Kill your failures fast and aggressively support the ideas that work. That’s the advice John O’Brien, CEO of S3, has for Irish firms that are contemplating scaling up through innovation and international exports.
O’Brien should know, because he led the transformation of S3, a long-standing services business into a products and services company that could change the worlds of TV and healthcare as consumers know them.
S3 is a multinational technology firm based in Leopardstown, Dublin. The company’s employees have, over 27 years, experienced the highs and lows of creating a global business in the fast-moving technology world. Much of S3’s history is centred on supplying silicon design expertise and services to some of the world’s biggest technology companies.
S3 originated as a spin-out of electronics giant Philips, led by Maurice Whelan, founder of S3. Up until 2006, Philips owned the majority of the company. S3 then led its management buyout, with a US$13m investment by ACT Venture Capital. The move catapulted S3 on a new strategic journey that involves creating its own products, as well as continuing to serve other technology players with silicon design and software services. Philips remains on board as a minority shareholder.
O’Brien, an electronics engineer by training, had been working in the UK and heard of S3 while he was back in Ireland on holidays in 1989. He wandered in for a chat with Whelan and has effectively never left.
“S3 has changed radically since its founding days,” O’Brien said. “For much of our history we were 100pc dedicated to providing the tech industry with silicon and software design services but in 2006 we kicked off our strategy to become a 50pc products company and a 50pc services company.”
S3 employs 250 people in Ireland, Poland, Singapore, the Czech Republic, and in Philadelphia, Pennsylvania; and San Jose, California, in the US. S3’s Polish office only opened last year.
The company brings in annual revenues of around €22m.
O’Brien said S3 is playing a defining role in the evolution of TV as consumers know it, and counts broadcasting giants BSkyB, Comcast and Time Warner among customers of its technology. That technology is used for testing the robustness of networks delivering video-on-demand and multi-screen TV experiences.
S3’s technology is also helping transform the future of healthcare by creating systems that enable patients with chronic diseases to be treated remotely. The technology is being used in Northern Ireland in what is the largest European rollout so far of telehealth systems involving thousands of patients.
The third element of S3’s business is its silicon design business, which involves designing chips for companies like Samsung, NXP and Cisco.
In terms of the TV business, the industry faces technology challenges on two fronts. The first is the increase in the number of pay-TV subscribers all over the world. The second challenge is multi-screen TV, where providers are enabling consumers to watch TV on any device, be it a smartphone or tablet, in the home.
Pay-TV operators are trying to serve consumers with different forms of video, including video-on-demand, internet TV, user-generated content, 3D content and more. The requirement is to deliver this to a range of different devices (consumers are even watching TV via games consoles) without disrupting the quality of service.
What S3 does, said O’Brien, is consult with broadcasters as they build their systems.
S3 has a range of technologies that test and validate the quality of service millions of consumers in Germany, the UK or France, for example, might experience, he added.
The TV products strategy is working: S3 has quadrupled its customer base in that area in the last few years to 60 broadcasters around the world.
S3 moved to the top of this market by focusing on the top networks in the world, O’Brien said.
“This strategy led to a lot of expansion and that’s why we’ve offices in Singapore and a Brazil expansion is on the cards. Deploying multi-screen TV services is complicated and we need to be near the top operators,” he said. “We are in the vanguard of deploying these TV services around the world.”
S3 and telehealth
In terms of telehealth, O’Brien said S3 is also blazing a trail in terms of telehealth systems.
“The continuing growth of chronic diseases among the aging in the developed world is very high and this is causing hospital costs to spiral out of control. In the developed world, if you walk into a hospital you’d find that 60pc to 70pc of the patients would be suffering from a chronic disease,” according to O’Brien. “The question is, why do they need to be in the hospitals?”
Another area of opportunity for S3 lies with large pharmaceutical companies, who are under increased pressure to ensure patients are adhering to their medications to prove the efficacy of the drugs, said O’Brien.
At the end of 2011, S3 rolled out what O’Brien said is the largest European telehealth service for the Healthcare Trust in Northern Ireland, which is serving a couple of thousand people. The system works by feeding data back to hospitals on patients who have diabetes, for example. A key aspect of the technology is patient engagement, by providing the patients themselves with constant information, such as diet information and educational videos, he added.
O’Brien said the company’s original silicon design expertise remains fundamental to the company’s growth and if anything, the growing complexity of mobile devices is making this expertise increasingly valuable.
“For the past 60 years, silicon technology has enabled performance enhancement and cost reduction for a host of industries. We’ve grown and maintained a top-class team of engineers and designers who build products around silicon intellectual property,” O’Brien said.
As an example, he said the company recently worked with Iridium, a global satellite phone company. S3 re-engineered its handset to make it more power efficient and more affordable to run.
S3 has also taken on an extra 25 workers this year.
“Building the business around major technology megatrends requires having skill sets in different locations,” said O’Brien. “Our strategy revolves around finding growth through a combination of building products and providing services. The key thing is not being afraid to go to the top of the value chain in terms of customers and just keep pushing forward.”
Change of direction
The pivot in the direction of products in 2006, O’Brien said, was the right strategy to take.
“If you cannot change and adapt, a technology business is just not going to survive. Every successful products company needs to have a mix of products and services,” he said.
O’Brien is ambitious about the future of S3. In the case of TV technology, he said S3 wants to provide larger elements of the managed services aspect of broadcasters’ operations.
“I can imagine S3 evolving to a situation where these companies might outsource complete oversight of parts of their network to us,” said O’Brien.
“Telehealth is still an emerging business for us. Working with some of the providers at the top of the food chain has given us a clear insight into what it takes to set up and manage what could be Europe’s largest telehealth monitoring business. The whole area of patient engagement around health is the bull’s eye and that’s where we’re going to continue to innovate.”
Taking S3 through the management-buyout process and then realigning it into a products and services organisation has taught O’Brien lessons about agility.
“Try different things; do it quickly and fail quickly,” he said.
With several products, S3 made the proposals and got the products to market quickly. “That enables you to test it but if it doesn’t work, be ruthless,” O’Brien said.
“You don’t build a business by being right every time. You build it through experimentation and I would urge other Irish businesses to get better and grow faster by experimentation and by ruthless destruction of things that aren’t going to work.”