Episode 8: Senceive Ltd: An organic growth success story - TRANSCRIPT
TRANSCRIPT Episode 8
Transcript edited for clarity and context
Dr Steven Schooling
Hello, my name is Steven Schooling. I’m a director of UCL Business, UCL’s IP commercialisation company, and I’m here today with Graham Smith, who from 2008 through to 2021, was the Chief Executive Officer of Senceive Limited; UCLB’s spinout company that started life, building on technology from the Department of Electronic Engineering at University College London.
And over that journey from 2008 to 2021, Graham turned the business very much from an early-stage tech-focused organisation to a commercially focused provider of wireless remote condition monitoring solutions, which basically became the de facto solution in rail and construction asset management.
And Graham, first of all welcome. Thanks for joining us.
Graham Smith
Thank you.
Dr Steven Schooling
I’m sure we’ll start, perhaps in due course, with just a bit of a summary of the underlying technology for those who are not familiar with wireless remote condition monitoring if that’s OK. And then I think what we’ll do is, just go through the three phases of the journey (because it was a journey) talk about the various phases of building the business. And the learnings? The challenges then?
Graham Smith
And the critical success factors to making the business ready for a sale.
Dr Steven Schooling
Critical success factors would be wonderful.
Dr Steven Schooling
…which, as you say, taking us through the 2021 with its acquisition by Eddyfi/NDT and then just wrap up at the end with just some learnings for those who are thinking of going on this journey. Again, that would be really helpful (and) I think insightful for the people who will download this and were thinking about possibly doing that with their own technology at UCL, if that’s fine.
Graham Smith
Yeah, absolutely. The Senceive Journey? Well, I hope to be able to inspire people and to see what is possible from a very humble start up, but also, (and here’s the tricky bit) in how to be realistic about the journey and how hard the journey can be and the sacrifices one needs to make along the way but leave you, hopefully, with the feeling that, when you do crack it, (hopefully when rather than if you finally crack it), that it will be an amazing journey to go on and you can look at back on with some great success.
Graham Smith
We talk about 3 phases in the journey. The first phase is around the foundation, those early stages as it immediately comes out of a spinout from UCL or any other university. The second phase, the consolidation and establishing credibility, which is fundamental there, if you’re going to move on; and then finally, stage 3 or phase three, the growth phase, where hopefully we’re starting to make some money and the businesses is going places.
So yeah, I’ll start with phase one, the foundation that is the period before I joined. Steven managed to corral me into the business sometime around 2008, but I think it would be fair to say that it was a fairly basic technology business. In fact, it was a wireless mesh technology business very much developed at UCL postgrad researchers. And when I joined in 2009 so looking back on that first phase, it was a business that had not made its pathway very clear.
It was effectively a technology looking for a home and without a clearly developed set of products or even a real awareness of markets and market dynamics. And I’ve run a number of businesses in the past and you know that it is not unusual for a startup. You create a technology, you’re searching around for a place that you think it will work, and it often takes a while to work out which sector, what kind of products that you need in order to be able to make it successful.
But anyway, I apocryphally or amusingly I do look back on my first or second meeting. Steven introduced me to the guys. We had a sales meeting, there was a sales sheet who I think with 20 pages of opportunities, and when I mean 20 pages, I mean, 20 pages double sided with 10 prospects on each page! So, I’ll let you do the maths on how many opportunities in theory the business had. It was in the in the hundreds, across almost every sector known to man; oil and gas, rail, I think we even had some hospitals, and almost every other kind of sector that that you’d kind of like to mention.
We came to the end of the meeting, and I think it lasted about five or six hours, didn’t it, Steven? It was one of the more amusing ones. And I think I came to the conclusion after five hours of going through hundreds of prospects, actually we had no real prospects.
Dr Steven Schooling
But it’s fair to say at that point, Graham, we all knew that we thought that wireless enabled measurement and instrumentation had great potential, and that’s probably that first sort of in a sense, list of prospects reinforced at one level that it may have had potential, but it also encapsulated the gulf that were the chasm that needed to be crossed to go from conceptually using wireless enabled instrumentation to getting adoption.
