Sky's limit for China-backed OpenJaw
Takeover by State-owned TravelSky convinced Kieron Branagan to return to the airline software company
They say you should never go back but Kieron Branagan did and it seems to be working out pretty well. He walked away from his job as chief executive of OpenJaw after a big disagreement with the company's (now former) owners.
He went and set up another business in a similar field, putting in months of work. But when OpenJaw's current owners approached him during their acquisition process, Branagan made the decision to return.
Now, a year or so on, he's sitting in OpenJaw's office in Bernard McNamara's old headquarters on the north side of Dublin's quays. The company makes software for the travel industry - its main product is the 'T-Retail' software platform that enables airlines to conduct ecommerce.
OpenJaw's parent is Chinese State-owned TravelSky, which bought the company last year for $40m from Canadian business GuestLogix when the latter ran into financial trouble.
It was a traumatic time for OpenJaw, which had only been purchased by GuestLogix at the end of 2014.The deal been an opportunistic approach on the back of interest from other players.
"We'd had a number of approaches from large industry players - one of which failed at the last moment," says Branagan.
"We had a process that ran for about six months and was very close to a conclusion. And for their internal reasons, not our reasons, in terms of reorganisation and things like that, it unravelled at the last moment."
Then an approach came from Toronto-listed GuestLogix, which had a product designed to help airlines sell goods on board the aircraft, handling the difficulties associated with payment in the air.
The logic was that the combined entity could provide customers with a combined product for selling goods online and on board. There was a vision also for opportunities in retailing via on board back-of-seat entertainment - set to be a growing area. The three founders of OpenJaw, John Lambe, John McQuillan and Sean Mac Roibeaird, decided the offer was appealing. And so OpenJaw became part of a plc with all that such a move entails.
"Initially it went very well. The first quarter of full combined revenues and earnings was actually very positive. We had built a much larger business as a combined entity," says Branagan.
"But I think the integration aspects of the acquisition didn't go particularly well. There were definitely challenges with respect to our business model versus the GuestLogix business model. And what we ultimately saw was that the GuestLogix financial performance dropped away and literally nine or 10 months later they were in serious trouble with respect to being able to reach agreements with their lenders."
In February 2016, GuestLogix had to file for court protection from its creditors, but by then Branagan had left his post as chief executive.
"GuestLogix wanted to reorganise and restructure in order to cut costs. And then there was a disagreement with the management of OpenJaw on that because we were a growing business and cutting costs was simply something that I felt was detrimental and destructive. It certainly wouldn't have helped GuestLogix as a group, so there was a major difference of opinion on that. And I basically just could not accept that there would be any cuts in OpenJaw or staff, it just made no business or financial sense. I left the business and then a week later the CEO of GuestLogix stepped down."
After he left OpenJaw, Branagan and a number of other senior members of OpenJaw went and set up a new business called Travel Transformation Partners, working on digital transformation for airlines and the airline industry in general.
He worked on that for about three full months, and then an approach came from TravelSky, who were looking to buy OpenJaw when it was put up for sale as part of the GuestLogix court process. The two companies had a pre-existing relationship having worked together on a partnership, and Branagan was asked to come back as chief executive and bring back some of the senior members of the team who had left during the GuestLogix problems. "It was a difficult call to make but I think in terms of the vision that TravelSky had and the Chinese opportunity to really, really scale OpenJaw, not just outside of China but in China, was very compelling. And there was also a sense I think of duty because definitely OpenJaw was fragile at that point and it did need stability," says Branagan.
Much of the senior team did return - including all those who worked with Branagan at Travel Transformation Partners, and the business had another year of growth in 2016.
"It was a really good rebound and things are very stable. Plus we're now looking the future and investing in the future."
Branagan first joined the company in 2007 as chief operating officer. His working life began at Datalex, OpenJaw's Irish-listed rival which has been one of the star performers of the Irish Stock Exchange in recent years. After that he worked for Chris Horn's Iona Technologies, before a stint as a partner at ACT Venture Capital.
It was in that role that he had a series of engagements with OpenJaw's founders, who were looking for someone to help them scale the business. At that time, it was focused on so-called middleware, a particular type of software.
"They seemed to have acquired some very prestigious brand names very quickly for a start up which was remarkable. Within six months ... there were very good readings from the market that they actually had something that was of value and that could be sold. And that model was effectively allowing the business to fund their expansion literally from retained profits which was very unusual for a technology business. So if you wanted a validation that actually this was a business that had big potential, this was it," says Branagan.
The company then began to transition towards ecommerce, with Branagan becoming chief executive in 2011, replacing McQuillan. Now, it's looking at developing its offering in areas including big data - and with a Chinese parent company. That makes efforts to eat a slice of the enormous Chinese airline market a bit easier. In May, the company announced it had added four new Chinese airlines to a customer base already including British Airways, Iberia and Cathay Pacific.
"The vision is to substantially scale our operations. We've been investing in our platform substantially. We've been making a whole range of new product announcements. It's not just in traditional ecommerce," says Branagan. For example, the company has been working on a cognitive computing platform with IBM Watson, designed to conduct customer service via Facebook Messenger. It wants to have customers talk to a chatbot rather than somebody working in a call centre.
"That chatbot has been loaded up with thousands of questions and answers that a normal call centre would receive. It responds to people using all of the learning that it has from the past and then also learns from the current interaction. It's a way of really automating, servicing and ultimately selling without human intervention. In China, we think that this is really important because the scale of the travel market there is so vast. Anything that can reduce contact centres or call centres is really valuable."
Via its relationship with TravelSky, the company has access to the last seven years of booking data for the Chinese airline market which it wants to leverage to enable it to target customers more effectively. It has an office in Dalian in North-West China, a major IT city, which it is looking to grow to 100 people by the end of 2019.
That's where the company's R&D for the Chinese market will be carried out.
There aren't many Irish companies that have been bought by the Chinese so in that respect Branagan is in an unusual situation. It takes time to build relationships, he says.
"There's no getting down to talk about business after a meeting or two. It is a multi-year engagement. Trying to understand and navigate TravelSky is difficult. There's an additional sort of control element because they're also a State-owned company so you've got a lot of oversight and audit and things like that, but by and large we've found people to be very friendly. They're outward looking, they're looking to expand their business outside of China but also leverage the asset that they have within China. I think we have a good relationship," says Branagan.
"I think TravelSky recognise and they certainly have taken advice that they should not impose their own culture and business practices on a western company. So they kept our company separate to a large degree, we have our own culture, we operate as an independent brand within the group." Branagan's ambition now is to double the company's workforce to 450 and increase annual revenues to more than €40m over the next three years. After stabilising the business following its time with GuestLogix, Branagan will be hoping no more turbulence lies ahead.
Sunday Indo Business