Elite Business July 2018 by Elite Business Magazine

XERO TO HERO

WATCH OUT VCs

YUMPINGO

FLASHY FASHION

Gary Turner has changed accounting with Xero UK

772050

723000

FROM SKYPE TO STARSHIP 9

ISSUE 47

JULY 18 Â£4.50 07

This startup is challenging the likes of Yelp

AHTI HEINLA IS PROOF THAT ENTREPRENEURIAL LIGHTNING CAN STRIKE TWICE

These startups are breaking free from traditional funding rounds

Why fashion tech innovations are so in right now

Elevate Business Performance and Better Manage Spend with Automation

Expense, Travel, and Invoice Management for Small and Medium-Sized Businesses AUTOMATED SOLUTIONS INCREASE VISIBILITY, EMPLOYEE SATISFACTION AND SAVINGS

Small and medium-sized businesses are increasingly embracing the cloud. This trend is reflected in the way businesses are adopting expense, travel, and invoice management solutions. Of organisations surveyed, over 76% use cloud-based travel and expense tools, and 82% use cloud-based invoice tools. Mobile tools are also an important feature to organisations. Of organisations using automated solutions, more than 58% reported that employees access the solution via mobile devices (i.e. tablets and smartphones). This trend will grow as the workforce continues to decentralise. There is no denying the advantages of implementing an automated expense, travel, and invoice management solution. The benefits to users are numerous and impactful. Automation helps firms overcome challenges and achieve positive business outcomes in a variety of ways.

Better data visibility: Organisations with automated solutions are better able to track cashflow over time,

allowing them to make decisions that directly impact their bottom line. Even as the number of expense reports grows, companies have more time to analyse data because less time is spent processing expenses. One SAP® Concur® customer stated, “We are now able to better understand the total return on investment of working with a client, which helps us to manage workflow and gives us the ability to be more selective on the projects we work on.” —Director of Company Operations, Small Financial Services Firm.

Integration and employee satisfaction: One of the

most beneficial features of an expense, travel, and invoice management solution is its ability to integrate with other software. Of firms surveyed, 73% integrated their expense, travel, and/or invoice solutions in some combination. Integration helps to unlock the full benefits of automation by allowing firms to get a clearer picture of the expense narrative. According to a Travel & Expense manager at a large software firm using SAP Concur solutions, “The benefit really is the integration and how seamless it is. When you book a flight, it creates the report on the expense side. It’s one experience for [users], it’s one tool they are familiar with.”

This type of integration is a key driver of employee satisfaction as it facilities faster expense processing and reimbursements. The same T&E manager stated, “Travellers love the mobile app. Take a pic of the receipt and upload on the go. Automatically, the time to do expense reports is cut in half.” Another SAP Concur customer stated, “Employees are happier now; with Concur we went from 3 to 4 weeks to 3 days to get people paid.” By increasing employee satisfaction, organisations can also boost productivity and compliance.

Improved compliance: Organisations with an automated expense, travel, and invoice management solution find that employees are less likely to submit out-of-policy expenses. Additionally, finance and accounting managers are better able to flag out-of-policy expenses and prepare for audits. “Using the system now allows us to pick up on lack of knowledge of certain policies. Now we have a better understanding of what is acceptable and what’s not.” —Fleet Manager, Large Manufacturing/Construction Firm “When preparing for an audit, you have the peace of mind and comfort level that you’ll find the documents that you need and not have to worry that there is a handful that are not filed or misfiled. No more egg on my face when dealing with auditors” –Accounts Payable Manager, Large Technology Solutions Provider

Scalability: The time savings provided by an automated

expense, travel, and invoice management solution enable organizations to grow while maintaining the size of their accounting teams. A key decision maker within a large technology firm lauded the benefits of scalability afforded by SAP Concur: “As we continued to grow, the system just absorbed new employees. The accounting team has remained stable as the company has grown over the last 3 years.”

Time and cost savings: Saving time and money is one of

the most valuable benefits of an automated expense, travel, and invoice management solution. Finance and accounting teams see an average time savings of 15% after adopting

an automated solution. On average, organisations save nearly £22,000 per year after implementation. Firms using Concur Expense reported average savings of £29,000 per year. A Fleet Manager of a National manufacturing firm in Australia highlighted the company’s savings on travel with SAP Concur; “just on airlines we’re saving about [GP] £18K/ month compared to previously.” Business with an automated invoice management solution saw similar time and cost savings. The average finance or accounting team reduced time spent on invoice management by 16%. This translates to about 40 hours per week for a team of 5 employees, and average annual savings of over £25,000. Firms using Concur® Invoice reported savings of nearly £29,000 annually. This is just the tip of the iceberg, one firm stated: “I have saved over 500 hours/year of my own time… we’re talking north of £52K per year and that doesn’t include anyone else. Because we outsource accounting, there is a very tangible cost to adding employees… we are easily saving another £30-£45K a year on administrative cost.” —Director of Management Operations, Small Financial Services Firm

KEY TRENDS DRIVING THE NEED FOR BETTER EXPENSE, TRAVEL, AND INVOICE MANAGEMENT Mobile workforce: 80% of firms have employees that

travel at least 4 to 5 days per month. As a result, employees and managers need the ability to submit and approve expense reports from anywhere.

Processing invoices from multiple suppliers:

The typical firm is working with 190 suppliers, and processingbover 156 invoices per month. This amounts to 28 invoicesbfor each Accounts Payable employee to manage eachbmonth. On average, finance and accounting staff spend 14% of their time each week processing invoices—more than 5 hours per employee per week. An automated solution allows them to significantly reduce time spent processing invoices, so they can focus on other priorities.

Business objectives and pressures: The top issues

firms are grappling with include; pressure to reduce pricing, improve productivity, support geographically dispersed workforces, and manage restricted cashflow. Sixty-four percent of businesses expressed that reducing operating expenses is a strategically important goal When considering an automated expense, travel, and invoice management solution, key decision makers should focus on the following features:

• Broad integration capabilities—An integrated solution can improve efficiency, bring down costs, and boost employee satisfaction in the long-term. • Accessible via mobile devices—Automatically populating expense reports, allowing mobile receipt capture, and enabling managers to approve invoices while on the road saves time and boosts employee satisfaction. • Strong customer support—A firm that places a premium on the customer relationship will continuously seek to

improve its solutions.

Benefits Across Industries

Summary of top benefits and annual savings by solution type and industry Finance T&E: Better visibility/analytic capabilities; Avg. savings/firm = £20K Invoicing: Cost savings through improved tracking; Avg. savings/firm = £20.7K

Manufacturing T&E: Better visibility/analytic capabilities; Avg. savings/firm = £22K Invoicing: Better visibility/analytic capabilities; Avg. savings/firm = £22K

Professional Services T&E: Better visibility/analytics; Avg. savings/firm = £25K Invoicing: Decrease of inaccurate entries; Avg. savings/firm = £29K

Retail T&E: Employee satisfaction/decreased inaccuracies; Avg. savings/firm = £24K Invoicing: Improved compliance/savings from better tracking; Avg. savings/firm = £24K

Street smart THE ELITE Interview

Ahti Heinla has already revolutionised the communication industry with Skype. Now he plans to disrupt deliveries too with Starship Technologies 6

ELITEBUSINESSMAGAZINE.CO.UK JULY 2018

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issue 47 JULY 18

REGULARS 9 12 19 86

From the editor Upfront The big idea The crunch

columns 21 Jacqueline Gold 31 Anil Stocker 32 Gary Stewart

A life-long tech aficionado, Gary Stewart was the perfect boss of Xero UK

review market with its clever tech

Startups have had enough of exhausting funding rounds

What happens when a founder doesnâ&#x20AC;&#x2122;t want to be a CEO?

Xero to hero

Food for thought breaking the VC Yumpingo is sinking cycle its teeth into the food

Countering Crisis

Do you have what it takes to ride out a storm?

From the ground up

Minority report Predictive tech startups can define the future but face many ethical dilemmas

When it comes to the next big tech thing, stylish fashion tech is it

How the fall of Theranos stopped startups fronm lying to people

Bursting at the seams

End of number fudging

JULY 2018 ELITEBUSINESSMAGAZINE.CO.UK

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EDITORIAL Zen Terrelonge – Acting Editor Eric Johansson - Feature Writer Varsha Saraogi - Junior Feature Writer Angus Shaw – Editorial Intern Yoana Cholteeva – Editorial Intern editorial@cemedia.co.uk DESIGN/PRODUCTION Darren Marriott - Head Designer darren.marriott@cemedia.co.uk Dan Humphris – Designer dan.humphris@cemedia.co.uk Lizzie Thurgood - Design Intern lizzie.thurgood@cemedia.co.uk Dan Lecount – Web Development Manager dan@cemedia.co.uk SALES Gemma Campion – Head of Sales & Marketing gemma.campion@cemedia.co.uk Richard Smith - Senior Account Manager richard.smith@cemedia.co.uk Taylor Blayney – Account Executive taylor.blayney@cemedia.co.uk Ore Akinniranye - Marketing Assistant ore@cemedia.co.uk CIRCULATION Amy Coleman - Data Compliance Assistant amy.coleman@cemedia.co.uk ACCOUNTS Sally Stoker – Finance Manager sally.stoker@cemedia.co.uk Colin Munday – Management Accountant colin.munday@cemedia.co.uk DIRECTOR Scott English – Managing Director scott.english@cemedia.co.uk Circulation/subscription

UK £18, Europe £38, Rest of World £60 Elite Business Magazine is published four times a year by Channel Edge Media, 1st Floor, Regency House, 16 Victoria Road, Chelmsford, CM1 1NZ Copyright 2018. All rights reserved No part of Elite Business may be reproduced, stored in a retrieval system or transmitted in any form or by any means, without the prior written consent of the editor. Elite Business magazine will make every effort to return picture material, but this is at the owner’s risk. Due to the nature of the printing process, images can be subject to a variation of up to 15%, therefore Channel Edge Media, cannot be held responsible for such variation.

In it to win it I

hope you all enjoy this issue – it’s a whopper and the team really pulled together to complete it. Of course, that’s business: uniting as one. Gary Goodman, founder of Yumpingo, reminded me of this with his dreams of changing the dining industry as we know it. And this wouldn’t have been possible without the backing of the power players supporting his vision – or wine. Then there’s Gary Turner, MD of Xero UK. People thought him “insane” when he left Microsoft to front the digital accountancy business, so he found a group of “freaks” to embrace the company, which helped give it a growth injection.

However, growth takes many founders into unchartered territory and that means bringing in someone else to steer the ship and lead the company onwards – we caught up with entrepreneurs who did just that, abdicating the throne, as it were. Interestingly, our cover star, Ahti Heinla, co-founder and CTO of Starship Technologies, has himself passed over the CEO title to allow his robot-based delivery startup to evolve even further. With $42.2m of investment it’s already off to a solid start but Heinla clearly knows the value of people. Zen Terrelonge - Acting Editor zen.terrelonge@cemedia.co.uk

contributors

Josh Russell Our old editor made a guest visit in this issue and showed us the chops of a true Elite Business veteran by interviewing the founder of Starship Technologies.

Varsha Saraogi Our newest edition to the Elite Business team has dedicated considerable time this month at untangling how startups should manage crisis. And yes, she talks about Cambridge Analytica.

Emilie Sandy Not only has snappy snapper Sandy snapped pics of our cover star Ahti Heinla for this issue but she’s also taken time out of her busy schedule to photograph the co-founder of Xero UK.

Eric Johansson Having outdone his regular prolific self, our resident viking has penned profiles about Xero UK’s Gary Turner and about how the traditional VC funds are breaking. Check it out.

JULY 2018

From the editor.indd 1

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LEARNING TO LOVE DIGITAL TRANSFORMATION There was a time when only the largest organisations with the deepest pockets could invest in the IT necessary to drive efficiency and innovation. Thankfully those days are gone; cloud technology has made the same IT firepower that was once the preserve of only the wealthiest and biggest corporations available to SMEs. So, itâ&#x20AC;&#x2122;s no wonder so many SMEs are embracing the digital future and the amazing opportunities it brings.

Realise your digital potential A recent white paper by research firm IDC, The Road to the Digital Future of SMEs 1, involved a survey of 300 businesses and casts new light on the circumstances of British SMEs. But while there is much cause for celebration, there is still work to be done before all firms realise their digital potential. Perhaps most concerning was that 45% of SMEs view IT as a necessary cost rather than a driver of competitive advantage. The truth of the matter is very different, so letâ&#x20AC;&#x2122;s take a look at what digital transformation can achieve.

35%

of respondents agreed digital transformation was one of the best ways to improve business efficiency.

48%

of larger SMEs which viewed IT as an enabler of business efficiency also reported the highest growth numbers

Source: virginmediabusiness.co.uk/insights/transforming-business-whitepaper

Standing up to the competition

Getting connected

Digital transformation is a way to increase competitive advantage and that first-rate connectivity is key in a world shaped by cloud and wireless/mobile technologies. Paradoxically, at the same time, a lot of SMEs are held back by a lack of willingness and knowledge to invest in ICT to drive their digital transformation.”

Having a fast, reliable internet connection means you can be more open to new ideas and technology – it’s about being ready for the future. The IDC white paper says, “UK SMEs run the risk of not having the right ICT infrastructure or internet connectivity and therefore cannot take advantage of the opportunities in a data-driven digital world.

Clearly, leveraging digital technology provides a distinct competitive advantage to SMEs willing to make the investment to drive future growth.

45% put innovating products and services among their key challenges

“From Voice-over-IP (VoIP) to accessing the cloud, the benefits of flexible working, improving digital marketing and enhancing customer experience mean that reliable, high internet connection speed is a necessity for the future. IDC believes that it is important for SMEs to embrace an investment strategy to drive growth.”

A growth sector In other words, investment is necessary in order to win market share against larger organisations. To take advantage of transformative technology costs far less, thanks to the cloud and digitisation of telephony estates.

The big benefits of digital transformation

The customer is king

---------------------------------------------------------1. Improved customer experience

Digital transformation can improve customer experience. This could make a crucial difference to the 51% of SMEs that reported finding new customers was their biggest challenge. In fact, many SMEs feel their ability to provide excellent customer relations is a crucial advantage over larger organisations.

2. Reduced operating costs

So how can digital transformation help? In short, by giving customers what they want from a business’s online portal. That means a regularly updated website, customer support and social interaction. IDC concludes: “All SMEs (and small SMEs specifically) should focus on improving their customers’ digital experience. For example, if small businesses are difficult to find online they are limiting their audience and thus growth.” That sounds like sound advice.

7. Faster adaption to changing

3. Easier to acquire new customers 4. Find and retain the right staff skills with more success 5. More innovation in products and services 6. Increased ability to manage suppliers and partners regulations --------------------------------------------------------

Ready to see how digitally transformed you are? Visit virginmediabusiness.co.uk/DigitalSurvey

The investment rounds that rocked the startup community last quarter

SERIES

R E V OL U T

$250m

This digital bank is now valued at $1.7bn after it secured $250m in a series C funding round. Having more than 250,000 users under its belt, it plans to reach 100 million users in five years.

SERIES

CMR SURGICAL

$100m

With revenue of $4bn, surgical robot company, CMR Surgical is set to reach its goal of $20bn by 2025 after it raised $100m in a series B round. Its main focus will be the Versius system, made for complex laparoscopic surgery.

SERIES

CULT UR E T R IP

£80m

The millennial travel site has secured $103m to date after funding of $80m in a series B round. Now it plans to expand its reach to other languages and get more freelance writers from different countries on board.

SERIES

MONE Y FA R M

£40m

Having secured £40m in a series B funding round led by Allianz Asset Management, Moneyfarm, the digital wealth management company plans to launch more personlised solutions and expand its customer base.

IMMIGRANTS ARE MORE ENTREPRENEURIAL THAN BRITS IMMIGRANTS AND MINORITIES ARE MORE LIKELY TO LAUNCH AN EARLY-STAGE STARTUP THAN WHITE BRITS THERE’S NO DOUBT IMMIGRANTS contribute a lot to the British economy. In fact, it seems as if they are more likely to launch startups than born Brits. That’s according to researchers from Aston University that has looked at data from a survey of more than 12,600 adults across the UK. The Global Entrepreneurship Monitor report revealed that 12.9% of immigrants were likely to have engaged in the early stages of starting a business. That’s compared to 8.2% of Brits. Moreover, 14.5% of non-white Brits were likely to launch a startup compared to 7.9% for white Britons. Given the increasing numbers of immigrant entrepreneurs, this research definitely raises questions about the potential impact of the government’s crackdown on immigration and the consequences of Brexit. WORDS BY VARSHA SARAOGI

FINANCE COMPANIES FIGHT BACK AGAINST CYBER CRIME AS THE NUMBER OF CYBERCRIME VICTIMS INCREASE, SO DO SOME COMPANIES’ INVESTMENTS TO COUNTER IT IT’S NO SECRET THAT CYBERSECURITY is more essential now than ever. Businesses need to digitally protect their companies. But it seems not every business owner is taking the threat from laptop-wielding larcenists seriously. That’s according to a new report from Savoy Stewart, the property agency. Having surveyed 811 UK firms, the research found financial and insurance firms had increased their cybersecurity investments by 85% to roughly £17,900 in general between 2016 and 2017. On the other end of the spectrum, the entertainment industry had decreased its investment by 82% to £770 on average. With the number of hack attacks jumping each year, spending money to beef up your digital defences is a good investment for businesses.

ELITEBUSINESSMAGAZINE.CO.UK JULY 2018

WORDS BY VARSHA SARAOGI

Back behind the wheel After sparking a lawsuit between Uber and Waymo, Anthony Levandowski launches Kache.ai Anthony Levandwoski is back with a new autonomous vehicle startup. This may surprise some people as the entrepreneur played a key role when Uber and Waymo duked it out in the courts earlier this year. He was accused of having copied files from his time with Waymo that he then used to form his own self-driving car company Otto, which was later acquired by Uber. When the legal battles began, Levandowski was quickly sacked from Uber after failing to co-coperate with an internal investigation. While few outsiders would’ve predicted it at the time, it seems as if Levandowski can’t let go of the industry. Now he’s returned with a startup called Kache.ai. The name means truck in Chinese and is a new project seems to be about getting self-driving trucks on the road, according to TechCrunch, which broke the story. While few would’ve predicted Levandowski’s return so soon, one thing is clear: he’s coming back to market rife with competition. Not only are both his previous employers working in the market but so is basically every other tech titan in Silicon Valley. Only time will tell who’ll win the race.

July 14 Access MBA London Le Méridien 21 Piccadilly, Mayfair, London, W1J 0BH

August 2-3 Executive Presence for Women RADA Studios 16 Chenies Street London, WC1E 7EY

September 26 - 27 eCommerce Expo 2018 Hammersmith Road, Olympia London, W14 8UX

July 17 Green Finance Summit 2018 Guildhall, Gresham Street London, EC2V 7HH

August 21 Litmus Live 2018 155 Bishopsgate London, EC2M 3YD

September 28 Future of fintech County Hall, Belvedere Road, London SE1 7PB

A full event listing is available on our website.

Finding my virginity, Virgin Books, £9.99, Out now

ichard Branson needs no introduction. Ever since he first shot to fame and glory in the 1970s, the founder of the Virgin Group has been one of entrepreneurial Britain’s big movers and shakers. And in this sequel to his first autobiography Losing My Virginity he offers a rare insight into where he gets his ideas from. A lot of it stems from his willingness to leap on opportunities when faith presents them to him. Whether that means taking the time to talk with an old friend he met running in Central Park or listening to a CFO excitedly scribbling down the idea of the airline Virgin Blue on a beer mat, Branson continuously shows how taking the time for other people has seen him grow his riches. Budding entrepreneurs can also learn a thing or two from Branson’s optimism and faith in a better tomorrow. Not only has this motivated the direction of his businesses but also seen him try to prevent the war in Iraq and, when that failed, to set up The Elders, the group of influential world leaders working together for peace. His attitude also stands in stark contrast to that of Donald Trump. In the book, Branson describes how he met the then-future president and his disappointment when he learned how vindictive and petty Trump was. Finding My Virginity is packed with important lessons for budding entrepreneurs. A must read. EJ JULY 2018 ELITEBUSINESSMAGAZINE.CO.UK

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Successful crowdfunding campaigns that have closed in the last quarter

FREETRADE

£2.99M 14.25% EQUITY

This startup seeks to be a thorn in the side of traditional stockbroking with its zero-fee and jargonfree app. And having doubled its previous £1.1m crowdfund, thanks to its 2,063 investors, it’s off to an amazing start.

