There is no direct translation for the Japanese term nemawashi, which has its origins in gardening practice but has become a common term in commerce.
Quite literally, it means to put something around a root, and refers to the process of digging around a tree’s root system before transplanting it to encourage the growth of smaller roots and ensure the success of the transplanting.
It’s a term with which Cubic Telecom’s chief executive Barry Napier has become very familiar over the past year or so, during the process by which SoftBank, the multibillion-euro Japanese investment firm, invested €473 million to acquire a 51 per cent stake in Cubic.
The deal, which was announced in December 2023, valued Cubic at €900 million, just within touching distance of unicorn status, but one of the things he remembers most vividly is the impact of nemawashi.
“It means the deal moves really slow on an hourly, daily and weekly basis, [so slow] that you’re actually wondering are we ever going to get this done,” he says.
But, as tends to happen with nemawashi, as soon as the roots were tended to, the work could begin – and fast.
“Then it’s, good God, it’s the fastest thing you’ve ever seen in your life,” culminating in six weeks of nearly 24-hour days to get the deal over the line.
Since March, when the deal was finally given regulatory clearance, Napier’s life has been a wash of meetings and translators, trips back and forth to Japan, meeting SoftBank executives and potential new clients, as well as mentoring sessions with a dozen or so Irish companies and entrepreneurs who either want to get to where he is, or are finding the current environment difficult to operate in.
Napier is coming up on 15 years as chief executive of Cubic, which provides software to smart vehicles – in short, ensuring that a car’s inbuilt hardware can take signals from the cell towers that provide the internet connection.
It’s no small operation. It has 300 staff, operates in 190 countries and its software is used to connect more than 20 million devices worldwide.
It’s been a fascinating journey for Napier, who started out life as a salesman for a rubber stamp company, before accidentally turning himself into a mobile phone salesman in the 1990s. After repeated troubles with the connection on his mobile phone he rang the distributor to complain and was offered a job as a reward for his doggedness.
That set him on the path of mobile phone sales and during the Celtic Tiger he set up a company called Celtic Telecom Consultants, which was selling tens of thousands of phones a month.
In 2003, he was approached by the Irish arm of Nasdaq-listed Brightpoint Inc, which wanted to buy him out. In a piece of Barbarians at the Gate-style deal making, he spotted a hole in their accounts during the due diligence, which turned the tables in the deal, eventually allowing him to turn from target to buyer. By 2009, he had grown the company to more than 80 staff and $200 million in income.
“I got an education in corporate structures and in buying and selling,” he recalls. “When you’re being audited every 60 days it puts a lot of discipline on you and the team to make sure you cross the Ts and dot the Is.”
The financial crisis of 2008 and 2009 provided a lesson of a different kind, he said. As the rest of the country was crumbling, Napier became “laser-focused”, in his words, on bucking the trend and doing the opposite of what the market was doing.
“In 2008 and 2009 we had our biggest year ever,” he says. But it left him absolutely exhausted. When the opportunity arose to sell the assets of the business to DCC, he took it.
Around that time, he had made an investment in Cubic Telecom, which had been founded by Pat Phelan, which he eventually took over as chief executive.
He later struck a deal with Elon Musk’s Tesla after a chance encounter with him at the Web Summit in 2013. Although regulatory issues in China eventually ended the Tesla deal, it opened the doors to a relationship with Volkswagen and Audi, which allowed the company to scale and to raise more money.
It wasn’t all smooth sailing. Covid proved difficult, with an 80 per cent drop in revenue and some difficult choices for Napier and his senior leadership team, including chief operating officer Shane Sorohan and chief financial officer David McManamon.
“I took a 30 per cent pay cut. Senior leadership took a 25 per cent pay cut. And we distilled that all the way down to 5 per cent through the company,” in order to make sure that nobody had to lose their jobs during the pandemic.
The deal with SoftBank allows the company to accelerate its bounce back from Covid by opening up one of the world’s biggest car manufacturing markets.
