Falling from the sky: How hubris brought down Kogan Mobile



blog Whose fault is the failure of Kogan Mobile, just nine months after it launched? Who should take responsibility for the fact that 120,000 Australians are about to have their prepaid mobile plans chopped off at the leg? Kogan itself? Its upstream partner ispONE? Telstra? Or should Kogan’s customers have expected all along that the offer the company took to the market was too good to be true? In this (subscriber only) piece for Delimiter 2.0, I argue every party to the process contributed to the fiasco. A sample paragraph from behind the paywall:

“There’s a famous photo of Ruslan Kogan in which the entrepreneur is wearing a black t-shirt with a quote from Ayn Rand’s famous novel The Fountainhead. The quote, from the book’s protagonist, states: “The question isn’t who is going to let me; it’s who is going to stop me.” Ultimately, the answer to the question of who was responsible for the Kogan Mobile fiasco which landed this month is clear: Everyone involved. It was the inherent flaws in each party’s character that brought the whole system down: They were each responsible for blocking their own success. And if that isn’t the definition of hubris, I don’t know what is.”

Kogan Mobile wasn’t the first retail telco to fail in Australia’s telecommunications sector. And it won’t be the last. But what I have been surprised by in this process is how quickly it all went down, and why nobody involved appears to have realised that the failure of the whole setup was inevitable.

Image credit: Kogan


  1. I don’t see why Kogan’s failure was inevitable. If the whole deal was done honorably end-to-end… e.g. Telstra’s contractual conditions had been clear and understood by ISP One, and likewise, ISP One’s contractual terms and conditions were clear to Kogan, and Kogan priced its product on a sustainbable profitable basis, there’s no reason why the downfall should have been inevitable.

    What I really want to know (and I hope this is shaken out at some point) is who did the dodgy with their contract; who broke their contract; who relied on ambiguous wording in their contract to apply draconian conditions later; who failed to read the contract thoroughly… etc.

    • Everyone honoured their contracts in the end, it seemed. No-one relied on anything untoward.

      When ispONE realised that they had made a mistake in offering such generous terms to Kogan and were losing money, they tried to stem the flow by cutting off the heaviest users who were losing them the most money – breaking their contract. Kogan won the court battle to stop this happening, and thus lost the war: Before the decision, ispONE said of the case “if we lose this, it could send the company under.” Everything you needed to know right there in that statement.

      Kogan was buying a service to which there was no alternative. There are no other Telstra wholesalers, and it seems Kogan didn’t like the offers on the table from Optus or Voda. So, failure of ispONE was the failure of Kogan Mobile because they had no contingency plans.

      • So in other words it’s actually ISP One’s fault for not understanding their underlying cost structure with Telstra sufficiently and/or making flawed assumptions about the usage patterns of Kogan’s customer base.

  2. Regarding the comment “It was the inherent flaws in each party’s character that brought the whole system down: They were each responsible for blocking their own success.” – I think Telstra would, overall, not consider the failure of Kogan to be the “blocking of success.”

    They’ve got heavy users who didn’t bring much money off their network. Those users will either go elsewhere, or come back to it’s resellers (Boost, Aldi) for no net loss – or even to Telstra, as higher-margin customers.

    It appears that after a fashion, ispONE had some success with escaping the loss-making Kogan by spinning-off iBoss International.

  3. I’d be note rested to know how Kogan’s pricing & features compared with international products. Were they similar, were they competitive? Or were they dramatically and substantially cheaper (per mb of download), suggesting they were truly unsustainable in any market, even those with the greatest competitive environment?

  4. If you are selling another companies product it is generally in your best interest to ensure the transactions are profitable for both of you. Particularly when there is no or very restrictive alternative supply. It behooves you more when the supplier doesn’t actually need a 3rd party to bring their product to market.

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