UK TECH UNICORNS GALLOP PAST EUROPEAN COUNTERPARTS

COTSWOLDS DISTILLERY

£2.83M 8.62% EQUITY

Guzzling capital from past crowdfunding efforts gave Cotswolds Distillery its legs. And after this successful round, the company seeks to build a brand visitor centre with its new pool of 1,169 backers.

AMID BREXIT UNCERTAINTY, BILLION-DOLLAR TECH COMPANIES ARE THE UK’S KNIGHTS IN SHINING ARMOUR BRITAIN’S BEST BUSINESSES MUST SHINE more than ever to wade through Brexit tides. And given their domination of Europe, tech unicorns are blowing the competition out the water. Indeed, six billion-dollar companies have been added to the UK’s roster in the last 12 months alone, including Revolut, the digital banking startup and Blue Prism, the robotic software corporation. The six firms not only represent an impressive value of $12.4bn – greater than every fellow European market – but at a total

EAST LONDON LIQUOR COMPANY

£1.33M 4.76% EQUITY Its classy branding is reminiscent of the historically affluent East India Company. Which is fitting, given this startup has historical goals as the first distillery in 100 years to bring spirit production back to the East End.

WHAT’S THE WORD

VPS GROUP

£851,770

WORDS BY ANGUS SHAW

12.43% EQUITY Since 2004, this startup has been kitting out vehicles for automotive firms. Always seeking growth, it now has 228 backers to expand its number plate division with a new sales director.

of 26 see the largest number of unicorns in the continent since the millennium began, according to GP Bullhound, the investment banking company. Additionally, Blighty’s billion-dollar businesses now comprise $64bn of Europe’s $240bn tech ecosystem – that’s a 26.67% share, which is more than continental neighbours. While ripping off the Brexit bandage is expected to see hardships for Britain, there’s no denying that the tech industry should be given the support necessary to thrive and remain attractive to investors globally.

ELITEBUSINESSMAGAZINE.CO.UK JULY 2018

F**K BUSINESS Boris Johnson, the foreign secretary, laid his cards on the table to a probing Belgian ambassador about, you guessed it, business after Brexit.

A HARLEY-DAVIDSON SHOULD NEVER BE BUILT IN ANOTHER COUNTRY –

NEVER!

WE NEED TO MAKE DIFFICULT DECISIONS ABOUT OUR UNDERPERFORMING LEGACY STORES

Trump lamented about the motorcycle giant planning to transfer manufacturing for EU markets outside the US in a bid to avoid potential trade war tariffs.

Alex Williamson, CEO of House of Fraser, personified the decay of high street retail when talking about the company’s closure of half its stores.

Above the law?

Uber had its brakes slammed on last September after Transport for London (TfL) revoked its five-year licence for failure to report crime and to properly background check its drivers. For a moment it seemed the company may never see the Big Smoke’s roads again. However, in June the fog lifted and, after proving “wholesale change”, Westminster Magistrates Court granted the ride-sharing titan a 15-month probation. But it’s not out of the woods yet. Given the courts, TfL and Sadiq Khan, mayor of London, will monitor the service like hawks, the future of the capital’s popular on-demand transporter hangs in the balance. It’s easy to spot its ability to change an entire industry given the reaction it’s had from taxi drivers over the years and how the term Uberisation was coined after its revolutionary practice of defying traditional service barriers with tech. But even its dominance doesn’t make it invincible. The ruling sets a new precedent for what is expected of London’s cab drivers and SMEs alike. So, what lessons are there for the future? WORDS BY Angus Shaw

Lara Keenan partner, Globalaw

Michael Hibberd senior solicitor, Clarks Legal

Spencer Crawley co-founder, firstminute capital

Stephen Sacks founder, Funding Advisory

The initial revocation of the licence and the subsequent appeal are a stark reminder for SMEs that they are never above the law. The ruling also demonstrates that how SMEs act, or perhaps even appear to act, may also cost them dearly. SMEs can have a reputation for being quite casual, which for those that operate within the legal or regulatory landscapes, can come across as arrogant or dismissive of rules.

While Uber will be relieved by the outcome, the news is clearly a setback for other taxi companies, many of whom are either self-employed or operate through SMEs. London has already seen various protests by London black cab drivers – including in January 2018 following Uber being able to continue operating pending their appeal being heard. Many SMEs simply cannot match the convenience and fare rates of Uber.

Draconian regulations often hit small and innovative companies, who don’t have the financial firepower to navigate them in a commercially viable way, as opposed to impeding the large incumbents. Equally important, big tech has to play its part by engaging proactively with society. The Uber episode shows that companies, regardless of size, will face robust resistance unless they engage with and listen to regulators, unions and local government.

Uber has been unfairly victimised by the black cab industry. The fact is the feedback system makes it impossible for repeat offenders to operate as Uber drivers. I think Uber has democratised the cab industry, bringing down prices and increasing availability. The licensing authorities should welcome Uber and its competitors as I believe the SME community does already. After all, SMEs hate regulation and Uber drivers themselves are micro SMEs.

JULY 2018 ELITEBUSINESSMAGAZINE.CO.UK

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ME:NOW

Who, what and when? me:now provides time-based advertising to small businesses BY ZEN TERRELONGE

o longer are newspaper adverts, billboards or TV commercials the most desirable methods of exposure for a business as social media, apps and the web have all become the norm. So the big idea for me:now came when CEO and co-founder Barry Thompson was sitting in an almost empty central London restaurant at lunchtime. Upon asking how the venue advertised that it had space, the owner said the A-frame board outside did the job. That encounter convinced Thompson and his partners the restaurant wouldn’t be the only business relying on “ineffectual” approaches and me:now, a marketplace that allows SMEs to advertise to consumers in need of their services in real-time, was developed. It’s that time element that assures Thompson the company doesn’t have any direct competition because the power to say specifically when a business is available is incredibly useful in a society that’s forever moving and time-poor.

For example, a consumer in need can search a list of businesses based on time availability via the me:now website and apps rather than ringing around. This also increases efficiency for the companies who won’t need to devote so much time to answering such enquiries over the phone or via email. It’s not just builders or hairdressers that users should expect to find on the platform either as me:now covers 312 industries in a bid to appeal to the masses and their needs. And although me:now only launched in February 2018, it was over three years in the making with two years alone spent exploring business and customer needs. Looking ahead to the future, Thompson predicts maintaining growth may be tricky but he’s ambitious. Shedding light on the road ahead, Thompson said: “We want to change the way people advertise, especially small businesses – many of whom don’t take card payments and still use paper diaries to manage their appointments. We want to help them become digital. Our plan is to be in all English-speaking countries [within] three years. It’s going to be very interesting when [we] localise me:now for France, for Germany, for South America – that’s when the fun will really start.”

JULY 2018 ELITEBUSINESSMAGAZINE.CO.UK

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Jacqueline gold ceo, ann summers

Banish the boys’ club

Despite the progress for women in business that appears to have been made, the Hampton-Alexander Review has shone a light on a truly ugly side of company leadership

ommissioned by the government, the HamptonAlexander Review aims to increase opportunities for women to secure senior posts at work. It said “there should be an expectation in business that the selection process is based entirely on merit”. I wholeheartedly agree – we should always employ the best person for the job. FTSE 100 companies look set to achieve the review’s target of women accounting for 33% of boards by 2020 but FTSE 350 companies are off track. Besides that, the fact is no woman wants to be there to make up the numbers. It’s really sad but some leaders just fail to see the genuine benefit and talent women can bring. Moreover, they have awfully outdated views. It doesn’t make any business sense when there is compelling evidence that shows how mixed gender boards outperform male-only ones. For more women to take up their rightful place at the top, we must remove the barriers around flexible working and childcare to enable women with families to balance work and home life. We also need women at the top to demonstrate it’s okay to have children alongside a career and we need more men to take up shared parental leave, which currently only 2% do. But frankly it’s a catch 22 – there just aren’t enough female role models and that’s because women aren’t always receiving the support or progression they deserve. I was flabbergasted when I read some of the research from the review. It revealed a list of reasons FTSE 350 companies don’t have women on boards, one of which said: “I don’t think women fit comfortably into the board environment.”

My reply would be: “I don’t think you fit comfortably in a boardroom with women.” That male insecurity is transparent for all to see – we need to eliminate this boys’ club culture. It’s so frustrating that we’re still having the same conversation around gender equality, as I had when I started in business 37 years ago. However, if women continue to support each other in their progress and reviews like this continue to shine a light on unacceptable behaviour, then I am confident we will see more women take up their rightful seat at the table in the future.

JULY 2018 ELITEBUSINESSMAGAZINE.CO.UK

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AS A LIFETIME TECHNOLOGY ENTHUSIAST AND CHAMPION OF SMES, GARY TURNER WAS THE PERFECT PICK TO SPEARHEAD THE GROWTH OF XERO UK. HAVING SCALED THE BUSINESS TO BECOMING THE MARKET LEADER, HE’S NOW APPLYING A HEALTHY DOSE OF PARANOIA TO AVOID BEING OVERTAKEN BY NEW STARTUPS

TO HERO PEOPLE THOUGHT GARY TURNER WAS CRAZY. They kind of had a point. After all, not many people would’ve swapped a high-paying job at Microsoft for an uncertain future with a small accountancy tech startup from New Zealand few had heard of. But that wasn’t how Turner reacted when Xero reached out to him on LinkedIn in 2008, asking for help bringing the company to the UK and Europe. “I was like holy shit,” he remembers. “This was an opportunity to be a part of the next generation of software businesses.” That’s how he became the co-founder and managing director of Xero UK. While his decision to join the startup shocked friends and colleagues, a quick glance at his CV would’ve liberated them of any illusions the choice to opt out of the cushy pay cheque came out of the blue. Having spent two decades spearheading tech firms supporting SMEs in his professional life and

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blogging about the future of innovation at night, Turner couldn’t let this chance slip through his fingers. “It was so obvious that not only was that the right opportunity for me but I was the right guy for it,” he says. In the ten years since, he’s been proved right by scaling Xero UK into becoming the market leader in Britain and has helped thousands of small firms control their budget. And there’s no doubt in his mind that he made the right choice to join the startup. “I have the best job in the world,” he says. But his dedication to alleviate SMEs of their daily woes wasn’t just something picked up throughout his career. No, it started much earlier than that. “I grew up in the outskirts of Glasgow,” he says. “And I only recently realised the importance my teenage years had on my career choice.” At the time,Turner’s father ran his own small business and his mother did the bookkeeping. If the nightly dinner conversations

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about cashflow would’ve been the only influences at the time, Turner might’ve ended up as an accountant. However, that combined with his “utter passion for technology” set him upon his professional path from an early age. “I don’t think I could ever be in any other industry than the one I’m in because of that original experience,” he says. And growing up, Turner had plenty of opportunities to explore his interest in computers. From the ZX Spectrum to the Commodore 64, developers were increasingly flooding the market with hardware. And Turner still remembers when his parents bought him a BBC Micro computer. “It was on the 24th of January 1984,” he says. “That’s how impactful it was. It was like a huge, huge thing for me.” Armed with this technological marvel of the time and the BBC’s televised tutorials, he quickly developed a flair for making zeros and ones dance to his tune. “I was the kind of kid who the computing class teacher would come to for advice,” Turner laughs.

He even admits to having indulged in some low-level recreational hacking. Together with a friend, Turner wrote a programme they put on a disc. If it was put into a computer it would secretly copy every programme from the machine. They then took the disc to computer stores and asked if they could check it for corruption. Then, when the disc was checked on the store’s computers, the routine was activated without the owner being any wiser. While they didn’t make a profit from it and really had no use for the mostly office-based applications they downloaded, they were happy with proving their chops. “So I might have invented digital shoplifting,” he laughs. Given his aptitude for programming, it seemed only logical that he’d sign up to get a degree in computer science. “But after five months I concluded that it wasn’t the right path for me, so I dropped out,” Turner says. While kids in computer science classes today may have a host of options available to them – from interface design to product marketing – those options didn’t exist when Turner was young. Instead, the teenage dropout convinced a computer retail store to hire him while he figured out what to do. “I didn’t enjoy it but I was at least earning some money,” Turner says. Eventually he managed to get a job as a junior IT consultant at a firm servicing SMEs, a position he held until the mid-1990s. By then he’d started hearing about Pegasus Software, a PC-based accounting company, and how the firm was breaking new grounds in tech. And the news couldn’t have reached

I QUIT MY JOB AT MICROSOFT AND EVERYBODY THOUGHT I WAS INSANE BUT IT FELT LIKE I’D WON THE FIRST PRIZE IN A JOB COMPETITION

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SO I MIGHT HAVE INVENTED DIGITAL SHOPLIFTING his ears at a better time. “I’d been swimming around in the world of small business technology for five years and I was ready for the next challenge,” Turner says. So when a vacancy came up to become a regional account manager at the firm, he pounced on the opportunity. From this moment on, Turner had a front row seat to how tech changed the world around the turn of the millennium. Suddenly every business required an internet connection, an email address and a webpage. As the masterminds in Silicon Valley churned out innovations transforming the world of business, the leadership of Pegasus Software realised the firm needed to evolve too. And Turner, with his combination of tech and management skills, was just the person to do it. So in 2003 he found himself spearheading the evolution of Pegasus Software as its managing director and he loved it. “I think that I had finally found my calling at the age of 33,” Turner says. At the time he’d also been running his own tech blog for two years. “I was probably one of the first 50 people to have a blog in the UK where I would muse in the evenings about what the internet was and how the world of business could harness the web,” he says. The inspiration to do so came from having read the book The Cluetrain Manifesto where the four authors outlined how digital innovations would transform businesses. Through the blog, increasingly Turner found himself engaging in conversations with other tech aficionados that he describes as “quite avant-garde”. All their talks pointed in the same direction. “The game was up for traditional software businesses,” he says. Sadly, he became convinced this also applied to his current employer. This realisation that Pegasus Software wasn’t the right place for him to fulfil his ambition lead to Turner deciding to take a sabbatical from his role in 2007. Hearing that he was “slobbing around”, it didn’t take long before Microsoft came knocking, asking for help launching its business software Microsoft Dynamics. “It had always been on my bucket list to work for Microsoft,” he says. But having been flattered into signing the dotted line, a year later he again found himself wondering if the next level of innovation would come from the tech titan. And that’s when Xero reached out to him. “I quit my job at Microsoft and everybody thought I was insane but it felt like I’d won the first prize in a job competition,” he says. It didn’t hurt that he found a kindred spirit in Rodney Drury, founder of Xero. “We share the same fluency and passion about technology,” he says. Not only did this mean the founder was happy to sign off on Turner joining the business but the pair also ended up running the podcast The Rod & Gary Show together. “It was basically Rod and I trying to see who was the smartest when it came to blockchain or some other emerging new technology,” he smiles. Backed by the founder, Turner set out to grow Xero UK into the

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powerhouse that it is today. “I wouldn’t have left Microsoft if I didn’t think there would be a successful business at the end of it,” he says. But at the time few would’ve thought the venture would become a triumph with its handful of employees and no office. “I remember feeling quite frustrated that people couldn’t see we were going to be an incredibly successful business,” he says. Fuelled by this frustration and his belief in Xero UK, Turner set out to prove the sceptics wrong by tackling the challenge of growing the company’s client base. “We had to be very focused because we didn’t have a lot of money,” he says. So instead of wasting cash on lavish marketing campaigns, the team tried to find early adopters among accountants who could bring their message to SMEs. In order to find them, Turner’s team made a point of attending as many conferences as possible, or “pick-up joints for accountants” as he calls them, to “find the five freaks and weirdos that understood what we were talking about.” By following this approach, Xero UK rapidly grew the number of customers and by 2012 the company set up its first office in Milton Keynes. “I literally got out Google Maps and dropped a pin where the eight of us all lived,” he laughs. This office was later joined by one in London as the number of employees ballooned to 260. And it won’t be the last one. “We are always looking for more space and every year we have to rent more office space, buy more desks,” he says. Surprisingly, this rapid expansion hasn’t prevented Xero UK from maintaining its culture, although the formula has required some tweaking. “We’ve certainly had to bring in a lot more maturity and structure to how we run the business,” he says. “It’s no longer the case that I’m the only manager. We have a whole bunch

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more successful we’ve become, the more it feels like home to me,” Turner reflects. But just as Xero UK seemingly pounced out of nowhere to take on the market incumbents, he’s very aware that other startups may attempt to do the same to him. “The founder of Intel had a famous saying that only the paranoid survive,” he says. “Knowing what kind of disruptive impact Xero has had globally to established businesses such as Sage, we’ve always been looking over the shoulder for our Xero.” This watchfulness means the scaleup is kept on its toes against any startups looking to claim the crown. “If there’s a Xero out there that is coming for our marketplace then we’ll see them from far away,” he says. “And we know that it’s taken us a decade to build us a company of this scale. We don’t think there is going to be an overnight entrant that is going to completely transform the marketplace.” But despite this paranoia, he’s still eager to spare some time advising entrepreneurs at the beginning of their journey. For instance, he’s been a mentor to early stage fintech startups at the accelerator TechStars London. “I just love technology and I love solving problems,” Turner says. Whatever their problems, he’s happy to share his notes about how Xero UK has solved similar issues. “If I can help, I’ll help,” he says. Given Turner’s passion for tech and his own track record, it’s unsurprising that his ultimate goal for the business is simply stated “global domination.” And for some reason, we’re unsure if he’s kidding or not.

RUNNING A STARTUP BUSINESS WAS THE ANOMALY FOR ME

of managers in the business now.” Still, he maintains the team is still energised by Xero UK’s upwards trajectory and by the prospect of helping Britain’s 5.7 million SMEs to avoid failure. He points out that small businesses “deliver about 50% of our GDP” and that if Xero UK can boost their productivity, the whole country wins. “And we are incredibly motivated by that,” he says. Another huge difference from the early days is that he’s increasingly hearing how the scaleup’s software has helped SMEs. “I didn’t have that in the beginning,” he says. “So we begin to see some of the echoes of our existence getting played back to us now.” On a personal level, Turner feels that he’s fitting more into the role as the company has scaled. “Running a startup business was the anomaly for me,” he says. Having led Pegasus Software and worked with Microsoft in the past, he was accustomed to having thousands of customers and not running a small startup team. “So the bigger and 26

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06/07/2018 03/07/2018 11:40 16:50

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HOW TO OVERCOME THE BIGGEST HURDLES TO SCALE YOUR FINTECH STARTUP HAVING SPEARHEADED THE GROWTH OF XERO UK TO BECOMING A MARKET LEADER, GARY TURNER KNOWS A THING OR TWO ABOUT SOLVING THE MOST COMMON STARTUP CHALLENGES.

FIND YOUR MARKETING MODEL One of the most common mistakes startups make is that they don’t know how to market their product and drive sales. “They have no idea of how to get that idea out in front of an audience and drive growth and acquisition of customers out of the back of it,” says Gary Turner, managing director and co-founder of Xero UK, the accountancy tech scaleup. His advice is to find out who the influencers in the market are and to target them. For Xero UK, that was getting in front of accountants at shows. “Finding those pathways to commercial success is probably the number one challenge most startup businesses face,” he says.

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SOURCE THE BEST TALENT It’s hardly a secret that there’s a shortage of skilled workers in tech. But according to Turner, the trick to solving it is a matter of balance. “If you are a fintech do you hire somebody from a big established bank who understands the industry but may be constrained in their thinking or do you go and hire somebody from an adjacent marketplace that knows nothing about banking but understands everything about subscription service businesses?” he asks. The answer, unexpectedly is somewhere in between. “No matter how great your strategy is and no matter how great your product is, if you’ve got the wrong people you are not going to go anywhere,” he says.

DON’T THINK TOO SMALL When you’ve just launched your startup, it can be tempting to only look at the problems directly in front of you. However, Turner urges you to avoid thinking too small. “It’s a really dangerous slippery slope to mediocrity,” he says. If you have belief and conviction that what you are building is a great product and that the opportunity is big enough, then why wouldn’t you invest to the full extent of your ability to capture that?” Instead of only hiring people for your current needs, he advises entrepreneurs to look at what the needs will be in a year or five. Same thing with the product. It may work for 10,000 users, but how about one million? “Go large or go home,” he says. “Because why bother otherwise?” Why indeed.

