Francesco Caio experienced the highs and lows of the technology and telecommunications sector five years before everyone else. He ran Italy's first mobile-phone operator, Omnitel, in the mid-1990s. He became CEO of Olivetti in 1996 but resigned after three months over a disagreement with Carlo de Benedetti, the industrialist behind Olivetti, during a financial investigation of the company by Italian magistrates that was to become an all-too-familiar experience of telecom companies five years later. Since then, he's worked for the family-run household appliance maker Merloni Elettrodomestici, where he remains a nonexecutive director. In 2000 he founded Netscalibur, a telecom start-up that provides Internet protocol services to businesses throughout Europe, allowing them to save money by blending their computer and phone systems. Robin Moroney of The Wall Street Journal Europe talked with Mr. Caio about what a telecom start-up can hope for when the big names such as Cable & Wireless PLC are making big cuts, and what his experiences at companies as differently structured as Merloni and Motorola have taught him about effective corporate governance.

Q. How have the various crises among network companies affected your business?

A. In the late '90s the thinking was that you needed your own network to offer quality Internet protocol services to businesses. We've found they're separate. Huge investments in new networks are no guarantee of high-quality services to customers. We can't compete with the large telecom companies by building networks.

But we can compete by investing in skills and customer care offering innovative services on top of other companies' networks. And businesses need good services, not fiber. We're a telecom company without a telecom network. It's like a house. You have the plumbing, but you don't necessarily want the plumbers to do your interiors. We don't have to worry about the glut in fiber optic capacity: We're benefiting from it.

Q. How do people react to a start-up company like Netscalibur after the collapse in the telecom market?

A. Last year, businesses were skeptical about buying services from small start-ups in telecommunications. It was very difficult. Businesses wanted the reassurance of big brand names. Attitudes have changed a lot over the past few months due to the collapse of KPNQwest and what happened at companies like WorldCom or Global Crossing.

Now people are paying more attention to the product itself and the quality and financial viability of the company they want to hire. And with no debt, good services and profitable growth we have a very real chance.

You've said before that you'd like to see a model of corporate governance that would combine Europe's family businesses with the Anglo-American model of ownership by stockholders and run by a board. Has any of that changed in light of the recent scandals?

Recent developments have reinforced my belief in the need for combining aspects of both models. I think capitalism is always changing and adapting and that, as capitalists, we should welcome the opportunity to examine and assess.

Q. What do you think boards need to do to ensure they minimize the risk of fraud?

A. I think you need three things to effectively monitor and support the CEO in a board. First, board members should have an in-depth understanding of the business. ...Second, a set of structured processes that mean board members get to know the management team to guarantee fair, merit-based leadership selection. You'll always have crooks, but you need a way to find them by encouraging strong business ethics and by making the company transparent to the board. That also allows you to promote people to key leadership positions who you know are going to be good whilst making sure that nobody becomes essential to the future of the corporation.

For instance, when Motorola's [Chief Operating Officer] Ed Breen accepted Tyco's offer to become their chairman and CEO, the board coped with his resignation very rapidly because of a program we'd developed some years before ensuring we knew exactly who would be available for these positions and what they were like.

And lastly, a shareholding structure that balances committed long-term shareholders -- typically the founder or his or her family -- and more financially orientated institutions.

With family companies you normally find a much-needed long-term dedication to the industry, to relevant cultural values as well as the kind of knowledge of the industry that comes from involvement with it for a number of years.

These characteristics, along with professional CEOs, offer a powerful combination capable of delivering growth and superior returns for all shareholders. I was the first nonfamily member to become CEO at Merloni. They taught me how to be successful and innovative as a business whilst focusing on the long term.

Q. You've associated family-run businesses with innovation in the past. What's the connection?

A. Because they have a view to the long term. Merloni makes products that I previously knew little about and that I associated with low growth and low innovation (domestic appliances). But this is a company which wants to stay ahead in the long-term. Although this family has been in the industry for a long time they are very open to new ideas. It was a fertile ground to apply ideas that I brought from the telecom sector, like linking washing machines to the Internet. I have learned there are no boring sectors, only boring companies.