POWERING UP Dan Wagner has taken many a risk in his time. True to form, the serial tech entrepreneur is now betting big on his latest venture: the ÂŁ1.6bn-valued Powa Technologies
Cover Jan16.indd 1
24/12/2015 10:08
For a free quote visit: www.simplybusiness.co.uk Terms and conditions apply. Simply Business is authorised and regulated by the Financial Conduct Authority.
Andy Child, Educational Consultant, one of over 300,000 UK businesses already insured by Simply Business.
Simply Business
from
Get a team of experts for your business
ÂŁ130 a yea
r*
As a business owner you have to wear many hats. Tax, HR and legal issues can all test your knowledge and take valuable time out of your company. Join the Federation of Small Businesses and from as little as ÂŁ2.50 a week, you will have unlimited access to specialist advice, exclusive products and services, and a network of support to help solve your challenges so you can achieve your business ambitions. Want to know more? Contact us today on the phone or online.
Untitled-1 1 186 - Elite Business DPS Advert.indd All Pages
23/12/2015 09:58
ADVICE
FINANCE
SUPPORT
• Tax advice
• Business banking
• Employment advice
• Workplace Pensions
• Local networking events
• Health and safety advice
• Card payment processing
• Online legal documents
• Cash advance
• Legal and tax protection
• Fuel card
• Government lobbying for UK business • Business leads • Vehicle services
To arrange a meeting or join now
Call 0808 1688 512†
quoting ELB9 or visit fsb.org.uk/join *Membership starts from £130 per annum with a £30 registration fee in the first year. This rate is applicable to businesses with no employees. Rates increase depending on your number of employees. Please see the website for full details of subscription rate bands. †Calls are normally free of charge from UK landlines but charges may apply from mobile phones. Lines open 9am-5pm weekdays, closed Bank Holidays. Registered Office: National Federation of Self Employed and Small Businesses Limited, Sir Frank Whittle Way, Blackpool Business Park, Blackpool, FY4 2FE. Registered in England No. 1263540
Untitled-1 2
23/12/2015 21/12/2015 09:58 12:10
40
THE ELITE Interview
DAN WAGNER We speak to the man who’s on a mission to revolutionise retail
6
ELITEBUSINESSMAGAZINE.CO.UK JAN 2016
Contents January16.indd 1
24/12/2015 10:09
CONTENTS 01.16 issue 37 JANUARY 16
REGULARS 09 10 15 82
From the editor Upfront The big idea The crunch
22
columns 17 19 29 31
Jacqueline Gold Ed Relf Alice Bentinck Clive Lewis
Berlin is beckoning
The German city is drawing in the brightest tech talent the continent has to offer
FEATURES
32
62
the way video is sourced from the crowd
harnessing employee innovations
ASeenit thousand pictures is transforming
36
68
separates a successful IPO from a failure
infancy but there’s plenty to be excited about
Going public Proper planning
54
Share game
Can the UK successfully claim the sharing economy crown?
Gathering their thoughts Smart startups are
InHealthtech good health is in its
49
74
techniques to promote your brand this year
still miss the importance of encryption
stay ahead in 2016 Prognosticating the best
The state of surveillance Investigatory powers JAN 2016 ELITEBUSINESSMAGAZINE.CO.UK
Contents January16.indd 2
7
24/12/2015 10:09
EliteBusinessFullPage205mmx266mm.indd 1
29/09/2015 12:02
FROM THE EDITOR EDITORIAL Adam Pescod - Acting Editor adam.pescod@cemedia.co.uk Josh Russell – Acting Web Editor josh.russell@cemedia.co.uk DESIGN/PRODUCTION Leona Connor – Head Designer leona.connor@cemedia.co.uk Dan Lecount – Web Development Manager dan@cemedia.co.uk SALES Adam Reynolds – Ad Sales Manager adam.reynolds@cemedia.co.uk Gemma Campion – Account Manager gemma.campion@cemedia.co.uk Jazmin Humphreys – Account Manager jazmin.humphreys@cemedia.co.uk CIRCULATION Paul Kirby – Circulation & Data Manager paul.kirby@cemedia.co.uk ACCOUNTS Sally Stoker – Finance Manager sally.stoker@cemedia.co.uk Colin Munday - Management Accountant colin.munday@cemedia.co.uk ADMINISTRATION Emily Fulcher - Administrator emily.fulcher@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 CE Media Solutions Limited, 4th Floor, Victoria House, Victoria Road, Chelmsford, CM1 1JR Copyright 2015. 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 CE Media Limited cannot be held responsible for such variation. www.cemedia.co.uk
Sticking it to the critics
So here it is: 2016. It might sound rather cliched but it only seems like yesterday we were seeing in 2015. Maybe that’s because so much has happened in the world of startups since last January.
One company that’s been hard at work for the past year – and a few more before that – is Powa Technologies, the mobile commerce startup that is headed up by seasoned tech entrepreneur Dan Wagner. You could argue that the startup has gone somewhat under the radar, with its Silicon Roundabout counterparts stealing the majority of the media spotlight in recent times. That might be because Wagner doesn’t conform to the norm for tech entrepreneurs: he rolls up to work wearing a suit and his company occupies the top two floors
of Heron Tower, as opposed to the basement of a tarted-up warehouse. Nevertheless, if 2016 goes his way, Wagner could be elevated to a place among the UK’s – not to mention the world’s – technology elite. Who knows, it might even see him win the respect of those who previously doubted his business credentials. So here’s to a successful year for Wagner and those of you only just starting your entrepreneurial journey. Adam Pescod - Acting Editor adam.pescod@cemedia.co.uk
contributors
ALICE Bentinck After leaving uni, Bentinck turned down a job at Google to start Entrepreneur First. Who better to explain why new grads are eschewing Facebook and Goldman Sachs to build their own business?
Ed Relf Having headed up the marketing that drove the Moshi Monsters phenomenon, Relf is something of a viral marketing expert. This issue he explains why promoting your brand is all about K- factor.
Jacqueline Gold A member of the UK’s retail royalty, Gold holds court on the ways in which we can revitalise Blighty’s high streets, from omni-channel experiences to longer Sunday trading hours.
Clive Lewis The ICAEW’s head of enterprise knows a thing or two about small business finance. That’s why his financial healthcheck for 2016 is sure to go down a treat with you lucky lot.
JAN 2016 ELITEBUSINESSMAGAZINE.CO.UK
From the editor.indd 1
9
24/12/2015 13:33
DOING THE ROUNDS The investment rounds that rocked the startup community last quarter
Deliveroo
$100m Series D Fresh off the back of its $70m Series C, the takeaway startup has added a further $100m in a Series D led by DST Global and Greenoaks Capital.
More stick for Sports Direct
Gousto
£9m Series B The recipe box startup has notched up another £9m, with BGF Ventures joining existing investors MMC Ventures, Unilever Ventures and the Angel Co-Fund.
Sports Direct is no stranger to controversy. The sports retailer was among the companies criticised for its use of zero hours contracts earlier this year – a policy defended by chief executive David Forsey, who himself has been charged with a criminal offence relating to the collapse of clothing chain USC.
EatFirst
$8m Series A The ‘online restaurant’ startup has its eyes on European expansion after raising a tasty $8m in its Series A round from DMGT and HV Holtzbrinck Ventures
$7m Series A The mobile video platform has drawn down an impressive $7m Series A from investors Open Ocean, HV Holtzbrinck Ventures and Kristian Segerstrale.
10
Upfront.indd 1
Words: Adam Pescod, Josh Russell
LoopMe
Free ride
Uber grabs a lift with Facebook in its latest partnership When two giants of tech come together, not everybody is going to be happy and when those giants are Facebook and Uber you can predict some feathers are going to be seriously ruffled. Consumers will now be able to hail a taxi direct from Facebook’s Messenger app, bypassing the Uber app entirely. This is hardly a surprising move: Facebook is
Now the company is back in the firing line after The Guardian revealed temporary workers in its warehouses might be paid below the minimum wage. During an undercover investigation of Sports Direct’s Shirebrook warehouse, the newspaper discovered that agency staff were subject to strict security measures, including end-of-shift searches, the time for which was unpaid. It also found that staff had wages docked for clocking in a minute late and weren’t paid extra for staying late to finish a job. Thankfully, company owner Mike Ashley is now leading a review into its working practices.
steadily adding thirdparty functionality to make its Messenger app consumers’ first port of call on their smartphone, whilst Uber is harnessing a captive audience of some 700 million active users. And, just to sweeten the deal, the social media firm is even offering users $20 off their first ride. Cue yet another tantrum from London’s disgruntled cabbies.
ELITEBUSINESSMAGAZINE.CO.UK JAN 2016
24/12/2015 10:10
UPFRONT Coming up
npower feeling the heat
February 2 The Business Funding Show Old Billingsgate, 1 Old Billingsgate Walk, London, EC3R 6DX
Energy firm hit with £26m fine for its poor treatment of customers Given the number of horror stories we hear about energy companies’ customer service, one wonders why they’re not more routinely reprimanded. Well, it’s safe to say npower has paid the price for its practices: energy ombudsman Ofgem has ordered the firm to pay £26m for its unfair treatment of customers. Ofgem’s investigation discovered that npower issued over 500,000 late bills between September 2013 and December 2014, with some customers receiving inaccurate bills that contained little or no detail on how they were calculated. It found that the company received two million complaints over the period but failed to deal with many of them effectively because of failures with its IT system. The £26m fine will be split between the company’s worst affected customers and charity. It is the single biggest settlement that Ofgem has
Literary Corner
Portfolio Penguin Now £14.99
February 19 - 20 The Franchise Show ExCeL, Royal Victoria Dock, London, E16 1XL
reached with one of the big six energy providers. “It’s important that all suppliers ensure they follow the principles of treating customers fairly at all times,” said Dermot Nolan, chief executive of Ofgem. “The payment of £26m sends a strong message to the industry that we expect them to act quickly and effectively to ensure a good customer experience.”
Business for Punks by James Watt
Given BrewDog’s reputation for provocativeness, it was likely that the craft beer revolutionary’s first book would be imbued with at least some its rebellious spirit. But, in actual fact, mere words like irreverent or iconoclastic don’t really do it justice. Whether it’s looking at figuratively – or indeed literally – parking your tank on the financial sector’s lawn or encouraging consumers to join your revolution, every part of Watt’s entrepreneurial guide is gleefully centred on slaughtering the sacred cows of startup culture. It’s very easy to get carried along with Watts’ oratory; not only does his polemic perfectly capture the disruptive mood of the modern
startup landscape but his ability to turn a phrase certainly puts a grin on your face. Bon mots like: ‘Chase down every cent. Pimp every pound’ litter every page and continually keep the energy up, making even the driest subjects a joy to read about. Even if you’re not one for wordplay or provocative language, you can’t help but have a grudging respect for writing that so relentlessly refuses to pull its punches. Packed with solid advice on surviving in the modern, disruptive business landscape and permeated with the usual BrewDog piquancy, Business for Punks is something no aspiring entrepreneurial radical can afford to miss.
February 21- 27 Like Minds – Fintech and retailtech mission to New York New York, USA March 14 - 17 Global Entrepreneurship Congress Plaza Mayor Convention and Exhibition Center, Cra. 57, Medellín, Colombia April 14 - 15 nORTHERN BUSINESS EXPO EventCity, Pheonix Way, Manchester, M41 7TB April 19 - 20 UC EXPO London Olympia, Hammersmith Rd, London, W14 8UX April 27 - 28 Internet Retailing Expo NEC Birmingham, Pendigo Way, Birmingham, B40 1NT
A full event listing is available on our website: elitebusinessmagazine.co.uk/ events
JAN 2016 ELITEBUSINESSMAGAZINE.CO.UK
Upfront.indd 2
11
24/12/2015 10:10
TALKING POINT
Mark Zuckerberg and Priscilla Chan’s commitment to charitable causes is incredibly inspirational. Equally, I love Bill Gates’ initiative for clean energy. These entrepreneurs are leaders in their fields so it’s brilliant that they have used their influence and power to do some good in the world. My company always looks to promote sustainable fashion where possible and if I reach anywhere near the level of success as the Mark Zuckerbergs and Bill Gates of this world, I will do something similar. It sets a great example for people in business the world over. Erika Nilsson-Humphrey, founder and CEO, Dappad
Good business?
Did Mark Zuckerberg and Priscilla Chan set a good example by giving 99% of their Facebook shares to charitable causes? Mark Zuckerberg and Priscilla Chan revealed last month that they’d be giving 99% of their Facebook shares to good causes over the course of their lives. Coinciding with the birth of their daughter Max, the couple announced that the shares will go to the Chan Zuckerberg Initiative, which aims “to advance human potential and promote equality for all children in the next generation”. However, while many were quick to praise the generosity of Zuckerberg and Chan, others claimed there was more to the donation than first meets the eye. With this in mind, does the couple’s decision set a good precedent for entrepreneurs? Or are there better ways for businesses to support worthy causes?
There is no reason why companies can’t give back to society and make a profit at the same time. Indeed, getting involved in philanthropy can help entrepreneurs understand bigger markets. In a world where there are more unemployed than employed and more poor than rich, giving back helps you to think about 99% of the market, rather than just the elite 1%. Mark Zuckerberg is addressing inequality in a way that is, quite rightly, for profit and purpose. We can all learn something from the Chan-Zuckerberg initiative, which is a brilliant problemsolving approach to poverty. Gi Fernando, founder, Freeformers
The philanthropic acts of entrepreneurs have always got press attention since 2010 when Warren Buffett and Bill Gates launched the Giving Pledge. Lots of big names, including Larry Ellison, Michael Bloomberg, George Lucas, Peter Peterson, Ted Turner and Mark Zuckerberg have all jumped on the bandwagon. The philanthropic acts are generous and socially responsible in one sense. Yet they don’t alleviate the lost benefits to society of a long-term tax-planning scheme that directs the funds to what the entrepreneurs deem important rather than what society really thinks is important.
The contribution from Zuckerberg and Chan is a praiseworthy cause; their ambition to advance human potential and promote equality is fantastic. My company has traditionally supported a handful of local charities but more recently I joined Restless Development, a charity that helps put young people at the forefront of change and development in their communities. I am due to visit Tanzania this coming January where we will meet young entrepreneurs that are benefiting from our support. As the Zuckerberg Chan initiative demonstrates, giving something back needs to be a hands-on exercise.
