Cambridge Cluster

An honour for me to be to be asked to drive three bridesmaid to church for Flick’s wedding.  I used to drive the girls around to horse events all those years ago and now they have grown up and are settling down – well , most of them – and Flick wants me to drive them one last time.  So off to the local Cambridge garage where a wonderful Polish man valets a car ready for a princess or bridesmaid.

Took my lunch and the Daily Telegraph along to pass the time and got talking to the owner who had offered me a cup of tea.  He was not too keen to be named but the story he told was that he had set out to become a solicitor with his brother taking over the family garage business.  Sadly his brother did not survive a kidney transplant so my new found friend gave up the law and took over the family business.  He moved it to a new site, ditched the franchises when the main car companies started to run the franchises in great detail to the extent of even interviewing the cleaners.  You put up the money and we will tell you how to run your business.!  Margins were good and all was well.

Then the Internet started to influence the business about six years ago.  Instead of having local customers, he is now a “national” car dealer with an on-line presence on Auto Trader.   Glasses Guide which used to be the “bible” of second hand car prices is no longer necessary and Exchange and Mart has lost market share.  All the prices are on Auto Trader.  People want to see before they buy but now they all arrive with the details all printed out and especially with details of a similar car at a lower price somewhere in the UK.  When times were tough, stock of cars were cut back from 100 to 25 by making sure each unwanted car was the best buy on Auto Trader for its type.

But all is not so gloomy because new opportunities have opened up such as breaking cars on and selling the parts on eBay.  Just got to pack the goods carefully so no arguments with the carriers over damages.  Difficult to argue and win with a carrier!

Also the rescue fleet is all monitored from the iPhone or iPad so whilst the mechanic is out on a dark and stormy night rescuing some unlucky motorist, the fleet can be monitored from the comfort of the owner’s home.

Sad that there is no indication on the outside of the garage that it has moved with the times and has now become an iGarage.  It is a family owned business so no need for a business plan resource.

So a valet for my car and a valet for the garage!

Yvonne loves to go to the auctions and I go along.  Learning so much not only about the amount of junk so many of us hord but also all about people.  I am not a great fan of the Apprentice and the dreaded “Lord Sugar” – not sure he could run any Cambridge Cluster company – but the TV series does have a very important point about buying and selling.  It is so easy to sit back in an auction and buy but it takes a very different mindset to rise early on a Sunday morning and queue for the honour of having a stand at the Newbury car boot sale.  The skill is of buying in the auction for the customers at the car boot sale and not buying for your taste – not that it is better but it may well be different. It takes effort and concentration.

You see it so often in Cambridge Cluster companies (and we have done the same with the graphic novel The Entrepreneurs) that it is much easier to look inwards to build the product and a very different skill (and very difficult to do simultaneously) to intereact with customers and investors.  The latter takes effort and energy and usually travelling.

The other lesson we can all learn is to build a business lean and not mean.  But what about the entrepreneur who bought two pictures from the Wellington Gallery in Birmingham for a total of £10,000.  They were knocked down at the auction for a little more than 10% of their cost.  Stay lean and buy the luxuries from the proceeds of the sale of your business.  When items are entered for auction by the agents of Liquidators or the High Sheriff there is usually no reserve so a good time to try a low bid.

But it is very sad to see dreams shattered and not to think for too long about all the human tragedy behind some of the sales.  At least the entrepreneurs can start again but some auctions reflect the unhappy lives people have lived leaving behind a house to be cleared by agents and not loving relatives.

How I love people watching at the auctions.  The highest bidders are often the least well dressed.  The auctions are being changed by the Internet with a representative of The Sale Room sitting at the front.  Often the auctioneer gets frustrated by some of the Internet bidders being slow and brings down the hammer.  But if serious money is being offered the auctioneer has plenty of time!

The auctions we have attended are Jubilee Auctions in Pewsey, Mays Auctioneers of Shipton Bellinger, Stroud Auctions, Thimbleby & Shorland of Reading (sometimes five simultaneous auctions!), Wessex Auctions.  And closer to home is Cheffins Auctions with their very knowledgeable team including George Archdale and Sarah Flynn.

To buy or not to buy is easy; to sell, how and to whom is the question!  Something we all face in the Cambridge Cluster.

Great article of an interview with Greylock’s Henry McCance on why they are moving their HQ to Silicon Valley.  And so many lessons for the Cambridge Cluster.  It is sad and depressing that some of the so called movers and shakers of the Cambridge Cluster do not think that spin-outs of companies are important to building a cluster.  It is essential to keep the Thought Leadership motivated and generating the next generation of companies and technologies.

One interesting comment is McCance makes is ““At the margin, there are small things that can be done to make the climate more attractive for startups. An example is to change the non-compete laws that are much more restrictive and enforceable in MA than in CA. ‘Hot’ engineers don’t want to worry about ending up in lawsuits and court if they leave one company to start or join a new company.”  Guess it was a shame(!) that we linked with MIT and not Silicon Valley.

Also depressing in Cambridge that great successes such as Xensource are funded outside the Cambridge Cluster and then the success hushed up in case anyone on the fringes is unhappy.  I guess that this is Britain and no one likes to see a winner especially when they are public sector employees of Cambridge University.  Where else would a great success such as Xensource be hushed under the carpet?  Are there other Xensource type successes of which we have never heard?  Time to get out the business plan resource and start building great companies in the Cambridge Cluster.

Loss making Ocado (formed by three former Goldman Sachs bankers in January 2000) is planning to share it’s IPO with customers; they will be given the chance to invest.  The £1billion flotation is expected next month (July 2010).  It takes a GS banker or three to make a profit for shareholders from a company running a £32.6million pre-tax loss last year.  Guess the GS guys really understand their business plan resource and like many VC funded technology start-ups have built a brand with value.  Unlike a technology business, it is going to be difficult to scale Ocado into a global business.  So much easier to send 0s and 1s down the global Internet.  But at least the investors are being given a chance to invest in the equity.

Cambridge Cluster company, Hotel Chocolat, have a different deliverable – loan us your money and get dividends of chocolates via the their Tasting Club.  Will the Inland Revenue want a taster of “income”?  No sweet equity here and no sweat equity for the 600 people who have helped build the wonderful business of Hotel Chocolat.  Interesting to read that co-founder Angus Thirlwell’s father founded Mr Whippy and Prontaprint.  Does bean counter and co-founder Peter Harris have similar pedigree?

Two great companies, but both with problems with scaling their businesses globally.  But still I am sure that Andrew and Peter never regret leaving the technology world after meeting at Torch Computers in the early ’80s.  Those were the days.  How did we build and sell Baddeley Associates in five years after Torch showed great faith in us by becoming our first customer?  You never, never, ever forget your first customer – the people not the company.

Hat tip:  Daily Telegraph business section 8 June 2010.

Some people think that break outs from companies – people with cash from options/shares and the experience of working in a start-up – are not important.Guess this post on TechCrunch says it all – Yelp is “another company founded in 2004 by two former PayPal employees…..”.Guess we need to include some history of the founders – adding in both cash and experience of a start-up to show how the initial valuation is increased to reduce dilution in the first round – in the business plan resource.

Yelp

Another company founded in 2004 by two former PayPal employees, Yelp is a local reviews website covering almost 40 states. Yelp also launched in the UK in January 2009. Users write and read reviews about… Learn More