“If you think about it, 27 per cent of the automotive business is in Asia, and now you’ve got the biggest Asian company as a supporter, investor and partner, so it’s really starting to drive that opportunity for us as well,” he points out.
“It’s fairly hard to win an account and manage it if you’re a seagull, flying in and flying out,” he adds. “But if you do the opposite and you have a local presence and a local partner it really gives you a sense of endorsement.”
Already he has had visits from the Japanese ambassador to the company’s headquarters in Dublin, while he’s been accompanied on visits to big potential customers in Japan with senior figures from SoftBank, helping to open doors in all directions.
[ Cubic Telecom chief Barry Napier named Irish Times Business Person of the YearOpens in new window ]
So, what does a successful deal look like for Cubic Telecom?
“I think a successful deal for us is trying to hit that target of [its products in] 80 to 100 million devices – in high-value assets like vehicles and tractor units,” he says.
The deal comes at a particularly favourable time in the car industry, which has already begun the long transition towards electric vehicles, but also stands on the verge of an enormous boom in the connectivity of automobiles – not least of which is the prospect of self-driving cars and robo-taxis, all of which will open up a huge market for companies like Cubic Telecom.
Artificial intelligence in particular, he said, will be huge. Not just the AI-as-buzzword “but really getting into using machine learning to really drive in some really artificial intelligence that can really help on connectivity and services around that”, he says.
A lot of that is connected to the ever-accelerating pace of developments in semiconductor power, which is in turn driving people’s expectations of what’s possible.
“We’re now creating a demand for having the best-in-class and that chip set is coming into vehicles now for better infotainment, and once that robo-taxi comes out, people are going to want a user experience that’s first class,” he said.
In many cases, he notes, the technology is already here, but the challenge is the differences in regulatory frameworks around the world.
For Cubic, that’s the key to moving forward, he adds, being able to bring forward different kinds of use-cases for different markets.
“We have a roadmap which clearly defines 80 million to 100 million vehicles and we know the partners we have to contract with to get to that,” he says. “That doesn’t necessarily translate to a straight-line rise in revenue. There are different types of services in different regions. The services we launch in Brazil may not be the same services that are used in Europe, because it’s a different type of clientele or a different type of product.”
Ultimately, in Napier’s view, the car will undergo a journey not dissimilar to the one that the mobile phone has gone in recent years – no longer just fulfilling its primary function as a means of transportation, but also as a payment gateway for fuel, tolls, drive-through coffee, and any other transaction or interaction in which the driver might find themselves engaging in.
As far as he sees it, “the different types of services will generate probably anywhere from 10 to 25 per cent of the bottom line in Cubic by 2030”.
He has in the past told The Irish Times that he expects revenues this year to break $100 million (€90 million), up from $70 million the year before, but he’s not likely to forget the lessons of major catastrophes like the financial crisis or the Covid pandemic.
“I don’t think anyone learns from your success, because you just put that in the bank and forget about it, because you think that’s just organic.”
Indeed, Napier has made reference several times to his own mistakes in the past – mostly property investments that went sour in the crash and left him badly exposed.
“From 2004 to 2008, things were very easy in the country and things were pushed upon you – they sold a very easy story,” he says, remembering the kinds of property investments that became almost de rigueur during the boom years. “The country lost the run of itself, there were too many Bentleys around the city centre.”
He remembers being hesitant, because such investments went against his better judgment, before following the herd and investing anyway, before they followed so many other property investments by tanking.
The lesson, he says, is about trusting your gut and not losing the run of yourself, even in moments of triumph and success.
“Just sit on your hands, stick to the knitting,” he advises. “And always have a Plan B and a Plan C.”
You can find more on Top 1000 here. For the full list of Ireland’s Top 1000 companies, sign up to the ePaper today. The full supplement is also available in Thursday’s (12/09/2024) print edition
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