled determination, ambition and business acuity that defines Charles Dunstone has made him a formidable business success. However, this very drive to succeed proved to be his undoing when it came to making TalkTalk a triumph in the internet service provider (ISP) industry. Invigorated by his success with The Carphone Warehouse, Dunstone adopted a very bullish business model for its TalkTalk subsidiary. In fact, bullish is perhaps an understatement.

The main selling point of TalkTalk was that it could offer customers high speed and reliable broadband connectivity absolutely free. That is to say, free in the sense that the broadband service was not charged for per se but customers were required to subscribe to TalkTalk’s telephone services, which were, however, very competitively priced. This was a daring plan that was met with wave after wave of new subscribers, who realised that a switch to TalkTalk would save them a fair amount of money each month. Furthermore, TalkTalk’s main competitors at the time, notably BT, Telewest and NTL, were unwilling to match this extremely aggressive business model – and for very good reason. As the floods of new customers continued their exodus to TalkTalk, Dunstone soon realised that the promise of unparallelled customer service was going to be unsustainable.

Soon after the TalkTalk service was announced, the firm’s website crashed under the weight of some 40,000 hits per minute. This was a sign of things to come. Indeed, whilst the promise of ‘free’ broadband remained financially viable due to cuts in BT wholesale prices, what Dunstone had not fully accounted for was the immense interest that the business would generate. Perversely, TalkTalk was simply too successful. As customers fell over themselves to get in on the free broadband action – an offer seemingly too good to pass on – the TalkTalk infrastructure was insufficient to cope with the demand.

In fact, many new customers would have to wait as long as three months before they could get online after signing up to the service, which in itself was a critical flaw in TalkTalk’s business model. Furthermore, the company’s call centre staff, which was necessarily small in order to keep costs under control, was overwhelmed by the sheer number of customer queries and complaints that followed. Indeed, TalkTalk rapidly developed a reputation for excessively long call queues, poor customer service and a host of technical glitches that would plague the service once it did get up and running. In short, the free broadband dream was brought to its knees by the sheer interest in the service and the failure of Dunstone to anticipate the ensuing logistical nightmare. Nevertheless, Charles Dunstone’s business acumen has driven TalkTalk’s long haul to recovery and he remains one of the most successful entrepreneurs in the country.

Although perhaps a departure from other success stories we have seen here at Lammo.net in that earlier success was followed by recent challenges which are now being addressed, we see yet again the steely determination needed to overcome short term adversity in building a successful business in the longer term. There is little doubt that Charles Dunstone will prevail. Affiliates looking glumly at the overdraft take note!

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