A dv ert i s i ng f eat u r e

The Current Account Switch Service – a Guide for SMEs i

f you operate a business account, or simply receive business payments paid in to your current account, then make sure you are getting the best banking deal for you, using the ease of the Current Account Switch Service. Around 100,000 small-business owners have already taken advantage of the simplicity and reliability of moving accounts to another bank or building society, since the launch of the switching service. For too long, SMEs felt unable to get the best deal available due to the complexities involved in switching to a new banking provider. Moving payments manually, informing suppliers and customers of a change in account details made the idea impractical for many. Thanks to the Current Account Switch Service, all that has changed and the once daunting process is now simple, reliable and stress-free. Over 99% of switches have been successfully completed within seven days and the service has achieved a satisfaction rate of 93%. And those figures include SMEs.

How the service works Firstly, decide which bank or building society you would like to move your account to. Then go through the normal account opening process, stating you want to use the Current Account Switch Service.* Once your new account is open, all your old account activities, including all your payments in and out will be seamlessly switched to your new account within seven working days. Importantly, any payments sent to your old account by mistake will be redirected to your new one, indefinitely if required. If any payment is made using the old account details, the payer will receive a message confirming your new details. So confident is the Current Account Switch Service that the transition from the old to the new account will be seamless that it comes with a guarantee. This means that, in the unlikely event of any issues, your new bank or building society will put it right.

*To switch a business account you will need to have fewer than 50 employees and have an annual turnover of less than £6.5 million. If your business meets these criteria, the rest is plain sailing.

Bacs’ Director of Product and Strategy, Anne Pieckielon, said: “We have worked tirelessly since the Current Account Switch Service first launched, to put SMEs and consumers at the heart of the service. Only by doing this can we truly offer a service which delivers the best outcomes for all. “We have also worked collaboratively across the industry, using our unique position and experience as a catalyst for change and the Current Account Switch Service is a shining example of this.”

Who runs the Current Account Switch Service? It may surprise you to learn that the switching service is owned and managed by one of the most trusted brands in the UK’s financial services sector – Bacs Payment Schemes Limited (Bacs), the organisation behind Direct Debit and Bacs Direct Credit. Although nearly 50 banks and building societies have signed-up to offer the service to their customers, it is managed impartially by Bacs to ensure that the needs of consumers and SMEs are put at the centre of decisions relating to its day-to-day operation. As a small-business owner there are many things which might keep you up at night but moving your account needn’t be one of them. currentaccountswitch.co.uk/business JULY 2018 ELITEBUSINESSMAGAZINE.CO.UK

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06/07/2018 04/07/2018 11:46 15:37

Anil Stocker co-founder and CEO, MarketInvoice

International attraction

A recent speech made something very clear: there are three crucial elements that can cement London as the world’s Mecca for tech

peaking at CogX 2018, Rajesh Agrawal, the deputy mayor of London for Business, observed that the UK’s tech talent, finance sector and government are all local to London. These are three key things driving the city’s potential to become the tech capital of the world. As a hub for the UK’s homegrown talent, London also has a reputation for being open, tolerant and multicultural which is a significant drawcard for the migrant tech workers making up 55% of the sector. The opportunities in tech are as diverse as the culture in London and offer something for everyone. In recent years, we’ve welcomed many more tech giants to our East London neighbourhood including Amazon,

Google and IBM. As these companies set up headquarters here, they bring their experience and expertise, attracting international talent who want to work for the biggest names in tech. For those hoping to build the next tech giant from the ground up, London’s flat white economy also has significant appeal. There’s a real sense of possibility here and a feeling that the next big thing could be just around the corner. In fact, the UK has more tech unicorns than anywhere else in the EU. As the name suggests, unicorns are rare, private companies worth at least $1bn and of the 13 in the UK nine have headquarters in London. With London home to the world’s second largest financial centre it’s

no surprise to find four fintechs on the list of UK unicorns. The sector has become increasingly attractive to both investors and companies looking for funding, receiving 20% of all VC backing in London last year. When we started MarketInvoice, there wasn’t a word yet for what we were doing so it’s interesting to see how fintech and London tech in general have grown since then. As a scaling fintech, we’re investing in top talent from the UK and around the world. Our new CTO, Rija Javed, recently joined us from Silicon Valley – a move made straightforward by the Home Office’s Tier 1 Exceptional Talent Visa for digital technology. Government initiatives like this make it easier for top international tech talent to build a career in the UK and are evidence of the government’s support of the sector. Around 30% of our team are now from outside the UK, a number we hope to increase as we grow our own business and help drive the growth of London tech.

JULY 2018 ELITEBUSINESSMAGAZINE.CO.UK

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GARY Stewart director, Wayra UK

Black Bill Gates and Bangladeshi Oprah

With concerning statistics surrounding the employment of ethnic minorities, it’s a wake-up call that more should be done to empower those from different backgrounds

t can’t be true that 55.9% of young black men in the UK were recently unemployed, can it? This alarming statistic jolted me recently when I was at the Houses of Parliament to honour US civil rights leader, reverend Al Sharpton. Intrigued, I dug a bit deeper and found both good and bad news. The good news is that although the 55.9% number is accurate, it only applied for a three-month period in 2011. The bad news is, according to a recent House of Commons briefing paper, people from black, Asian and minority ethnic (BAME) backgrounds are almost two times as likely to be unemployed as people from a white ethnic background (i.e., 7.1% versus 3.8%). Surprisingly, young black people are not the least employed group – young Bangladeshi and Pakistani women are. 25% of Bangladeshi and Pakistani people aged 16 to 24 were unemployed in the year to December 2017 versus 23% of black ethnics and 11% of white ethnics. Forgetting about age for a moment, 3.8% of white ethnics are unemployed versus 10% of Pakistanis and black people and 12% of Bangladeshis.

Nonetheless, unemployment is not a particularly BAME phenomenon. According to an October 2017 release from the Department for Work and Pensions, almost 80% of the UK’s unemployed population is white. So what does this all mean in terms of meaningful next steps? A progressive politician who introduced reverend Sharpton provided the best answer. In an age of increasing income inequality that will only worsen as artificial intelligence and other technologies displace employees of all races, colours, genders and ethnicities, we need to empower young people to become job-creating entrepreneurs. Even leading progressives understand that entrepreneurship must be a key component of any programme of social change and economic empowerment. We need to find and inspire more black Bill Gates’, Bangladeshi Oprahs and female Alan Sugars. Every day, I see entrepreneurs like Chris and Lisa Hughes, both born and bred in Oldham. They have set up the UK’s leading search engine for unemployed people looking for funded training. I see our partner Colleen Amos, who set up the Amos Bursary with her sister baroness Amos of Brondesbury, to help high-potential black men access top universities and world-class professional opportunities. And I see Sherry Coutu, a serial entrepreneur who founded Founders4Schools. We have recently partnered with Sherry and O2’s Go Think Big to provide work placements within Wayra startups for young people from disadvantaged backgrounds. These entrepreneurs are the key to ensuring that, going forward, opportunity will not be limited by race, gender, ethnicity or socio-economic status.

ELITEBUSINESSMAGAZINE.CO.UK JULY 2018

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06/07/2018 16:00

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FOOD FOR THOUGHT BY ZEN TERRELONGE

A spur of the moment job application put Gary Goodman’s law career on ice and, having combined a love of food with an appetite for product development, he’s now giving restaurants the recipe to spice up the customer experience with yumpingo In a world with an obscene amount of variety when it comes to eating establishments and the menus within them, restaurateurs face stiff competition and consumers are forever spoilt for choice. Household names can’t presume to command footfall simply by existing as the market has been shaken by increasingly impressive independent options in permanent and pop-up locations nationwide. Recognising this culinary conundrum, Gary Goodman realised it was time for a solution and that’s where Yumpingo, the restaurant review startup he’s founded, comes in. 34

However, the business may never have begun at all. Goodman could have easily found himself on a different path, had he not been struck by a sudden rush of spontaneity as a graduate. The original plan was to follow his father and sister into a legal career but an impromptu decision changed his destiny. “I’d qualified as a solicitor and drove home with my books in my car to my parents’ house in Cheshire and I went past McCann Erickson,” he says, recalling the twist of fate. “I had no idea what the business was really but I just needed to get a job. I literally stopped the car, knocked on the door at

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McCann’s and asked for a job. And that was my way into the world of media marketing.” He came to quickly realise product development was where his interests lay and his next move was to join Wrigley’s, where he started leading Hubba Bubba development. With a tasting lab installed in the University of Reading and participants testing the bubble gum, data was harvested based on their feedback. “It meant that when the product was too squeaky after four minutes we’d know about it and make some changes,” he says. “That was 20 years ago and I guess I’ve been on a journey ever since, mainly building platforms that effectively connect people, processing data.” Outside of marketing though, Goodman held another fixation that had long been a part of him. “At heart I’m a foodie,” he says. He worked in kitchens in his youth and travelled to cities around the world but faced a hurdle obstructing his love for dining for years. “I was genuinely struggling to find a platform to give me a reliable service to find more food that I would love locally,” he explains. Although there are countless online reviews from people either ranting or raving about places, Goodman found them tougher to swallow than an overcooked steak. “It’s hard to kind of make any sense of that,” he says. Detecting a mouth-watering opportunity five years ago, he picked the brains of those in the restaurant industry JULY 2018 ELITEBUSINESSMAGAZINE.CO.UK

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We talked about what he would do if he had a magic wand in his restaurant

Gary Goodman

for feedback. “It was quite clear that to try and challenge food discovery head on is really hard,” he details, noting that scale of locations is key. “It’s only meaningful if you’re covering the majority of places to eat out in a village or a high street and that can be really hard to achieve.” With business plans stashed away, Goodman’s project was stored for safe keeping though never too far from his thoughts. The concept was revived three years ago during a winetinged conversation with Darrell Wade, an old friend and then-COO of TGI Fridays, at one of the US chain’s West End branches. “We talked about what he would do if he had a magic wand in his restaurant and anything was possible – what would he change technically in the environment?” Goodman says. “He looked around the restaurant in

Covent Garden and said he would love to see thought bubbles belonging to guests eating food, visualising in real-time what people really thought of their experience.” And so the plans for Yumpingo were dusted off and it was effectively designed to meet the needs of restaurateurs by tapping into the psyche of customers with a oneminute questionnaire at the end of their meals. “Obviously, that process has taken some time to get to a platform that’s stable and growing as we are,” says Goodman. Existing as software and hardware through mobile device management, Yumpingo is shipped in a box to restaurants and handsets only need to be turned on to work, with the WiFi codes embedded within. Of course, it wasn’t as simple when the service first launched. “You need to run fast but you need to learn faster, I think that’s our mantra in business,” Goodman declares. “It means that when we went into service initially, hardware was terrible – it didn’t work. The battery life just didn’t work. The WiFi went out.” Clearly this is one of those classic examples that you live and learn. In Yumpingo-powered locations, consumers are asked whether they want to complete a questionnaire via Yumpingo device when they receive their bill, with the idea they can give honest commentary on the experience and the restaurant can determine whether it was up to scratch or not. From there, the data can be leveraged in realtime to turn around any errors or capitalise on successes in an instant – the goal is to cater to what Goodman calls “Generation Yum”. “Our appetite, our passion and drive for food knowledge and new food experiences is unrelenting,” he says. “If you think about how we eat today, we all want new experiences and our expectations are higher than before.” To that end, Goodman reasons that it’s difficult for restaurants to “operate in a black hole” where meaningful data is absent. We’ve already established that Goodman is no

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stranger to knocking on the doors of large firms to effect. So as it stands, Yumpingo has a range of clients signed up to the service, counting well-known names such as Prezzo, Wahaca, Jamie’s Italian and Bill’s on the portfolio alongside smaller independents such as Whyte and Brown, the chicken restaurant and Mac & Wild, the steak and burger spot. “Unfortunately, there’s a whole world of conversations taking place in online review sites without the restaurants being able to take part,” says Goodman, shedding light on the problem as he details the damage bad reviews can cause. “We get from between 4,000 and 6,000 reviews per location per month. That data is, by volume, a game-changer for the industry. It invites depth and enables the industry to understand at a very granular level how to optimise and improve their restaurant and their entire experience.” What’s particularly interesting is this gets achieved without the lure of incentives, which Goodman flatly says he doesn’t believe in. “We’re getting between 150 and 400 live dish reviews a day per venue,” Goodman details. “We can start to give consumers absolute certainty as to what the most-loved dishes are in this

restaurant right now. We’re starting to work with some clients on integrating live feed to the service.” He points to the fact there’s a lack of reliability when it comes to online restaurant reviews, which circles back to the pain point he had years ago. In addition to working with big name brands, Yumpingo is backed by some respectable individuals too. For example, Ross Brawn, the Formula One managing director of Motorsports, is an investor that contributed to the foodtech startup’s £1m seed round from April 2018. “He’s probably the most prolific innovator of technology within sports in the last 20 years,” says Goodman of Brawn. “Elsewhere,

Oliver who became CEO of the chef’s media group, is a Yumpingo advisor. “She had a great deal of knowledge about how someone like Jamie [and his] reputation is important,” Goodman says. The food lover sees the US as a key area for growth and has already planted some seeds into American soil. A UK-centric deal with Wagamama enabled Yumpingo to cross the pond and enter New York and Boston in spring, as opposed to the team actively seeking to enter the market. However, after being told it would take two years to sell directly to a US firm, he found that to be the opposite. “We went to Dallas to meet some very large brands,”

We think we’ve found something that is quite special Goodman knew Steve Parish, the chairman of Crystal Palace FC, from the marketing scene while Tara Donovan, former lawyer for Jamie

he says of one Stateside meeting, remaining tightlipped on the deal while the ink dries. “Within 45 minutes of being with the CEO and people in charge, they said ‘let’s do this’. The story that seems to be quite compelling, which we build our product around, is that without us, restaurant groups have a lack of visibility.” Breaking down the opportunity before them, Goodman explained that entering just 3% of the US market would amount to 30,000 restaurants and approximately a billion live food reviews in year one. As of 2016, Yelp had reached 100m reviews in 12 years. It’s not just about the numbers though. Goodman’s zest for the food industry is palpable as he insists Yumpingo is on a genuine mission to create change. “This is a cause,” he says. “We believe if we can help restaurants and other commercial kitchens to understand and serve more food their guests love, then it’s a win-win for everybody. That’s the kind of joy in this – we think we’ve found something that is quite special.” JULY 2018 ELITEBUSINESSMAGAZINE.CO.UK

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B r ea k i ng t h e VC c yc l e

Breaking

the VC cycle BY Eric Johansson

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ELITEBUSINESSMAGAZINE.CO.UK JULY 2018

06/07/2018 19:47

Br e a king the VC c yc l e

Most entrepreneurs rely on venture capitalists for their investment rounds. So why are startups suddenly searching for ways to break the traditional funding cycle? In mid-April, Anthony Rose, CEO and founder of SeedLegals, the legal tech startup, published a post on Medium, declaring it was time to break the traditional VC funding cycle. “It seems unduly difficult,” he says. Raising a new investment round is usually a long and complicated journey. Founders often spend months chasing investors and hashing out the terms of the deal, time that’s vital in the beginning of a company’s journey. And then, about a year later, they generally have to repeat the exercise, round after round. What Rose proposed essentially boils down to one question. “What if you could have some flexibility?” he says. This query came from his own experience of supporting other startups and launching ventures of his own. “Sometimes finding funding is very hard and sometimes it’s very easy,” Rose says. Not only do founders actually have to locate investors but must also negotiate the term sheet, the agreement of how the round will look like, with them. The contract could for instance stipulate things like the round’s closing date and what the minimum total of dosh provided from all investors must be for people not to back out. “Everyone has to be on the bus,” Rose says. “There are no latecomers. There are no early comers. And if the bus doesn’t get full, it just can’t leave.” Anyone not on the bus would just patiently have to wait on the platform for the next round. This was exactly the problem Rose claimed to have solved by using tech to demystify the legal complexities surrounding VC investment. “Funding rounds used to be a dark art,” he says. Essentially, SeedLegals’ solution is a platform that can

provide the legal documents needed to set up a round within minutes instead of months of legal wrangling by lawyers. The documents enable startups to raise money continuously instead of looking for one big payoff every year by opening up for additional investments before and after the round, according to Rose. That, of course, is still only if the lead investor agrees. “You’ve got the freedom to choose what you want,” he says. Easy peasy, lemon squeezy. However, SeedLegals is hardly alone in attempting to reshape the funding

Funding rounds used to be a dark art Anthony Rose, SeedLegals

landscape. The last few decades have provided more opportunities for entrepreneurs to raise money. Crowdfunding platforms and initial coin offerings (ICO), which enable startups to raise money by issuing their own cryptocurrencies, are just two examples. “Compared to VC funding, that’s much faster and much easier,” says Igor Shoifot, founding partner at TMT Investments, the VC firm, and TMT Blockchain Fund, the investment fund for blockchain startups. But it’s hardly a secret why entrepreneurs may want to skip pandering to VCs. “It usually takes a lot of time and resources from the founders,” he says. “You need to make a bunch of calls, take on a bunch of meetings and it gets pretty emotional when, after another four or five meetings, they say ‘thank you but that doesn’t work for us.’”

JULY 2018 ELITEBUSINESSMAGAZINE.CO.UK

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But up until recently, founders had few other options than to chase VCs. “There was pretty much no alternative,” says Shoifot. While this enabled founders to get access to money and tap into investors’ expertise, the process of wooing these firms wasn’t just usually long and complicated but also came attached with a few disadvantages for founders. Given VCs put their money where their mouths were, they often wanted influence in the running of the business and things like first refusal in subsequent deals. “So you [can also get] rather unpleasant terms with the money,” says Shoifot.

“Compared to VC funding, that’s much faster and much easier,” says Igor Shoifot, TMT Investments Of course, that’s only if you can find a VC willing to bet on your business. “There just aren’t enough VCs to manage and vet and work on the number of investment opportunities that are out there,” says Simon Ramery, CEO and co-founder of Capitama, the private capital network. Not only is it difficult to raise money from VCs but it has also become increasingly tricky. Having looked at more than 1,000 startups raising seed rounds, CB Insights, the VC database, revealed only 46% managed to raise a second round of funding and only 14% went on to actually raise a fourth. With all the difficulties around raising money from VCs, you can hardly blame founders for making the most out of each round. Ironically, this could also present them with the disadvantage of raising too much money. “Even though it sounds counterintuitive, money can actually ruin a company,” says Shoifot. Jawbone is a great example of the damages overfunding can bring. The scaleup was once touted as a heavyweight in the wearable device market. Having raised over $983m and getting a valuation of $3.2bn, it certainly seemed as if the company had enough financial muscles to deliver a knockout punch against competitors like Fitbit. The problem was that its fitness trackers didn’t take off, which eventually led

to the collapse of the company in June 2017, making it the second costliest startup failure ever, according to CB Insights. While other startups facing similar woes could’ve saved themselves through an acquisition, Jawbone’s overvaluation meant it wasn’t an option. “So it’s a very poisonous sweet deal,” says Shoifot. Given all these issues with the traditional funding cycle, many startup founders are unsurprisingly jumping on alternative funding opportunities like crowdfunding and ICOs. However, this increased flexibility means some enterprises that shouldn’t get investment do. “Probably 95% of the companies raise money literally a year or two before they actually have a product,” says Shoifot. The result is that these startups artificially prolong their existence. “For better or for worse, usually for worse, people investing in ICOs invest in things that they don’t understand,” says Shoifot. The result is that they can risk losing a lot of money, which is one of the reasons why regulators have been cracking down on this market. Importantly, while entrepreneurs can use these alternative funding methods to raise money, they don’t provide the huge advantages of having a VC on your side. “You are actually getting absolutely priceless consultancy by just having them on the board or having them be your investors,” says Shoifot. Moreover, having one wellconnected VC onboard can also help you attract other investors. “You get access to a much bigger rolodex and you are introduced to a greater number of potential partners and distribution channels, marketing channels, ploys, etcetera, ” says Shoifot. But maybe there’s a way of merging these two worlds – the one of traditional rounds and that of alternative funding. “The world is not binary,” says Shoifot. “It’s not just zeros or ones.” The way he sees it, the next obvious step for VCs is to look for ways to merge ICOs and the new ways of prolonging the traditional funding cycle through things like SeedLegals’ solution. So rather than destroying the old ways, what we’re seeing now could actually be the next step in the evolution of startup funding. “There is a whole new breed of investment coming to the market,” he concludes. But it’s up to each entrepreneur whether they’re ready to embrace the brave new world of startup funding.