Marwan Izzeldin, senior lecturer, Lancaster University Management School
Mark Colquhoun, founder and owner, Solar Communications
12
Upfront.indd 3
ELITEBUSINESSMAGAZINE.CO.UK JAN 2016
24/12/2015 10:11
UPFRONT Kim cooks Tim As a role model, the CEO of Apple can’t keep up with the Kardashian
Mind the gap
For women over 40, the last decade has seen the gender pay gap widen Despite the fact we’ve hit the targets put forth by the Davies Review, it’s still far too soon to pat ourselves on the back about the headway we’ve made against the gender pay gap. The Chartered Management Institute (CMI) has laid down the gauntlet at the recent women and equalities select committee, quoting data that has shown that female managers aged between 46 and 60 are currently paid on average 35% less than their male counterparts, a whopping 13% higher than the average. And the problem only becomes worse the older female managers get, with the gender pay gap hitting 38% for those over 60. It seems the glass ceiling is merely cracked, rather than broken.
Move over Google. Step aside Apple. There’s a new star in town. According to UK students, Kim Kardashian is a more influential business role model than Tim Cook, Evan Spiegel, Larry Page and Marissa Mayer. Coming third in a Young Enterprise poll after winning the vote of 9% of 16- to 18-year-olds, Kardashian was pipped to the top spot by Lord Alan Sugar and Sir Richard Branson, who received 41% and 27% of the vote respectively. Meanwhile, the CEOs of Apple, Snapchat, Google and Yahoo! netted just 5%, 4%, 4% and 3% of the vote respectively. Evidently young people just really like reality TV stars. Who knew?
What’s the word? “In the words of my hero Mr Spock, to do anything else would be highly illogical” Business secretary Sajid Javid on the government’s commitment to grow the UK space sector to £40bn by 2030
“I left the office on Friday and I gave birth on Saturday” Hassle CEO and co-founder Alex Depledge, speaking at TechCrunch Disrupt on not letting pregnancy stop her from running a business
“We are rushing headlong into the robotics revolution without consideration for the many unforeseen problems lying around the corner” Noel Sharkey, robotics professor at Sheffield University and chairman of the newly launched Foundation for Responsible Robotics Find us on Twitter @elitebizmag
WORKING THE CROWD
Successful crowdfunding campaigns that have closed in the last quarter
Chilango
BrewDog
One Rebel
Crowdfunder
£3.4m+
£3.1m+
£3m
£1.3m+
10.4% equity
equity / 6.5% interest
23.1% equity
8.7%
Having already had a great deal of success with the mini-bond it launched in 2014, Chilango has gone back for a second bite of the burrito, smashing its £1m target three times over. Spicy.
After a fresh funding round, it seems BrewDog’s cup runneth over with capital. Producing over £3m, the brewer’s combined equity and mini-bond campaign was effervescent to say the least.
From the founders of Fitness First, gym 1Rebel has proven exceedingly popular with the crowd, netting a solid three mil for just shy of a quarter of its company.
Recursive though it may seem to crowdfund a crowdfunding site, Crowdfunder recently made a real splash, smashing its £1m target with a little help from 942 investors.
JAN 2016 ELITEBUSINESSMAGAZINE.CO.UK
Upfront.indd 4
13
24/12/2015 10:11
Our promise to you ✔ Dedicated account manager ✔ No contracts ✔ Flexible payment options ✔ Competitive fee structure
IT’S NOT ABOUT WHERE YOU TRAVEL,
BUT HOW YOU TRAVEL Which is why at Flight Centre Business Travel, we get to know you and your business travel needs to ensure you are travelling in the most efficient and effective way. TO DISCUSS YOUR TRAVEL PLANS CALL OUR DEDICATED ACCOUNT MANAGERS TODAY
flightcentre.co.uk/business-travel EliteBusiness0116.indd 1
0808 260 9928 23/12/2015 10:20
THE BIG IDEA Dropit
Shop till you drop By bringing the convenience of online shopping to the highstreet, Dropit looks set to shake up the world of retail BY ADAM PESCOD
T
here are plenty of reasons why people are turning away from the high street towards online retail – and ease-of-experience is undoubtedly one of them. However, new shopping service Dropit is looking to bring a touch of tech to the high street, for the good of retailers and shopaholics alike. The idea for the startup was conceived while its founder Karin Cabili was indulging in some retail therapy in New York. Finding herself weighed down by a load of bags – but keen to head straight out after a day of shopping – she saw the benefit of a service that lets customers have their bags transported back to their home or hotel so that they can continue their day unburdened. And it was there that Dropit was born. Quite simply, the service lets shoppers gather bags from numerous high-street shops into one convenient delivery. Users can choose to purchase a single bag drop for £8, a day pass for £15 or a three-day pass for £30, while the Dropit
mobile app allows shoppers to track their delivery or receive status updates via push notifications or email. By downloading the Dropit app, shoppers are able to see which shops offer the service, as well as the location of street-side Dropit kiosks where bags can be left before being delivered the same day or the following evening. Purchases can also be left in-store, with shoppers asked to set up a profile via the app or on the store’s Dropit device. As a user’s profile is built in the Dropit app and their spending habits are tracked from store to store, retailers are given a unique opportunity to gain the same level of knowledge about offline consumers as they would from online purchases. Following a successful pilot on Regent Street last year, Dropit is now being introduced across London’s West End, with participating stores including Liberty, GAP, Lacoste and River Island. When it comes to giving the high street a new lease of life, Dropit certainly looks like delivering the goods.
JAN 2016 ELITEBUSINESSMAGAZINE.CO.UK
The big idea.indd 1
15
24/12/2015 10:11
Big Energy Products for Small Businesses
Untitled-6 1
22/12/2015 16:02
Jacqueline gold ceo, ann summers
Revitalising high-street retail
There’s no hiding from the fact that the high street is proving a challenging environment for retailers – but there are plenty of things that can give them a boost
H
igh-street retailers contribute a significant amount to the UK economy. However, they are now doing so against a backdrop that is far more challenging than a decade ago, competing with 24/7 internet shopping and the significant growth of out-of-town shopping centres. Combine those elements with high business rates, the lack of cheap parking and the increasing number of vacant units and the high street very quickly becomes an unappealing shopping environment. So what can be done to bolster high-street retail? The first challenge is keeping customers loyal. Retailers have woken up to the fact that they need to give customers
the very best in-store experience but, at the same time, embrace digital engagement and keep up with the younger consumers that are driving change. Our strategy at Ann Summers is to build a seamless omnichannel experience, using technology to introduce digital into our stores. Customers today are also much more conditioned to promotional activity and discounting, which is forcing retailers to buy smarter and leaner. You only have to look at companies like Primark and Lidl; they have been very clever positioning themselves as value retailers where people are proud to shop. Because, ultimately, it’s not about being cheap: it’s about offering value. If we want customers to return to their local high street, then they have to believe it is worth their while, both in terms of value and experience. So what can the government do? First of all, I fully support the idea of giving local councils responsibility and accountability for business rates. This is a huge opportunity if it grants councils the power to reinvigorate their local high street. But it’s not just about having power: it’s also about working with retailers. After all, they have the necessary skills and experience of creating an appealing retail environment. Those that are doing it well are market towns like Reigate in Surrey, which have succeeded in creating not just a shopping destination but a leisure destination. Places like these go beyond just shopping; they are attracting families back onto the high street with that real ‘day out’ experience. Finally, whilst I know this may not be popular with everybody, I personally believe that councils need to be brave and extend opening hours for retailers on Sundays. From a business perspective, it’s a great idea because it gives us a more level playing field with the online retailers that are operating 24/7, 365 days a year. It’s also important to recognise that everybody’s lifestyle is different; you shouldn’t be dictating to families when they can and can’t shop. If we want to drive businesses back to the high street, opening on Sundays and creating that flexibility would be a really big step to making it happen. JAN 2016 ELITEBUSINESSMAGAZINE.CO.UK
J. Gold column (Jan 16).indd 1
17
24/12/2015 10:12
Funding for growth
could be closer
than you think
We understand that finding the right funding for your growth plans can be a daunting prospect, but the answer could be closer than you think. At ABN AMRO Commercial Finance we have the expertise and understanding to help you release the working capital within your assets. Our Asset Based Lending solutions give you the confidence you need to grow your business on your own terms. Contact our team of experts on 0808 278 4787 to find out more. www.abnamrocomfin.com/abl
EliteBusinessFullPage205mmx266mm.indd 1
29/09/2015 15:49
ed relf co-founder and CEO, Laundrapp
Do you have the K-Factor?
Convinced your customers’ enthusiasm for your business is contagious? The K-factor can tell you if you’re right
I
t doesn’t matter whether virality comes from shares, likes, word of mouth or fancy flyers that get passed around the office – it’s all a matter of K-factor. Why K-factor? It’s actually a term borrowed directly from the study of epidemics. But, whilst in medicine the K-factor refers to the number of people an infection will pass to, in the parlance of marketers it’s the number of additional people each of your customers will convert to your business. So what on earth does this have to do with growing your digital enterprise? Well, an awful lot if you want your business to spread as fast as Gangnam Style. One of your key goals should be to grow your K-factor – or viral coefficient – as much as possible. After all, if your customers do your marketing for you, then you can just put your feet up. The ideal situation is when each customer brings at least one other new customer to your business. One customer converts another, they go on to convert another and, voila, you create a viral loop. This is how great businesses – not to mention epidemics – begin. But how can you go about calculating the K-factor of your business? Luckily, it’s pretty easy if your business is a digital service like Laundrapp:
In both medicine and marketing, a K-factor larger than one results in growth, whilst a K-factor less than one means decline. If you have a K-factor greater than one, then any marketing activity you do will accelerate your growth and you can relax. If it’s less than one, you’ll need to constantly search for new customers by yourself. The good news is that there are plenty of great examples out there that show how to boost your K-factor in a pinch. One such example is referral programs. The very best of these are double-sided referral campaigns, which incentivise customers to share your business in return for rewards – an approach which has been very successful for Uber, Dropbox and Laundrapp to name but a few. Another simple way to improve your K-factor is through social sharing and making it easy for customers to share good news about your service. Some people will say customers only shared Uber and Dropbox because they offered rewards but I believe these were inherently great services that people wanted to talk about anyway. Never underestimate the positive impact of delivering a great service. If your digital service wants to harness its virality the same way stars like Psy have done, it’s time to get real. If you’re not tracking your K-factor already, then you need to start. Measure it, refine it and repeat.
X (number of people invited by each customer) x Y (% conversion of invitations) = K-factor
JAN 2016 ELITEBUSINESSMAGAZINE.CO.UK
E. Relf column (Jan 16).indd 1
19
24/12/2015 10:12
ing ko n bec is
BER LIN BY JOSH RUSSELL
With its unrivalled reputation for creativity and one of the most diverse talent pools in Europe, it’s easy to see why so many in the tech community are talking about Berlin’s burgeoning startup scene
Berlin is beckoning.indd 1
24/12/2015 10:13
E
Europe is fast becoming an entrepreneurial force to be reckoned with and it’s fair to say that Berlin is the jewel in the its crown. Whether it’s bringing together the best and brightest talent Europe has to offer or producing some of the region’s most staggering valuations, Germany’s capital has all the makings of the continent’s premiere startup hub. “It’s a creative city in which anything is possible,” says Pawel Chudzinski, managing partner at Point Nine Capital, the Berlin-based early-stage venture capital firm. As with many a top tech hub before it, whether that be Shoreditch or Brooklyn, there is one factor that has undoubtably contributed to the explosion of startups in Berlin. When the Berlin Wall fell and the city was reunified, the prevalence of cheap Soviet-era property in areas like Friedrichshain and Kreuzberg made it a dream for cash-strapped artists of every stripe, further cementing David Bowie’s assertion that Berlin is the “greatest cultural extravaganza that one could imagine”. But this hasn’t only created the perfect climate for artists and musicians: despite the fact that rents have risen in recent years, the overheads for a Berliner wanting to start a company are still significantly lower than they would be elsewhere. “Office rents are still quite affordable but what’s
Berlin is beckoning.indd 2
even more important is the cost of living,” says Kerstin Bock, co-founder and CEO of Openers, the organisation that connects Berlin startups with international corporates. “You can afford a flat here even if you’re a poor founder not earning that much.” This has lowered the barriers to entry for budding entrepreneurs and, inevitably, has led to an explosion in the number of startups in the city. This has certainly made its mark on Berlin’s professional make-up. “There are only three kinds of people working here: politicians, artists and entrepreneurs,” quips Pan Katsukis, the founder of Remerge, the app-retargeting startup. And it seems that all the raw creative material floating around in Berlin has recombined into a community of entrepreneurs with creativity built into its very DNA. Katsukis relays an oft-repeated adage amongst Munich-based entrepreneurs that Munich makes startups to generate money, whilst Berlin creates startups just for the sake of creating startups. “There’s a bit of truth there,” he admits. “In Berlin, people really love building startups; it’s not about income but about being creative.” This combination of low startup costs and a reputation for ingenuity has stood Berlin in good stead when it comes to drawing in talent from Europe and beyond. “What’s great about Berlin
24/12/2015 10:14
B ER L I N
is that it’s relatively easy to convince people to come and work for its startups,” says Chudzinski. The buzz created by the city’s startup culture is encouraging skilled workers to flock to the city in droves; many successful startups are the product of a diverse range of Spanish, Greek, Polish, American, British and German talent working side by side. “There’s this open culture of welcoming people,” Chudzinski adds. “That accelerates the improvement of the talent pool.” Bringing in such a broad range of perspectives has ultimately impacted on the kind of startups that Berlin tends to produce. Unlike London or Silicon Valley, Berlin is more generalist than specialist. “It’s not like Silicon Valley, which is super tech-driven, or London, where fintech is the big thing,” Bock says. While e-commerce, consumer apps, adtech, enterprise software and bitcoin have certainly all played a major part in the city’s burgeoning entrepreneurial scene, Bock emphasises that the real strength of the city comes from its multiplicity of ideas. “Our speciality is our diversity,” she says. Something else that sets Berlin apart from London is how far removed it is from its country’s financial centre,
There are only three kinds of people working here: politicians, artists and entrepreneurs Pan Katsukis, Remerge
24
¤1.97bn
which is based in Frankfurt. This definitely affected the way the city’s entrepreneurial The amount of investment Berlin environment evolved. While attracted in 2014 startups in London have developed in an ecosystem already dominated by one of the largest corporate economies in The amount of the world, Berlin was something investment raised by of a new ecological niche when Delivery Hero its own startup community began to develop. “In Berlin, you didn’t have the same resources; the only thing that you really Value of Rocket had was the community itself,” Internet says Michael Cassau, founder and CEO of ByeBuy, the tech subscription service. As a result, there have Value of Hello Fresh historically been far fewer corporate accelerator programmes or venture funds in the city than there would perhaps have been otherwise. This put the onus on the community itself to come together to provide the mutual resources that entrepreneurs needed. “When many people come to a place to build something, its obvious and natural that you would help each other,” Bock says. However, with time, the wide variety of home-grown resources like the Factory, betahaus and the Berlin Startup Academy have been complemented by the arrival of resources like O2 Telefonica’s Wayra Berlin and Deutsche Telekom’s hub:raum. But distance from Germany’s financial centre doesn’t only affect the availability of softer resources. Whilst early-stage funding isn’t necessarily hard to come by, there certainly aren’t as many funds based in the city as there may be in other hubs. “There are angels but probably not as many as there are in London, partly due to the lack of corporates,” says Chudzinski. “And there are really no late-stage funds on the ground.” However, Berlin has another ace up its sleeve: its massive international appeal. According to an analysis conducted by Venture Source last year on behalf of the national German newspaper Die Welt, startups in Berlin in 2014 attracted ¤1.97bn, compared to the ¤1.35bn raised
$600m $8bn $2.9bn
ELITEBUSINESSMAGAZINE.CO.UK JAN 2016
Berlin is beckoning.indd 3
24/12/2015 10:14
DOMAINS | WEBSITES | eSHOPS | ONLINE MARKETING
YOUR WEBSITE
QUICK. EASY. SMART ON ALL DEVICES. Get started with 1&1 MyWebsite now, and choose from our huge range of mobile optimised templates, designed specifically for your industry. Your new site will incorporate responsive design, to ensure perfect display on any device and preferential ranking on Google. Created by you Domain included Perfect mobile display Optimised for Google 24/7 expert support
1&1 MY WEBSITE
TRY FREE
FOR 30 DAYS!* NEW: The handy action bar lets your customers reach you at the touch of a button!
