I didnt start my career as an entrepreneur, and I dont think anyone does,” Murray said during a keynote speech at the Isle Expo conference on the Isle of Man at the end of May. She left university and decided to acquire what she described as some business skills beginning first at PwC, and then moving on to Vodafone and Pearson.
Murray was sharing the story of her entrepreneurial journey to the room at Isle Expo, explaining first her role in revolutionising the way people added credit to their pay-as-you-go mobile phones and then regaling how many bumps she had to navigate along the way.
Her first foray in the world of startups came when she was headhunted to join a business that had $300m behind it. It had some challenges with it though,” she added, we had to build a service a cellular network and think about things like marketing, financial control and hiring and training hundreds of staff.
The role got her thinking that one day shed like to do something similar herself. Moving from her native New Zealand to the UK, she stepped back into the world of corporates whilst also keeping her juices flowing by starting an MBA on the side.
Taking all the entrepreneurship electives she could, Murray continued to open up her mind and eyes to the opportunities possible on her doorstep. It wasnt long before she settled on the market problem to address, pre-pay top-ups. In 1999, the only way you could get a mobile was by entering into a contract. With the launch of pre-pay soon after, pretty soon ten million people had snapped up a pre-pay phone.
This looked really interesting to me, but the only way you could add time was through buying a voucher and ringing up a number it was a dreadful system, really clunky, manual and analogue,” Murray recounted to Isle Expo.
A shoe box full of those vouchers was worth about 40,000, and sometimes it got dropped off the back of a lorry so there was loads lost through shrinkage. Here was a really big market, growing quickly, with a problem that needed to be fixed. If you can find a marketplace with a problem that needs to be fixed, and has big demand, you have potential for a business. And potential for a business Murray did have, and the next six years would serve as the roller-coaster ride proving just why.
Murrays story resonated with Real Business, so we decided to catch up with her soon after Isle Expo, eager to discover more about the scarcely believable situations that cropped up along the way.
We first started by addressing the challenges associated with running a business spending capital so fast. Her solution to the pre-pay problem, Omega Logic, was burning through cash early on as it looked to secure the all-important four carrier contracts pivotal to long-term success.
The key then, and something we need to get back to now, was to find ways to get money in the door other than from investment,” she explained. My fear now is that there are some entrepreneurs who have become extremely proficient at raising capital they know the cycle and how to produce a pitch dec that hits the buttons of venture capitalists.
Omega Logic, due to its need for cash, had to find innovative income-generating opportunities. This meant getting the product to market faster, making consumers adopt quicker and consulting along the way selling the IP the business had begun to build.
I remember thinking 18 months after founding the business that we were only just now getting revenue, and our first profit was made three and a half years after beginning and we never made a loss after that. Murray agreed that this is dream thinking for fast-growth companies this year, exacerbated by Amazon-like sentiment that if you’re making a profit you’re not investing enough in future expansion.
“We had a lot of pressure from investors to get across that profit line. Pushing boundaries is one thing, but most start a business with a profit motive. So what are you doing if after ten years you’re not making a profit
Murrays need to get money in the door early on did, inevitably, mean she found herself at the door of investors. As weve covered already, Omega Logic needed to win contracts with each of the four British mobile phone networks operating at the time and it needed all four.
“We started applying for bids, supplying tenders and began to win it was very exciting,” she said. We got a lease on an office, but realised we needed investment beyond our life savings. We met a few venture capitalists and pitched our idea, and one said great, well give you 500,000 to build your business.
Murray and her team were overjoyed, and saw a serious future for their business. However, the sting in the tail came when the investor threw the agreed upon term sheet out of the window and said that the value of the business was half of what it was three months ago.
“We asked why, and they said we dont think you have any more money left so the new price is what were willing to invest at. The good faith agreement Murray had with these investors was now not worth the paper it was written on, and she had a very big decision to make.
Their belief was that if we dont take the money were going to go bust, but I told him what he could do with his money,” she added. But he was right, we had nothing left. So I rang creditors who were waiting to be paid, and then everyone I knew that had expressed an interest in my business.
Murray cobbled together the 250,000 the business needed, paid off creditors, and the company was on its way again.