JULY 2018 ELITEBUSINESSMAGAZINE.CO.UK

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IN 2003, AHTI HEINLA TURNED THE TELECOMS INDUSTRY UPSIDE DOWN BY HELPING TO CREATE THE TECH THAT GAVE THE WORLD SKYPE. NOW, WITH STARSHIP TECHNOLOGIES’ AUTONOMOUS ROBOTS, HE’S BRINGING AI TO OUR PAVEMENTS AND HELPING THE DELIVERY INDUSTRY PUT ITS BRAIN IN GEAR

STREET SMARTS

BY JOSH RUSSELL PHOTOGRAPHY BY EMILIE SANDY

A H TI HE I NL A

LICHES ARE ANATHEMA for entrepreneurs: serial founders are living proof that lightning can and often does strike twice. But there are few who can claim to have been part of the driving force behind a continent’s most significant unicorn and even fewer who can claim all of the parts required to build another. Evidently, Ahti Heinla is the exception – not only was the Estonian entrepreneur the technical lead that oversaw the development of Skype but now, as the co-founder and CTO of Starship Technologies, he is revolutionising deliveries by bringing its fleet of autonomous bots to cities around the world. It’s no surprise Heinla came to play such a significant role in the Estonian entrepreneurial ecosystem – his young life was steeped in tech and he literally learned to code at his parents’ knees. “Both of my parents were computer programmers,” he says. “In fact they taught me to program when I was tenyears-old so this is a way of life for me.” And as he matured, the adolescent Heinla added to his technical skills by combining his passions for programming and play. “Anytime I had a problem, I tried to solve that using software,” he says. “This led me to develop computer games.” But Heinla wasn’t content with remaining an amateur and throwing together the 1980s equivalent of Flappy Bird. He soon went pro and co-founded the games studio Bluemoon Interactive with his school friends Jaan Tallinn and Priit Kasesalu, giving him a front-row seat as the desktop and home-gaming markets exploded. “The industry is very exciting,” he says. “It’s full of adventure, there is a lot of creativity going on and a fusion of different types of talent, so it’s a lot of fun.” However, over the following decade, the wild frontier of the games market began to be tamed as the larger publishing houses staked their claims. “The game development world was consolidating: only the top games ended up making a profit and that meant the games had to be bigger and bigger to have a chance,” Heinla says. “Essentially we found it hard to keep it commercially viable.” Fortunately, it wasn’t just the games industry that was transforming. After the collapse of the Soviet Union, Estonia had been forced to rebuild its bureaucracy essentially from scratch. Able to embrace technology in a way that

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A H TI HE I NL A

Anti Heinla and Starship Technologies’ new CEO Lex Bayer

countries with legacy infrastructure weren’t, its capital Tallinn soon established itself as the epicentre of European tech. “It’s hard to predict the way a country will evolve but certainly Estonia has found one of its niches: it’s a tech-savvy nation,” says Heinla. This meant that when the dotcom boom hit the continent, Estonia was effectively ground zero – providing the perfect opportunity for Heinla and his co-founders to pivot into a different profession. “All of the internet was opening up and there were lots of opportunities so it was only natural that we made the switch to making new things,” he says. Thanks to the emergence of this thriving tech ecosystem, entrepreneurs from elsewhere were eyeing the innovations being cooked up in the country. “Everyday.com was a web portal being developed by a couple of Swedish companies,” Heinla says. “They had just acquired a small web-development company in Estonia and decided to look for a group of top developers over here, which is how they found us.” Not only did this give Heinla and his friends a crash course in developing dotcom tech but it brought them together with the Swedish / Danish entrepreneurial duo Niklas Zennström and Janus Friis – creating one of Europe’s most renowned development teams. After graduating from Everyday. com, the newly formed group of

entrepreneurs had some success building tech like the Fasttrack P2P protocol – which underpinned file-sharing platforms like Kazaa – but they couldn’t possibly have anticipated the impact their next startup would have on the world. “In my experience, it’s always very difficult to predict in the beginning whether a startup is going to be a mega success,” Heinla says. “Skype was no different.” As is the case with many of the innovations that have come to transform the tech landscape, it was a group of friends chewing over a mutual gripe that led to Skype’s conception. Finding themselves frustrated with the high price of phone calls, in 2003 Heinla and his fellow entrepreneurs began discussing whether it would be possible to offer free voice calls over the internet. After a few back-of-a-napkin calculations to ensure the economics stacked up and some early experiments to trial the tech, development of Skype’s initial platform began in earnest. And when it launched just nine months later, the team’s faith in the idea was quickly vindicated. “We got the first 10,000 users in one day and the first 100,000 users in 20,” says Heinla. “Back in 2003, things didn’t normally happen quite that fast so that was actually a fantastic growth rate.” Becoming Skype’s chief technical architect, Heinla spent the next five

years overseeing the creation of much of its underlying technology. But while the company’s fortunes continued to rise – by 2005 its name was on everybody’s lips, thanks in no small part to its $2.5bn acquisition by eBay – Heinla began to crave the opportunity to once again forge his own path. “I have always been a person to start things, lay the foundations and do the initial work,” he says. “After a while, all of Skype’s products and services were pretty much developed and it was more like fine tuning and growing in numbers.” In the years that followed his departure from Skype, Heinla not only co-founded Ambient Sound Investments with his fellow Skype engineers, helping to fund startups such as Treatwell and Blip, but he also founded several startups including targetAPI, the provider of predictive content personalisation technology. However, his most ambitious project came about in 2014 when he happened to cross paths with a face from the past – Janus Friis. Since Skype’s acquisition, Friis had co-founded Atomico Ventures and the TV and music streaming startups Joost and Rdio with Zennström but after several solo startups he was now looking for a new joint project to tackle. “We had really enjoyed working with each other and realised we wanted to build a startup together so we started to brainstorm,” says Heinla. Although they agreed robotics and AI were areas with enormous potential, many of the verticals that received the most attention were those where a startup could have relatively limited impact. “Realistically, to create a self-driving car, the development team needs in the region of $1bn of investment and it’s a very tough market to crack,” says Heinla. “We realised that a small robot is a lot easier to build and is more suitable for a startup, yet still has the potential to have billions of users.” As far as the entrepreneurs could see it, there were three JULY 2018 ELITEBUSINESSMAGAZINE.CO.UK

A HTI HE I NL A

fundamental human needs that could be better catered to by autonomous robots. “The first was agriculture, the second was cleaning and the third was delivery,” Heinla says. “We chose to focus on delivery.” Thanks to Amazon Prime, online fashion retailers and food delivery startups, demand for deliveries was sky high – but it seemed many entrepreneurs and investors were interpreting this literally. “Pretty much everybody was focusing on developing drone deliveries,” says Heinla. While this excitement is easy to understand given the clear use cases for drones, significant regulatory, security and safety hurdles mean the technology still has a steep hill to climb in order to win the public’s trust. In Heinla and Friis’s eyes, this meant that ground-based bots might actually be able to outmanoeuvre their sky-bound brethren. “We thought a small, ground delivery robot would be more accepted by society,” says Heinla. Certain they’d hit upon a winning formula, the entrepreneurs co-founded Starship Technologies with the aim of bringing futuristic delivery droids to global high streets. But this was easier said than done: putting together such an ambitious project would require significant technical talent. Fortunately, thanks to its tech-infused culture and strong academic focus on STEM subjects, Tallinn was awash with great developers – and Starship’s rep was already such that it was easily able to pull them in with its tractor beam. “I was known as one of the founding engineers of Skype so we were definitely the coolest startup being developed in the country,” says Heinla. But the considerable cachet of its founders wasn’t the

PEOPLE ARE AFRAID OF A ROBOT WHEN IT LOOKS INDUSTRIAL – BUT IF IT LOOKS CUTE THEN THEY REALLY ACCEPT THEM IN THEIR LIVES 48

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only draw – ultimately, there’s just a charm to developing droids that few coders can pass up. “Engineers love building robots,” says Heinla. “Building an autonomous bot that uses AI, that’s one of the coolest things that machine-learning engineers can do.” With the help of this passionate development team, Starship soon had a fleet of prototypes at its disposal and before long began commercial trials in partnership with Just Eat. And the experience it offered these hungry customers was silky smooth. “The consumer orders their food on the platform, just like they would do normally,” Heinla says. “The robot is dispatched to pick up the food from the restaurant, then drives to the customer’s location.” While the robot navigates its way to its destination, the customer can track its progress, safe in the knowledge that their food is locked up nice and safe in its cargo hold. And once it arrives at their doorstep, they receive a message notifying them the delivery is complete. “If you are the right recipient, that message allows you to open up the robot’s cargo compartment and take your stuff,” says Heinla. “Then the robot drives away. It’s as simple as that.” But offering this painless customer experience requires a lot more going on beneath the hood. Helping the robots to understand the communities they operate in takes a lot of intelligence – both artificial and analogue. When Starship’s tech is introduced to a new location, humans first map the basic area and then the robots are allowed to explore, using their sensors and GPS to flesh out their sense of the local neighbourhood. But even when the area is fully mapped the droids are never completely alone in the world. If one of Starship’s robots ever finds itself unsure of how to proceed – for example wondering when is the best time to cross a busy intersection – it can ask for a helping hand. “In difficult situations the robot stops, calls the human operator and they’ll help it negotiate the situation,” says Heinla. This combination of machine learning and light-touch human oversight has made Starship’s solution eminently scaleable – which is partly why investors have been clamouring to support it. “Investors want to back startups

A H TI HE I NL A

with big ideas that have a large addressable market,” says Heinla. “Starship stands out and investors love that.” When the startup opened its seed round in January 2017, it drew in a whopping $17.2m right out of the gate from investors including Matrix Partners and Shasta Ventures. When you compare that to the £2.7m series A raised in 2014 by now unicorn Deliveroo, it’s easy to see that investors fully expect Starship to reach the stratosphere. However, not everyone is as excited about the ubiquitous presence of autonomous robots in cities as investors and engineers. One qualm that is often raised is whether an algorithm can be considered sufficiently infallible to safely operate around humans. “Safety is our main criteria when we decide if our robot can operate in a certain area,” says Heinla. Fortunately, Starship’s bots are specifically engineered so they can safely share public spaces with pedestrians. Not only has their AI been rigorously tested to ensure they won’t crash into obstacles – human or otherwise – but they are intentionally lightweight and have a cruising speed that’s about walking pace. As a result, while rare cases of artificial stupidity in technology like drones or driverless cars could potentially result in injuries or even fatalities, even the most reckless delivery bot would struggle to leave much more than a bruise. “I have specifically tried that myself. We removed all of the safety systems in the robot and had it crash into me,” Heinla says. “It really doesn’t hurt: it’s not an issue.” Another factor is the inherent unease many people feel around allowing AI to have such a significant influence over our lives. However, when looking at Starship’s WALL-E-esque robot, it’s hard to imagine it playing a pivotal role in the rise of the machines – something that seems like it must have been a conscious design choice. “Oh that was a very deliberate decision,” Heinla admits. “People are afraid of a robot when it looks industrial, makes weird noises and buzzes. But if it looks cute then they really accept them in their lives.” In fact, Starship’s robots have proven incredibly popular with the public. Not only have they stormed up a trend on Instagram as the star of scores of selfies but on the odd occasion one has run into trouble, citizens have

WE REMOVED ALL OF THE SAFETY SYSTEMS IN THE ROBOT AND HAD IT CRASH INTO ME: IT REALLY DOESN’T HURT

swarmed together to provide succour to the stricken droid. “People go bananas about them,” says Heinla. Without a doubt, scenes like these are set to become much more commonplace. Starship’s vehicles are already operating in ten cities around the world and this is set to surge in the coming months. “Thousands of people have experienced our robotic deliveries so far and obviously we want to turn this into millions quite quickly,” Heinla says. “So this year is going to be the year when we are expanding our services rapidly.” And Starship has made sure it has the fuel needed to launch into orbit. Fresh from announcing its commercial rollout this April, the startup closed a new seed round in June, securing a $25m cash injection to help it bring its services to neighbourhoods and corporate and university campuses across the US and Europe. Heinla also recently announced he would be focusing on driving the company’s tech as CTO moving forward and handing over the role of CEO to Lex Bayer – a canny move given his previous role as group head of business development, payments and Airbnb for Business at Airbnb. “The appointment of Lex was a natural next step in the company’s growth journey,” Heinla explains. “He has a wealth of experience in scaling tech companies and bringing revolutionary ideas to market.” Not content with turning the global delivery market upside down, it also seems Starship may also be in the perfect place to help transform our attitudes about robots’ role in society more generally. Just as increased convenience has gradually been driving greater acceptance of AI and automation in other areas, Heinla feels Starship will play a similar role in driving acceptance of robots’ place in our neighbourhoods. “I certainly expect that after some time the same sort of transition will happen,” he says. “People will become used to things being delivered by machines.” JULY 2018 ELITEBUSINESSMAGAZINE.CO.UK

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world of

JULY 2018

WORLD OF OPPORTUNITY

WELCOME

n a climate that’s currently filled with uncertainty, concern and rumour, UK business leaders are constantly being updated with various reports about the risks surrounding their companies. But what about the opportunities? Those beyond Britain? We’ve spoken with a series of entrepreneurs about their experiences of operating internationally and started at the best possible place – the beginning. If you plan on launching your company abroad, it stands to reason you won’t have all the answers, which is why we’ve questioned those who have been there and done it on what they believe are the most crucial things to consider in order to successfully secure a footprint overseas. With everything from costs, strategies and being honest as to whether the market actually wants your service, you should have everything you need to get the ball rolling with an export plan. There’s an incredible amount of data doing the rounds on what seems to be a daily basis surrounding Brexit and the UK’s future. So we’ve crunched the numbers and rounded up the key figures in one infographic to bring you up to speed.

Setting up shop overseas may seem like an uphill struggle and, while we’re by no means saying it’s easy, online has helped the ambitions of entrepreneurs to open overseas and achieve sales. Indeed, we’ve heard how some business owners haven’t even had to set foot on a plane to attract international customers thanks to the internet. As one leader puts it: “Cross border e-commerce is the backbone for our ambitious business growth.” So we’ve covered what to consider when growing abroad and how the web can help your ambitions but the next question is where should you go? China is a solid destination for its market opportunity thanks to a love of Brand Britain as well as the spending power possessed by local consumers in the country. Finally, some things you’ll hear on the grapevine about export will be true and others the work of fiction. We’ve done some myth-busting to break down what you can expect to hear when setting out overseas to give you a head-start on what’s true and what’s false. Happy exporting!

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WORLDFIRST

Follow the leaders Growing a company overseas can seem daunting, so we’ve secured first-hand pointers from business leaders that have successfully expanded beyond the UK “It’s important your website talks directly to your new market. Having a platform that sells in pound sterling isn’t going to entice a US audience. Speak to your new audience by pricing products in their national currency and, if you can, make the shipping, returns and delivery process as barrierfree as you can.”

Richard Valtr is the founder and CEO of Mews, the hospitality software provider

Niamh Barker, founder of The Travelwrap Company, the cashmere wrap retailer “The most important thing for us was making sure that customers around the world have a positive journey with us, from when they order an item to when they receive it. It’s vital not to rush into making decisions and to look at all the options when it comes to order fulfilment.”

“Have a very clear business plan with a clear export strategy. Ensure your value chain can accommodate an importer-distributor margin and remain market-led if it’s a premium brand proposition. If you’re serious about export, having credibility is key, otherwise you will not attract the right partners.”

Mark Dawkins, co-founder, Langley’s England, the gin brand

Tom Jeffrey, e-commerce manager at Jules B, the luxury clothing brand “Research into the market size, native languages and customer behaviour in your desired location are important to think about. This will ensure you understand your market well. Also, your financial situation – make sure you’ve got budget and resources to expand in the way that you want to.”

Ashleigh Hinde, founder of Waldo, the direct-to-consumer contact lens brand www.worldfirst.com

“Seriously consider whether or not your product or service has a potential customer base in your new market. While you may be successful in your home country, this doesn’t always translate to success overseas. Put simply, if there’s no need for your service or product, and you do not undertake due diligence on a new market, you’re doomed to fail.”

“It’s very unlikely you’ll be an expert in the country you are doing business in, so always try to find a local partner that understands the landscape. This is a strategy we’ve pursued to great success in South Korea and Japan.”

Omar Rahim, CEO of Energi Mine, the energy company

SUPPLEMENT WORLD OF OPPORTUNITY TITLE

Of UK-based businesses expect their overseas trade to increase over the next year

Is the amount exported UK goods and services will increase by 2020 - which will double by 2030

The value of international imports in April 2018 – a 2.5% increase from last year

of London-based SMEs make a foreign transaction each month, followed by 30% of the South East and West Midlands

The value of international exports at the start of Q2 in April 2018, showing an increase of 6.6% year-on-year

of European businesses are moving operations out of the UK following Brexit – down from 15% in 2017

of UK SMEs export to Western Europe, making it the most popular destination, followed by Central Europe, the Nordics, Eastern Europe and the US

SMEs invested in exports in Q1 2018

of small businesses are positive about leaving the EU

of UK SMEs trade internationally in Q4 2017 – down from 52% in Q4 2016

Source: Bibby Financial Services, UBS Evidence Lab, WorldFirst, HM Revenue & Customs, HSBC/gov.uk

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Online:

An overseas opportunity

The power of online shopping and communications means companies can now cross countries at the touch of a button, so we’ve spoken with the leaders who did exactly that with their businesses to head overseas

he UK high street has been hit hard throughout 2018, with a seemingly endless list of retailers including John Lewis, Toys R Us and House of Fraser announcing store closures. Comparatively, online retail is surging. An IMRG Capgemini sales index revealed that purchases online spiked by 19.4% year-onyear in May 2018. Commenting on the study, Andy Mulcahy, strategy and insight director at IMRG, said: “Growth for the online retail market has been exceptionally strong so far in 2018, with May’s result being the highest

for that month in eight years. It’s becoming increasingly clear that shoppers are favouring online channels over physical ones to a greater degree than they used to, which is accelerating the pace of change for multichannel retailers.” Of course, online shopping doesn’t just support consumers and make their lives easier, it simplifies things for retailers in many ways, particularly when it comes to expanding the business and operating overseas. Indeed, rather than physically visit countries, look at locations and property options, introducing an

online store into a new market can speed up the process. Jules B, the luxury clothing brand, is one such company that didn’t even venture overseas to explore markets before selling in them, it just went in for the kill, according to Tom Jeffrey, Jules B’s e-commerce manager. Explaining why the move outside the UK was made, he says the opportunity to build the brand was too good to pass up. “Selling outside of the UK meant we could expand our potential customer base and bring our unique mix of brands and styles to more people,” Jeffrey details. “These things always

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take a lot of work and figuring out to begin with but it’s been a worthwhile process and has increased brand awareness for us in a way that couldn’t have happened if we were only selling in the UK,” he says.

“Without having to physically leave the country, we’ve reached a point in which international orders represent 20% of our business and this figure is constantly increasing.” When assessing where to launch, the brand turned to Google insights and keyword tools alongside paid advertising to weigh up the best options suitable for its growth. And although there were challenges, they’ve been overcome and have literally paid off. Jeffrey says: “With the tools and technology we have access to now, selling online is certainly the easiest way to take a business overseas and make that expansion. Without having to physically leave the country, we’ve reached a point in which international orders represent 20% of our business and this figure is constantly increasing.” In terms of the approach to achieve sales, Jules B is open-minded with the method it chooses, although online marketplaces have both been valuable. “We look at all options, from Amazon and affiliates to apps and third party platforms, to help us build the Jules B brand and generate traffic to our site,” says Jeffrey. “We already use both Amazon and eBay to drive sales and have found this to be a successful strategy.” China is one such market that businesses should pay attention to closely if they want to branch out to new territories. According to PwC, the professional services firm, the Far East country is the biggest e-commerce market with online sales of $307.4bn in Q1 2018 – that’s a 35.4% rise year-on-year. Langley’s England, the gin brand, secured a deal to enter Asia in 2018 and cofounder Mark Dawkins said he’s keen to achieve the success there that it has in Europe and the US. He believes that an international presence is needed in order to be a true brand. “40% of our global sales are currently from the UK but we have a clear three-year plan to reduce that reliance to 20%, whilst still doubling the UK sales,” says Dawkins. He notes that export sales were crucial to let the business reinvest in its marketing plan to scale abroad.