1
TRIAL TRY FOR 30 DAYS
1
MONTH SHORT TERM CONTRACTS
1
CALL
SPEAK TO AN EXPERT
0800 171 2631 * 1&1 MyWebsite 30 day trial. If your package is not cancelled within the fi rst 30 days, your agreed contract term will apply. Visit 1and1.co.uk for full product details, terms and conditions. 1&1 Internet Limited, Discovery House, 154 Southgate Street, Gloucester GL1 2EX.
EliteBusiness0116.indd 1
1and1.co.uk 23/12/2015 10:21
B ER L I N
Delivering the goods Delivery Hero
It’s a creative city in which anything is possible Pawel Chudzinski, Point Nine Capital
by London’s startups. Additionally, the city has seen some significant high-profile investments, such as those made by Peter Thiel, the highprofile Silicon Valley investor and co-founder of PayPal, in Berlin-based Number26 and EyeEm. And that’s not to mention the colossal $600m raised last year alone by food-delivery company Delivery Hero. “Berlin is attracting huge sums of money from investors all around the world,” Chudzinski says. And it’s not just capital that’s flooding into the city: plenty of global tech firms are relocating to Berlin. “Many international organisations are looking into the Berlin market,” says Bock. This is hardly surprising; the tech hub is a stone’s throw away from London, produces the same tech as somewhere like New York and is at the same level of maturity as Tel Aviv. This makes Berlin the perfect place for these entrepreneurial ecosystems to converge. Yet despite the influence Berlin is gaining on the international stage, it does seem that, historically, startups haven’t quite shared the same ambition as their contemporaries in Silicon Valley. “German startups typically exit early to Americans,” Cassau says. “Seldom do I see people believing that we can build a Google here.” But this does seem to be changing: just as London has recent successes with unicorns like Funding Circle and TransferWise, so Berlin has made a splash with the $8bn-valued Rocket Internet and the $2.9bn-valued Hello Fresh. Evidently, the development of Berlin’s startup community is at a tipping point. The hub has seen its first round of startups failing, its first round of startups succeeding and is now witnessing its startups making waves around the globe. Ultimately, the city has everything it needs to become one of the world’s brightest entrepreneurial hotspots. “We’re ready to knuckle down to business,” Bock concludes. 26
There can be few companies that better demonstrate the raw potential of Berlin’s startup ecosystem than Delivery Hero, the global online food-ordering business that owns the UK’s Hungry House. After cutting his teeth co-founding OnlinePizza. se in Sweden, Niklas Östberg, the company’s co-founder and CEO, licensed his former company’s tech and know-how to bring online food ordering to the German market. “After a successful entry into the competitive German market, Niklas Östberg and his team decided to launch the business model internationally under the name Delivery Hero,” says Bodo von Braunmühl, the firm’s head of corporate communications. Without question, Berlin was the natural home to grow an ambitious startup into a true tech giant. “Berlin is a vibrant and dynamic city, enticing talented people from around the globe,” says von Braunmühl. This has enabled the company to build a talent pool of over 1,500 people that comprises more than 53 different nationalities speaking 20 different languages. Additionally, the city has taken to heart the Silicon Valley maxims of remaining agile and constantly iterating. And this has helped create an innovation-rich environment in which to build a thriving tech firm. “The creative and lively spirit of Berlin, rich with culture and continuous transformation are also qualities that inspire and shape the spirit of our company,” von Braunmühl says. Thanks to this creative culture, Delivery Hero has since grown to become the world’s largest global provider of online food delivery, serving around 30 million meals a month across 34 countries and boasting a valuation of over $3.1bn. “If Uber is the new way of riding, Delivery Hero is the new way of eating,” says von Braunmühl.
ELITEBUSINESSMAGAZINE.CO.UK JAN 2016
Berlin is beckoning.indd 4
24/12/2015 10:14
Looking after your boiler is looking after your business
Every employer has a legal obligation to maintain workplace gas appliances. Get your gas appliances checked by one of our commercial British Gas engineers. Call us free today to book an appointment on:
0800 975 6448
*
It costs more to ignore. 1030/09/15
Find out more: britishgas.co.uk/business/gassafety British Gas is a trading name of British Gas Trading Limited. Registered in England and Wales: No.3078711 Millstream, Maidenhead Road, Windsor, Berkshire SL4 5GD *We record calls to help improve our service to you. Calls to 0800 numbers are free.
EliteBusiness0116.indd 1
23/12/2015 10:14
"GOING WITH
XLN, MY BILLS HAVE REDUCED FROM £70 A MONTH TO £20!" Mahel Shah, Opticalise
We’re Britain’s most trusted provider of phone and broadband services for the small businesses that power our economy. North, south, east, west; we supply every type of business imaginable, in every UK postcode. Wherever you are, we offer rapid internet speeds and the lowest prices. Our Standard Broadband is fast and unlimited. It’s also affordable. In fact, if you switch today, it’s FREE. And our Fibre Broadband is even better – 5x faster download speeds, 20x faster upload speeds and 99.9% reliability – the perfect choice for busy SMEs. Over 250,000 small businesses – people just like you – have chosen us as their trusted partner.
Top speeds. Low prices. Award-winning service. Start saving today by calling
0808 178 1860 xln.co.uk
Phone
EliteBusiness0116.indd 1 Elitebusiness full page ad 221215 quote.indd 1
Fibre
Broadband
Mobile
Card Processing
Energy
23/12/2015 16:05 23/12/2015 15:57:55
Alice Bentinck co-founder, Entrepreneur First
Why grads are rejecting Google AND Facebook
From Silicon Valley to Silicon Roundabout, the message is clear: talented graduates are giving up traditional careers and starting their own companies
O
nly a couple of years ago, most ambitious graduates would opt for a prestigious career in banking, law or consulting. I know this because I was one of those people. I left university and became a management consultant at McKinsey & Co. It was a well-trodden path and a position in a respected company. However, I always knew that I wanted to build a startup. I believed it would give me the satisfaction of creating something from scratch and help me realise my potential. Yet instead of following this vision of starting my own company, I looked for a job. I got an offer from Google to join their London office but I wasn’t excited by the position. It felt risky to leave a prestigious company; having a ‘steady’ job gave me social approval from my peers, family and potential employers. But I knew it would only get harder to build a startup as I got older and more risk-adverse. I had to take the leap. So I left McKinsey, turned down Google and set up Entrepreneur First with my co-founder and friend Matt Clifford. At Entrepreneur First, we see this decision-making process every day – whether it’s a PhD student wondering if they should turn down
their own ‘insert-big-tech-co’ offer or a developer wondering if it’s foolish to turn down that big promotion. If you ask anyone who works at a big tech company what’s great about their job, they’re likely to say a number of ‘cool’ things: office space, sleep pods, free food, ping pong tables. However, the fact is that these are peripheral benefits: things that stop employees from being dissatisfied but that don’t actively deliver job satisfaction. Things are changing though. Today’s technical graduates are realising they are uniquely placed to run successful companies. They can apply their technical skills to build products that few would be able to and solve tough problems that we face everyday in original, defensible ways. All this whilst continuously challenging themselves and quickly becoming experts in supplementary areas like marketing, sales, accounting and legal documents. Being a founder is a continuous and steep learning curve. You won’t get an annual review and promotion but you will have a deep sense of fulfilment from what you are achieving. You have the responsibility of knowing that the buck stops with you. You’re ultimately responsible for your team, your investors and your customers. You get the opportunity to do something meaningful and to solve hard problems. Put simply, as a founder, you are central to the organisation and how it functions. And that’s why UK grads are rejecting Google, Facebook and Goldman Sachs: to forge a more meaningful career path. JAN 2016 ELITEBUSINESSMAGAZINE.CO.UK
A. Bentinck column (JAN16).indd 1
29
24/12/2015 10:15
Do you offer credit? Do you want to avoid late payers and know the current financial position of customers?
Take a look at how Experian Business Express can help protect your business. ✓ Credit check a UK business ✓ Credit check an International business ✓ Reduce the risk of bad debt and improve your cash flow Try our free business credit report to provide a snapshot of your customers or suppliers financial position. All Elite Business magazine readers receive a 20% introductory discount.
Call 0844 481 0082 and quote ELITE or visit www.experian.co.uk/elite
Manage
Protect
Verify
Grow
EliteBusinessFullPage205mmx266mm.indd 1
29/09/2015 15:21
CLIVE LEWIs head of enterprise, ICAEW
Money matters
Keeping on top of the finances is essential for any small business owner, so it pays to be aware of your rights and responsibilities
S
mall businesses were left celebrating as November’s Autumn Statement exempted them from the apprenticeship levy and small business rate relief was extended for another year. But in 2016, how else can SMEs and microbusinesses ensure a good financial bill of health? Am I maximising all of my tax reliefs? If your business has brought some equipment that is not chargeable to profits – for example, if the item of expenditure is classified as ‘capital’ rather than ‘revenue’ – you can claim capital allowances, which reduces your taxable profits and tax liability. And, if it’s applicable to your business, you can also claim motor expenses, pension contributions and the use of your home as an office. Sole trader or limited company? Forming a limited company has been a very taxefficient way of trading. However, from April this year, dividends will be taxed. Businesses need to talk to their accountant to maximise dividends before then. After April, trading as a limited company may help save tax and national insurance but the changes to dividends mean being a limited company is unlikely to save money unless business profits are in the region of £40,000 per annum. Am I managing cash flow effectively? Businesses should maintain accurate records and prepare year-end accounts in plenty of time. The sooner you know your tax liability, the better. When you prepare a cash-flow forecast, make sure you account for commitments like payroll, predictions of receipts, as well as payments from future sales, purchases and expenses over the forecast period. When you spot a time the business might run low on cash, you can form an action plan in advance.
