In the mid 90sSpain was at the dawn of the Internet revolution, three friends in their twenties, all of them from Seville (Luis Torrado, his brother Germán, and Juan Ignacio Rodríguez), decided to bet on a business that was then viewed with skepticism: provide access to that booming network in a barely connected country.
This group of entrepreneurs did not start from scratch; They had previous experience in a small joint computer repair workshop, called ‘ADN’ (from ‘Applications, Developments and Nodes’). Ok, it is true that the experience had not been very profitable (they had to ask for credits and in the end they decided close when thieves stole “every last screw”), but it was experience, in any case.
So they decided to launch into the ISP market by founding ‘Arrakis’. Why that name? Easy, because Germán was reading at that time a novel about a planet that, although endowed with few resources, contained the spice that gave access to knowledge of the future. The name of the novel was, of course, ‘Dune’ and ‘Arrakis’, the name of the planet in question.
Germán himself was also the one who designed the company’s website, as well as (using Photoshop and Corel Draw) its logo.
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Disembarking at the market
We are talking about a time when, to connect to the Internet, you had to pay separately for the telephone call (often interprovincial) to the provider, and for the service of the provider itself, which was the one who provided access to the global Internet. In short, being an ‘internet’ was a luxury.
But a few months earlier, Telefónica had launched Infovía, a company that provided ISPs with telephone access infrastructure at local call prices, and in just two years the number of ISPs would multiply to more than 600 (Spain became the country with the most national Internet access providers in the world).
Despite all this competition, Arrakis managed to break into this market (in January 1996) by offering competitive prices, quality services and technologies such as satellite connection, which led to exponential growth.
They knew that having many customers (that is, taking advantage of economies of scale) was the key to the company’s sustainability… and they achieved it: in just three years, Arrakis became the leader of the Spanish ISP marketwith more than 60,000 users (more than 15% of the current market) and generating great income.
For many, The key to its success lay in simplifying the registration procedures of its users, who went from waiting for the provider to send them the contract by post, filling it out, signing it and sending it in the same way to being able to register on the fly, through a phone call or chat.
They only asked for your name and payment method, and they immediately gave you access to the service and a week’s time to pay. They were told that it was going to be their ruin because the system would generate a lot of non-payment, but the level of delinquency never exceeded 2%.
Success and error, all in one: the sale to British Telecom
This success did not go unnoticed by large telecommunications corporations: in 1999after a failed sale attempt to Telefónica, Arrakis was acquired (after intense negotiations and speculation) by British Telecomfor an amount that was around the current 13 million euros.
This movement marked the end of an era for small ISP businesses in Spain, which had begun to succumb to the pressure and offers of multinationals
And then the conflicts began: Luis Torrado, who had been appointed general director after the sale, He was fired along with the other founders just five months lateramid internal controversies and power disputes within BT…
…which led to a series of legal claims by Torrado, which claimed 2.4 million euros from BT for discrepancies related to the sales agreement (evaluation of the company’s value) and his subsequent dismissal (failure to comply with the agreed terms). This legal conflict culminated with an arbitration award that favored the British multinational.
a quarter of a century later
In retrospect, Arrakis symbolizes a time of transition in Internet access in Spainand his true legacy lies in his contribution to the development and democratization of the Internet in Spain.
Over time, British Telecom could not consolidate leadership of the market that he had acquired with a checkbook, and the founders of Arrakis ended up returning to the technology sector founding Mentat Consultores, a telecommunications and Internet consulting firm.
As a curiosity, The name of the new company came back from the Dune novel: ‘mentat’ are a type of characters, humans specially trained to perform complex calculation and analysis functions, which the great noble houses used to replace the prohibited artificial intelligence.
Image | Marcos Merino through AI + Arrakis Logo
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