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Interestingly though in the case of Langley’s, achieving online sales abroad hasn’t been as key for the business as it has for Jules B. “Our brand is available on many online retailers and we have a good online presence via our non-commercial website and social media platforms but importers do not buy from their brand partners online and we’ve noticed that not many overseas consumers do either,” Dawkins says. Focusing on Amazon specifically, it hasn’t been particularly prominent for overseas sales either but does have its benefits. “It has been very good for us in the UK and if you are a successful performer with a good sales performance on Amazon it does prove the saliency of your brand and that does make import partners sit up and take notice,” he adds. “It has a similar impact to having good sales in multiple grocers these days.” Elsewhere, Niamh Barker, founder of The Travelwrap Company, the cashmere wrap retailer, has been able to enter most foreign markets with the power of the internet without travelling to them in person. “For our overseas audience, our signature product, Scottish cashmere travelwrap lends itself well to an online audience,” Barker explains. “Our brand emphasis on the quality, craftsmanship and British heritage provides reassurance and reduces barriers to purchase for overseas customers.” With that product reassurance and brand exposure overseas, Barker feels the business expanding outside of the UK has been low risk. “As customers spend more and more time shopping online our strategic growth plan continues to be following our customers anywhere in the world. Cross-border e-commerce is the backbone for our ambitious business growth.”

WORLD OF OPPORTUNITY

Beyond EU borders What the UK’s SMEs may have thought of being a slow death with the triggering of Article 50 has resulted in increasing profits from the Far East

here are no second thoughts about China being the largest economy on a purchasing power basis. Whether it was British beer, Whittard tea from Chelsea or British pork, China seems to have taken a shine to goods manufactured in Blighty. And the UK was always viewed as a gateway to entering the tech industry with the increasing startups. China’s interest in the country was shown when it issued the first overseas sovereign RMB bond in 2014. This means endless opportunities for UK-based companies. As the Brexit countdown ticks even louder with each passing day, business owners widen their gaze beyond the EU over to the Far East. Post-Brexit vote, the UK’s trade increased by £0.6bn with countries outside of the EU and declined £1.2bn with countries inside the EU in the first quarter of 2018, figures from National Statistics show. While businesses believed that failing to reach a deal with the EU could

be fatal and the single market access is crucial, SMEs are now confident about expanding and are being able to produce profits from overseas. In fact, 60% of medium-sized business leaders plan to increase investment in exports beyond the EU in response to Brexit according to research by Mills and Reeve, the national law firm. The study based on a survey of 500 companies said that despite an unstable economy being foreseen, businesses are feeling bullish with 83% of them planning to increase their turnover this financial year. But Brexit is not the only reason for expanding in other countries. Many Asian investments were being directed to the US until now. But figures by Magister Advisors, the M&A advisory firm, witnessed a change when Asian investors turned their back on America after Trump’s punitive trade tariffs. This would mean that foreign investment from Asia would scale up UK businesses far faster.

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An example of a British business thriving in the Far East is Jaguar Land Rover, which racked up export sales in China after it opened its first engine plant in the country and is to be one of the largest exporters to the market. Indeed, while the full financial year ended March 2017 saw the firm’s retail sales up 16% year-onyear, China dominated the growth with a 32% sales spike over the period. That’s more than the 24% in North America, 16% in the UK and 13% in Europe. “We continue to make encouraging gains in key markets such as China and North America,” said Andy Goss, sales operations director at Jaguar Land Rover. This was seen in other companies as well. For instance, the sky-rocketing demand for luxury commodities led to a 4% increase in sales last year for Burberry, the British clothing brand, and much of it came from China. Similarly, Intertek, the product-testing company, said in its annual report that China, Vietnam, India and Hong Kong are main markets. Another business witnessing an upward growth was BP, the UK-headquartered oil and gas company. Its report said that energy consumption in China rose by 3.1% in one year making it the largest growth market for 17 consecutive years. It

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just goes to show how closely the fortunes of UK firms can be linked to Chinese markets. But export does comes with its challenges. For many exporting SMEs that sell in foreign currencies, foreign exchange risk is the most cited challenge and many see either gains or losses fluctuate due to exchange rates, given the depreciation of the sterling. According to Civitas, an independent think tank, SMEs find finance to be another mountain to scale when it comes to expanding abroad. But despite these challenges, figures from global currency company WorldFirst’s ninth quarterly Global Trade Barometer showed that of the 1,000 SMEs surveyed, one in four are looking to export to a new country in the next quarter. Of the ten markets that saw the greatest growth in payments from UK SMEs in the first quarter of this year, seven are outside of the EU. These include — Turkey, Norway, Morocco, Singapore, Russia, Indonesia and the UAE. Commenting on the issue, the chief economist at WorldFirst, said: “These SMEs will be our global exporting pioneers post-Brexit and it is vital that the government and wider industry does all they can to support them. This could mean anything from facilitating connections between UK small businesses and foreign counterparts, to offering advice and training on how to do business and communicate with international trading partners.” Despite the more confident outlook, 46% of those surveyed said that some form of external support would encourage them to export more. Digging deeper, 18% want help to discover international partners, while 17% want to see government to play a more active role. At times like these, government departments such as UK Export Finance (UKEF) is useful as it offers insurance and capital to viable UK companies. Elsewhere, the China-Britain Business Council is on hand to support and advise UK businesses who are considering entering the Chinese market. The UK government has been trying to aid businesses by equipping them with tools such as the legal proceedings and laws they need to know so as to reach its goal of £1tn worth of exports by 2020. Leaving the EU might pose a challenge but with the Far East as well as other international markets proving to be the silver lining, it seems like company heads would do well to look beyond EU borders.

WORLD OF OPPORTUNITY

The export rumour mill You’ll see and hear a lot when it comes to shipping your business out across international borders but how much of it is accurate?

eople will always have a difference of opinion when it comes to certain business situations. For example, is it better to bootstrap or seek funding early on? What works for one company will not necessarily work for another – although that doesn’t mean anyone is necessarily right or wrong. However, there’s a difference between opinions and what is fact or fiction. Some business myths come from assumptions and others from word of mouth but, regardless of its origin, a myth is still false. And when it comes to exporting, one such belief is that small companies can’t thrive overseas – which was denied by Dominic Jermey, the former UK Trade & Investment chief executive back in 2014. Supporting that further, the June 2018-released UK Export Finance report revealed smaller businesses accounted for 77% of the UK exporters that the government funding arm helped sell in 75 countries over the past year.

So to prevent any other UK leaders falling for international information they believe to be accurate, we’ve spoken with a handful of entrepreneurs that have expanded globally to find out what fables they were fed during their expansion.

Beware the costs According to Omar Rahim, CEO of Energi Mine, which now operates in South Korea, there were a couple of standout myths he heard when looking at taking his company overseas and cost was chief among the factors. “Probably the first myth we encountered was that moving into new territories is phenomenally expensive,” Rahim says. “Really, it doesn’t need to be if you manage it properly. If you try and do everything yourself, from a distance then the costs can soon rack up.” The second thing he was led to believe is that

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you need to become a font of knowledge before daring to embark on an export expedition, which also proved to be inaccurate. Referring to cost and expertise, he advises: “In both cases, the key is to make use of local support specialists that know the ground you want to cover and can to get you up and running at reasonable rates, rather than trying to hire and negotiate deals on premises and services from afar.” We know that discussion with peers can be a good thing but you hear a mixed bag of positive and negative points, the latter of which could easily act as a deterrent. Indeed, Rahim was met with a fair share of horror stories when conferring with others. “Issues of spiralling costs and expansion plans becoming time vampires that drain the rest of the business are commonplace and you can’t help yourself but accept that it’s an unavoidable part of the challenge,” he details. “However it really doesn’t have to be that way. Just plan, be smart, and don’t try to do everything yourself. Local help is essential to being successful in new territory.”

conserving a company once it’s up and running in an overseas market. Commenting on his experience, Richard Valtr, founder and CEO of Mews, the hospitality software provider, says: “Much gets made of the pains of starting up and maintaining businesses in other countries. For us, hiring our financial director and using a cloud service has really helped us streamline processes in all of these different countries. Of course, there is no startup that seems to remove the headache of transfer pricing but startups shouldn’t be afraid of the risk and must be willing to accept some costs in order to establish multi-market growth.”

Piece of cake Seemingly, myths tend to be linked to negative elements surrounding exports. However, on the other side of the coin, Tom Jeffrey, e-commerce manager at Jules B, the luxury clothing brand, revealed people think internet retail is a walk in the park. “That the online market place is ‘easy’ is a myth,” he declares. “A lot of people think it’s easy but it takes a lot of time and effort to do it right. We would always recommend putting the effort in at the start as it will make everything more stable and automated in the long term, which makes doing business online and continuing to expand much easier.”

It’s too risky For Ashleigh Hinde, founder of Waldo, she could have quite easily been put off exporting altogether had she taken the words of peers to heart. “Generally speaking, the feedback I’ve experienced around internationalising is that people are very risk averse and tend to warn against it,” Hinde reveals. The key, she believes, is to take a step back and assess the risk for yourself as it’s you who knows your business better than anyone else. “For a lot of products their points might be valid but I think it’s important to look at your business through your own lens and make decisions, particularly regarding expansions, based on your own situation. Analyse your own company’s abilities and resources and if you truly believe it will work, don’t let people scare you.”

Running wild Elsewhere, another myth that can get in the way isn’t simply costs of getting started or the risks once you’re there but

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COUNTERING CRISIS BY Varsha Saraogi

In the wake of the Facebook and Cambridge Analytica scandal, itâ&#x20AC;&#x2122;s vital startups can prevent reputational damage when in a crisis without becoming history

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Cr isi s m a nage m e nt

arren Buffett once famously said: “It takes 20 years to build a reputation and it takes 20 minutes to ruin it”. These words of warning ring particularly true today when reputations can be ruined much faster than in 20 minutes. Hence being prepared to manage crisis is more important now than ever. While many see the perks of being their own boss, new entrepreneurs sometimes forget that even when plans are being executed, there is a possibility that things can go wrong and mistakes are made. Whether it’s a badly phrased ad or a bigger problem like KFC running out of chicken, business leaders must equip their companies with the tools to protect themselves against any unforeseen circumstance. “They are so enveloped with financial damage that they forget about other details,” says Anthony Burr, founder of Burr Media, a PR company specialising in crisis management. Being able to overcome any things that happens to a company is important as 65% of global CEOs have experienced a crisis within the last three years, according to a survey by PwC. Given many businesses experience bad things, it would be a huge mistake for startups to wait until a crisis hits before thinking how to respond. “Get ahead of the curve and, at a bare minimum, think about talking with your employees in confidence so as to get their support as well as pay heed to statements given to investors,” says Leon Emirali, co-founder of Crest Communications, a marketing agency for startups. The solution lies in startups preparing for rainy days just like they would for clear skies. As part of these preparations, founders must recognise that challenges comes in many forms – be it financial, product-associated, PR-motivated, HR-driven, management failures, market disruption or legal woes. “Having processes in order, knowing the protocols when the winds blow against you is more valuable than estimated,” adds Emirali. “It’s about ownership, authenticity of response and evidence of change.” But what are the fundamental to-dos for startups?

The first thing to remember is always respond in a timely fashion when faced with bad news. “Timing is everything,” says Burr. If a company makes a mistake and then goes dark, it leaves the customers, investors and the media immediately suspicious. If you have any doubt about this, remember how Mark Zuckerberg faced a massive backlash when he took five days to respond after Facebook was accused of leaking millions of people’s data to Cambridge Analytica. Where transparency and honesty is important, tactful communication should be every CEO’s mantra. The Zuck’s faux pas is even more ironic considering he more than almost anyone should know how fast bad news travels through social media. “Especially on Twitter, if you don’t get something in before maybe a key influencer or someone else does and bang, it will take off and then you can’t get it back,” says Burr. Given how quickly a situation can go from bad to worse online, founders must be prepared to snap into action the moment things go sour. He adds: “Don’t ignore the complaint or rush to respond with a denial. Immediately issue an apology with a holding statement — that buys you time. Be on the front foot. If you wait, the press will write your story, not you.” While it’s important to respond quickly, startups should also consider what to say. For instance, Texaco, the US-based fuel and gas company, tackled a situation well in 1996 when its executives were caught on tape spewing racist slurs. Not only did the company issue an honest apology but took immediate action, including sacking the racist employees and creating more equal opportunities. “That’s how you address people,” Burr says. “If you publish a standard press release, people see through that.” Another example of the essence of communication is set by Virgin Media mogul Richard Branson. When Virgin Galactic test craft SpaceShipTwo crashed in 2014, Branson published an emotive blogpost immediately. Fast forward three years and his project took flight again, this time successfully. “He knew how to make a crisis work in his favour,” Burr adds. “As long as that information is channelled with honesty, people do forgive. The one thing they won’t forget is being lied to or being cheated on. And that’s where the mistakes happen.” JULY 2018 ELITEBUSINESSMAGAZINE.CO.UK

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budgets but Emirali argues the PR helps to get a strategy in place during the early days. “Pivotal plans could sometimes save businesses thousands if not millions of pounds further down the line,” he says. “Their [PR companies’] network with journalists ensures you’re not portrayed in the wrong light. Investors should know that you’ve got a good strategy in place because their reputation is aligned as well and it could get ruined if something went wrong.” However, Burr warns startups to be wary when hiring one. “If the PR is not qualified enough for handling a crisis, what you’ve got is two chefs panicking at the same time which is a recipe for disaster,” he says. “And that’s why they need a real crisis management team to come in to analyse it and then to make those decisions for you.” What businesses also need to consider as a safety net is liability insurance. The shockwaves get more tolerable despite it being costly, given startups have a short runway for capital. “Especially where startups involving health records are concerned, it can save them a profuse amount of money,” Burr says. Saving that money in the early stages of a business can sometimes end up costing more if caught in an unexpected situation. Given that reputational damage can happen in the blink of an eye, entrepreneurs will find a crisis management system is what can save their ship from sinking. “Entrepreneurs should always have something in their locker,” Burr concludes.

One wrong word or a tweet phrased badly can cost you your whole business and that is the world we live in now Anthony Burr, Burr Media

And it’s clear that business leaders play a key role in getting these messages right. In fact, research by the University of Michigan and Emory University found mismanaged crises often stem from impulsive decisions by company heads which lead to a wide range of long-term regrettable consequences. And United Airlines CEO, Oscar Munoz would now agree after past experience. When a video of a passenger being dragged off a plane due to an overbooked flight went viral, the airline should have addressed the problem by making amends. Instead, Munoz chose to publish a statement saying: “[It was] an upsetting event to all of us here at United.” He was criticised for that by the media as well as customers which resulted in the company share taking a prices

plunge after the incident. “This is what new business leaders shouldn’t do,” says Burr. Of course, these are established organisations but the principles are the same for startups. “Respond rather than react,” says Jonathon Gabay, co-founder of KBA, a PR firm. “Think first, rather than become driven by reactions. Otherwise you can find yourself in deep water without knowing how to swim.” As part of your efforts to crisis proof your business, it’s worth considering hiring a PR agency that’s responsible for your reputation. “It’s one of those essentials on a checklist for any business,” says Emirali. “In times of crisis an important part is the liaison between the PR and the legal team.” Entrepreneurs might find it expensive to inject money into a PR firm due to their slim

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A DVE RT IS IN G F E ATURE

TEENAGE ENTREPRENEUR LAUNCHES STARTUP TO SUPPORT SMES

JASPAR CARMICHAEL-JACK MAY STILL BE IN HIS TEENS BUT HAS ALREADY PROVEN HIMSELF AS A CAPABLE SERIAL ENTREPRENEUR 16-YEAR-OLD ENTREPRENEUR Jaspar Carmichael-Jack started his company S33 Management with an aim to assist SMEs struggling in this new digitalcentric world. He noticed the gap in the market when he was looking to start an online business but couldn’t find one agency to manage everything he needed digitally. Carmichael-Jack started his first business when he was seven years old

- it was a sweet shop in his bedroom, with the only customers being his siblings. At age 12 he started his domain-reselling business for which he would purchase domain names relating to YouTubers and sell them back to them once their channels had grown. This was when CarmichaelJack began to learn website development. He offered website development services to YouTubers

and acquired some basic coding and design skills as he went along. Over the years, Carmichael-Jack has learnt the latest and greatest techniques for achieving social growth, which he implements into S33 Management. In 2016, he was commissioned to create a fan page for a YouTube group which he grew to over 30,000 followers in under six months. Despite his young age, Carmichael-Jack has already hit some milestones in the business world. In April of this year, S33 Management was nominated as one of three finalists for in the category New Business/Start Up of the Year at the Surrey & Hampshire Biz Awards. In May, his company attended The Business Show in London with him being the youngest exhibitor. According to Carmichael-Jack, the most popular services S33 Management has to offer are social media management and website development. “Many agencies simply post on their clients’ accounts and hope for the best - with social media, you can’t just do that,” says CarmichaelJack. “We use a variety of manual and automated methods to not just create engaging content, but to also grow the audience rapidly. We’ve found our new Twitter algorithm to be highly successful in achieving fast growth.” S33 Management offer social-media management plans from just £20 per week and website development from £495. If you run a small business or are looking to start one, S33 Management is perfect for all of your digital needs. Find the company online at www. S33management.com. JULY 2018 ELITEBUSINESSMAGAZINE.CO.UK

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THE SEAMS FROM ACCELERATORS TO INVESTMENT OPPORTUNITIES, THE WORLD OF FASHION SEEMS TO BE HAVING A RENAISSANCE, SO WE’VE HEARD FROM INDUSTRY STARTUPS TO FIND OUT WHAT’S REALLY GOING ON IN THE SECTOR BY ZEN TERRELONGE

t’s near impossible to go a day of reading business headlines without seeing tech, or more specifically tech developments such as artificial intelligence (AI) and cybersecurity, get a mention. But in a world filled with evolutions of the electrical variety, have we been caught sleeping on enhancements within the fashion industry? Farfetch, the online fashion retailer, launched a fashion and retail tech accelerator called Dream Assembly in April with a view of “supporting startups who are shaping the future of commerce”. The London-headquartered company elected to host the programme in Lisbon, though it’s open to startups from across the globe and parts of the 12-week incubator will take place in the UK capital and San Francisco. José Neves, founder and CEO of Farfetch, reflected on the journey with his firm over the past decade from startup to highly-regarded business boasting partners including Burberry and said how important exposure to brands and consumers alike was for the company. “Farfetch Dream Assembly is dedicated to supporting the best entrepreneurs and teams to scale to the next level,” Neves said of the launch. “We believe that the whole luxury fashion industry, including Farfetch, can benefit from helping to support the next generation of technology companies dedicated to shaping the future of e-commerce.” One entrepreneur well aware of the opportunity from a startup accelerator is Stacia Bedford, founder of Prim & Clover,

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a bridal tech startup. Of course, we’ve all heard of fintech, retail tech, proptech and even foodtech but bridal tech? That’s arguably far more niche. The idea for the business came from Bedford and business partner Luciana Riquet, who she met at London College of Fashion, where both of their dissertations were about customisable fashion and the pair went on to work together. During their market research to bring customisation to the fore, Bedford got engaged and started hunting for a wedding dress. “Very quickly, I became frustrated and overwhelmed as I couldn’t find exactly what I was looking for and all the appointments and running around was exhausting,” she says. “For the one time in my life when

the advent of bridal tech. “We found that designers and brands have websites, of course, but very few of them allow brides to purchase online – let alone customise their dress,” Bedford explains. “And bridal shops offer even less innovation – it’s all a bit last century.” The founders have only discovered one UK-based bridal designer offering a dress builder but the customer still has to visit a shop for the process to be completed. “We realise what we’re doing is quite disruptive and it’s going to take time for brides to seek out buying a wedding dress this way as there’s a culture and tradition surrounding the idea of wedding dress shopping.” She emphasises her point as she notes the endless reality TV shows sticking to said tradition like glue but that hasn’t stopped 20,000 unique visitors flocking to Prim & Clover’s site on a weekly basis with terms such as ‘design my wedding dress’ leading them there. Millennials in particular are keen to change with the times, she says, and the business is eager to deliver the experience customers desire for what’s “one of life’s biggest milestones”. Taking part of the Plexiglass accelerator, a 12-week programme for women-led tech startups, not only did Bedford and Riquet get a dose of female empowerment but it was an opportunity to further establish themselves on the tech scene. Prior to participating, Prim & Clover had only been engaged with fashioncentric incubators. With the three months coming to an end in June, Bedford says of the period: “It was an incredible experience and the connections and relationships we made whilst on the programme will definitely help us grow. Receiving help – financially, mentally and professionally – is essential to every entrepreneur. Even after years of careful planning, research and now sales, Prim & Clover is no exception to the need for support. We want to offer our brides impeccable products and an amazing service, so Plexiglass was absolutely the right vehicle for that.” Although Prim & Clover has its eye fixed unblinkingly on the bridal market, on a broader scale, Bedford feels the overall fashion market will shift in terms of sustainability being viewed as a more crucial element of what consumers look for. “Fashion is going to have to figure out a way to become more sustainable,” she says. “But it’s a paradigm shift and a big one. Future generations are taking note but they still need to be educated on how clothes are made, what they are made of and who is making them.”

