The current plight of PC house is not strange or unexpected outcome for many of us. We cannot declare this was the definite state for that company but most of us suspected something like this would happen due to many reasons.
At this moment I did some unorthodox writing or analyzing to explain some significant facts, not about the particular company, but related to many similar kinds of companies engaged in the same business: computer hardware trading. .
The initial business model of all these companies was very simple: bringing computer parts from the countries like Singapore, assembling and selling them with a profit.
If you try to identify how they blossomed in the initial stages and what happened next you may find many similarities in most of these computer companies.
Actually these companies we talk were not established by any big firms in a big way to enter into this business.
About 25 years ago, there were few young individuals who came aware of the opportunities available in this field , mostly by chance, started hand carrying of computer parts from Singapore and selling here. Most of them were school leavers, set to this business after doing several odd jobs here and there.
We should go back to late 1980s to start this story.
One of the foremost of computer hardware business was one Jagath Ranawaka , a self studied computer enthusiast, with a good family background. He started a Limited Liability company called Jagath Robotics.
From mid of 1980s they supplied machines and services to Government Departments. I think they expanded opening some branches but later-on confined their presence to Colombo. They are still in software business at manageable capacity without much publicity.
Then, one Krishan , a boy recruited by Jagath RL who got the chance to visit Singapore for several times for his company while working here in marketing side. After learning everything about this mostly unknown bargain business he started a separate company with an educated chap called Ravi. (… I think, Kishan’s farther , Mr. Theodore worked in Irrigation Dept. and JRL supplied machines to them.... ) (I think this Ravi was then unknown Raigam owner – Dr. Ravi Liyanage) They registered a company named Kobian and supplied lot of computers to various Govt. institutes under the same brand name (Kobian) at healthy margins . Actually Kobian was the name of a shop in Singapore, Jagath RL and K. used to buy computer parts .
Then we see boys such as R. Gamini, Nilu, Janaka, Sanjiva , Wije etc. joined to this lucrative business. At the initial years all of them followed the same model and same routine. Fly to Singapore , stay 1-2 nights in a small room, go to Sim Lim Tower, find cheaper places to collect parts, hand carry the goods to Colombo and sell here with a good profit. If they buy a hard disk for 4000/- they sold it here at least at 7-8000/-. The profit margin of these initial players was over 80 – 100 % because assembling hardware and installation of software was an alien thing for almost everybody in SL .
Most of the chaps joined later in this list were actually the “Golayas” of senior players. Some were hired by some small companies for transporting goods from SIN to CMB by air. It was a risky setup. When you use a golaya to carry your stuff he quickly learn the secrets and places, starts his own business after few visits !.
Most of them used same room to stay in Singapore sharing same mat and pillow.
Actually some people who later became well known in the circle joined the group by accident.
One poor fellow ( name withheld) marooned in SIN after failed job attempt , given shelter of that ‘room’ by others. As a support, he was given chance to fly back to CMB carrying computer parts of some other guy who was in the game. As this innocent looking guy did it nicely he hired him several times. When they go to the suppliers at Sim Lim the new man was introduced to the Singaporeans as his partner. That boy did his job nicely for few months. Suddenly he disappeared and never came to that room again.
Few months later the senior guy found him Colombo, when he visited a big computer shop in Unity Plaza . Then he realized his lost golaya is the owner of that shop ! (when the cashier girl called him ‘Sir’.) By then, ‘golaya’ was hiring some other ‘golayas’ to carry parts for him from Singapore !.
At that time knowledge of hardware was rare and no one tried to even to open the CPU. Hence, this business was lucrative and most of these guys were able to earn lot of money, recruit staff , start companies and establish business places in Sri lanka. Supplying to the Govt. was very profitable even after paying commission to the officials.