Graham Smith
Fundamentally, and again relating this to many other technology businesses, the challenge you have a technology, you think it’s great. It may or may not be well developed, but actually at its heart, it sounds like it ought to be interesting to people. But actually, in practical terms and in more pertinently, commercial terms, you’ve got to work out where that technology is going to be positioned. What are the market dynamics? What is the price? How many can I sell? What margin am I going to make?
These are really difficult issues and the business had wrestled with those. For two or three years, three years and so when I joined, but I mean, looking back, the good news was that it had made progress. It had got into and developed a relationship with Network Rail, had done one or two projects that actually were paid projects and fundamentally they’d led to critical approvals in a difficult sector: a sector that’s very safety conscious. And eventually looking back, I don’t think we’ve fully realised how helpful they would be, but it gave us enormous early critical early-stage advantage in the marketplace.
Dr Steven Schooling
And it’s probably first, at that point where we had, the value of having a champion, or at least one consortium champion, Sir Ian McAllister, who, for those listening, had been previously Chief Executive of Ford UK and then Chairman of Network Rail and he was on the UCL Business Board. And they gave us, you know, not just one, but a number of introductions into Network Rail.
Graham Smith
In that phase that first phase, the foundation phase, you know the good news was, as we said Network Rail introductions, starter product approvals fundamental later on in the business. The bad news was that we had real, no, we had no real prospects and almost no revenue. We had had some seed money, that I can’t remember whether you alluded to it, but obviously UCL had provided a modest sum of money initially to keep the business up and running for those first few years and then have obviously been very helpful, but that was that was long gone.
Dr Steven Schooling
I think it’s fair to say cash flow management was always an interesting challenge for us pretty much right until the end. But I suppose coming into that phase one, in hindsight, what do you think you got yourself into?
Graham Smith
But as you well know Steven, there have been in almost unlimited numbers of times when I have thought to myself why on Earth, did I join this? I had to know that it was going to make money, was going to make profit and ultimately that that was the sign that it was going to be a true success.
Dr Steven Schooling
Tell us a bit about your focus and what you believe. What you know was that was in a sense, you know the learnings from that, from that next phase, that next sort of six years 2008 to 2014.
Graham Smith
Well, I’ve talked about that very first meeting with the 20 pages and the lots of prospects or lots of opportunities, but no real prospects. It’s very clear that number one (and I will always say this as a probably number one on any list of Critical Success Factors), is understanding your priorities. And priority and focus is fundamental to any business, but certainly one with limited resources and limited money.
Rule number one and focus number one is, which market are we going to focus on now. That was relatively easy and there’s probably a clue in everything that we’ve said before. We had some entry points into rail, Network Rail in particular; so, very much a UK focused business. ‘Rail’ number one and only focus. Now, without going through the nuances of our particular business, ultimately, the actual sectors or the sub sectors are really evolved around geotechnical and structural monitoring for the rail sector. So, rail sector, geotechnical, structural monitoring and to rail engineers to structural engineers and the like.
Dr Steven Schooling
So, what sort of problems that it’s a structural engineering: tell us a bit, you know, for those that are not familiar with wireless and monitoring.
Graham Smith
Ok. Pretty straightforward structural engineer. Let’s call structural engineering and monitoring. Let’s talk about a wall. You’re worried about a wall potentially falling over onto a rail track or any other safety critical area.
We used to have wireless tilt sensors; still very much do wireless tilt sensors and they measure minuscule amounts of movement .000 something of a degree or a millimetre of movement. And the movement would be conveyed by wireless back to a gateway, and that gateway (which would be solar powered) would then send the data back to somebody’s phone or their laptop, monitoring a rail track, monitoring earthworks and monitoring whether or not movement has taken place in the earth next to a railway line, and potentially may derail a train.
So, these are all pretty important and certainly seriously safety conscious areas, which I’ll come back in a moment, but you know, coming back on the priority. Number one, our market, we were very clear. We stopped all efforts in, in other areas, oil and gas and the and the rest.
Just one market.
We clearly needed to go out and get some projects and win some revenue, get some case studies so that we could learn, because we still had a very basic technology in those days. And instinctively it felt (but obviously it became obvious over time) we needed to upgrade the technology.