It’s also worth having a system for chasing late payments from customers. This will involve keeping the aged debtors schedule up to date with recent receipts and escalating things up your customer’s management chain if they do not pay as agreed. Last but not least, letting suppliers down will reflect in your credit rating, which could affect future suppliers and access to finance, so agree payment terms with suppliers and stick to them. Should I be registered for VAT? If your business has reached the annual VAT threshold turnover of £82,000, it must register for VAT. This means adding VAT at 20% if the sale is at the standard rate. This is a challenge for businesses serving customers who have no way of offsetting the VAT charge. Registering for VAT usually results in a business requiring more working capital because total debtors will increase. Businesses should keep a close eye on their cash flow when paying quarterly VAT payments. However, it’s worth bearing in mind that you can account for VAT on a cash basis. Is it time for a financial check-up? While running a business is time-consuming, it is advisable to do a stock-take of your personal wealth. Periodically consider what your longer-term objectives are and whether the business is going in the right direction. Will you keep the business in the family or sell it? Is a merger, acquisition or even a stock-market listing a possibility? It might be worth talking to a chartered accountant, many of whom provide business health checks as part of a long-term review. JAN 2016 ELITEBUSINESSMAGAZINE.CO.UK
ICAEW column.indd 1
31
24/12/2015 10:16
A thousand pictures By allowing brands to harness the creative power of the crowd, Seenit is helping to democratise the production of branded video content BY JOSH RUSSELL
A thousand pictures.indd 1
24/12/2015 12:20
Se e ni t
G
Given almost every member of the public carries a highquality video camera on their hip, there’s no question that the way media is produced has irrevocably changed. With 300 hours of video uploaded to YouTube every minute, content creation is no longer controlled by the select few. Plenty of brands have tried to tap this resource but it has proved hard to commission and curate professional video content from the crowd. Fortunately, this is all set to change, thanks to crowdsourced video platform Seenit. Emily Forbes, Seenit’s founder and CEO, is certainly no stranger to the world of video. After studying film at the Chelsea College of Art and interning at Working Title, she moved to Cape Town to work for a company producing wildlife films and documentary shorts. The seed for Seenit was sown when Forbes was sent to cover a large-scale protest in South Africa. “As soon as I arrived, I very quickly realised that the whole community was already filming on their phones and GoPros,” she says. So rather than trying to muscle her way into the action and shoot her own footage, she asked members of the crowd to send her their videos. Forbes couldn’t have imagined how this would proliferate: in the days that followed, not only did people start sending her film but they also began introducing her to others in their network with content of their own. “With no budget, camera equipment or network, I was suddenly pulling video from a whole country,” she says. “That was the start of Seenit.” Forbes began to develop a model for a crowdsourced video production company on her return to London but she would be the first to admit that there were some kinks to work out. “I would charge people’s phone batteries in exchange for their video: it was the least scalable solution imaginable,” she laughs. Fortunately, these early experiments gave Forbes a lot of valuable insight into the nature of crowdsourcing content, whilst the initial relationships she formed with brands like Pepsi and Dunlop gave her an understanding of what clients might require from a user-generated video app. “I got to understand what they needed, what their budgets were like and what type of video they were interested in,” she says. Armed with this experience, Forbes hired a developer to build a bare-bones app and then took it to Collider, the marketing and advertising accelerator. “Collider was instrumental in getting Seenit off the ground,” Forbes says. Not only did the fledgling company’s time on the programme give it much-needed know-how of finance, team-building and business law but the nature of Collider’s brand partners meant that Forbes had mentors from Betfred, Unilever, Bauer Media and the BBC from the off. Inevitably JAN 2016 ELITEBUSINESSMAGAZINE.CO.UK
A thousand pictures.indd 2
33
24/12/2015 12:20
Seeni t
With no budget, camera equipment or network, I was suddenly pulling video from a whole country
this was something that proved utterly invaluable for the adtech startup. “In the really early stages, I wasn’t selling to these people; I was actually working and conducting research with them,” Forbes says. “When you’re such a tiny company and you’re trying to get as much validation as you possibly can, that’s phenomenal.” As well as providing the business with its first injection of seed capital, one of the key benefits of Seenit’s Collider experience was the fact that it provided the young startup a built-in client base. “It meant we were able to grow pretty organically,” says Forbes. One of the most fruitful relationships that resulted has been with the BBC. Not only did Seenit’s relationship with the broadcaster lead to a place in the BBC Worldwide Labs programme but it ultimately led to BBC Earth coming on board as the startup’s first subscription client, something that has definitely stood it in good stead as it has grown. “When scaling up a network, a recommendation from somebody at the BBC goes a long way,” says Forbes. Seenit has since come to work with a plethora of brands, including Grazia, British Airways, Bacardi and The FA, as well as covering the premieres of both The Hobbit: The Battle of the Five Armies and The Hunger Games: Mockingjay – Part 1. However, understanding why Seenit has proven so popular with its clients requires an knowledge of how it actually works. “Our tech offers a radically different way to thread the narrative together,” Forbes says. Using Seenit, marketers can send out a branded app containing briefs and example videos to a specific subsection of its customers, employees or advocates. Once users have captured video, brands can easily review it, offer feedback and reward the best contributions, before editing within the online studio and pushing it out over their social channels. “It’s all curated and crafted, meaning all of the video that is pushed out is on-brand, on-message and is something companies are proud to share,” Forbes explains. By way of example, Forbes refers to a video produced by the National Lottery and British Athletics. They sent out Seenit’s app to eight
HOW IT WORKS Producers Filmers
34
Studio setup Customise who has access to your private online studio
Start a project Create a script and brand your project
Call Out Contact your contributors and encourage to partake
Download App Download the app and enter the project
Capture Read script & record footage
ELITEBUSINESSMAGAZINE.CO.UK JAN 2016
A thousand pictures.indd 3
24/12/2015 10:27
Se e ni t
athletes so they could document everything from what they’d eaten for breakfast to how their latest event had gone. This enabled the organisations to provide behind-the-scenes coverage of British athletes at major events like the European Athletics Championships without the hassle and overheads that come with mobilising a film crew. “The platform means you can collect video from anywhere in the world at any time,” she says. “It means the stories that brands can now produce are so much more reactive and relevant.” Yet Seenit’s platform offers much more than just a cheap, ready-made film crew: the perspectives it presents can offer something far more personal than a studio might be able produce on its own. “You find stories and characters that you never would have otherwise,” says Forbes. For example, the Ultimate Fighting Championship has found serious traction through Seenit’s videos, thanks in no small part to the appearance of a security guard who has proven to be something of a hit with audiences. “Even if you don’t know about the sport, you immediately get pulled into it if you can relate to the person you’re watching,” continues Forbes. Unsurprisingly, commendations have been coming in thick and fast for the startup. Not only has it won ad:tech’s Next Big Thing and Startup of the Year in the British Interactive Media Association (BIMA) awards but, most notably, it was listed as a part of the Unilever Foundry 50 last June. “To be selected in the Foundry 50 was completely unreal,” Forbes says.
Review Clips Give contributors feedback and rewards
Rewards Receive feedback and rewards
Our tech offers a radically different way to thread the narrative together As a result, she was flown out to the south of France for Lions Innovation, the disruption mini-festival that forms part of the global creative and advertising conference Cannes Lions. Along with the other startups at the event, Forbes had the opportunity to speed-network and meet senior marketers from some of the world’s biggest brands. “It was a real stamp of validation on what we’re doing and we got some great work from it,” she enthuses. And it isn’t just Seenit that is attracting plaudits:in October Forbes was listed in The Drum’s 50 under 30, with the judges describing the startup’s platform as ‘something extraordinary’. Being recognised as one of the most promising young women working in the UK’s marketing sector is something Forbes finds humbling. “[The 50 under 30] is championing women who are real forward thinkers and are disrupting the industry,” she says. “I’m so honoured to be on that list.” But even though both Forbes and Seenit have garnered some serious recognition, the entrepreneur is unequivocal that the journey is far from over. Not only is the startup looking to scale up its team but it is also aiming to automate much more of its tech, making it easier for small firms to create high-quality video without the overheads that come with hiring a conventional studio. “People can now collect video from anywhere in the world: all of the barriers that traditional production set in place are being completely broken down,” she says. “We now want to help startups and small companies tap into that.”
Edit Edit within your online studio or tap into Seenit editing service
Release Video Release video on own channels and through app
Share View and share final piece
JAN 2016 ELITEBUSINESSMAGAZINE.CO.UK
A thousand pictures.indd 4
35
24/12/2015 10:28
Pr e pp i ng f o r a n I P O
Going public An IPO can provide the fuel that grows a startup into a brand with global reach. But failing to prepare properly can have dire results BY JOSH RUSSELL
36
ELITEBUSINESSMAGAZINE.CO.UK JAN 2016
Going public.indd 1
24/12/2015 10:29
Pr e pp i ng f or a n i p o
Unless a startup is planning to sell stateside, the most effective way to grow a company past a certain level will be to float on the stock exchange and become a public company. But preparing a startup for an IPO isn’t something that can simply be done overnight. “Moving from a private company to a publicly traded company involves a big change in your corporate structure,” says Russ Shaw, founder of Tech London Advocates, the organisation that promotes and champions London’s tech industry. Given the multitude of changes that a company must go through in its transition from private to public, it’s absolutely vital that an entrepreneur leaves themselves a long enough road to get their business up to scratch. “It’s not just a case of deciding, ‘I’m going to go out and IPO my business,’” Shaw says. “You have to really think long and hard about it.” One of the reasons a startup needs to set aside sufficient time is to address one of the key concerns involved in preparing for an IPO: securing the right talent. “You need to consider your board structure over a long period of time and make sure you have the right people in position,” says Sam Smith, founder and CEO of finnCap, the independent finance broker. Attracting the right c-suite, non-execs and advisors will help keep a growing business on
the road as it begins to gear up for its floatation. “It’s about finding people who can help you get through not just the startup stage but also the scaleup stage,” she says. Another factor a startup has to consider as it builds towards its IPO is the regulatory responsibilities it will need to stick to. “You need to prep your business to operate in a different way,” Shaw says. For example, when a startup lists on Nasdaq, it will need to comply with the Sarbanes–Oxley Act of 2002. “Both you and your finance team will be required to report things in a certain way,” he says. “You have to make sure you’re ticking the correct boxes from a financial and regulatory point of view.” But a startup’s obligations don’t end there; it may also need to adjust its financial systems to ensure that it is able to offer accurate reporting of its results. “You’ve got to have some sort of visibility over your revenue,” says Smith. Whilst quarterly reporting is no longer mandatory within the EU, being able to offer accurate, periodic updates to shareholders will be absolutely vital when a startup goes public. This is why a strong finance function and an FD will prove invaluable in preparing for an IPO. “That’s something that is probably underinvested in early on but it will help you get on top of everything because you’ll have that person to think about controls,” adds Smith.
JAN 2016 ELITEBUSINESSMAGAZINE.CO.UK
Going public.indd 2
37
24/12/2015 10:29
Pr e pp i ng f o r a n I P O
Inevitably, this will involve something of an adjustment for many businesses: startups may have become used to doing their own thing but going public means they are opening themselves up to a much higher level of scrutiny. “If you’re not used to having those sorts of board meetings and you haven’t got a structure in place, it could end up being quite a shock to the system,” Smith says. Putting effective measures and processes in place, such as monthly meetings with clear documentation, can help prepare a business for the expectations of public shareholders. “It doesn’t have to involve a whole lot of time and admin but it’s just about bringing a bit of rigour to the process,” Smith explains. Whilst all of these factors will lay the groundwork for an effective IPO, entrepreneurs are probably most concerned with how they can make their shares as attractive as possible. Ultimately, if a startup can construct a credible narrative about its place in the market, its point of difference and how it has gained serious traction, it will help make the case for its valuation. “It’s
You need to prep your business to operate in a different way Russ Shaw, Tech London Advocates
not going to be a long, detailed story but you want to have some key messages out there that say: ‘this is what we’re doing, this is what we’re bringing to the table and this is why it’s going to be a solid IPO’,” Shaw says. “These are all things that investors will look at when thinking about your share price.” But, of course, having a strong equity story is only half the battle. Building a buzz around your floatation relies on how you communicate that story to the world at large. “Quite often it’s about building up a position,” says Smith. “It’s about how you get the message out there and build up that track record and reputation.” For this reason, Smith recommends building effective PR into a startup’s floatation strategy from an early stage to gradually boost the company’s rep and ensure its narrative is reaching investors and the wider public. “It makes the IPO much easier because people have heard of you,” she says. “You’ll always be walking in there with a big advantage and they’ll already have a perception of your business.” 38
However, building up a jawdropping valuation can prove to be a double-edged sword. It’s natural that a startup would want to net the highest possible share price but it’s vital a company is still setting realistic targets for its growth. “People want a higher rating and a higher multiple but, if you don’t hit that, share prices drop back down very quickly and it’s very hard to recover from,” Smith says. This is an easy trap for any startup to fall into, particularly one operating in an exciting and hype-prone sector. “We see this particularly with the high-profile US tech floatations,” says Shaw. “They raise a lot of money but create a lot of expectations.” Perhaps the most obvious recent example is Twitter: despite a huge amount of excitement pre-floatation, the company struggled to meet its targets and, over a fourmonth period from April to August 2015, saw half of its value wiped out. “If you’re suddenly in a downward spiral, before it gets too late you need to make sure you have a good explanation as to why you’ve under-delivered and figure out how you’re going to turn the corner,” he adds. Ultimately, there are many stages to planning a successful IPO and it will likely take several years to transition from a private to a public company. Therefore, it’s worth taking the time to really research and plan the route you need to take. “It’s a big commitment: there’s a lot of work involved and there’s a lot of advance preparation,” concludes Shaw. “So if you’re going into this, make sure you’re going into it with your eyes wide open.”
ELITEBUSINESSMAGAZINE.CO.UK JAN 2016
Going public.indd 3
24/12/2015 10:30
Tax finance that’s made to measure
01244 527300 | www.ldf.co.uk
QUICK TURN AROUND
DEDICATED ACCOUNT MANAGER
6, 10, 12 MONTH LOANS
LDF Operations Limited (reg. no 02029122) part of the LDF Group is authorised and regulated by the Financial Conduct Authority for credit-related regulated activities (including hiring).
039EliteBusiness0116.indd 1
17/12/2015 15:05
THE
ANTI-TECH ENTREPRENEUR
IN 1994, DAN WAGNER BECAME THE YOUNGEST CEO OF A PUBLIC COMPANY IN THE UK, SHATTERING PEOPLE’S STEREOTYPES IN THE PROCESS. TWO DECADES LATER, HE’S TEARING UP THE RULEBOOK AGAIN WITH POWA TECHNOLOGIES WORDS BY ADAM PESCOD / PHOTOGRAPHY BY EMILIE SANDY
Powa T ec h no lo gi es
His company is currently valued at £1.6bn but it’s evident Dan Wagner would rather be known for his products than his market price. He’s certainly far from enamoured with the language surrounding startups that carry such valuations.