SHE IS A TRUE VISIONARY WITH THE ABILITY TO INSPIRE OTHERS AROUND HER NATALIE HUGHES, THE FASHION DIGITAL

it was a given to spend a lot of money on a dress it just wasn’t fun. So, I convinced Luciana to switch our plan from customisable ready-to-wear to bridal wear and Prim & Clover was born.” The goal is to bring the bridal industry out of the dark ages as Bedford reveals the market “is really stuck in the past.” And while frustrating for her as a consumer, it’s presented a significant business opportunity – hence 62

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SUSTAINABILITY IS THE NEW ROCK AND ROLL OF BUSINESS JACK OSTROWSKI, YELLOW OCTOPUS AND REGAIN

Her comments will be music to the ears of Jack Ostrowski, a fashion industry veteran who’s founded two businesses based around sustainability. For 12 years, Ostrowski has been running Yellow Octopus, which works with retailers to distribute their unwanted stock using a sustainable approach. And in spring 2018, he launched a complementary platform called reGAIN, a consumer-facing app that helps them recycle clothes. He’s seen online come in and disrupt the space massively during his time. “The rise of fast fashion etailers has changed the market dramatically, changing the business models of many fashion retailers but unfortunately, impacting the sustainability of the industry as a whole,” Ostrowski reveals. However, this concerning shift he details seems to be turning a corner though as he adds companies are increasingly considering their environmental impact. “They are starting to focus on design from materials which can be recycled in an eco-friendly manner, as well as developing take-back programmes for post-consumer textiles,” he says. With the introduction of reGAIN, Ostrowski declares it was simply a matter of common sense in order to be pro-active rather than sit back and watch clothing being dumped in landfills. “Marrying technology and sustainability is what I personally want to focus on,” he says. “It can and will have a massive impact on the way we shop in the future. Sustainability is the new rock and

roll of business. Investors who can’t see that should probably think about retirement.” Those parting words are perhaps something for Neta-Porter founder Natalie Massenet to take on board – although it’s clear she has no intention of thinking about retirement. Indeed, her new project Imaginary Ventures, a VC fund, was unveiled at a similar time to reGAIN and “invests in early-stage opportunities at the intersection of retail and technology in Europe and the US”. The fashionista takes on the mantle of managing partner alongside Nick Brown, a seasoned investor. Imaginary arrived on the scene with a $75m fund and counts Farfetch, pop-up retail marketplace Appear Here and size-inclusive women’s fashion brand Good American among numerous companies on its portfolio. And Ostrowski can rest easy too, as Imaginary has also invested in sustainability ventures including Everlane, the ethical clothing essentials manufacturer, and Reformation, a producer of sustainable merchandise. Commenting on her new focus, Massenet said: “During my time at Net-a-Porter, I saw the retail landscape transform over a relatively short space of time, enabled by technology and social media and characterised by fastmoving new entrants – brands built entirely around the needs of the consumer.” With such transformation in the market we heard from another Net-a-Porter Natalie – Natalie Hughes, former social media editor for Net-aPorter turned founder of The Fashion Digital, a social media agency for luxury brands. As her old boss embarks on a new

JULY 2018 ELITEBUSINESSMAGAZINE.CO.UK

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path different to the one she carved out, Hughes has some thoughts on the transition. “I think it’s a really exciting and natural next step,” she says. “All of us at Net-a-Porter felt inspired by Natalie each and every day. She is a true visionary with the ability to inspire others around her. The fact she’s now empowering other entrepreneurs makes total sense.” Hughes believes that innovation is the key to anyone in the market looking to achieve investment and highlighted Zyper, a startup that connects brands to “passionate users”, as a prime example. “I think influencer marketing is going to further diversify, with smaller, more engaged communities driving conversions for brands. I’m also excited to see how IGTV inspires new creators and audiences. I’m sure algorithms will continue to challenge content creators to be more creative and nimble. And that can only be a good thing.” Like Massenet, Hughes has also witnessed the market evolve and points to digital as the stimulus. “Brands and publications alike are needing to create more content than ever for different platforms, while social media has changed the face of content and commerce wildly and continues to,” she says. Her point is backed up as The Fashion Digital is a byproduct of freelance consultancy work that she says organically grew into a business of its own. “I found myself in a unique position – there were few others specialising in digital content and social media for fashion brands,” recalls Hughes. “As a result, I began working with a large number of high-profile brands. As my client base grew, I knew it was time to scale up into a fully fledged agency.” Full of the energy you’d expect from a startup owner in a sector that’s evolving, Hughes is buzzing with life about the industry’s future development. “It’s an exciting time,” she says. “Thanks to social

media, brands and publications are having bigger conversations about issues that have existed in the industry for decades – issues around body positivity, sustainability and diversity. The fashion market has always been a powerful one with super-invested audiences who have serious buying power. That’s an attractive prospect and it’s never going to change.” Founder of We Are Gntlmen, the men’s lifestyle brand, Matt Bird would likely back Hughes about serious buying power sticking around. Believing that reality TV had lowered standards of what it meant to be a gentleman, the concept for his business was born. “I’ve always been into nice clothes and brands so I decided that menswear would be the medium in which I promoted this message,” he says. We Are Gntlmen develops items with a focus on quality so that consumers don’t have to worry about replacing versions of lesser efforts. “It’s about investing in a couple of well-made products rather than buying countless, poorer versions. It’s a tough balance as doing this reduces the need for a customer to actually come back and buy another shirt from us.” With a demographic of professionals aged between 28 to 36, the business differentiates itself on the market with carefully chosen fabrics and fits, while Bird explains customers like the brand message about less being more. It’s not just customers who like the message – Nick Patrick, an early-stage investor and entrepreneur, caught wind of We Are Gntlmen when the business was crowdfunding on Crowdcube and got behind it. “He liked the concept of reinventing the true gentleman and agreed that the product really was great quality,” Bird says. “Nick and our other two investors really buy into this vision and are excited about the journey ahead.” Concluding on the fashion sector as it stands and the future of it, Bird opines: “There are lots of new, smaller brands, like us, giving it a really good go and it’s nice to see. It’s a challenging market and there’s lots of competition but what industry isn’t like that?” He adds that growth in the market will continue with the support of tech and the internet. “All you need to do is read the news about large department stores and retailers to know what’s going on. That approach just isn’t the favoured one anymore.”

THERE ARE LOTS OF NEW, SMALLER BRANDS, LIKE US, GIVING IT A REALLY GOOD GO MATT BIRD, WE ARE GNTLMEN

JULY 2018 ELITEBUSINESSMAGAZINE.CO.UK

To find out more: huw.graham@wembleystadium.com 0208 795 9527 clubwembley.com

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EXPLORING OPPORTUNITIES OUTSIDE THE EU

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CONTENTS

JULY 2018

Editor Zen Terrelonge introduces Elite Global

Entering China was all part of the plan for this startup

This airline aims to open up the American way

This Scandi city is buzzing with startup energy

Is London among the best cities for female founders?

These initiatives can help your business grow into new markets

Welcome to eg

Cheeky Panda

Primera Air

Simply the best

Oslo is on the rise

Scheming to leave

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brexit banter Business leaders debate if Brexit is good for export

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FROM THE EDITOR

World Domination A

h, Brexit. Sore as it may be for some, we can’t talk about international growth without broaching the long-running subject. The word was thrown around well before the EU referendum in June 2016 and ever since the vote to leave was revealed. Serial use has even resulted in it becoming something of a pop culture reference used for comedic effect on TV. But the fact is, business owners should be keeping abreast of Brexit developments and thinking further afield in preparation for that EU departure. Which is precisely why we’re pleased to announce the debut of Elite Global, a new publication dedicated to the overseas opportunities UK startups and entrepreneurs have beyond British soil. With the EU farewell looming, we’ll be bringing you fresh developments and insights from around the world, giving Britain’s bosses the details they need to stay in the loop with global activity.

In our first issue, we feature a heated debate between two leaders about severing ties with the EU itself, with one in favour of the move and one against. Elsewhere, we’ve spoken with Chris Forbes, founder of The Cheeky Panda, a bamboo-based tissue manufacturer, about what he’s taken away from operating a business alongside China. We also explore how Norway’s capital city of Oslo has grown into a flourishing startup hub, even with the country existing outside of the EU, while we heard how Primera Air plans to cause turbulence in the airline market with its startup-esque culture and low-cost, long-haul flights to the US. So please buckle up, remain seated and on behalf of the entire crew, welcome aboard.

ACCOUNTS Sally Stoker – Finance Manager sally.stoker@cemedia.co.uk Colin Munday – Management Accountant colin.munday@cemedia.co.uk DIRECTOR Scott English – Managing Director scott.english@cemedia.co.uk Circulation/subscription UK £18, Europe £38, Rest of World £60 Elite Business Magazine is published four times a year by Channel Edge Media, 1st Floor, Regency House, 16 Victoria Road, Chelmsford, CM1 1NZ Copyright 2018. All rights reserved No part of Elite Business may be reproduced, stored in a retrieval system or transmitted in any form or by any means, without the prior written consent of the editor. Elite Business magazine will make every effort to return picture material, but this is at the owner’s risk. Due to the nature of the printing process, images can be subject to a variation of up to 15%, therefore Channel Edge Media, cannot be held responsible for such variation.

Zen Terrelonge - Acting Editor zen.terrelonge@cemedia.co.uk

JULY 2018

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Cities

The top ten global cities for female founders Find out where women have the biggest chance of making their startups a success

or the longest time it seemed as if the startup scene was singularly populated by white guys in their 20s with a shared fetish for hoodies. However, the times they are a-changing. Not only are more women stepping up onto the tech scene across the world but female founders are finally getting the recognition they deserve. That being said, not all startup ecosystems are equally well-catered to for the next generation of women-led enterprises. That was something The Dell Women

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NEW YORK

BOSTON

London

Toronto Stockholm

Seattle

Singapore

San Francisco

Los Angeles

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Entrepreneur Cities Index looked into when it ranked the best cities around the world for attracting and supporting female founders. Having looked at factors like whether or not the cities have big enough markets, a significant talent pool, an availability of capital, a culture that supports female entrepreneurship and a high enough level of technology enabling connectivity, the index left no stone unturned. So if youâ&#x20AC;&#x2122;re a woman looking to start a company, the top ten list should help you pick the best place for your business.

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Washington D.C.

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Brexit export

T h e g r e at has Brexit been good for

Y ES W

Carl Reader is a business coach, director at the accountancy firm d&t, a regular columnist in numerous national publications and author of The Startup Coach

hilst it’s rare to hear a pro-Brexit voice in business circles, it’s also rare to hear an analysis that looks to the future, not the past. It would be easy to say British exporters are performing better than before due to the weak pound but it’s just a symptom of the uncertainty that will prevail for the next few years. Long term I believe there’s a strong case for UK plc flourishing. We need to look towards the future circumstances of the UK post-Brexit, rather than extrapolating previous performance and certainly without presuming the worst. If there happens to be no trade deal agreed by March 29 2019 the UK will benefit from Article 24 of the WTO’s GATT for a period of up to ten years whilst further negotiations take place. Given that we effectively have at least a decade of free trade regardless of a trade deal, we can then look to the world outside of the EU. We often forget the power of the UK – the world’s sixth largest economy. According to both HSBC and PwC, the top ten nations will be dominated largely by non-EU nations by 2050. Growth outside the EU will far outstrip growth within. “Made in UK” still has cachet outside the EU, evidenced by the brands I work with

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who are experiencing tremendous growth in regions such as Australia, Canada and China. At present, the UK benefits from 40 EU trade deals with 70 third party countries, covering ten of the UK’s top 50 export markets, according to the House of Commons International Trade Committee report. Whilst trade deals cannot be signed until after Brexit, per this report the government has visited these 70 countries and none have objected to an effective replication of their EU agreement post-Brexit. There are of course some problems in reaching a Brexit agreement. With pressure from Sinn Fein, which wants a united Ireland, and the EU, which desires a united Europe, the Northern Ireland border might prove troublesome. Likewise, the EU, noting the remainers’ noise in Britain, might be inclined to influence UK citizens by generating fear of travel restrictions. So, these may cause some issues to exporters – but there is a whole world out there to make further trade deals with. We won’t be subject to horrific tariffs based on Trump and Verhofstadt’s Twitter rows, nor the alleged removal based on Merkel’s fear of the impact on Germany’s car industry. Instead, we can put the debates behind us and look towards becoming a beacon of free trade. Globally.

JULY 2018

06/07/2018 17:24

Brexit export

d e bat e :

SMEs’ export opportunities? Siddharth Shankar is a leading expert in trading with Asia and CEO of Tail’s Trading, an innovative new solution for SMEs exporting to Asia

n my opinion it’s unavoidable, at least in the short term, that exiting the EU will poise significant challenges for UK SMEs who export their goods abroad. Currently, EU exports account for a whopping 48% of British exports. But Theresa May has repeatedly asserted the UK will leave the customs union and the single market when it exits the EU next year. If this comes to fruition, it will spell the end of free trade to EU countries, leaving UK businesses grappling with complex administrative and financial barriers. This is a very worrying prospect for the many UK leaders whose companies currently rely heavily on EU exports. The government’s reaction has been a scramble to strengthen trade ties globally and put greater incentives in place for UK businesses to export to countries outside the EU. 2018 has seen a succession of visits made by UK trade officials to countries such as China and Thailand. Indeed, Asia in particular presents a huge value offering and a real alternative to the EU. In my opinion, to minimise the impact of Brexit, businesses need to shift their focus East. The weaker GBP should strengthen exports globally

and, although trading within the EU will likely be much harder, trading globally should become easier. Asia opens up a world of possibilities. China, for one, is a growing market with immense potential for British businesses and the UK already has a good image there for trade and education relationships. In addition, East Asia is a large and wealthy society with high consumption. Whilst countries like Japan (the world’s third largest economy) already consider the UK an ally, based on long-standing cultural and economic ties. It seems inevitable that leaving the EU will have a negative impact on the British economy as a whole. To me, it’s absolutely essential that the UK taps into the strong and growing Asian market in order to ensure a burst in trade that could prove very helpful post-Brexit. Britain’s current export figures are at an all-time low and an economic recovery plan will have to constitute strengthening the export market to be successful. To counter the negative impact of Brexit on trade, the UK will have to re-adopt its old policies – of an outward-looking, engaged country.

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The Cheeky Panda

ON A

ROLL

After spending most of his career working in recruitment, Chris Forbes found himself convinced by wife Julie’s idea for a new kind of toilet tissue and the couple flew to China to make The Cheeky Panda a reality BY ZEN TERRELONGE

nspiration can come from anywhere, whether that’s a book, TV, film or people. It can also be brought on from other experiences such as places and cultures. So, with that in mind, China is surely one of the most obvious locations rich with heritage and influence, capable of stoking up the flames of innovation for an entrepreneur. This was the case for Chris and Julie Forbes, husband and wife founders of The Cheeky Panda, the bamboo-based tissue manufacturer. Prior to his involvement in the business, Chris Forbes spent two decades running an executive search firm. Detailing the switch, he says: “I’d spent a lot of time working up to board-level with companies like PwC and world-class procurement and supply chains and we were able to use those principles when we set out in the beginning with Cheeky Panda.” After spending much of his career in recruitment, it begs the question: where did the move into toilet roll production com from? Forbes explains it was his wife’s idea as she’s originally

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from China – home of bamboo. “She’d been talking to me about it for a year and said ‘I have this idea for a bamboo tissue company’,” he recalls. “I thought it sounded great but it was one of those things I didn’t have my mind on before we decided to do something with it.” His focus soon landed on it when the pair flew to China in December 2015 to meet Julie’s parents, a trip that mixed business with pleasure as the couple also jetted to the mountains to investigate bamboo. “The thing that inspired me was the scale of the bamboo harvest, which is absolutely gigantic,” Forbes details. “They can probably produce over a billion pounds of bamboo pulp a year.” Compared to trees which can take 18 years at least to grow, bamboo is the fastest-growing plant in the world and Forbes notes that the sustainability opportunity was a key driver behind the Cheeky Panda ethos. Interestingly, although part of the ambition was to create a tissue that would have an

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The Cheeky Panda XXXX

environmental benefit, it’s also had health perks too. “Unbeknownst to us, most tissue in the UK is from virgin pulp and recycled pulp – and recycled pulp comes from newspapers, copier paper and has to go through an intensive bleaching and de-inking process,” says Forbes. “And as part of that you end up with all sorts of nasty chemicals in it.” It turns out the release of Cheeky Panda’s bamboo-based tissue had unintentionally become a health product as allergy sufferers wrote to the business saying they hadn’t had any reaction to the tissue. “By doing the right things well you get unexpected results,” Forbes says. “On a planet of stretched resources we should be looking for more eloquent solutions in terms of using everyday products.” To get their operations off the ground in the market, Forbes was pleasantly surprised by the calibre of the partners and said their factories look better than ones here in the west. “The back-end was exceptionally modern and efficient, with all sorts of modern manufacturing and recycling,” he says. “There’s also the ethos and they’ve got a philosophy there, which they incorporate into how they treat their people and the community. It’s really cool.” He also expected the country to be more bureaucratic than it was but reveals: “It’s kind of a screw it, just do it attitude. We’ve developed products that never existed in the market before and it only took three months.” Being Chinese, Julie was invaluable when securing local partnerships. Apart from that she’d had experience in operating a shoe business, which meant importing from China and selling across Europe. “There are lots of people in terms of manufacturers and sales officers, so she knows how to navigate the potentially difficult minefield to find the right people,” Forbes says. “I think it would be very difficult for a western person sourcing from China to do what we’ve done.” Cheeky Panda wasted no time in pushing the business forward after returning from China as

Forbes quickly secured the support of Invest Essex, a regional business growth network, over a meal with an executive. “I put a loo roll on the table while he was in the middle of the curry and said ‘right then, you can help me with this’,” he laughs. “And his response was ‘Chris, I look after £100m plus businesses’ and I went ‘I know, that’s why you can help me with this’.” The bamboo business ran a crowdfunding campaign at the end of February 2016, which was overfunded when it closed at the start of April. It gave the founders confidence there was an appetite for the products as well as brand awareness. With sales officially kicking off in August and beginning at £10,000 a month, which Forbes calls “not bad for our first month.” Cheeky Panda has continued to scale. “It’s grown exponentially from there, he says. “We started selling internationally from early on,” he says. In addition to the UK, France, Germany, the Netherlands and Belgium are among the key markets the business serves. Closing on how lucrative looking overseas for inspiration has been, Forbes concludes: “We’re a brand that’s about to go mainstream. We’re in the stage of completing some proper investments, which will put our value to around £20m. Our current turnover is £1m but we’re looking to get to £5m turnover by 2019 based on existing contracts. You can take inspiration from international markets but you have to understand how to adapt it for your market.” JULY 2018

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fro m ha h

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A dv ert i s i ng f eat u r e