And to be clear that we needed to have a set of products. One thing having a wireless technology is another to have a product or multiple products that are appropriate for that particular marketplace, with the right price and the right margin and all of the other commercial dynamics.
We were selling to a very sceptical, unsurprisingly sceptical, set of engineers in a hugely safety conscious environment, trains derailing. Everyone loved the concept. The thing is that they wouldn’t buy. Getting someone to part with money versus letting you have a really nice meeting and loving the product. Well, any of that. Anyone that’s been in the startup business will be familiar with that. Lots of warm noises, but no parting with money.
Dr Steven Schooling
Oh, I remember those conversations very well. There was a great positivity; but there was then this challenge, wasn’t there? That challenge that conversion challenge. And those calls that we would have and showing great promise, but could we actually unlock that application?
Graham Smith
Absolutely, absolutely. I mean we did win a few smaller projects, but…
Steven Schooling
It probably brings us onto Bond Street.
Graham Smith
Yeah, I mean there is always, I think, and I’ve been involved in a number of startups before, there’s nearly always a seminal project and one doesn’t actually guarantee success, but what it does is, it (coming back on the consolidation, established credentials), it allows to say that you have a serious case study and people can start to take you seriously. And, in a start-up generally where you’ve got incumbent technologies, that’s always going to be the challenge.
And yeah, the Bond Street project with hundreds of sensors, as opposed to onesie twosies, that really put us on the map. I mean, we developed our own special magnets that allowed us to put the sensors on the inside of the tunnel. But I mean boy, was this a high-pressure environment, as you remember.
Dr Steven Schooling
Remind us of the application.
Graham Smith
Well, in short terms, what they were trying to do was to measure the defamation of a London Underground tunnel whilst they were firing high pressure concrete behind the cast iron lining of London Underground in and around the Bond Street area.
They had to have trains running and therefore, everything had to be cleared by 6. You could never get access until probably one or two in the in the morning, so you had a very, very intense 4–5-hour window in which tens of people needed to be down in the tunnel, with all the equipment and doing what it is that they were doing, which was effectively firing high pressure concrete.
And they were making decisions about whether to stop and start this work, based on the movement of our sensors, and that being indicated on someone sitting on the on the live rail, which was turned off, looking at the data on a laptop and making decisions about whether to go or no-go. And I think Simon, our COO at that time, (he was an ex UCL B employee before he joined us) he was fundamental in the success of that project. I don’t think he got much sleep in the three months that that work was going on.
But when I looked back at that and, you know, not only did we survive, we were successful and the project was deemed successful. It creates an amazing case study. It then enabled us to win more. But it wasn’t an easy journey. I mean, I talk about that whole period as the pain period, because yes, we were able to win more projects, but they were still small.
You know, we had a very low revenue base, and we were looking; even, you know, after a successful project. Steven, you will remember that famous meeting in the pub where you, Simon and I sat down – the CEO, the COO and the major investor in the business, or the major shareholder in the business. We sat down and said should we close? This is a lot like hard work. Yeah ok, we’re turning over revenue. We’ve got some case studies, but I mean, we’re not making a profit and we didn’t look like we were generating enough money to be able to support our own growth. And I think we made the right decision.
Dr Steven Schooling
But there was that that particular meeting on a Monday in a pub in near West Brompton tube station. Yeah, I think, rightly we asked ourselves the question: was this still an opportunity and how long was it going to take us? And it would have been very easy to walk away at that point.
But I think that belief we had, even though the revenues were still relatively small, we were at the cusp of delivering something which had widespread appeal and widespread customer application and that sort of drove us on. The fact that you hadn’t been paid. Simon hadn’t been paid.
Graham Smith
For a mere three years.
Dr Steven Schooling
Absolutely never cease to remind me of that. Was it really three years, anyway? But it was that point around, we had very little money in the business, but what we did have, was a base of potential customers, early use cases.
Graham Smith
Yes, we did. We did. And I knew that we could have gone out in the market potentially given up a large quantity of our potential equity base and then generated maybe a few £100,000 I suspect in further investment, but actually, would that have made the difference? We needed to make it happen ourselves and we did. We just generated just enough cash to free cash, to grow the number of people. We’ve got a few extra projects. We invested ahead, as well you know, because we ultimately, we still didn’t break even in 2018.