“i
don’t like the term ‘unicorn’. It’s creating the wrong dynamic around businesses,” he says. “Businesses shouldn’t be championed for the fact that they have an X or Y valuation. They should be championed for the fact that they have a great initiative, great products, customers and momentum – all the things that define a business as a success.” While the headquarters of his e-commerce firm Powa Technologies might inhabit the same postcode area as London’s other billion-dollar startups, Wagner doesn’t associate too closely with his Shoreditch counterparts. “There’s an almost enthusiastic desire to be a unicorn and to be in some club. I don’t want to be in that club. I don’t like being in any club actually. I am the anti-tech entrepreneur in that respect,” he laughs. Indeed, the Powa offices are a far cry from what most people would expect from a modern tech company, spanning the top two floors of Heron Tower and offering some stunning views of the city. “There are no exposed brick walls, there is no fussball table,” says Wagner. “We are not trying to put ourselves forward as something [we’re not]. We’re a very serious business.” Yet back in 1984, Wagner was himself a fresh-faced tech entrepreneur with a big idea. His first company MAID (Market Analysis Information Database), which later became Dialog, is widely recognised as the first attempt to package electronic information and make it accessible to anybody with a computer. As Wagner remarks, “That was 1984, five years before Tim Berners-Lee presented the concept of the World Wide Web at CERN and eight years before we started using it.” Wagner was inspired to launch MAID while working at WCRS (White Collins Rutherford Scott), the London ad agency. Yet, if it wasn’t for an inspired job application, things may have turned out differently for the entrepreneur. Having dropped out of school at 16, Wagner found himself at a disadvantage compared to 42
ELITEBUSINESSMAGAZINE.CO.UK JAN 2016
Interview Dan Wagner.indd 3
24/12/2015 13:03
DA N WAGNE R
other candidates. “It was very difficult to get into advertising,” he says. “Back in those days, they had the cream of the graduates putting themselves forward, so I had to do something to stand out from the pack.” Wagner knocked up an advert of himself on a huge piece of poster board and sent it to the chairman of WCRS in a taxi. It landed him a job as a runner on a salary of £2,400, the minimum wage for under-18s at the time. “I was absolutely thrilled,” he smiles. Wagner’s imagination helped him work his way up the ranks at WCRS. Keen to make a move into account management, he started turning up in a suit. “People were saying ‘Why are you walking around in a suit? Do you want a job in account management?’” says Wagner. He was promptly promoted, which is when the idea for MAID started to emerge. “When we were pitching for advertising, I had to find out about the ice-cream market, the milk market or the market for sports cars,” says Wagner. “In those days, you’d have to go to libraries to get the information – it was quite difficult.” At a time when computers were a cutting-edge piece of new technology, Wagner envisaged a
There was a feeling of incredulity in 1994 that a 30-year-old could be running a public company solution to the problem faced by marketers, not to mention scientists and librarians. While admitting it was “a bit of a punt” – hardly anybody owned a computer in the early 1980s – Wagner ended up floating MAID on the London Stock Exchange in 1994, making him the youngest CEO of a public company in the UK. However, he fell foul of many commentators and industry leaders after sporting a Daffy Duck waistcoat to the media call ahead of the company’s IPO. Wagner believes the hysteria over his choice of attire was just a symptom of general attitudes towards him personally. “There was a feeling of incredulity in 1994 that a 30-year-old could be running a public company,” he says. “Today there are loads of 30-year-olds running public companies and nobody really cares because that’s not what defines an individual and their ability. But back then, it did.” JAN 2016 ELITEBUSINESSMAGAZINE.CO.UK
Interview Dan Wagner.indd 4
43
24/12/2015 13:03
DA N WAGNER
MAID prospered as dotcom companies proliferated in the mid-1990s – Wagner was invited by Bill Gates to the launch of MSN, to which MAID provided the majority of content – but suffered, like all companies, during the dotcom collapse a few years later. Dialog – as the company was renamed after its acquisition of Knight Ridder in 1997 – was eventually sold to Thomson-Reuters for $500m, shortly before the crisis culminated in March 2000. “It is very possible that, had I not sold Dialog just before the dotcom crash, a lot more value would have been applied to it as a public company [after the crash],” says Wagner. “But that’s the vagaries of the public market.” Wagner’s attention turned to his second venture Venda, an e-commerce firm that provided cloud software services
There Therecancan only onlybebeoneone PowaTag: PowaTag:it it hashastotobebea a platform platformthat that is isdeployed deployedbyby everybody everybody to retailers; this was ten years before the terms ‘cloud’ and software-as-a-service (SaaS) were officially coined. Venda was built using the remnants of dotcom casualty Boo.com, which Wagner acquired for £250,000 in 2000. “From the outside, Boo.com was a lot of people flying around on Concorde, drinking champagne and spending investors’ money but beneath the surface was a very capable e-commerce team,” he explains. While Wagner initially had trouble convincing people of Venda’s potential, retailers 44
including Tesco and Laura Ashley are now using the platform, which was sold to software giant Netsuite last year. However, Wagner had stepped down as an executive of Venda in 2010 to push ahead with a new project. His time at Venda had opened his eyes to some of the pitfalls facing retail brands that were looking to offer a seamless multichannel experience. “My engagement with retailers identified a number of things,” he says. “One of the things was the awful disparity between the experience that a consumer has when they go online and when they shop offline with the same retailer. It’s quite a personal experience when you go online but I could go to that same retailer’s store and they’d have no clue who I am. I could be anybody.” Thus, far from steering consumers towards online retail, Wagner was on a totally different mission: to save the great British high street. “You can have two visions of the high street,” he says. “Vision number one is tumbleweeds and lawlessness: you stay at home and drones deliver everything to you. But there’s another vision of the future and that vision is that you make the high street relevant again.” Suffice to say, there was a device that sat squarely at the forefront of Wagner’s vision. “If you look at a millennial, they sit looking at their mobile phone all day, even when they are in physical stores,” he explains. “They are not engaged with
ELITEBUSINESSMAGAZINE.CO.UK JAN 2016
Interview Dan Wagner.indd 5
24/12/2015 13:04
DA N WAGNE R
$76m
the things around them in the way that Size of Powa they are engaged with their mobile device. Technologies’ Series A round That’s the problem I wanted to solve.” The first products out of the Powa Technologies stable were mPowa – now PowaPoS – which offers a mobile payment solution to retailers, and PowaWeb, a cloudbased e-commerce platform similar to Venda. However, it’s the third member of Powa’s portfolio that Wagner is hanging everything – including his reputation – on. Seven years in the making, PowaTag uses image and audio recognition to let consumers purchase an item that they see in a shop, advert or online with two taps of a smartphone button. Anybody with the app simply has to wave their phone over a magazine advert – or in the vicinity of a TV ad – before being taken to the retailer’s site where they can instantly purchase the advertised item. The app’s integration with mobile payment technology saves people from having to negotiate what Wagner calls “the four pages of hell” that accompany the majority of online purchases. It is also set to incorporate beacons, notifying people of offers on items that they might be strolling past in a retailer’s physical store, which can then be purchased with ease at the counter. PowaTag officially launched in March 2014 after raising an eye-watering $96.7m in the space of seven months, including a Series A round of $76m in August 2013 led by Boston-based Wellington Management. This was topped up with a further $80m in November 2014 to support its launch in the US. Wagner, who has also ploughed $50m into Powa through his
incubator Bright Station Ventures, doesn’t believe he could have attracted as much investment on these shores. “UK investors couldn’t bring themselves to provide that level of capital to a business that doesn’t have any revenue yet,” he says. “We might have got $10m and that would have been a fantastic result in the context of the UK but even that is unlikely. I just don’t think it happens here – there’s a sort of natural limit to investor appetite.” An impressive 1,600 retailers, including Cath Kidston and Liberty, are already signed up to PowaTag, with the company’s $75m acquisition of Hong Kong-based MPayMe in June 2014 looking set to boost this number significantly. It’s all part of Wagner’s plan to make PowaTag a globally recognised brand. “Ubiquity is important to us,” says Wagner. “There can only be one PowaTag: it has to be a platform that is deployed by everybody.” Powa Technologies now has 15 offices worldwide, employing over 500 people. Thankfully, despite heading up a company with employees in multiple timezones, Wagner can still find time for a bit of shut-eye. “I have got good people,” he says. “When you have got good people, you don’t need to be up all night.” Such is the ambition of his enterprise, Wagner admits that another IPO might be in the offing at some point in the future. “We expect [Powa] to become the underpinning infrastructure for mobile engagement globally and, if that’s the case, there’s almost a necessity in being a public company,” he says. However, if he was to float this company, Wagner reveals he would do so in the USA or Asia, something that comes with personal implications for the entrepreneur. “The UK is not the natural place to list a cutting-edge tech business and that’s why we don’t have any cutting-edge tech businesses listed on the London markets,” he says. “I don’t really want to move to America or Asia [and] it might also mean not being the CEO, both of which would be big decisions for me.” As both a husband and a father to two daughters, it’s easy to understand why Wagner wouldn’t want to relocate. One thing’s for sure though: he won’t be resting until Powa has justified its hefty price tag. “I love the thrill of creating something,” he says. “It’s in my DNA.” JAN 2016 ELITEBUSINESSMAGAZINE.CO.UK
Interview Dan Wagner.indd 6
45
24/12/2015 13:04
EliteBusiness0116.indd 1 MMR Elite Business 410x266 DPS Dec2015 4 ol.indd All Pages
23/12/2015 13:43
ÂŁ400 Up to
Average reward is ÂŁ100
EliteBusiness0116.indd 2
23/12/2015 13:43 11:03
EliteBusiness0116.indd 1
23/12/2015 10:16
STAY AHEAD in 2016 Startups can now reach customers in ways that wouldn’t have been imaginable around the turn of the millennium. Whether’s it striking up a conversation on Facebook or creating a viral vlog, the marketing avenues available to companies in 2015 appeared almost endless. But, with technology evolving on a daily basis, the channels that were relevant last year might soon become archaic. With that in mind, we asked some leading industry lights what marketing trends startups can ill afford to ignore in 2016
BY ADAM PESCOD
JAN 2016 ELITEBUSINESSMAGAZINE.CO.UK
Brand new for 2016.indd 1
49
24/12/2015 10:45
M a r k et i ng t r end s
ADVERTISING Siobhan Shipman, digital account coordinator, Liberty Gmail Native Ads are set to be huge in 2016. Google’s latest foray into advertising, these ads appear at the top of a Gmail user’s inbox and are formatted just like an email. However, it’s their targeting capabilities, rather than how and where they appear, that will drive the success of Gmail Native Ads. Advertisers will be able to use AdWords’ regular targeting capabilities – demographic and geographic, for example – but will also be able to further refine their audience with the ability to target web domains. This precise targeting is made possible by Google’s automated systems, which analyse email content for keywords. The implications of this are significant: it allows advertisers to directly target those who’ve previously bought from them, those who’ve bought from competitors and those who’ve bought from complimentary brands. When paired with keywords, particularly phrases like ‘your order’ and ‘receipt’, it means you can not only get your ads in front of your ideal customer, you can also get them there when they’re in the mood to buy.
YouTube’s Shoppable TrueView ads are also likely to blow up in 2016 because of their ability to reduce the barrier between researching a product on the platform and searching for and buying it. Basically, Shoppable TrueView ads let advertisers layer specific images and links over video ads, meaning that viewers can easily click to buy featured items, as opposed to having to leave the site to search for a brand or product. Again, these ads are highly targetable, so will only show up when they’re contextually relevant. Early indications show that this new format is proving to be extremely successful, with brands like online home goods retailer Wayfair seeing a three times revenue increase per impression for their Shoppable TrueView ads when compared to a regular TrueView campaign. This is big news for YouTube as marketers have typically seen the site’s ads as a brand-building channel, rather than a means to push specific products.
SOCIAL Steve Mark, brand director, Vanarama In 2016, the challenge will be moving quickly to embrace trends in social that are important to your audience. The millennial generation adopts technology quickly so agile marketing is a must. Apps such as SnapChat and WhatsApp are being adopted by news organisations as mainstream tools for communicating with their audience. Brands have started to adopt these tools in 2015, a trend that will continue in 2016. However, the challenge is to integrate these trends within the framework of traditional marketing channels. With so many advances in technology in 2015 it can be easy to become distracted and taken off course with a purely digitaldriven strategy but recent surveys have highlighted the 50
ELITEBUSINESSMAGAZINE.CO.UK JAN 2016
Brand new for 2016.indd 2
24/12/2015 10:46
Ma rk e ti ng tre nd s
effectiveness of face-to-face and local marketing strategies. Successful brands and business owners will use technology available to them to build relationships online but will also have a cohesive and tactical strategy to continue the conversation offline to build rapport with their audience. A new wave of celebrities are also emerging from Facebook. They have invested time in building their tribe of loyal followers who like and share every one of their videos. Emerging UK talent such as Jack Jones, who has 2.8 million Facebook likes, are using their new found status to their advantage by working with brands to deliver viral content. Videos featuring these new wave stars can very quickly reach one million views, sometimes in a matter of hours, so the trick is finding talent that speaks to your audience. As with adopting any talent, brand reputation is paramount, so do your homework and choose wisely.
The millennial generation adopts technology quickly so agile marketing is a must Steve Mark, Vanarama
DATA
Jon Cano-Lopez, CEO, REaD Group Big data was the phrase on so many decisionmakers’ lips last year. It’s a great term and has been influential in elevating the importance of data, especially around the boardroom table. But to a data expert it’s essentially meaningless. Why? Because data has always been big. Back in 1992, we spent £16,000 on four 1GB hard drives to hold as much information as we could for our clients. These days a portable 8GB drive on Google comes in at £2.99. There will always be more data coming in than companies are capable of dealing with. Just as the amount of data coming into a business gets larger and our capacity to collect and analyse it increases, the new technologies and touchpoints to collect it also increase exponentially. The speed at which volumes of information come into a company now means that the vast numbers of data scientists being hired at FTSE 500 companies around the world find
themselves bogged down in the sheer onslaught, unable to find the really important facts in the torrent. The way for businesses to move forward is to recognise that it’s not the mountain of data that’s important; it’s the spoonful of gold that we need to harness and act on quickly. Big data is big business; it has big implications. It is not, however, new, and it is leading businesses astray. Big data is a big distraction from the real issue: fast data. Fast data is the processing of big data in real-time. It gives marketers immediate information that allows them to take action when it matters most. The problem for small businesses is that customers have off-the-charts choice in almost every market niche. Therefore, the moment they feel slightly dissatisfied, they’ll move on to a better alternative. Fast data enables businesses to identify the specific moments in time when a customer is about to leave and take action to retain them. Customer retention is crucial to the survival of small businesses so utilising fast data is a great way of retaining their most valuable asset. JAN 2016 ELITEBUSINESSMAGAZINE.CO.UK
Brand new for 2016.indd 3
51
24/12/2015 10:46
Basepoint has it covered!
...your office can grow with your business...speak to us for current availability.
basepoint.co.uk
EliteBusiness0116.indd 1
23/12/2015 10:19
Basepoint has it covered!
...you can get free business advice with....
basepoint.co.uk
EliteBusiness0116.indd 1
23/12/2015 10:20
54
ELITEBUSINESSMAGAZINE.CO.UK JAN 2016
SHARE GAME THE BEHEMOTHS OF THE SHARING ECONOMY MIGHT RESIDE IN SUNNY SAN FRAN BUT COULD THE UK BECOME THE MOVEMENT’S NATURAL HOME IN YEARS TO COME? BY ADAM PESCOD
THE GROWTH OF THE SHARING ECONOMY in recent years has been nothing short of staggering. According to JustPark, the parking-space marketplace, over half of sharing-economy companies were founded in 2013 or later, with 80% launched since the start of 2011. Meanwhile, PwC has predicted that the industry will be worth an eye-watering $335bn globally by 2025, up from $15bn today. So how does one account for the emergence of a sector that looks like soaring for decades to come? Unsurprisingly, there’s more than one area to pinpoint. “It’s really about the coming together of a number of different macro-economic factors,” says Alex Stephany, CEO of JustPark. The industry’s explosion has certainly been aided by a technological trend that kicked off in the early-2000s. “The falling costs of both broadband and smartphones is putting the internet in more people’s pocket than ever before,” Stephany says. However, while the sharing economy’s growth might have depended on the availability and proliferation of modern technology, the success of startups such as Airbnb and Uber owes just as much to a significant shift in people’s behaviour. “There has been a general trend towards people wanting to get as much as possible out of their existing resources and make the most of their assets,” says Tom Elvidge, general manager at Uber. JAN 2016 ELITEBUSINESSMAGAZINE.CO.UK
55
sh a r i ng ec o no my
i
It’s no coincidence that this attitude only became more prevalent during the recession, which in turn gave sharing-economy startups a healthy dose of rocket fuel. “Periods of economic distress often lead to innovations in the way that business is done and the sharing economy is a good example of that,” explains Stephany. Indeed, companies like Airbnb may not have been met with as much enthusiasm in times of economy prosperity. However, as the downturn took hold, its business model started to appeal to hosts and holidaymakers alike. “Airbnb has made mainstream the concept that you would stay in someone’s home or have someone stay in your home,” says Debbie Wosskow, founder and CEO of Love Home Swap, the home-swapping platform, and chair of Sharing Economy UK, the trade body for the UK’s sharing economy. “When I was initially pitching for VC finance four and a half years ago, I was told by a lot of VCs that nobody would ever do that. But Airbnb has normalised the ‘can I trust a stranger?’ conversation and socialised the idea that ordinary people can make extra money in this way.” Sharing-economy companies have gone on to attract some serious investment: while Uber and Airbnb have raised $6.6bn and $3.9bn respectively, British food-delivery startup Deliveroo has recently closed a $100m Series D round, demonstrating that it’s not all about Tom Elvidge, Uber Silicon Valley. It’s the simplicity of these services that has evidently been a major selling point to the investor community. “Uber has enjoyed pretty phenomenal growth over the past few years,” says Elvidge. “We have a service that is very efficient and, as a result of that, we have been able to add both riders and drivers to the platform at quite a rate. That has helped make it an attractive investment.” While investor interest is now spiking, many argue that it was first stimulated by eBay, which Wosskow describes as the “grandaddy” of the sharing economy. “It was the first business to get everyone comfortable with the language of trust and peer-to-peer ratings,” she explains. “You can really track investor appetite back to that time.”