We wanted to know what gave Murray the confidence to tell that investor to stuff it, turning down the capital that both parties knew she was in dire need of. It comes down to personality really,” she stated. One of my co-founders was ready to accept it, from the viewpoint that we had worked so hard but there was not way I was going to let anyone do that to me.
So the response came from her personality. Knowing that all business owners experience hard days, whether it is staff acting in ways not preferred or suppliers breaching contracts, when faced with an existential risk to the business, Murray said you learn what kind of grit you have.
There was no guarantee that we were going to be successful, and that investor could have been right in that inside two weeks the business could have gone bankrupt. But it comes down to how much you are personally willing to bear.”
Read on to find out about the shareholder who tried to screw Murray out of her business.
The second major existential crisis Murray faced came from a much more familiar face. Despite having to work long and hard to secure the fourth key contract, constantly beating down the door of the one hold out, the business was growing quickly.
“We had four networks, top-ups were growing, pre-pay handsets were being sold even more and things were going really well,” she remembered, We didnt have profit yet, but it was only six months away.
At this stage a board had been assembled, comprised of executives and shareholder investors ” some serving as board directors. The business had monthly meetings, and sending out the usual papers on a Wednesday for the expected Friday get together gave Murray a pretty big shock.
I immediately got a call back from one of our investors, who said I see you’re running low on cash. I replied yes, but were moving some things around. His response was that he believed we were trading insolvently, which is illegal, and if we didnt have 50,000 of spare cash in the bank account by Friday hed put us into liquidation and buy the business back from creditors for 1 on Monday.
This put Murray fully into emergency response mode, needing to find a way out of a situation where one of her trusted shareholders was stabbing her in the back. Jumping in a car, she headed to the East End of London, where she knew a guy who was in distribution. Murray had resisted a partnership before, but it was a case of needs must and offered a deal which would be sealed with a good faith payment of 50,000 on his behalf commission that hed earn over the first six months.
He left the room and came back with a cheque and a bottle of champagne. I headed straight to the bank.
When the conspiring shareholder arrived at the regular Friday board meeting he was not dressed in his usual chinos, but a three-pice suit and had a stack of legal papers. Interrupting the meeting, Murray remembered him taking great pleasure in saying: Were only here for one thing, how much is in the accounts
However, Murray took even greater pleasure in sliding the accounts details over, turning him green and rendering him silent for the rest of the meeting. We never saw him again, and he was so close to stealing my business. We made a profit two months later, and in those moments your success determined.
So is it possible to protect yourself against the kind of unscrupulous shareholder Murray found on her board She readily admitted that she was obviously not very good at it, but had some words of advice. When entrepreneurs are picking directors and investors, they should be doing as much due diligence on them as they are having done on themselves. Its a two-way street,” she emphasised, and the best way to do it is talk to as many other founders in the investors portfolio.
The other big thing to sort out is a robust shareholder agreement. Shareholders in their own right are professionals, so make sure they have their protections in place why not the business owner as well
I didnt even know something like what happened to us could happen, it staggered me. I come from a country where what is valued is pragmatism and being open and down to earth. So in one sense I was probably naive, with it being my first business, but was stunned that someone could be so two-faced.
Since exiting her business, and then working for the acquirer for a while, Murray has taken a step back from company creation and adopted a more active role in supporting early-stage businesses with her experience and investment.
“Was it painful building business she asked herself, “yes horrendously at some points. Were the rewards worth it Well, we sold to Fortune 500 company. I thought it was going to be about money, but it ended up being more that I showed myself I could do it.”
Murray is now someone who is turned to by prime minister David Cameron, in a hope that the government can learn from successful entrepreneurs’ journeys and provide better policy for future business builders. Hers is a story worth hearing and learning from.
“Wear your scars with pride,” she urged the business community. “Nobody builds a business with out significant scar tissue. If you get wounded and respond, it provides a sheer veneer you can coat yourself with. Then next time someone does it you can respond better with bit more strength.”
If you enjoyed Dale Murray’s story, check out the serial entrepreneur whos partied with Hugh Hefner at the Playboy Mansion.