Dr Steven Schooling
We’ve got a couple of grants, didn’t we? Which were very helpful.
Graham Smith
They were enormously helpful. They were time consuming to do, but judicious use of looking for grants and the right kind of grant money is absolutely something that should be a target, but you know, ultimately, it’s a very limited number of people working very hard.
You know, you were the finance director. You were very hands on. I was certainly very hands on.
I was writing all the proposals, chasing the invoices, and so I was responsible for cash in, and you’re responsible for cash out.
Dr Steven Schooling
Or little or as little cash out as I can possibly get away with.
Graham Smith
Very much so, if I remember rightly, and ultimately that gave us the ability to survive. So even though we were making no money and certainly no profit, we were able to survive from the cash that we were able to generate.
But you know, if I look back over the whole of that period, you know, what were the major themes in that period? Yes, we still have to win revenue. But if I look at the other key decisions that we made, we made a core decision to upgrade the technology platform, effectively dumping the platform that we had originally built and that was the platform that came out of UCLB. I mean, that was ultimately totally rewritten and upgraded. And we needed to do that in order to provide and supply the sector, the rail sector and the construction sector with the appropriate technology and reliable technology.
The other thing that we did was we recruited, we did recruit a number of people in and amongst that the core recruitee was the CTO, A new CTO, a young and skilful CTO. And then you know, finally, I suppose, we were using the platform, the technology platform to make sure that we grew our revenues, but we started to make ourselves into an international business and not just a UK business.
And if I were to summarise, by the time we’ve got to the end of… what was it, say, 2013? 2014?… I would say that we had truly evolved and embraced the fact that we were not a wireless technology startup. We were a rail and construction focused product and solutions business with dynamic people, who had an utter and ruthless focus on customer service and customer support. So, I would say we had evolved from startup phase to proper business by the end of that phase.
Dr Steven Schooling
You know, I look back and I wonder, you know, that six years, 5–6-year period of when, as you rightly describe pain, could we have shortened it, maybe? Are there lessons that as we look forward, would greater investment capital have helped us to shorten that a little bit maybe? I welcome your views, but I think the most important thing about being close to the users, and the customers; that’s so important and every business has to go through that period of trying to meld in finding product market fit.
Graham Smith
I do believe in the that the hard work bit and judicious injection of capital at the right time, clearly providing it’s being used by the right people. But you know, we worked very hard in that period of time. You know, there was six or seven of us and, of course yourself, Steven and the team working together, relentlessly, and ruthlessly over those tough periods got us through because.
Dr Steven Schooling
Yeah, that sort of then takes us into the sort of climbing, you rightly describe it, as the growth phase the climbing. It was sort of climbing the J curve of adoption. And I think you rightly break it down not into a single curve, but into two phases.
Graham Smith
You know I’d, I’d, I sort of break the two stages down in the way I have – 2014 to 2018 and 2018-beyond, because one is a is an increasing curve, and then, one is a very steeply rising curve. So, Stage B for me is very much like stage A but with the business on steroids. I think the pace of and the rate of change and evolution and growth in Stage B is significantly greater and are still very successful 2014.
You know, the whole period was starting to become the fun phase. If I talked about the previous phase being the pain phase, this was definitely the fun phase. We were a credible business. We were winning high profile projects. So, forget 10s and yes, we did. We certainly did projects with one or two sensors (let’s be clear on this) but we were now into winning serious high-profile projects with hundreds, thousands of sensors and we were displacing incumbent technologies, not all the time.
And we were more pertinently, also beating our newly arrived competitors who had also started to appear, sensing that we were having success; because the moment you have success and you raise your head above the parapet, then others are going to see you and they’re going to say, yeah, maybe we should be in this as well.
But we definitely felt like a proper business, and we therefore felt ready to, not only be a in a serious player internationally and in the UK obviously, but we also felt capable of meeting the needs of our marketplace and being the best in terms of beating our competition as well.
We’re winning more projects, getting more revenue certainly, that’s critical and as a signal and a sign of success and winning repeat projects from the same customer; so, satisfied customers we went international. From a UK business, we were then into five or six countries. We couldn’t do that with the old platform on its own, so the technology platform that we had evolved was fundamental in making that happening as an enabler. We increased our product range, the sensor types, the breadth of what we were doing able to offer.