But that’s not to say investors will throw their money at any old sharing-economy startup. Especially as the sector continues to grow, new entrants need to demonstrate originality and proof of scalability to stand any chance off getting off the ground. “What helps investors get comfortable is not only showing how these marketplaces can scale in accommodation and transport but also how they can scale in food, fashion, pets or logistics,” says Wosskow. “It’s then about demonstrating how you acquire both sides of your marketplace, whether that’s guests and hosts or buyers and sellers.”
There has been a general trend towards people wanting to get as much as possible out of their existing resources and make the most of their assets
56
As far as Stephany is concerned, there’s still plenty of space for even further innovation in the sharing-economy space. ‘There are definitely some verticals in the sharing economy that haven’t been nailed and that someone is going to nail in the next few years,” he says. However, in order to maintain its upward trajectory and hit the numbers put forward by PwC, the sharing economy needs the support of lawmakers. This was one of the key discussion topics at Breakers to Makers, a sharing-economy conference recently held in London, which was attended by Wosskow, Stephany and other industry leaders. As agreed by all speakers at the event, a few legislative tweaks should ensure that
ELITEBUSINESSMAGAZINE.CO.UK JAN 2016
Share game.indd 3
24/12/2015 12:31
S HA R IN G E C ONOM Y
$335bn 80%
the sharing economy can continue to thrive in years to come. “Sharing-economy companies PREDICTED VALUE OF are often doing something that the law hasn’t THE GLOBAL SHARING anticipated, so they are existing in something ECONOMY BY 2025 Source: PwC of a grey area,” explains Stephany. “JustPark was doing that but now there is government guidance that says you can rent out a driveway for a secondary income. So it’s important that laws and regulations keep up with the times.” Thankfully, this is something the British government recognises. In September 2014, it commissioned Wosskow to lead a review PROPORTION OF SHARING–ECONOMY into how the UK can become the global COMPANIES FOUNDED IN centre for the sharing economy. Her review, 2013 OR LATER Source: JustPark published in March 2015, put forward over 30 recommendations and led to the creation of Sharing Economy UK, the trade body that Wosskow now chairs. Suffice to say, she’s encouraged that the government has ultimately put the future of the sector in the hands of its stakeholders. “It’s been really interesting looking at how the UK has taken a much more light-touch approach to regulation than other markets,” she says. “The government has been a lot more consultative in terms of working with the industry.” As a result, there’s a sense of confidence that the UK can, in time, become the industry’s natural home. “We are a lot more progressive than the US in this sphere,” says Alex Depledge, co-founder and CEO of Hassle.com, the marketplace for independent cleaners. “The government is very much on board with what we are doing and definitely sees it as an area of growth.”
CLEANING UP Hassle.com
Like many startups, Hassle. com started its life as something slightly different. “Basically, we tried to create the eBay of local services,” explains Alex Depledge, the company’s co-founder and CEO. “It was originally called Teddle.” But it soon became clear that the startup would have to narrow its focus. “We found that one in four people were searching for a cleaner, which was ironic because we couldn’t actually find any cleaners,” Depledge says. “[But] that was the lightbulb moment: we thought there was a real opportunity to bring the cleaning world online in a safe and transparent fashion.” Depledge also realised that independent cleaners weren’t getting a very fair deal from the agencies
that hired them. That’s why it implemented a flat fee of £10 per hour for every cleaner in its network, with 15% of each transaction going to Hassle.com. “It’s actually a really good deal if you consider that in an agency, they’d get paid minimum wage, which is about £6.50, and the customer will be paying anything from £11-15 per hour,” says Depledge. The startup has since enjoyed some serious traction: it closed a Series A round of $6m in May 2014, led by Accel Partners, one of early Facebook’s first investors. And, in July 2015, the company was acquired by German startup Helpling for $32m, with Depledge continuing to operate as CEO of the Hassle.com brand. “We had the choice of either spending the next two years going toe-to-toe with Helpling or joining together as one company and dominating Europe, which is what we have done,” says Depledge. All in all, it’s been a pretty successful 18 months for Hassle.com. “It does feel like everything major has happened at once,” Depledge concludes.
JAN 2016 ELITEBUSINESSMAGAZINE.CO.UK
57
EliteBusiness0116.indd 1
23/12/2015 10:26
s h a ri ng e c onom y
periods of economic distress often lead to innovations in the way that business is done and the sharing economy is a good example of that Alex Stephany, JustPark
Home sweet home Love Home Swap
A bad experience is the inspiration for many new businesses – and the same is true of Love Home Swap. Prior to launching the company, Debbie Wosskow had been building other businesses in the digital and creative sectors, which entailed a fair bit of travelling. But things became a little more challenging when she had children. “Off the back of a particularly bad hotelbased holiday with two very small children, I thought to myself, ‘Is there not a better way to travel?’,” Wosskow explains. Her flash of inspiration came while watching The Holiday, a film about home-swapping. “I wondered whether this existed in real life and started to look at home exchange as a category,” she says. “It had its roots in the 1950s when people produced directories but it felt massively ripe for innovation. So that’s where Love Home Swap was born.” The benefits of the platform are clear. By listing their home on Love Home Swap and arranging exchanges with other members, people can save money that would otherwise be spent staying in hotels, but without skimping on quality. Meanwhile, the company makes revenue from subscriptions, with non-members able to list their property for free and pay to message other users. “It’s a bit like online dating for homes,” says Wosskow. Members can also accrue swap points by letting people stay in their home while they’re away. These can then be cashed in at a later date. The recent acquisition of German competitor HomeForExchange has pushed the number of properties listed on Love Home Swap towards the 100,000 mark. But, as Wosskow says, it’s been something of a slog. “We are now the leading home swap business in the world but we need to continue to grow the category,” says Wosskow. “That stuff is hard and requires grit. It’s not for the faint-hearted.”
Nevertheless, Depledge doesn’t believe startups on this side of the pond can take on the world until Europe unifies under a digital single market. While this is something the EU is looking to implement, Depledge is eager for it happen sooner rather than later. “In every [European] country we have to abide by all the different nuances, which takes a lot of time and understanding,” she says. “Unless we get a digital single market, we’re going to struggle to get the size of market we need to build really big businesses.” For now, the likes of JustPark, Hassle.com and Love Home Swap are proudly flying the flag for Blighty. While Hassle.com was acquired by Berlin-based Helpling for a cool ¤32m in July 2015, JustPark has signed major deals with Hilton and Sheraton Hotels, with BMW listed as one of its biggest investors. Stephany believes these sorts of partnerships are essential for sharingeconomy startups, even if it means deviating very slightly from their initial model; JustPark started life as ParkatmyHouse, which was purely focused on letting people rent out their driveways, before rebranding in 2014. “Sharingeconomy companies are professionalising and borrowing certain tips from larger companies and conversely large companies are borrowing tips and tricks from the sharing-economy handbook,” he concludes. “It’s actually a very healthy thing when the two come together.”
JAN 2016 ELITEBUSINESSMAGAZINE.CO.UK
Share game.indd 5
59
24/12/2015 10:35
A DV ERT I S I NG F EAT U R E
How to take the most out of the Business Funding Show The Business Funding Show will help you to obtain the necessary funding and support your business needs. In just two days you’ll meet dozens of leading providers, all under one roof – all there to help you to find the best funding option quickly Kicking off the show on day one is the industry-leading body British Business Bank, who will be talking about the various funding solutions and recent funding trends and initiatives. If ‘alternative funding’ is a new terms for you, then you can also hear from Funding Knight, the fast-growing P2P platform, on how alternative lenders are shaping the funding landscape. If you are familiar with the terminology of the market today and simply need to compare providers, then Karen Melonie Gould, one of the top UK’s mentors who recently set-up digital funding market-space Gateway2enterprise, will be available to go through specific options with you. To discover various types of funding options, visit the Lending and Investment Zones, where you can meet top providers from each sector. The Lending Zone will introduce you to leading debt-finance providers from traditional institutions like NatWest to leading alternative funders like PayPal Working Capital or GLE. Alternatively, if you feel you would prefer to exchange part of your business in return for investment then marketleaders like Angels Den, UK Business Angels Association, Rockstar Group or Crowdcube within the Investment Zone will help you to understand how to do this. In the Growth Zone, you can meet 60
grant-providers like the Science and Technology Facilities Council and the Enterprise Europe Network. You can also hear from the Intellectual Property Office why investors are so concerned about IP rights and what needs to be protected. You can also attend the free one-to-one Mentoring Clinic to get help and support from finance and service providers like Nucleus IP or ESA Business Incubation Centre, who will be available to advise you how to get onto the top UK science and tech incubation programmes or how to obtain grants. The Business Funding Show also plays host to essential workshops spread across three stages: Central Funding Zone, Show Me The Money and Growth BootCamp. The Central Funding Zone is your chance to meet celebrated entrepreneurs like Richard Reed, the founder of Innocent Drinks, Charlie Mullins, founder of Pimlico Plumbers and Lord Bilimoria, who created Cobra Beer. The CFZ is also your chance to pitch to six strong investors through the Live Investment Challenge from Angels Den, as long as you’re among strongest finalists, but to do so you need to apply ASAP. On the Show Me The Money stage you’ll be able to hear from Ratesetter, who will share ‘secret’ success tips on how to get funded. Everline will explain how disruptive technology is helping to
provide funding instantly. Meanwhile, Bibby Financial Services, the invoicefinance provider, will share insight on how to get your money even before your clients have paid. The Growth BootCamp’s seminars will provide essential information to ensure effective growth. Experts from top accounting bodies like ALMA CG, ICAEW and HW Fishers will explain how to get extra finance through the R&D tax allowance, as well as elaborate on the opportunities of the EIS and SEIS schemes for investors and businesses. Experian will help you to find out more about your credit score. Paul Grant and Chelsey Baker, two of the UK’s top pitching experts, will also be there to help you prepare a winning pitch for investors and media. Understanding how to best publicise your business is key for all SMEs. This is why BFS has set-up a special Interactive Zone, where you will be able to take photos or videos with speakers and be able to pitch your business through BFS channel. Alternatively, if you’re a vlogging enthusiast, you’ll be able to share your BFS experience with our online community at the BFS Media Hub, which will be hosting journalists from top-tier media. There will also be a Networking Area, where you will be able to build new relations with your peers. At the end of the first day, we will also be hosting an exclusive VIP reception with all our special guests, speakers and exhibitors. We are inviting all attendees to become a part of it through our great-value VIP ticket offer. We look forward to seeing all of you at the Business Funding Show on February 2 and 3.
Exclusively to Elite Business Readers, BFS has a special offer, simply enter CODE: CEGeneral or CEPremium when checking out on eventbrite. Make sure to book your ticket while available: www.businessfundingshow.com
ELITEBUSINESSMAGAZINE.CO.UK JAN 2016
Business Funding Advertorial.indd 1
23/12/2015 17:25
Business Funding Show The UK’s ONLY EXHIBITION ON SME FUNDING AND GROWTH SUPPORT Speakers
Richard Reed
Bill Morrow
Mark Wright Founder of
Founder of
Lord Karan Bilimoria
Charlie Mullins
Innocent Drinks
Angel’s Den
Climb Online
Cobra Beer
Pimlico Plumbers
Co-founder of
Founder of
Founder of
Don't miss your chance to meet the top finance providers all under one roof!