Janaka (Ratnayaka) started a place called Computer Island. Sanjiwa (became Sanjiva Ayiya) who used to visit Neat Computers in Singapore to buy parts started a business in the same name, just like local Kobians did. Sanjiwa, a Sinhala man, later gave jobs to many youths and became a pillar in the industry now dominated by Muslims.
We also can find Naleem of Barclays and many others joining to this business. Naleem is still maintaining his reputation and satisfied within his limits. He did not try to expand his business to vulnerable levels like others.
Rishan of PC House is actually a young fellow joined at secondary stages of this hand carry business by watching at others progress. Not like for earlier guys I suspect he was given support by some big financial source because he joined the game when others starting to feel the lowering profit margins of the game.
All of these boys made lot of money at initial stages due to the situation prevailed at that time. Subsequently profit margin was reduced due to competition. Some people started importing bulk from manufacturing plants in Malaysia and Thailand.
Some of them went into troubles by believing they can grow and beat others if they expand and established bigger companies island wide. I think they had no idea about risk involved in expansion. Present situation.
Now we see the bigger PC house created by Rishan did not produced expected prosperity compared to smaller PCH.
Sanjiwa of Neat also performed well and then saw upside down parabola in his graph. That boy , Janaka who created an island of computers was appointed ( surprisingly) as the head of a big financial institute because of the political work he has done. (SMS broadcasting from his servers in 2010) I think all who are in finance sector know his story better than me. They say, at present no one can trace him. ( Google and see the story if you have no idea about Janaka Ratnayaka.)
Nilu Wijedasa, Gamini and Kobian Kishan and many others soon realized the business is not that lucrative anymore, ventured into other fields. In those ventures also some succeeded some failed due to same reasons I mention below.
Jagath Ranawaka , the owner of JRL is still there as he controlled his desire for bigger expansions at the right time.
So is Naleem of Barclays , a simple down to earth person , still doing well at 1st floor of Unity Plaza and in his own building closer to Bamba Police. He did not excavate the well too deeper, knew the banks will collapse on him if dig too much. I think he knew the ground condition better than anyone and as a human being possess the ability to manage desires and greed for show. Analysis
If we understand the overall picture of these companies and their leaders we can see they were smart guys used the opportunity created at that time to make their fortune.
In the process they had to use many tricks such as buying ‘almost new’ used parts from the 7th floor of Sim Lim, giving commissions to officials who were in purchasing committees, paying ransom to customs, over clocking, over pricing etc.
When you expand the business and made it public you cannot rely on all these things. Furthermore we can see these boys were from similar educational background, learnt the business by practice, have had no time to developed any academic and professional expertise.
Naturally these kinds of people always develop ego and overconfidence about their abilities and always tend to extrapolate blindly.
It is natural to think nothing will go wrong because they have enough experience in particular field than any other in the country.
Actually during their lifetime in the industry they miss and ignore the learning most of the very important aspects of business management. They are not like the boys or girls who join as executive trainees to the places like JKH , Hailey or SAMP who get step by step exposure and professional education in parallel and climb up towards CEO’s seat.
Although they performed at one stage due to born talents and temporary opportunities prevailed, they are not guarded by the shield of wisdom of real exposure to the business world. They were in the company of similar level of crowd for many years while those who spend their youth in reputed places meddle with CIMA or CIM devotees.
Unfortunately, they were the bosses from the beginning.
These limitations are hidden until they keep their work within their capacity.
When they expand, the setup becomes too big to handle and troubles start. In most of these places you cannot find enough professionals recruited to top positions. They always try to run with the people who make the venture successful during the progressive years.
I do not write anything here. The reader can do it his own .
Somehow, I believe, anyone who wants to expand his business in future should consider these facts and get enough professionals to run the business at right time and also get their help in project planning and decision making. If you do not like, then keep doing it at your capacity while enjoying your ego.
I did not buy some IPOs in CSE due to the above reasons in additions to negative financial data. Recommended reading: What Got You Here Won't Get You There
- Marshall Goldsmith