We recruited some quality people. So, we were moving up in terms of the numbers of people were in the tens rather than the single. Customer support second to none, and we made it second to none. We stood out, you know, whatever happened, we were there to support our customers.
The tricky thing, of course, is the dynamic of how many people you can recruit with the amount of revenue that you’re generating. Picking and choosing those right and selectively, you know, choosing obviously the right kind of person, but also the type of person that you need at various stages is fundamental.
We went from 18 to 20 people. Customer support was, you know, a very significant part of our growth and we were in five countries. So, we needed to make sure that our customers UK, Australia, the US, France and Germany were the Big 5 for us at that time, and we moved from £400,000 or so, to around about £2 million in in revenue, so starting to look like a proper business.
So, it did mean that we were able to start paying, paying the bills on time, but cash was always very tightly managed and in and anyone who understands cash, accounts, PNLs and how you run a business, look at our numbers and they will ask how on earth we managed to grow and still be massively loss making and have no overdraft and no external funding.
Steven and I will launch a book later on. It’s top secret, the answer to all of that. But yeah, we had a pretty special formula, and I can tell you to allow us to make it through that time to grow the number of people and to still be loss making. And I make it sound amusing, it was not easy.
00:40:23 Dr Steven Schooling
And it was fairly stressful at times. It was fairly stressful. But that was probably encapsulated in one of those successes in that period was the great Pudding Mill Lane, where tunnel boring machine was emerging from below ground on Crossrail. And was it Network Rail?
Graham Smith
Yeah, the Network Rail. yes, it’s principally monitoring the Network Rail lines in and around the rebuilding of a new station and where the tunnel boring machine was coming up, so that they were really worried about the high-speed tracks coming into London. So main lines coming into London and whether or not there was going to be movement. Movement on a railway track when a train is running at high speed is generally not good but, if the lines get out of alignment, then obviously you can have a derailment and death. So, it’s pretty intense stuff.
And in the project, we had 800 or so, or sensors that we have on the on the rail track bed was a fairly well, very significant. I’m going to say seminal again. I think in each of the phases that we have gone through, there have been one or two seminal, critical projects that effectively moved us on to another level.
Dr Steven Schooling
I think I always look back and think of those industry awards we got for Pudding Mill Lane. And they were a further badge of honour; again, we were working towards cracking this opportunity and demonstrating that Senceive was the industry leader.
Graham Smith
Yes, and yeah, you’re totally right. I mean, I’ve kind of forgotten about all the awards. We, you know there was a slew of awards that we won in that period, which of course we became very blasé about in the end because you know we won so, so many.
But looking back they were another fundamental building block in in showing credibility but by no means were they the only mechanism to demonstrate credibility to the marketplace because ultimately, the marketplace looked at “OK, tell me what you’ve done recently in this space and show me where you’ve been successful” and that kind of mentality and questioning was fundamental to us being perceived to be successful.
Yes, it took us a long time to become credible or to be perceived to be a serious player. But once we were, we were established, we were the market leader, and we remain the market leader in Rail by a long, long way and the ground that we established there, is core to the business success to this very day. And ultimately, is core to the success of the business in enabling its sale in in 2021.
Yeah, I mean the groundwork and for the success from 2018 and 21 and had obviously been done (if it’s not clear from what I’ve said before) in the previous periods and the previous phases. The stage A that I’ve just described in the period from 2014 to 2018; that set the base for the supercharged growth phase because clearly, by that time we were seriously credible in our chosen space. We were well recognised in our marketplaces, and we were getting significant repeat work.
We’ve moved in gradually from five countries; the Big 5 that I mentioned earlier on, and we were increasing that almost every year. We certainly got up to, I think about 30 and by the time we got to 2021, but we were easing into other international areas. So, we were then able to make sure that we were establishing new revenues from new countries as well.