Book your ticket now www.BusinessFundingShow.com 2nd - 3rd Feb 2016 | Old Billingsgate | London Sponsored by
Some of our exhibitors
EliteBusiness0116.indd 1
23/12/2015 14:36
GATHERING YOUR BY JOSH RUSSELL
STARTUPS LIVE OR DIE ON THEIR ABILITY TO STAY AHEAD OF THE CURVE. THAT’S WHY THE BEST BUSINESSES ARE THOSE THAT ARE OPEN TO EMPLOYEES’ INNOVATIONS
62
ELITEBUSINESSMAGAZINE.CO.UK JAN 2016
For creative thinkers, there is no greater motivation than knowing they can be given a platform to run with their ideas Carl Rodrigues, SOTI
THOUGHTS IN A COMMERCIAL LANDSCAPE DEFINED by disruption, no business can afford to ignore a potential source of innovation. In light of this, embracing the disruptive ideas that emerge from every area of one’s business is becoming key to survival. And the truly competitive companies are those that make use of the most fertile source of innovation available to them: their employees. For businesses keen to produce truly disruptive ideas, attempting to guide innovation from the top-down or through a siloed department isn’t the best approach. Ultimately, companies that try to innovate at arms length will inevitably lose out to those in which an openness to new ideas is embedded at a cellular level. “Innovation needs to be an organisational norm,” says Carl Rodrigues, CEO and founder of SOTI, the enterprise mobility management company. “Concerted efforts must be made to nurture and encourage this type of culture amongst all employees – or else [businesses] run the risk of it fizzling out.” There are several different ways a startup can approach this: one strategy simply entails being open to suggestions and recognising those that have helped improve processes. “Essentially you need to say: ‘We can try small things; if they don’t work that’s fine and if they do then we’ll make champions of you’,” says Simon Hill, CEO of Wazoku, the provider of idea management software. He points to Waitrose as an example: the company has a programme in which employees can suggest ways that everyday processes around them can be improved. It trials these ideas at store level and, if they’re successful, rolls them JAN 2016 ELITEBUSINESSMAGAZINE.CO.UK
63
E M P LOY E E I NNOVAT I O NS
If you can make innovation accessible at all levels of the business, you fundamentally change its culture Simon Hill, Wazoku
64
ELITEBUSINESSMAGAZINE.CO.UK JAN 2016
out across its network. “That person will then be rewarded, recognised and championed across the business,” he says. A more hands-off approach involves empowering teams to find new ways to resolve existing challenges. “It’s about getting people working in autonomous teams and solving specific problems,” says Dave Tonge, CTO of Moneyhub, the personal and professional finance app. Rather than attempting to control every aspect of these projects, Moneyhub simply sets the goal and allows its employees to find the optimum solution. “We equip them to do what they think is best to hit the goal,” he says. “This means giving them a lot of freedom in terms of how to solve specific problems, rather than saying ‘we need this feature, this feature and this feature’.” But this isn’t the only way to make the most of employees’ creativity and expertise: both SOTI and Moneyhub allocate creative time to their teams to experiment with new ideas. “Our programme is intended to encourage employees and provide them with dedicated time for innovative pursuits,” says Rodrigues. The scheme, titled SOTI Jolt, invites employees to propose new ideas to a committee and, if they’re selected, allows them to spend up to 20% of their working week as innovation time to bring the project to life. “It allows employees to work on projects that they are passionate about and, in turn, pushes the company’s innovation to new heights,” Rodrigues explains. “It’s a recipe for mutual success and satisfaction that keeps the entrepreneurial spirit alive throughout the organisation.”
E MPLOYE E IN NOVATI ONS
As one can probably infer, this has wider benefits than just improving a startup’s product or service. “For creative thinkers, there is no greater motivation than knowing they can be given a platform to run with their ideas,” Rodrigues says. This can have a truly transformative effect on a business’s talent, providing increased engagement and helping to unlock individual’s true potential. “People who perhaps never saw themselves in leadership roles begin to appreciate their own capabilities and seek out greater opportunities to innovate and manage projects,” he continues. Running a startup in this way can also profoundly alter its DNA. “If you can make innovation accessible at all levels of the business, you fundamentally change its culture in a very meaningful way,” says Hill. Not only can doing this guarantee that companies are casting the net as wide as possible for potential innovations but it can also utterly change the way they are perceived by top-end talent and the world at large. “The best-in-class businesses – the Toyotas of this world – have been doing this for many decades,” Hill continues. “They have a culture where people feel valued all the way from the top to the bottom of the organisation.” But, despite the myriad benefits that embracing employee innovations can bring, it seems that many companies are still wary of harnessing the creative input of their employees. According to the EveryDay Innovation report published by Wazoku last October, the average UK business receives 31,200 ideas a year but only 43% of these ideas are acknowledged and just 39% are implemented.
Ironically, Tonge believes that part of the reason for this is an unwillingness to disrupt the old ways in which innovation is handled. “A lot of people really get used to not working in this way,” says Tonge. “They get used to not really being innovative.” Adapting to a world in which innovation is the prerogative of every individual throughout the business requires a shift in responsibility, something that can prove to be intimidating for both those at the top and at the coalface. “It requires a cultural shift from management but also from employees,” he says. “That new freedom and empowerment can be quite daunting.” However, it’s important to recognise that embracing innovations from every level of the business doesn’t simply mean opening the floodgates and abandoning all oversight. “You need to empower teams and enable innovation but that doesn’t mean that there should be no measurement,” explains Tonge. Making astute use of metrics can not only act as quality control but also offers employees the safety of a framework in which to operate. And team members that may be wary of putting ideas forth still have an important role to play in assessing and refining the innovations that emerge. “In an age of increased personalisation, not everyone is an innovator or an ideator,” says Hill. “Others are great at challenging and championing ideas.” Making use of the critical abilities a company has at its disposal can help whittle down a longlist of ideas and create an effective business case for those that stand to have the most positive effect. “By the end of that process, you’ve got a really strong insight-driven set of data to tell you whether or not these are actually good ideas,” he says. Ultimately, there has never been a better time to embrace employee innovations. “People are now waking up to the fact that this is becoming critical,” Hill concludes. JAN 2016 ELITEBUSINESSMAGAZINE.CO.UK
65
inspired by the many
At Elite Business, we’re passionate about championing new business. Providing fresh perspectives and representing disruptive solutions, we’re interested in the new generation of business that is helping to drive Britain forward.
Get
faces
Every issue covers up-to-the-minute content and presents a unique angle on the things enterprises need to know. We also gather the best and brightest voices in the community to share their experience. Whether it’s Funding Circle shaking up business finance or Chilango making waves with Mexican food, we profile the individuals reinventing enterprise.
of
entrepreneurship elite interview Profiling some of the most inspiring entrepreneurs in the UK
the crunch Bringing you all the stats that matter
Insight First-hand experience from high-profile entrepreneurs
scaling up Highlighting the hottest scaling startups
Exclusive offer - GET YOUR FIRST ISSUE FREE Receive quarterly issues of the UK’s market leading magazine for entrepreneurs for only £18* Subscribe to the print edition and enjoy free access to the digital edition every month. Call us today on: 01245 707 516 or visit: elitebusinessmagazine.co.uk/subscription
No matter your market, we’ve got it covered
Elite Business SubAd.indd 1
*Limited to new subscribers at UK addresses only. Please allow 28 days for delivery. Overseas mail: Europe £60; rest of world £95. Offer closes 31.03.16
24/12/2015 13:36
H EA LT H T EC H
In good health
We’ve all seen how technology has disrupted the worlds of finance, food and fitness in recent years. As a result of the hype surrounding startups in these sectors, innovations in healthcare haven’t hit quite as many headlines. However, there is a plethora of companies working in Britain’s burgeoning healthtech space that are harnessing the power of digital to solve some of life’s most serious problems.
It was only a matter of time before healthcare got caught up in the technology revolution. But, as demonstrated by some groundbreaking British startups, healthtech looks like changing the world for good BY ADAM PESCOD
68
ELITEBUSINESSMAGAZINE.CO.UK JAN 2016
In good health.indd 1
24/12/2015 10:40
HE A LTHTE C H
babylon Founded by Dr. Ali Parsa in 2013, babylon is quite literally putting healthcare in the hands of patients. The idea for the startup came while Parsa was leading CircleHealth, which is now Europe’s largest partnership of clinicians. “One thing that we quickly discovered is that the vast majority of people’s healthcare needs have little to do with hospitals,” explains Parsa. “There isn’t much in our system that helps keep you at the peak of your health.” He also spotted a fundamental flaw in the way healthcare was provided globally. “While the system is inconvenient or expensive for those of us in the West, the problem is much more serious for 50% of the world’s population who have no access to healthcare but have a mobile phone in their hand,” Parsa adds. “So we sat back and asked: ‘How can we meet more people’s healthcare needs, deliver it to them right from their mobile and, in doing so, make healthcare accessible, affordable and available to every human on earth?’” Suffice to say, babylon is going a long way to answering this question. As well as letting people
consult with doctors on their phone within minutes – and get answers to basic medical questions – users can also monitor their health, carry out rudimentary tests and store their clinical records, which can then be easily accessed and shared with GPs. In the space of three years, the startup has amassed an impressive list of corporate partners including Sky, BT, LinkedIn and Mastercard, not to mention the likes of Bupa and Aviva, whose support has been essential. It has also been well backed by the investment community. “We have never had a problem raising money,” says Parsa. “If you are doing something that is beyond the ordinary, you always have a huge amount of people who want to back you.” And while the industry as a whole isn’t yet attracting the same levels of investment as other sectors – fintech, for example – Parsa is sure it won’t be long before healthtech starts to flourish. “Once we are doing something that genuinely contributes to healthcare, we’ll start to see some big valuations,” he says. “There is no question about that.”
uMotif It was shortly after the birth of his first son that Bruce Hellman had the inspiration for uMotif. “I was tracking my own sleep and other aspects of daily life,” he says. “I realised that if you have that understanding, you can make changes to improve your health.” However, when Hellman paid a visit to Cure Parkinson’s Trust with uMotif’s co-founder Ben James, the pair discovered a more compelling use for the technology. “We realised these very general ideas could be applied to people with a serious health condition to help them have a better quality of life,” says Hellman. The entrepreneurs have gone on to develop a set of digital tools for patients, care teams and providers, all designed to ensure the best care possible. “We wanted to explore how people can do more to manage their own health condition but within the context of a healthcare relationship with a nurse, clinician, doctor or physiotherapist,” says Hellman.
JAN 2016 ELITEBUSINESSMAGAZINE.CO.UK
In good health.indd 2
69
24/12/2015 10:40
H EA LT H T EC H
Big Health uMotif has been warmly received by the NHS, which is letting it sell software licences into hospitals. “People might ask ‘how do you get into the NHS?’ but our experience has been really good ,” says Hellman. “If you are focused on doing something that matters and that solves a real problem, there is plenty of help and support available.” While its currently selling into the public and private sector, uMotif will be making its mobile app available for free download in January. “The public-facing trial will get more people on the platform and will help with our own learning, product development and marketing,” says Hellman. “It also means that more hospitals and healthcare providers will be able to experience our tool.” As the CEO of one of Blighty’s brightest healthtech startups, Hellman is predictably optimistic about the industry’s future on these shores. “It’s all too easy to think that everything great happens in the US but it’s not the case,” he says. “There is already an incredible amount of data available here.”
There’s a lot of interest in healthtech amongst investors but it’s understandably tempered with caution Peter Hames, Big Health
70
People all over the world suffer from sleeping difficulties – and Big Health’s CEO Peter Hames used to be one of them. Like many insomniacs, he found that traditional remedies weren’t doing the trick. “My own experience of insomnia – and the difficulty I had getting something other than sleeping pills – inspired me to find a way to get evidence-based non-drug therapy to the millions who need it,” says Hames. He hit upon the solution when recovering from his own sleep problems. “I finally overcame insomnia by self-administering a course of cognitive behavioural therapy (CBT) using a selfhelp book,” he says. “It struck me that technology offered a much more accessible, friendly, even enjoyable way for sufferers of mental health problems to receive evidence-based solutions such as CBT.” Before long, Hames had started building a clinical team to help develop his idea. It included renowned sleep expert Professor Colin Espie, whose book had helped cure Hames of insomnia. Hames convinced Espie to come on board as Big Health’s co-founder and two years later, the pair launched Sleepio, a digital sleep improvement program. Initially rolled out as a web-based platform, the Sleepio mobile app was launched in 2014 and has gone on to win numerous awards. With Martha Lane Fox listed among its advisors. the startup has also raised seed capital from angel investor Esther Dyson and completed a $3.3m Series A round led by Index Ventures in April 2014. Hames says that building a healthtech startup “takes time, care, patience and money”. This, he suggests, is why investor activity in the space hasn’t been quite as electric as elsewhere. “There’s a lot of interest in healthtech amongst investors but it’s understandably tempered with caution,” he explains. “There are knowledge gaps that need to be overcome, whether that’s traditional healthcare investors learning about what’s possible with new tech or traditional tech investors learning about healthcare.” Given the success of Sleepio, Hames is now exploring other ways that his tech can help healthcare. “We’re looking at how to apply the principles that have been so successful in addressing insomnia to other mental health problems,” he concludes.
ELITEBUSINESSMAGAZINE.CO.UK JAN 2016
In good health.indd 3
24/12/2015 10:41
EliteBusiness0116.indd 1
17/12/2015 15:13
sausage anne egg McMuffin I am a franchisee & this is my McDonald’s ‘For me, it’s all about the people. I have some fabulous people working for me – quite a few who’ve been with me since day one – and it’s a pleasure to watch them grow. Someone who started out as a Crew Member is now the Business Manager at one of my restaurants.’ Anne, operates four restaurants in Leeds
www.mcdonalds.co.uk/franchising
EliteBusiness0116.indd 1
24/12/2015 12:17
e g n
ee & ald’s
ome a few d it’s eone w the ants.’ Leeds
EliteBusiness0116.indd 2
24/12/2015 12:17
S UR V E IL L A NC E
THE STATE OF SURVEILLANCE WITH THE DRAFT INVESTIGATORY POWERS BILL LAYING OUT THE UK GOVERNMENT’S PLANS FOR THE FUTURE OF SURVEILLANCE, HOW ARE TECH COMPANIES AND ENCRYPTION LIKELY TO BE IMPACTED? BY JOSH RUSSELL
74
ELITEBUSINESSMAGAZINE.CO.UK JAN 2016
IN JANUARY 2015, DAVID CAMERON was met with derision from those in the tech community when, for the sake of national security, he called for an outright ban on end-to-end encryption. This led to much public wrangling between the then coalition government and various stakeholders, leaving something of a question mark over how the government intended to resolve the interests of tech startups and public safety. That was until the publishing of the draft Investigatory Powers Bill last November, which revealed the government’s revised plans for surveillance powers in the UK. But how does the proposed legislation stand to impact the way companies employ encryption, not to mention the security of UK consumers? First of all, it’s important to recognise that encryption doesn’t interfere with much of the traditional work done by the security services. “Encryption doesn’t prevent individual surveillance,” says Rafael Laguna, CEO of Open-Xchange, the provider of webbased communication, collaboration and office productivity software. Whilst recent incidents such as November’s Paris terror attacks are held up in support of the Investigatory Powers Bill, eight out of nine of those involved were already known by the security services. And intercepting the communications of known individuals through existing legal channels is fairly trivial. “You’re simply tapping the phones themselves, recording keystrokes and shooting screenshots,”
S UR VE I L L A NC E
Laguna continues. “No matter if the mail or the file was sent encrypted or not, when the user eventually looks at it, then you’ve got it.” Instead, much of the Investigatory Powers Bill’s focus is on facilitating the practice of mass surveillance. But it’s important to recognise that adding more hay won’t necessarily make it easier to find the needles. “People cannot grasp the amount of data that has been collected and the limits of what can effectively be done with it,” says Laguna. Questions have already been raised about the ability of security agencies such as the NSA and GCHQ to effectively interpret and provide actionable intelligence from the huge quantities of data they have collected. “Collecting even more data won’t help,” Laguna says. Unlike previous versions, the latest incarnation of the Investigatory Powers Bill doesn’t require the security services to have first-hand access to consumers’ encryption keys, merely for companies to decrypt them if requested. But whilst this sounds like a step forward, requiring tech companies to retain encryption keys on their servers potentially exposes both them and their customers to significant risk. Essentially the problem is twofold. Firstly, if tech firms are forced to retain the encryption keys of their users, it is open to abuse from the inside. In 2013, multiple cases came to light of NSA operatives abusing their positions to spy on romantic interests. Placing customer encryption keys somewhere they can be accessed by employees potentially makes tech firms vulnerable to similar misconduct. “If you don’t need it, don’t store it,” Laguna says. “Not having the data in the first place is the best thing that you can do.” More significantly, gathering encryption keys in one place would make it fairly trivial for an external threat to access consumer communications on a truly massive scale. “If we introduce backdoors, we make it much easier for all the bad hackers to do terrible things,” says Laguna. “Everything is exposed with one hack.” All it would take is for a single exploit to be found in a high-profile company’s security and potentially millions of private conversations could be accessed at a stroke. “Imagine that in the hands of ISIS, Russia or even the US,” he says. “That gives such incredible power that we would be preparing for armageddon.” This problem is compounded by the fact that the Investigatory Powers Bill is only likely to reach mass-communication channels, rather than hitting
those likely to be used by the most serious security threats. Many incredibly secure encryption algorithms are easily accessible on the internet, which means it is very simple for criminals and terrorists to send and receive messages that can’t be intercepted by the security services, whilst common consumer services are potentially compromised. “You’re taking away security for all the lay people and you’re not taking it away for the terrorists,” Laguna says. “That’s the end result.” But it’s not only consumers that are jeopardised by these changes. We don’t need to look far to find many examples of high-profile security breaches that have severely damaged confidence in a brand, with the recent TalkTalk, Ashley Madison and iCloud hacks all fresh in mind. For companies that have staked their reputation on the security their service provides, the price of complying with regulation could prove to be too high. “If you are a service whose users heavily rely on the security of their data then you may have to pull out of countries that threaten your model,” Laguna says.