EXPORTING OPPORTUNITIES E

xporting is a great opportunity for businesses large and small to increase sales, spread risk and meet fascinating people in a vibrant variety of new markets. Getting started can be intimidating, but you can gain the confidence and skills to really thrive globally through the education, training, and support framework provided by the Institute of Export & International Trade. For over 80 years we have been helping companies and individuals to enter international trade through our world class suite of qualifications and training courses, our exporter helpline, unique membership packages, and our free-to-use Open to Export platform for SMEs. Our New Exporter Membership package in particular is ideal if you’re looking to take your business to the next level, giving you an unrivalled wealth of information to research new markets, backed up by training and advisory services to help your business quickly gain the skills and expertise needed to trade easily and successfully. With the ‘New Exporter Membership’ you can take control

of your export strategy. We offer a free export strategy consultation session with one of our trade experts to go through the Export Action Plan tool - an online business planning tool on Open to Export that allows you to focus your export strategy, decide your market, diagnose key areas of your business you need to strengthen, and set yourself achievable next steps. You will also be able to draw on our expert team for bespoke market research into the new markets you’re looking to enter, and we’ll guide you through the free guides and webinars on Open to Export covering all the most important aspects of trade, while giving you preferential members’ rates for our world-leading training courses. Whether it’s customs declarations, international taxes or creating a successful international marketing and sales plan, we’ll have it covered. And when things get technical and specific - as they often do in international trade we’ll be there for you. Through the New Exporter Membership you’ll get unlimited access to our technical helpline for help with any international trade issue, ensuring you can get answers to all the key questions around customs compliance, shipping documentation, controls and licences, and all the other requirements your

For over 80 years we have been helping companies and individuals to enter international trade 10

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business will have to deal with when selling to a new market Doing your research and understanding how international trade works are the two biggest requirements for companies looking to export successfully, and through the Institute of Export & International Trade you can get all the information and guidance you need to become a fully fledged global trader. You also get to join a tightly knit community of traders who support each other, sharing insight and advice through our members’ journal, full programme of events, and communications package. So if you’re thinking about increasing your exports but are not sure where to start, join our community and let us guide you through everything you need to know to make the most of the opportunities international trade undoubtedly provides.

www.export.org.uk/NewExporter

JULY 2018

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www.export.org.uk

@ioexport

Choosing a great export training partner can really help your company take off in the export trade! We can help develop new ideas and find ways to drive down costs and produce sustainable improvements in your export business. Join us today

Membership : Training : QualiďŹ cations : Advice Call: +44 (0) 1733 404 400 : email: institute@export.org.uk

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Oslo

Flouris

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Oslo

hin g fjords BY Eric Johansson

Decades of depending on the oil industry has made Norway one of the richest countries in the world. But the nation was forced to reinvent itself when the oil price crashed in 2014. Now, Oslo is emerging as one of the fastest growing startup cities in Europe

t’s the oil, dummy. Ask anyone why Oslo’s startup scene only recently came into its own and they’ll tell you it’s because petroleum dominated Norway’s economy since it was first discovered in the late 1960s. While the natural resource buried at the bottom of the North Sea has consistently placed Norway among the top ten wealthiest countries in the world, it’s also restricted the country’s innovation capabilities. “The technology in Norway has basically been focused towards obtaining and abstracting oil and gas resources,” says Kjartan Rist,

co-founder of Concentric, a VC firm. As a result, the idea of establishing an entrepreneurial hotbed in Oslo was put on the back-burner. That doesn’t mean Norwegians didn’t launch any tech ventures in the past. “If we look at the 90s, we had several big IT companies here in Norway,” says Jørn Haanæs, startup director at Oslo Business Region, the city’s initiative to support the startup ecosystem. It’s from this era that you can track success stories like Opera Software, a tech company sold to a Chinese consortium for $600m in 2016. JULY 2018

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OSLO

In many ways, it wasn’t unlike the scenes in Denmark, Finland and Sweden where the period saw startups take their first steps into the world of IT. But the sector collapsed after the dotcom crash in 2000. That coincided with the world oil price jumping from $25 per barrel to almost $150 per barrel between 2000 and 2008. And in a population of just five million, it’s hardly surprising that most innovative minds bet on the safe and rich oil industry rather than going at it alone. “So we had a handicap for years,” says Haanæs. That’s why, while Stockholm has birthed startups like Spotify and Helsinki has hatched the Angry Birds creator Rovio Entertainment, Norway’s startup culture has been lagging behind. Until now. Oslo’s transformation began with a crash. When the financial crisis kicked off in 2008 it caused the price of oil to plummet to $40 per barrel. It only recovered ever so slightly before falling again in 2014 to $28 per barrel, resulting in profits for the Norwegian industry to tumble too. “It was a blessing in disguise for Norway because it was a wake-up call to reduce our reliance on the oil and gas sector,” says

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Haanæs. Recognising the need to innovate, the whole country seemingly got behind the desire to help startups flourish among the fjords. Indeed, even the royal family has pitched in with Crown Prince Haakon opening the annual Startup Extreme festival in 2016. And it’s hardly a secret why the community has this backing. “We need new companies because we need new jobs,” says Haanæs. “This is a vital part of our economy.” And Norway is putting its considerable coffers where its mouth is. “There’s tons of initiatives,” says Karen Dolva, CEO and co-founder of No Isolation, the startup creating tech to fight loneliness. “There’s tons of programmes, accelerators and incubators popping up.” Indeed, over the past decade the government has launched or supported initiatives like Innovation Norway, the organisation aiding

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OSLO

startups, and Investinor, the Norwegian government-backed investment company, to help entrepreneurs realise their dreams. Moreover, the last few years have seen the launch of more than 50 incubators and accelerators as well as nearly 30 co-working spaces. And with each new initiative, the hurdle budding entrepreneurs face becomes slightly easier to overcome. “This is the new hype you want to be a part of,” she says. “And that’s cool.” And it’s safe to say these efforts have already had an effect – investment in Oslo’s startups jumped from $24.7m in 2014 to $196.3m in 2016, representing the second biggest growth in the Nordics after Stockholm, according to Oslo Business Region. “If you have a good idea, a team assembled to do it and a way of attacking the problem then you’re probably going to get the money to try to figure that out,” says Haanæs. However, while the number of rounds worth over $10m have jumped from one to 11 in the period, most of the investment rounds are still targeted towards early stage startups. This means Oslo

This is the new hype you want to be a part of Karen Dolva, No Isolation

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OSLO

We’d like people to move here and have kids Axel Bentsen, Urban Infrastructure Partner

entrepreneurs must often move abroad to scale. For instance, that was the case for Unacast, the contextual and transparent location data platform, which relocated to New York when it raised its $17.5m series B round in February 2018. “That’s a problem for us,” says Haanæs. But that isn’t the only reason for entrepreneurs to look abroad for their expansion plans. “We’re a very small market so just conquering the home market isn’t necessarily enough,” Dolva says. Indeed, with its small population, it’s hardly a secret why Oslo’s startups go abroad. “It’s just never going to be enough,” she says. “So, it forces you to go out fast, which is probably good. You kind of have to leave your own country which is maybe not the case if we were in the UK and had a large home market.” However, while the British and Norwegian markets are different

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in many ways, both nations will soon be outside of the European Union. Despite the risks and benefits of Brexit still being debated in Blighty, Norwegian entrepreneurs’ opinions about being outside the union are clear. “It makes me super-angry to be Norwegian and to come from a country that doesn’t realise the value of being a part of the EU,” says Dolva. The way she explains it is that even though Norway is a member of the European Economic Area, No Isolation was still forced to open a daughter company in Amsterdam in order to trade with the rest of Europe and to avoid tariffs and extra admin. “Right now it’s easier for me to ship robots from our office in Amsterdam to Sweden than to ship it from Norway and that just doesn’t make sense to me,” she says. In fact, Brexit has caused some worries among Norwegian entrepreneurs too. The reason

is that because the country has such a limited talent pool, startups are no strangers to recruiting engineers from further afield. “We’d like people to move here and have kids,” says Axel Bentsen, CEO and co-founder of Urban Infrastructure Partner, the transportation sharing startup. Given Norwegians have the fourth highest English proficiency in Europe, it’s safe to say that the language barrier isn’t a problem for people wishing to come and work in Norway. Add to that a high quality of life, a generous welfare state and long parental leave for new parents, moving to the land of the midnight sun is a highly attractive alternative. But Brexit has made Norwegian startups worry about what the UK’s conscious uncoupling from the EU will mean for them with the UK and what will happen with their British employees. “We’re quite nervous about what

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OSLO

N o I s ol at i o n

It makes me super angry to be Norwegian and to come from a country that doesn’t realise the value of being a part of the EU Karen Dolva, No Isolation

Dying children are not part of most startups’ journeys. But No Isolation isn’t your average tech venture. Founded in 2015, the firm began life after a conversation between the CEO and cofounder Karen Dolva and one of her friends.”She’d been working as a nurse at a children’s ward in a hospital and mentioned in passing that they were miserable,” Dolva remembers. The reason was they never saw anyone else other than the people in the hospital and their friends. At the time she was working at the incubator StartupLab Oslo and had talked with two of her friends about launching a business. The result was No Isolation, a startup tackling loneliness. And with the backing of angel investors in an undisclosed angel round in 2015 and a subsequent 800,000 round in 2016, the team went to work. “We have developed a robot, a teleperson, that can go to school and that the children can control from home so they can see everything and can talk to everyone,” she explains. That way the kids can participate in the everyday life of their classmates and don’t miss out. But to get to that point they had to do a lot of research, which meant talking to a lot of children suffering from terminal conditions when the founders tested their minimum viable product. “It’s no fun getting a robot back because someone has died,” she remembers. After the first product proved a huge success, No Isolation began selling its products in nine countries. Since the launch the company has raised an additional seed of 2.4m in 2016 and a fourth round in 2017 worth 2.1m. The company is now gearing up to raise a series A round. “It will hopefully be after the summer,” she says. “We’re not in a rush and we want to do it right.”

going to happen and how it’s going to be,” says Bentsen. “They have rights because we have close ties to the EU but if Brexit is complete, then what?” While there are certainly challenges left for the emerging startup city, the people in Oslo are confident about its future. “We are now in an extremely intensive stage where we’re seeing high growth for several years,” says Haanæs. He points to the fact that the number of rounds valued at $10m or more has jumped in the past few years and predicts this figure is only set to grow. Moreover, with successful startups like Vivaldi and Kahoot! having originated from Oslo, it’s safe to say the city is onto a good thing. “That reaffirms our position as a good place to grow companies, not only seed companies, and that is an important next stage in the next cycle for Oslo to become an ecosystem for scaleup growth companies,” he concludes. JULY 2018

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A DV E RTIS I NG F EAT U R E

FREE SUPPORT FOR YOUR IMPORT/EXPORT BUSINESS

ITH BREXIT ON everyone’s mind, we understand the need for up-to-date and accurate data and hold information that can really help you with your import and export business – at whatever stage you are at, whether you are thinking about launching a startup or are considering ways to scale your established company. The City Business Library, in the heart of London, is a public library specialising in business support with a huge array of information with free membership. In an ever-changing world, the information you have can really boost your business by giving you access to what is happening right now and what is forecast to happen. The library subscribes to a range of specialist online resources with current information to help with your import or export queries. For instance, IBISWorld not only has detailed market research and industry

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JULY 2018

profiles but also a separate section on UK Brexit impact statements, which is continuously updated with the latest information. Passport and MarketLine both contain a vast array of industry reports worldwide, which include references to Brexit. Another example of the library’s vast resources is Statista, which has a huge amount of statistics on how Brexit has impacted different industry sectors so far. Exporters Almanac contains links to many useful support services such as supply-chain solutions, customs and tariffs, tax, rating agencies, international banks and insurance. It also provides country profiles, so you can see likely impacts on the country you’re trading with or thinking of trading with. It also has a section specifically on Brexit. Integrated Tariff sets out the duties and measures affecting the import, export and transit of goods to and from the UK. The UK Tariff consolidates UK specific data with the EU TARIC data. Global Trade Tracker contains detailed commodity trade statistics like value, volume and price. It covers 99 countries with monthly and yearly data from 2002 to date.

“REALLY EXCELLENT RESOURCES. MADE US FEEL SUPPORTED IN OUR BUSINESS” Economist Intelligence Unit Country Reports covers nearly 200 countries with profile data, including economics, politics, business and policies, all of which may impact on international trade. It also has forecasts on hard and soft commodities. The City Business Library also has resources – like Mint Global and Fame – to help you find company contacts worldwide, with access to over 160 million active companies, including many British importers and exporters. These online resources are always kept up-to-date and you can use these resources to help you make informed decisions to start or develop your business. We do also have trade journals and seminars at the library and staff are always on hand to help you identify which resources can help you with your individual business needs. The information contained in the library’s resources is detailed, accurate, current and expensive. So come and use our resources for free at the City Business Library and really benefit from all the amazing data that can support you throughout your business journey.

Create Free B2B contact lists at the City Business Library

Free membership at the City Business Library gives you access to an amazing array of specialist UK and global business information and market research data some of which is available remotely. Create B2B lists for free from over 160 million companies worldwide; browse import and export statistics from over 90 countries; access in-depth global market research reports, country profiles and statistics; use the global forecasting tool for hard and soft commodities worldwide; analyse performance indexes, forecasts for consumer markets, industry sector reports as well as global demographic and economic data. Plus - we also offer free flexible workspace, events and seminars, business start-up advice and room hire.

Tel: 0207 332 1812 Guildhall, Aldermanbury, London EC2V 7HH

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Primera Air

Across the pond BY ZEN TERRELONGE

For many British businesses cracking the US is a sign of success. So offering low-cost transatlantic flights from London Stansted Airport, Primera Air hopes to be a facilitator for those UK entrepreneurs chasing the American dream on a budget by using its startup culture

ity, Gatwick, Heathrow, Luton, Southend and Stansted: there’s no shortage of airports surrounding London and yet the capital’s air traffic is an issue. Heathrow expansion campaigns have rattled on for years, largely with inaction. However, in June 2018 the government granted approval for a third runway, although completion is still reportedly eight years away at the earliest if the build goes ahead. But Elite Global has discovered Stansted may seemingly be the airport to watch. We were there for the UK launch of Primera Air, the Icelandic airline on course to create turbulence in the British travel market with low-cost transatlantic flights. While the benefits for consumers are obvious, with one-way flights to New York from £149, Primera is equally keen to service the needs of businesses in the surrounding areas of Essex, Cambridge and London, revealing a 50/50 split between business and leisure passengers. Stansted is an essential part of the airline’s strategy for conquering the UK, says Ken O’Toole, CEO at London Stansted Airport. “Businesses and

local residents have been very clear to us they don’t want to have to commit up to three hours trekking around the M25 to get to Heathrow. You look back to the development of easyJet and Ryanair and what they’ve done for prominent low-cost developments – it was an easy decision for Primera to make.” In addition to the location, Stansted provides Primera growth opportunities neither Heathrow or Gatwick could manage, according to O’Toole, who described the airports as “effectively full.” 26 million passengers travelled through Stansted in 2017, which is expected to reach 29 million in 2018. And currently the airport has a cap of 35 million a year but an application is in place to have that extended to 43 million, so there’s certainly potential to scale, which aligns with Primera’s “strong growth ambitions.” But how can Primera offer such low prices to fly across the pond? While sitting on-board a Primera Airbus A321 Neo plane with Anastasija Visnakova, chief commercial officer at Primera Air, she tell us it’s all down to technology. “Traditionally these planes are used for short haul,” she says. “Now with technology it allows you to fly over the pond, which is quite a game-changer in the industry.” Having operated in the Nordics for 14 years though, you may wonder why the airline didn’t launch in the UK sooner. Visnakova explains the timing is now right because consumer awareness of, and desire for, low-cost airlines is higher than ever. Primera’s fuel efficiencies

If this was a war, we’re guerilla. A major army like the legacy carrier can go against us and lose 20

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Primera Air

mean costs are 25% to 40% lower than those from older aircrafts. “We’re making expensive transatlantic flights history,” she explains. “Even with all the money in the world, people want a bargain. Why not pay £400 and sit in premium class instead of £2,000 in business class?” Whether you’re a consumer or growing business owner, it’s hard to argue against the cost savings to be had. Particularly as premium class promises larger seats, priority boarding, check-in baggage, meals, drinks, pillows and blankets. However, despite the ease on the wallet and facilities on offer, Hrafn Thorgeirsson, CEO of Primera, admits the airline isn’t for everyone. “Primera Air will be attractive for a big majority of the population but we’re not for everyone,” he says. “If you want a lie-down seat, first class service or big lounge, we’re not the airline for you. But most people aren’t in that category, we’re almost taking about the 1%.” Thorgeirsson is under no illusion some will stick with legacy carriers but Primera is comfortable in its own skin, so its approach to make an impact in the UK is ready for take-off. In fact, he expects the titans of travel to follow low-cost carriers. “What I think is going to happen is they’ll imitate us more and more,” he says. Indeed, more airlines have cut prices by removing things such as baggage allowance as standard in

We’re making expensive transatlantic flights history

a bid to offer more consumer choice and entice a broader demographic but that doesn’t guarantee an easy win. Go Fly, British Airways’ low-cost airline, ran for just three years from 1998 before subsequently being merged with rival easyJet. “They have a much higher level of cost already, so it will be difficult to copy for all kinds of reasons,” says Thorgeirsson of legacy airlines, pointing to things such as aircraft and crew fees. Interestingly, operating an airline today requires a culture startups will be very familiar with, explains Thorgeirsson. “You have to have a special spirit which you don’t often find in the hallways of airlines that have been around for decades,” he says. “We’ve been very quick to adapt ourselves to the everchanging winds in aviation.” He refers to oil costs, fluctuating currencies, politics and other events being out of their hands, noting that speed is essential to survive. “You have to have a flexible organisation to move very quickly. I think it’s been created by itself because we’re a relatively young airline. It’s important to never forget your objectives and that’s to kill any unnecessary cost. That’s the only way we’re going to be profitable and still offer very low prices.” In addition to biting into the Big Apple, Primera will fly from Stansted to Washington DC, Boston and Toronto by the end of the summer and Thorgeirsson believes the UK could account for 40% to 50% of the overall business within three years. “We’re still small, very flexible and we can move around so we can tweak things,” he says. “If this was a war, we’re guerilla. A major army like the legacy carrier can go against us and lose. It will be a challenge in the coming years if we are successful in maintaining this spirit. Right now it’s alive and dynamic in the company, so I don’t foresee it as a problem in the next two to three years but we have to be conscious all the time about where we came from and where we want to go.”

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crossing countries

scheming to leave With the Brexit deadline in sight, world trade is an increasingly prominent focus for UK businesses – and there are plenty of initiatives to provide support Mending money matters SMEs shipping overseas can sound warning bells for lenders – and that’s why the government’s Export Working Capital Scheme exists. By giving partial guarantees to lenders and covering up to 80% of export credit risks, companies which don’t quite ease the minds of lenders can start bagging high-value contracts with the government backing them up.

Banking on business If you’re safe enough for a bank then you’re safe enough for the government. Indeed, after securing a British bank’s signature on a Letter of Credit issued by an overseas bank, why not double-up security under the Letter of Credit Guarantee Scheme where the government will ensure between 50% and 90% of its value.

Countering political challenges All investments are prone to losses but when exporting outside the Organisation for Economic Co-operation and Development (OECD), the future is especially unpredictable. Luckily, the government’s Overseas Investment Insurance safeguards companies from losing out because of disruptive political events which may arise outside the OECD.

Drumming up exports Marketing grants from £5,000 to £50,000 were music to the ears of artists like Editors, Nina Nesbitt, Paul Draper and Shame, who were able to tour four continents thanks to the British Recorded Music Industry’s Music Export Growth Scheme. While the 13th round has passed, music companies with under €50m turnover and fewer than 250 employees can get application for the next round in from Monday August 6.