I think it’s…, when is the right time to mention COVID? Clearly, COVID fell right in the middle of that phase. I think we made a very important conceptual decision, which was that we were actually generated some decent cash by that time, some spare cash because we were now profitable for the first time in our history, and we genuinely had money in the bank for the first time. So, we never needed to go to the bank ever again
And we were able to get a very helpful loan from an interesting organisation called Finance Birmingham, so they should definitely need to be mentioned in this. That was hugely helpful. It was a rail-focused because it’s government-backed support. It enabled us to make some even bolder decisions, maybe I might have not taken, if we’ve not had that money. It just gave us another level of comfort, that if things went wrong, we would be able to fall back on some hard earned and hard learned cash.
But coming back on the COVID decision, we made a decision of whatever happened, we wouldn’t get rid of any people. We never knew what would happen. We certainly plan that all revenue would stop. We assumed that all construction work would stop on building sites; because people weren’t get able to get on sites, they would not be able to get on rail track etc. and we took a fundamental decision that we would continue with all of the people and we would, if necessary, burn through all the money and keep a hold of the people because we knew we had a crack team that would see us through whatever period that would arise out of COVID would be.
In the end, didn’t need it to worry and we didn’t know that for, probably three or four months. But actually, the COVID year, we had our best year. I won’t ever make light of COVID because of its impact on the rest of the world, but we managed to work our way through it, and we hardly missed a beat.
We increased our revenues as I said, we increased our activities in in significant number of countries. And I think by the end, we were up into the 30-odd. We were able to continue to extend the technology. Removed… added, I should say from our core mesh technology to a Lorawan based technology. We were winning (and herein lies some fairly fundamental evolution or revolution you could argue) in the business, we were winning projects with 20,000 sensors, rather than tens or even hundreds. 20,000 sensors, I mean, the work that we did for Network Rail in earthworks is the largest wireless monitoring project ever globally by a long way, and we’re still working there and we are, you know, into tens of thousands of sensors.
Dr Steven Schooling
It’s best at that point. Well, we were doing some quite interesting stuff around sensor fusion, weren’t we?
So as a business, we weren’t just providing wireless tests, but you had cameras integrating with tilt sensors to provide, a really highly reliable real time monitoring solution that the use of it on the embankments in South East London and particularly the Barnhurst deployment was probably, another great case study.
Graham Smith
Well, it was the seminal project of that period, wasn’t it? That particular project was of the seminal project and it, you know, it was an earthworks project. And yes, you’re right that the development of the product range, I mean…. Yes, did I think that we were going to be building our own camera, which is effectively what we did, a camera that was integrated with our wireless.
And if we hadn’t have got that, you know, well, that wouldn’t have got us the next project and the next and the next. So, if we hadn’t have looked at the market, understood the market needs and then developed the product on the basis of those market needs, created a product that that made sense to our customers and adapted and evolved that, having our antennae out in the marketplace all the way through that period of time, we wouldn’t have been the business that we were.
Dr Steven Schooling
And I think that innovation piece was really, really important in the culture of the business around innovation. And so, we’ve gone from, in effect, the early instant incarnations, which is very much technology-push to being something which was addressing market-pull and that, in a sense, an ability to create solutions.
Graham Smith
Yes, to all everything you’ve just said. I think it’s tough to evolve the product, because there’s always a list of things that you want to do with the technology or the product or the products.
Dr Steven Schooling
But I remember you always insisting that there’s certainly the slightly more senior technical team or those well, those have been with us a bit longer were out there talking to our customers; so it wasn’t just the business development team feeding back a list of requirements, but it’s actually the tech team talking to the customer and understanding the user requirements and that’s I think it’s fairly that doesn’t happen all that many or that often in in businesses.
Graham Smith
Well, I insisted on it. I mean, I’m going to try not to generalise, but often in within the technical team. You know, people don’t necessarily want to be necessarily out there in the marketplace and talking to customers in meetings or on the phone. I was insistent that they did in order that they understood the customer and the and the market needs, and whether that be going to conferences and other things as well, yes, but it’s actually talking to our customers. So, we had software developers talking to structural engineers, rail engineers.
Some of them I wouldn’t necessarily want facing off with our clients. But as a general rule, you know, 80% of all those people that work within the technical team spoke to our customers and I think it’s fundamental to our success; because what you don’t want is, the salespeople just giving you all of the impossible things.
Oh, God, if we had every because often, the salespeople would just.. they want all the bells and whistles, and they’ll tell you how critical those bells and whistles are, but they actually won’t really understand the dynamic of what it takes technically to be able to develop that; how much effort, time, and is it really necessary and is the customer going to pay for it?