YOU’RE TAKING AWAY SECURITY FOR ALL THE LAY PEOPLE AND YOU’RE NOT TAKING IT AWAY FOR THE TERRORISTS Rafael Laguna, Open-Xchange
And this is perhaps one of the biggest risks that the UK government is taking with the Investigatory Powers Bill. Apple has already expressed concerns that complying with its requirements will simply prove incompatible with the underlying architecture of key services like iMessage, which employ end-to-end encryption that even the tech giant itself has no way of breaking. “I wouldn’t be surprised if Tim Cook decides they need to pull out of this country,” says Laguna. Whether the government believes it can risk driving one of the world’s largest tech brands away from these shores remains to be seen. In light of these factors, one could fairly ask why the Investigatory Powers Bill is being so vigorously pursued. Having been born in East Germany and witnessed the abuses of the Stasi first hand, Laguna believes part of the problem is British people’s lack of similar experiences, which has made them more complacent about the risks of ubiquitous surveillance. “We should know better about what this kind of mass surveillance really does to the way countries operate,” Laguna says. “I hope that we’ve learnt that lesson from history.”
JAN 2016 ELITEBUSINESSMAGAZINE.CO.UK
75
B U SI NESS S U PPO RT S ECTI ON
Save Time Save Money Make Money Digital Britain is a certainty, and it’s happening around us right now. Learn how to be compliant, stay safe on-line and take advantage of true Cloud Computing.
What’s not to like?
Many businesses are already enjoying the benefits, some of them could be your competitors. Our new workshop “Digital Britain, Cloud Computing, what it really all means and what to do about it ...” will help you discover how and why this evolution in IT is having such a massive impact – walk away with the knowledge and tools to keep you ahead with a fully working cloud system to try, free for 12 months. To pre-book your place for 2016 call today and start your new year with an advantage. Telephone: 01227 811947 | Email: salesenquiries@beyondtheclouds.solutions www.beyondtheclouds.solutions @btcsolutionsuk beyondthecloudssolutions
Cresco is a finance training provider and a management consultancy. Our aim to simplify financial statements as we care about the success of businesses. Our one day Finance for Non-Financial Manager training workshop simplifies the essentials of: • Profit & Loss statements • Balance Sheets
• Cash-Flows • Budgets
• Business Analytics • Big Data
Streamline your finance functions and gain competitive advantage with our management consultancy.
Cresco, we care about your success so let us help you know your business finance. Tel: +44 (0) 208 012 8555 | info@crescotrainingandconsultancy.com www.crescotrainingandconsultancy.com
Business Support Jan16.indd 1
24/12/2015 13:13
BUS IN ESS SUP P ORT SE C TI ON
6
Are you looking for a flexible, efficient & highly rewarding Accountancy Franchise? Are you a Bookkeeper or Accountant? Want a better work life balance? Current job not paying enough? You want to earn much more than your current income? DNS Accountants offer the perfect Franchise solution! • Award Winning Business • Proven Sales Program and Leads • Free Accounting & CRM Software • Large Marketing Territory • Full Training & Unlimited Support • IT Set-up, Back-up & Support • Value Added Services • Dedicated Account Manager • Low Overheads • Zero Risk Solution For more information call us on 020 7148 1706 or email us at info@dnsaccountantsfranchise.co.uk www.dnsaccountantsfranchise.co.uk
Business Support Jan16.indd 2
Your One Stop Shop For all your Business Legal Advice Hodders Law Buying and Selling a Business
With Hodders you get:
• Excellent service • Payment options to suit you
Commercial Property
• Specialist teams of Solicitors and Advisors
• Experts in Personal and Employment Law
Business Law
• Multiple offices across London • Online delivery
Agreements
Contracts
• A Trusted name since 1868 Speak to one our team for a free no obligation consultation
Business Immigration
08442 640 290 | business@hodders.co.uk | www.hodders.co.uk
24/12/2015 13:14
B U SI NESS S U PPO RT S ECTI ON
Trade fair magnets at a small price FOLDED LEAFLETS, LETTER FOLD DL (9.8x21 cm), 6-sider, 135gsm gloss, 4/4 full colour print 1,000 copies
£46.09 GROSS £38.41 NET
2,500 copies
£66.22 GROSS £55.18 NET ROLL-UP BASIC system incl. print, 85 x 200 cm, 500gsm PVC banner, 4/0 one-sided print, silver housing 1 copy
Discover more on flyeralarm.com
£49.97 GROSS £41.64 NET
Specialists in
ALTERNATIVE FINANCE Traditional banks are not lending but SMEs still need help. Genie Lending have the proven track record in successfully assisting UK businesses with finding the most suitable funding solutions for their business requirements. We believe that we have a funding option for every client.
Business Support Jan16.indd 3
Call 01202 868843 for a free consultation or email: enquiries@genielending.co.uk www.genielending.co.uk
24/12/2015 13:14
BUS IN ESS SUP P ORT SE C TI ON
Do you shop online? Millions raised for 200,000+ charities at over 4,000 online retailers
Did you know you can raise FREE donations for charity just through buying your everyday work purchases online? From train tickets to printer ink, simply shop with top online retailers like trainline, hotels.com, Viking or Vistaprint and we’ll donate a percentage of every penny you spend to your chosen charity – at no extra cost to your business. ✔ Shop with over 4,000 online retailers ✔ Raise FREE donations for charity ✔ No extra cost for your business ✔ Great for your corporate social responsibility programme
Sign-up now at give.as/business
HR Elite’s top tips for managing workplace sickness absence Sickness absence can have a detrimental impact on any business and in severe cases, it can make or break a company. Thankfully, HR Elite has a handful of tips on how to manage absence effectively. • Ensure T&Cs are clear or implement full sickness absence policy – It is an employer’s obligation to ensure staff are contractually informed of the terms and conditions relating to incapacity to work due to ill health. This can be done either through an employee handbook which lays down the terms and the process or a full sickness absence management policy. • Ensure managers are well educated and informed – Sickness absence can take many forms. It can be short- or long-term; related to pregnancy or disability; due to a degenerative condition that requires regular review and adjustments; and in
Business Support Jan16.indd 4
some cases may be cited as work-related due to increased workload or work-related stress. Having a clear policy will go a long way but where a more complex issue arises it’s advisable to gain expert advice from an experienced HR consultant and/or invest in some sickness absence management training for managers. • Record absences appropriately – When managing a number of staff it’s difficult to remember who has been off sick when, for how long and for what reason. To manage an individual’s sickness absence fairly and effectively it’s imperative that you are able to show them when they have been off, for how long, the impact this has had on the business and the reasons for absence. You may take a different approach to managing short bursts of absence compared to long-term sickness absence.
• Use expert medical opinions where necessary – In most cases you may get documentation from an individual’s GP. However, they are not skilled in looking at an ill health condition in relation to an individuals job role. Many businesses will seek advice from occupational health advisers or specialist advice relating to an individual’s condition. By receiving this advice you will be better placed to manage an individual’s ill health appropriately and better advised on whether any adjustments should be made. • Use preventative approaches – Many businesses are now using the term ‘well being’. This means investing in your staff’s good health and introducing measures that will create a healthy workplace, which should prevent some forms of sickness absence, while reducing absence levels and the impact that some absences have on the workplace. Contact HR Elite now for advice on managing absence from work at info@hrelite.co.uk
24/12/2015 13:14
B U SI NESS S U PPO RT S ECTI ON
Your business is more than a set of books, and Cloud Computing is not just Cloud Accounts ! Find out how to make a change that really matters, and take advantage of this revolution in computing efficiency. Involve everyone, access anywhere, anytime you want. True cloud solutions from Acumatica and Amazon, delivered by experts ...
Call today and make a difference 01795 534964 kissukltd @kissuk1 www.kiss-uk.com
Business Support Jan16.indd 5
24/12/2015 13:15
BUS IN ESS SUP P ORT SE C TI ON
Myers Clark has been working closely with clients for over 100 years By combining knowledge and experience, we have become an extension of many clients’ businesses and for individuals a professional and trusted friend This gives us a unique perspective and enables us to give excellent, strategic advice. We provide a broad range of services to individuals, businesses and not-for-profit organisations.
“Their professionalism and deep understanding of our business goals and practices shows... They are an active member of our strategic planning and implementation strategy. We would have no problem with recommending them.” - CC Engineering Ltd
01923 224411 enquiries@myersclark.co.uk www.myersclark.co.uk
powered by pink lizard
pinklizard promotions PEN S
20p group from
eac h
d your
telephone: 01362 693710 Ad here! logo pinklizardpromotions.co.uk sales@pinklizardpromotions.co.uk plmarketing.co.uk sales@plmarketing.co.uk
e Check out ouwerbsfuitll e!rang r ou on
ttles Drinks Bo Mugs &
powered by pink lizard
pinklizardpromotions.co.uk
“
Branded Merchandise has the biggest ROI than any other media,
It’s a no brainer! ”
01362 693 710
sales@pinklizardpromotions.co.uk Trafalgar House | Rash’s Green | Dereham | Norfolk | NR19 1JG
Are you managing your Health & Safety effectively? There is no need to gamble with your business. Houghton Safety Services can help you. We offer: • Expert Health & Safety Advice • Full Range of Health & Safety Services • Health & Safety Training FREE Health & Safety Checklist: www.hsafety.co.uk
Because being a good employer is less work, less stressful and costs less than being a bad one… …we give expert advice to employers
What you get… Answers, confidence and strategies All the Legal paperwork done All the admin paperwork done Guaranteed peace of mind A bit more respect More time to run your business Sign up FREE and speak to a Lawyer today Tel: 0800 043 1964 email: info@sowlegal.uk
www.sowlegal.uk
Expert Health & Safety advice and assistance for your business consult@hsafety.co.uk | 01371 856 833 | www.hsafety.co.uk
Business Support Jan16.indd 6
24/12/2015 13:15
THE CRUNCH
£1,200
The stats that matter. And some that don’t
Minimum amount that Margaret Thatcher’s peeress robes were projected to collect at auction
532,300 Number of people who entered UK higher education in 2015 – the highest ever, according to UCAS
£81,700
£57bn
Amount that Margaret Thatcher’s peeress robes actually collected at auction
Total cost of sick employees to British businesses, as revealed by Britain’s Healthiest Company
$5.9bn
Sum paid by Activision Blizzard to buy King Digital, the maker of Candy Crush
433% Increase in freelance working in the UK since 2012, as calculated by PeoplePerHour
82
1 billion
81%
Proportion of companycar drivers who admit to regularly breaking 70mph on motorways, according to RAC Business
46%
Proportion of companycar drivers who admit to regularly breaking 80mph on motorways, according to RAC Business
Number of mobile broadband subscriptions in Africa by 2020, as estimated by Ovum
£633,000
Amount that former JJB Sports chief executive Chris Ronnie has been ordered to pay following his conviction for fraud last year
ELITEBUSINESSMAGAZINE.CO.UK JAN 2016
The crunch.indd 1
24/12/2015 10:43
AMBITION
DON’T LET ANYTHING GET IN THE WAY OF YOURS
from
£130 a yea
r*
Get a team of experts for your business As a business owner you have to wear many hats. Tax, HR and legal issues can all test your knowledge and take valuable time out of your company. Join the Federation of Small Businesses and from as little as £2.50 a week, you will have unlimited access to specialist advice, exclusive products and services, and a network of support to help solve your challenges so you can achieve your business ambitions. Want to know more? Contact us today on the phone or online.
ADVICE
FINANCE
SUPPORT
• Tax advice
• Business banking
• Employment advice
• Workplace Pensions
• Local networking events
• Health and safety advice
• Card payment processing
• Government lobbying for UK business • Lead generation
To arrange a meeting or join now
Call 0808 1688 512† quoting ELB9 or visit fsb.org.uk/join
*Membership starts from £130 per annum with a £30 registration fee in the first year. This rate is applicable to businesses with no employees. Rates increase depending on your number of employees. Please see the website for full details of subscription rate bands. †Calls are normally free of charge from UK landlines but charges may apply from mobile phones. Lines open 9am-5pm weekdays, closed Bank Holidays. Registered Office: National Federation of Self Employed and Small Businesses Ltd., Sir Frank Whittle Way, Blackpool Business Park, Blackpool, FY4 2FE. Registered in England No. 1263540
EliteBusiness0116.indd FSB 143 - Elite Business 1Full Page Advert.indd 1
23/12/2015 30/11/2015 10:27 15:56
EliteBusiness0116.indd 1
24/12/2015 12:52