FROM THE INDUSTRY
What is it that sets Rincon apart? Instead of just brokering hardware equipment, we created and designed programmes where our customers, the carriers, can use their surplus assets as currency to trade for or buy the assets they need. All these operators are huge multinationals; no matter how tight their procurement process is, they’re going to spill something. They’re going to have some over buys and some incorrect buys, given the scale of the companies. We help them develop a programmatic approach to their surplus assets, sell them off, and then use the proceeds from that sale to help them buy what they need. Or to repurpose them for internal use and drive down their CapEx. Traditionally, as a broker, you would be trying to buy that surplus asset for as little as possible, because you want to make money and you also take a lot of risk when you buy these assets because you’re going to inventory them for a while, and the value might go up or down. Instead of being on the other side of the table from the carrier where we’re trying to buy it for as little as possible, if we brought these assets in as a consignment programme and did a revenue split, then our goals are aligned. We’re releasing assets into the market in a measured way. Our approach considers the supply- demand dynamics of the secondary market at specific points in time, as well as proprietary pricing algorithms in determining price. It’s an approach designed to maximise the absolute return versus the traditional brokerage approach that is driven toward velocity, and a return of versus on capital.
Fostering a sense of trust between you and the customer. We wanted to demonstrate that we’re best in class at how to move these assets. It was also an upgrowth of our skillset. Mike had the salesmanship and the product knowledge, I had the inventory management, financial acumen, the marketing piece. We dovetailed together nicely. Great business model. What was your mission statement? By 2003 the internet was reaching the point where you could see it was going to help people. Building telecom networks was going to be a net positive for society; the ability to communicate was exploding as was access to more online information. Our bigger, meta idea was to help accelerate the building of telecom networks by reducing the cost. If carriers could buy surplus or used equipment, reducing their CapEx, they’ll be able to stretch that CapEx and build more networks faster. You were very much ahead of your time. Nobody was talking about sustainability at that point. It was maybe not being broadly talked about, but we were in Santa Barbara and environmental consciousness is just a part of that community. The very first Earth Day was held there; it’s often thought of as the birthplace of environmentalism in
the US. This is likely an outgrowth of the geography of the place, with the ocean on one side and the mountains on the other side. The residents appreciate the natural beauty and are actively engaged in it. Our whole approach from the very beginning was about creating a business model that saves your customers money and helps the environment, making things better for the next generation. How has the industry changed over the years? Firstly, increasing pressure on capital and operating budgets. Operators/ carriers have to do more, with less. This is fueling acceptance of secondary market hardware, also known as green market hardware. In an environment of shrinking budgets, the price points are just too compelling to dismiss. Secondly, demand for sustainable business practices. In the States, because of the ESG movement, there is more interest in sustainability, but there’s also backlash against ESG where maybe it’s overstepped in certain areas. So currently, we are in a bit more of a ‘carrot’ driven approach to encouraging change in the US. The European market however has leaned into sustainability aggressively with new regulations and anti-greenwashing initiatives, that are a bit more ‘stick.’ How has your business model changed? One is an increasingly broader scope of work, and secondly, how we execute that work is driven by circular economy thinking and metrics. There are a lot of brokers in the space. There are
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Volume 46 No.3 September 2024
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