So, making a much tighter link between the business development team, the customer and the technical team is fundamental to success. And I don’t think there’s any perfect organisation that you can have, but I think you have to start from the top and you have to say philosophically that you want your technical team to be inextricably linked with, and talking to the marketplace so that they understand the needs and it’s not something that’s thrown over the fence in terms of “Oh God, guys, you need to develop this tomorrow and we must have it tomorrow, by the way.”
Dr Steven Schooling
No, it’s a great learning. I think it’s a great learning for people and certainly, I think it was a really an important part of the evolution of the business.
You’ve described the journey so far and the business by now is, revenues are growing nicely, the business is in profitability and the product is being as being utilised in multiple countries.
Talk to us a little bit about the about the about the timing for the exit because the business ultimately was ended up being sold in April 2021.
Tell us about the motivations for moving towards the exit and then the positioning for an exit. Because that’s well because people are often asked the question at the start what’s your exit strategy. It’s very hard to be sure of what your exit strategy is, and I think we got with this business, there became a clarity around exit, that was, probably a maturity point and a scaling point. But your views and your own circumstances that led us to the exit.
Graham Smith
Making a decision to sell a business, either in its entirety or a part sale of a business, or to engage an outside entity to take a partial stake, or to be able to be more actively involved in the business from a phase where the founders, let’s say, are in total control is always going to vary by every business and the nature of the individuals within the business.
You know the principal players, the shareholders and in our case, UCLB and their appetite. The Chief Exec and any other shareholders (and by that time I was a 50% shareholder, so I was the largest shareholder) and UCLB had moved to a secondary shareholder with around 30%. But you know, there were some very, very particular decisions associated with our decision making that are unique, but I’d like to think that some of the lessons are also applicable to others, as well.
I think no.1 is, what do the shareholders want to do? Do they want to stay involved? Do they want to be actively involved within the business after a sale, partial or full? Or do they really want to get out?
You know, they feel for whatever reason, a host of reasons they’ve been around long enough, they’re too old in my case. And I’m 67 now; I’m 65 or so when we sold the business. So, whilst I love the business, I’d definitely come to a point where I felt like I had done my time in the trenches, and I was ready to move on. Didn’t mind helping the business very much, part time, but I was certainly of an age where I wish to move on, to other things and frankly retirement.
Steven and I, we discussed at enormous length over many years what did we want to do, did we want to sell the whole business, did we want to sell part of the business, did we want to continue and do some of this on our own because, you know, we genuinely believe that the business had opportunity to grow not only within itself (organic growth), but by being bolted onto or bolting on other businesses that the opportunities for and a business that was bigger, broader, wider etc. were all of which were possible.
Dr Steven Schooling
Absolutely. And I think in the end, we were mulling over the various options; and ultimately selling in selling the business in April 21 to Eddyfi, I honestly believe was the right decision and was a great outcome for a;; the shareholders of Senceive, for the employees of Senceive and for the organisation in Eddyfi who acquired the company to take it on that next phase of its journey.
Graham Smith
Yeah, sorry, I need to interrupt because you know, maybe we don’t mention it again. But you know we did spread out some of the wealth created from this process to employees. There were significant number of employees who benefited from the sale process; and we also set up further incentives post-sale to keep people on board, and to keep them motivated with further incentive.
You know we’ve reinvested back some of that money that we could have got for all the shareholders. We invested that back into further incentive programmes within for the employees, so yeah.
Dr Steven Schooling
For the employees who stayed with the business, and it was a strong outcome for everybody.
Acutely, aware time is running on and I just wanted to sort of summarise in a sense of sort of and just ask you to reflect a bit on the journey some of them, particularly the lessons for those entrepreneurs, whether they’re academic entrepreneurs or just more broader sort of, you know, technology entrepreneurs who are thinking about or going on a journey with a new technology, what would you say you know those key Success Factors, in particular, and then some broader perhaps some learnings that we can mull on them all over.
Graham Smith
Well, yeah. I mean, how do you summarise that whole journey obviously by the time we got to where we got to, I mean it was fairly, fairly amazing. And I’ve obviously felt very proud of what we’ve achieved, and I know you do, Steven, as well.