JULY 2018

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04/04/2018 14:44

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S TA N DIN G D OW N

FROM THE GROUND UP BY ZEN TERRELONGE

ADMITTING YOU NEED HELP AS AN ENTREPRENEUR IS NO EASY THING, ESPECIALLY WHEN THE BUSINESS IS SOMETHING YOU’VE PUT YOUR HEART INTO. BUT SOMETIMES THE DECISION IS FOR THE BEST IT’S COMMON FOR ENTREPRENEURS to refer to their businesses as their babies. So like the process of handing your child over at nursery for the first time, it’s fair to expect the process of bringing in a new leader to helm your firm as uncomfortable or even upsetting. Surely they know the business better than anyone else since they created it from their imagination? Why replace the founders at all then? In some cases, like that of Apple co-founder Steve Jobs who was famously exiled by his business, because they were ousted by the board. “How can you get fired from a company you started?” Jobs said in a speech at Stanford University. “Well, as Apple grew we hired someone who I thought was very talented to run

ELITEBUSINESSMAGAZINE.CO.UK JULY 2018

S TA N D I NG D OWN

the company with me and for the first year or so things went well. But then our visions of the future began to diverge and eventually we had a falling out. So at 30, I was out. And very publicly out. What had been the focus of my entire adult life was gone and it was devastating.” Of course, we know that the ejection was shortlived and he took the tech firm to heights beyond anyone’s wildest dreams. But leadership reshuffles don’t have to be this brutal. Google founders Larry Page and Sergey Brin promised investors in 1998 they would appoint a CEO and later seemed to regret the agreement, that is, until they met Eric Schmidt who took on the role in 2001 to great success. Brin said at the time that the search for a Google CEO was to provide “parental supervision”. However, it’s not just Silicon Valley top dogs who’ve taken on other jobs in the pack. Justin Broadbent, the founder of isoenergy, the sustainable energy installer, has been there and done it when it comes to bringing in external leadership. “Initially, I was involved in importing and installing systems with the help of a couple of plumbers,” he says of his early duties when he launched the company in 2006. “I was actually installing the systems – and installed one in my own house at the time – so my role was both practical and managerial.” By 2011 when the business had grown to 15 members of staff, Broadbent knew it was time to bring a in CEO. Although he wanted to retain control, partly to keep costs down, he admitted he was preventing further growth by holding too tightly. “Having been in business for a while, I understand that most companies will eventually get

I KNEW HIM IN A WAY THAT CAN’T BE ACHIEVED THROUGH A STANDARD INTERVIEW PROCESS Justin Broadbent founder, isoenergy

to the point where they simply cannot be run by just one person,” he says. “Plus I’m rubbish at organisation and administration of any kind. There came a point where I had to accept the business needed more than I could offer on my own.” The key attributes he sought in a leader were stability and maturity as well as solid business and technical knowledge, which resulted in him hiring someone he knew outside of the business – from their children being friends at school. “I knew him in a way that can’t be achieved through a standard interview process and I can confidently say he is one of the better hires I have made over the years,” Broadbent declares. These days, he’s still hands-on but has more freedom, likening himself to someone we’re all familiar with. “Nowadays, I concentrate my efforts on selling to clients and acting as a figurehead for the company – a bit like the Queen really,” he laughs. “Most business decisions can be made without me sticking my oar in but the CEO knows to come to me and the board if there is a particularly significant strategic decision to make. Know your limitations and don’t be too proud to bring in others to fill the gaps.” Elsewhere, Harvey Bowden founded Harvey Water Softeners back in 1978 as a man-in-a-van outfit. Selling water softeners from the US prompted him to build a better British-made alternative. As founder and CEO, Bowden was juggling accounting with new businesses and installations with HR and management. These days he is non-executive chairman but his first step to stand down was by handing the keys over to his son who worked alongside him, rather than someone from outside the business. “The second part was three years later when we appointed our first external MD – that was made easier because the handover process had already begun,” he says. Bowden was aware the situation JULY 2018 ELITEBUSINESSMAGAZINE.CO.UK

S TA N DIN G D PW N

I DON'T HAVE A BIG EGO SO I'M NOT WORRIED ABOUT HANDING THE CEO TITLE OVER TO SOMEONE ELSE Julian Hearn, founder, Huel

wasn’t necessarily going to be easy had he been too stiff to the changing dynamics of the business. “I believe that once you’ve handed over it’s important to get out of the way quickly to let the next leader make their mark,” he opines. “That’s what I’ve tried to do.” Interestingly though, unlike Broadbent, Bowden didn’t actually realise there was a need to appoint a new leader because they were so engaged in the day-to-day. He explains: “We’d brought in Martin Hurworth as technical director and he made such an impact to that department that we realised ‘here is someone who will be able to run the business better than we can.’ Two years later we’d made

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him MD.” Bowden says that he and his son are both more hands-on entrepreneurs, not built for running what is now such a large enterprise. With the addition of Hurworth, staff count has trebled to over 300 and turnover rose from £11.5m in 2012 to £26.5m in 2017. “We’re on course to hit over £30m this year,” he adds. “None of this would’ve happened without us bringing in external expertise.” While Bowden’s decision to step aside came from a desire to see the business scale, other leaders do it out of boredom. That was the case for Julian Hearn, founder of Huel, the nutrition brand. Coming from a marketing background meant he was happy acting as CMO, brand designer, copywriter and all things associated with his past realm. However, he found the duties of being the head honcho mundane. “A CEO has to get involved in finance, ops, systems, etc,” he says. “All important areas but ones that don’t excite me. For me. brand

and marketing drive the success of a business and I felt that I wasn’t giving it due care and attention.” Two years after launching and, still unexcited by CEO duties but finding more stacking up on his plate, he knew it was time to recruit. Unsurprisingly, it wasn’t a hard decision to make. “I don’t have a big ego so I’m not worried about handing the CEO title over to someone else,” he says. “I’m still heavily involved in Huel and being CMO suits me better, I can add the most value in that position. And I know the rest of the company is being looked after by someone with more knowledge of running a large organisation.” With awareness as a key component for the job, Hearn also sought an individual with experience in food and crucially, without a marketing background to avoid conflicts. He managed all the interviews personally and was confident when he saw James McMaster on LinkedIn. “I still interview everyone before they join Huel,” he reveals. Hearn admits though that a relaxed sense of communication is needed on both sides to make the transition work out well with minimal issues. “James is very patient with me,” says Hearn. “Huel is my baby so I get very passionate sometimes but he keeps calm which in turn, calms me down.” Closing with some advice, Hearn adds: “Only give up the CEO role because you want to not because someone else wants you to. [If that’s the case] stay on the board and give yourself a real and important job role so you are still involved in the direction of the company.”

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PR ed i c t i v e T ec h

Minority Startups have developed tech that can accurately predict the future. While itâ&#x20AC;&#x2122;s easy to see the benefits, innovators still have to face a slew of both technical and ethical challenges

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P re d i c ti ve T e c h

report Don’t be alarmed but Facebook may know when you’re going to die. That’s one of the things you learn by looking through the thousands of patents the social media giant has filed since going public in 2012. For instance, one idea is to use your devices’ cameras to see if someone else is using your laptop or smartphone and then estimate how close your relationship is with that person. A second patent utilises the devices’ microphones to listen in and find out what shows you like to watch. A third one looks at things like your posts, messages, location and credit card transactions to determine whether or not you’re heading towards a life-changing event. You know, like dying. While filing a patent doesn’t necessarily mean a company is using an innovation, this list points towards a bigger trend where more tech firms are developing technology to essentially predict the future. “Multiple companies are now using predictive analytics every day,” says Jean Ortiz-Perez, head of analytics for insurance and assistance at The Collinson Group, the insurance and assistance provider. For example, the British startup Black Swan has developed an algorithm that can estimate when the next flu epidemic will strike. In the past, it also accurately predicted the success of the movie Frozen, empowering Disney to up its production and match the demand. However not all predictive technology solutions are that flashy – price-comparison sites use artificial intelligence (AI) to provide better quotes and your smartphone comes complete with autocorrect services. But no matter the industry, there are plenty of companies leveraging this new tech. “Machine learning and AI is now being used more frequently Dan Somers, Warwick Analytics and I feel we are every

day [getting] closer to enabling the customer to see the benefits of this [increased use of the] technology – not only reflected in price but also choices, recommendation and added benefits,” says Ortiz-Perez. From estimating the value of stocks to predicting new trends, it’s clear this technology can have huge benefits for firms of all sizes. For instance, it can help boost companies’ interaction with clients. This is especially important given the former Mercedes-Benz CEO Steve Cannon’s assessment that “customer experience is the new marketing.” He has a point. “It’s not just a nice soundbite,” says Dan Somers, CEO of Warwick Analytics, the machine-learning company. Given how dissatisfied customers are more likely to swap suppliers and vent their critiques from the rooftops, businesses must consider their clients’ opinions more than ever. Predictive tech can improve this relationship in a number of ways. For one, it can help estimate when devices will break down and give customers a fair warning. Another use could be to scan the online chatter about your devices and see whether people are likely to abandon your company for a competitor. Moreover, it also allows you to estimate how much you can boost your customer satisfaction by making small product changes. “You need to get inside the customer’s head, not your creator’s or your engineer’s head because, ultimately, the customer pays the wages,” says Somers. And that’s where predictive tech can be a huge help. Given these benefits, it’s easy to see why investors are flocking to support predictive tech startups. “This space is very hot,” says Somers. For instance, Uptake, an American scaleup able to predict

Garbage in equals garbage out

JULY 2018 ELITEBUSINESSMAGAZINE.CO.UK

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PR ed i c t i v e T ec h

when machines will break down, raised a massive $117m series D round in November 2017, pushing its valuation above $2.3bn. In Britain, startups Black Swan and SwiftKey, the autocorrect firm, have both leveraged this interest to raise multi-million pound rounds. Not bad, considering the fact many founders start off working from their own dinner tables. “There are a lot of garages that have created millionaires and in this space I think there is room to make a few more,” says Somers. But predictive technology is in itself nothing new. “Everybody is telling me that this is very new but I don’t think so,” says Daniel Wajngarten, managing director of Data Reply DE, the data consultancy. He’s not wrong. Meteorologists have used predictive analytics for decades to estimate the weather and during the Second World War the scientists working on the Manhattan Project ran computer simulations to predict nuclear chain reactions. While these algorithms have clearly been around for a long time, the potential of them only recently came into fruition thanks to the leaps made in technology. Not only can modern computers process data faster but doing so has become a lot cheaper over the past 50 years. For instance, the price to store one gigabyte of data has gone down radically from $1m in 1967 to about two cents in 2017. “These factors in place [has] combined [made] this industry pop up and explode,” continues Wajngarten. These giant leaps forward have been crucial to the launch of modern predictive tech startups. While none of them would exist without these storage and processing capabilities, these innovations still leaves them with the challenge of getting high-quality data. “You’d be amazed how hard it is to get access to the data,” says Wajngarten. Basically, entrepreneurs in this field have two options. The first is to collect all data themselves, which is a time-consuming and costly task. The second option is to use the data from clients or the public space. However, if founders opt for the latter, they still have to spend considerable efforts to mould it into something they can use. “The data is the hardest part of it,” says Wajngarten. Another common misconception is that this technology is all-seeing and all-powerful and there are multiple examples that it isn’t. “Don’t believe the BS about predictive analytics,” says Somers. This has 74

Don’t believe the BS about predictive analytics Dan Somers, Warwick Analytics

become apparent in a series of highly publicised cases where predictive tech has been used by police around the world. For instance, several American police departments have repeatedly been criticised for using algorithms based on data with a clear bias against people from ethnic minorities. In the UK, similar criticisms have been raised against police in Kent using historical data to classify suspects as a low, medium or high risk of breaking the law depending on things like where they lived. After facing extensive criticism of how the technology was used, Durham Constabulary began revising the data to rid itself from the biases within. Again, this points to the problem many startups in this sector face: the challenge of souring good data. “Garbage in equals garbage out,” sighs Somers. And if you ask Gareth Edwards, senior consultant and data science specialist at Softwire, the bespoke softwaredevelopment company, startups in this field have to make sure they pay close attention to how their tech is being used. “Although there are many benefits to machine learning it should be remembered that such systems cannot provide accountability for the choices made and may be biased in unacceptable or even illegal ways,” he says. Pointing at how the General Data Protection Regulation requires companies to be fair and transparent about how they process personal data, Edwards thinks it likely that there’s a trend of more legislation in this area. “Businesses should be looking towards machine-learning technology to help them enhance their business but all the while remembering that currently there’s still an ethical need for human-based decision-making,” he says. In other words, just because you’ve got the tech, it doesn’t remove your responsibility for how it’s being used. Clearly there are huge risks with developing predictive tech but given there’s also great benefit and massive interest from investors, we forecast big rewards for innovative entrepreneurs that can walk this line with the right amount of care.

ELITEBUSINESSMAGAZINE.CO.UK JULY 2018

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A dverti si ng f e ature

Three Steps to boost your Digital Disruption Strategy D

igital Disruption is uprooting established business models, turning giants into also-runs and small firms into giants. For SMEs, the good news is that the tools required to embrace digital are more available and cheaper through the cloud. However, this leads to the bad news that, because these tools are so easily obtainable, it’s created a highly competitive environment where customers have more choice than ever. This means having a distinct identity and an online strategy is more important than ever. Luckily, you can get ahead of the competition in three simple steps.

Prepare You know that old saying about measuring things twice means you only have to cut them once? Well, the same principal applies to you creating a successful digital strategy. For you, this means you must know and understand your target audience. Fortunately, SMEs usually have a clear grasp of who their customers are as they’re traditionally closer to them than bigger firms. That being said, while you may understand your customers’ past and present requirements, you must also anticipate their future needs and how digital trends may be changing what your customers search for and how they’re doing it. This means you have to recognise that every company is now a tech firm in some capacity. Look at your business and review where technology could be used to better serve your customer needs. Make sure you’re always prepared.

Implement Once you’ve examined the lay of the land you should start implementing new tech into your company. The first thing you need is a good hub to capture data and ensure you have common processes in the business. Essentially, you need a decent spine to build a foundation from. The key to a good platform is the feedback loop from the data on how customers engage with your platform. Once the platform is in place this becomes easier and easier to incrementally improve over time, and this incremental improvement helps build the customer relationship. Once you have it in place you should look at the data and consider what the best way for customers to contact you is. How do they reach you? This is where an app-based approach could enable you to better engage with your clients online. Apps could be traditional mobile apps, outsourced services or simple mini-portals enabling automation of a common engagement in the business. A clear advantage of the app-based approach is it empowers your business to gradually introduce digital contact points connecting customers with your teams through technology. But don’t attempt one overwhelming solution to everything but instead start small and achieve quick wins to build momentum in your strategy. Use this momentum to scale on successes and abandon on failures. Each contact point provides data regarding how customers interact with the you. This will allow you to better know your customer and understand how they want to interact with your services. The key here is to centralise your

data but decentralise your operations by using the apps to better connect or outsource elements of the business in a way that empowers the customer. While customers may contact you today predominantly via online or mobile apps, the rise of smart devices like the Amazon Echo means apps for all sorts of devices can enable you to better connect with your customers.

Business as a Platform Disruption is about making the business and the platform work for you. This frees up your business to work smarter rather than harder. As transactions and relationships move into a self-service digital model – this enables you to always be open for business without requiring your people to be always on. A benefit of this is that the customer sees the value in the relationship with your business and not just in individual transactions. The is particularly important when you consider millennials’ buying patterns which chime with their identity over traditional push marketing. Want to know more CRMCS provides customer relationship and engagement solutions dedicated to helping businesses get the right results from digital disruption. We do this by partnering with Microsoft to look at how businesses can use the Cloud as a platform to deliver better customer-focused business and stronger relationships. Contact us at contact@crmcs.co.uk or www.crmcs.co.uk/contact-us.aspx to discuss your new digital disruption strategy in more detail. JULY 2018 ELITEBUSINESSMAGAZINE.CO.UK

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M i sr epr es ent i ng sta rtu p s

End of number fudging BY Eric Johansson

There’s a long history of startups exaggerating their numbers to either woo investors or the public. However, the culture of faking it until you make may be at an end after a series of highly publicised company collapses

f you ask some venture capitalists, Theranos’ fall from grace put an end to the era of entrepreneurs fudging their numbers. But no one saw it coming back in 2015. At the time the blood-testing startup was hailed as one of the most impressive Silicon Valley stories ever. At its peak it was valued at over $9bn. The founder and CEO Elizabeth Holmes was repeatedly characterised as the tech industry’s latest wunderkind, an up-and-coming titan in the tradition of Steve Jobs. Then, in October the same year, The Wall Street Journal published a story that totally debunked the illusion. The report alleged the startup’s so-called revolutionary blood-testing technology was bust, a sham, a fraud. Three years since, Theranos has gone from being a unicorn to essentially seeing its value evaporate, Holmes has been accused by federal prosecutors for defrauding investors for hundreds of millions of dollars and the company’s workforce has dropped from 800 to 20 employees who are reportedly trying to close down the remains of the business. “That gave everybody a big wake-up call,” says Julian Zegelman, co-founder of TMT Blockchain Fund, the investment fund for blockchain startups set up by the VC firm TMT Investments. The startup scene clearly required a rough awakening. After all, entrepreneurs in Silicon Valley have been no strangers to faking their numbers. “The biggest problem is that, up until very recently, people were so invested into this idea of faking it until you make it,” says Zegelman. He’s not wrong. Another report by The Wall Street Journal looked at 50 tech startups before and after they went public. Among them, 15 were revealed to 78

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Mis r e pr es e nti ng sta rtup s

have considerably lower sales figures in their public files than what they had previously said. Added to that Snapchat’s co-founder Evan Spiegel said the social media platform had 100 million users when it only had 89 million and Facebook has been caught over-estimating its video views and it’s easy to spot a culture of tech firms fudging their numbers. “Everybody understood it and everybody was doing it,” says Zegelman. “Startups were talking about things that didn’t really exist, large corporations were over-exaggerating their numbers [and] venture capitalists were lying about how successful they really were. Everybody was involved in this culture of over-exaggerating, putting only the positive news forward. You know, looking busier or more successful than they really were.” However, this culture may not be restricted to San Francisco’s bay area. In April 2018, Cera Care, the UKbased health tech startup, was accused of allegedly posting fake reviews on

Trustpilot and of claiming to be partners with organisations that it wasn’t working with. “It’s unsurprising that startups in the UK have been heavily influenced by their US counterparts,” says Lisa Botterill, partner at Shakespeare Martineau, the law firm. While people may say some startups are lying, Botterill believes the puffed-up numbers were more due to founders’ optimism rather than a desire to mislead anyone. “Entrepreneurs by their nature are usually very positive people,” she says. “They genuinely believe that their business is going to be successful and this is often reflected in their figures and forecasts for the coming years.” Moreover, Botterill argues the numbers may also be due to the founders being new in their roles. “Generally, the larger and more-

The biggest problem is that, up until very recently, people were so invested into this idea of fake it until you make it established the business is, the more realistic financial projections tend to be as they can be based on a track record,” she explains. “Startups don’t have this sort of financial history, meaning that projections are more likely to be based on hope rather than actual experience.” But no matter whether you’re blaming the wrong numbers on entrepreneurs’ inexperience or a desire to boost valuations, things may be about to change. “I think that more and more entrepreneurs and the people around them were looking at the negative impact

[of misleading numbers],” Zegelman says. “The venture capitalists had lost their money, the customers who never got the products they paid for and the engineers that worked for a company for a few years that ended up being just a complete sham, a lot of these people have learned their lesson.” As a result, he believes both founders and the people in the startup community are going to be more thorough with their due diligence in the future. “A lot of folks in Silicon Valley, the younger generations of the entrepreneurs, they are looking at this culture of faking it until you make it and reevaluating it,” Zegelman says. And there are certainly enough legal reasons for them to do so. “If the numbers that have been presented have been knowingly falsified to entice investors or paint a rosier picture than is factual, this is ultimately self-defeating and depending on the depth of the miscommunication can, in some cases, lead to fraudulent trading,” says Simon Renshaw, insolvency practitioner at AABRS, company rescue experts. If you’re found guilty of fraudulent trading you could face fines as well as lengthy prison sentences depending on the severity. “[So knowing] that you are not being transparent with investors in particular, can come back to bite businesses,” says Renshaw. Although, things aren’t as clear cut when it comes to distorted forecasts and projections. “If the thought process and estimations used in formulating these can reasonably be justified, then it’s difficult to prove any wilful financial misrepresentation,” Botterill explains. Add to that being known for faking the numbers can cause serious reputational damage to your startup, it’s worth double and triplechecking your numbers before speaking with the press or a VC. That being said, if you do have an excellent startup with magnificent numbers, then you should be sure to tell the world about it.

JULY 2018 ELITEBUSINESSMAGAZINE.CO.UK

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of people know that using the same password for multiple accounts is a security risk

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Brits dream of becoming a CEO

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people are at risk of losing their jobs to machines

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