Dr Steven Schooling
Massively.
Graham Smith
And UCLB, you know, can take enormous credit from this as well. I think I’ve probably alluded to it earlier on and I’ve talked about the pain phase. Not losing the faith in that journey and when you’re going through that very, very as every business will, I mean even successful businesses will go through dark phases, whether they be startups or otherwise.
But I think it’s a truism to say than anyone that’s been involved in a in a startup will go through some very dark phases. And then there will be a time, you know to pull the plug on. (And I do accept that)
But toughing it out is pretty important, and knowing that something exciting could be at the end of the tunnel (as in the light) of I would say is fairly fundamental to any entrepreneur or technologist that is involved
I think ultimately the relationship that you and I, Steven, had was fundamental. We always laugh about it. Yes, Sir. Even though I made all the key decisions in the in the business, I did find it fundamental like anyone does to have a sounding board, throughout the good and the bad times, and the ability to be able to dialogue with someone who you trust is fundamental, I think, in making of any business successful. It’s truism of a chief executive chairman in a multinational FTSE company, as it is in a in a small business, but we were very hands on.
Dr Steven Schooling
No, we’re very hands on. Very hands old. And a time when, you know, we’re seeing, you know, the questions about the roles of technology transfer offices, in terms of supporting spinout companies, it was a journey, and there were lots of soundings, lots of discussion, and I hope I honestly hope that we added value beyond the resource that we put.
And in a sense, the relatively small amounts of seed capital we put in just supporting you because ultimately it was the business was you with a load of other with lots of people around it. But the defining aspects of it was your, your passion, your commitment, and your intent belief in the opportunity. And I hope we added we added some value to that.
Graham Smith
If I were to list, I mean these has probably been said, several times already as we’ve gone through our phases. Just encapsulating the core components:
I’m going to put at the top of this customer support, ultimately that, if we weren’t able to offer whatever the level of the technology or the quality of the technology or whatever products, customers are always going to need support and listening to the marketplace and understanding your customer. You could argue that they’re one point or two points, but listening to the marketplace and being close to your customer and supporting them is fundamental.
I think getting out and winning business, some people might think it’s a dirty word selling, but ultimately, if you don’t win projects you don’t get revenue, you don’t make money, you don’t make profits and you know that is core to any business and getting out there face to face, obviously people don’t do quite so much face to face since COVID but face to face, whether it be through zoom now, or out face to face and talking to people is key to winning projects.
Cash is king. Always will be. How? How did we manage to grow? People grow our business and only make a profit in 2018. Well, cash is the key to that. Ruthless cash management and understanding your cash both in and out and making sure that people within the business understand it and not just one or two people, understand that.
And finally, I’m going to say, well, I’ve used it right at the beginning. Focus, focus, focus. Understanding what are the critical priorities, the critical issues, the critical things, and they will vary at various stages of the business.
This is about an evolution, a continuous evolution, and the business needs to be nimble and ready to make big decisions at almost any time. Yes, you can make a load of small decisions that are fundamental in building up to something that’s quite big, but you’ve got to be ready to make a big decision, bold decision.
Dr Steven Schooling
Being brave, occasionally being brave, isn’t it? Being brave in the face of uncertainty?
Graham Smith
It is, yeah. I think, in the end we obviously were able to make the business into an amazing success and despite the pain and despite the challenges, we were able to show the art of the possible is.
Ultimately, it isn’t for everyone, but I hope that there is enough in the story of the journey that is positive for almost everyone, and then hopefully, it will inspire some people to make that journey. But to anticipate a little bit of sacrifice, a lot along the way, and wow, well, the journey it can be when you look back on it and something that you’re very proud of; something at the end of that, that, that journey.
Dr Steven Schooling
Graham, I absolutely share that sentiment. It was a great journey with a great outcome that certainly UCLB was very proud to be part of, and you know, thank you for sharing your thoughts, your reflections, bringing back some of the memories that we had on over those years, and to demonstrate the value that can be achieved by TTOs, and by management teams from university spinouts. And yeah, thanks for sharing and really appreciate it. Thanks a lot.
Graham Smith
Thank you again.
End