Our determination was stronger than our judgement
John O’Connell became an accidental technology pioneer while working as an accountant for a large international group in the City of London. His eclectic career has seen him run publicly-listed companies, chair a series of early stage businesses, chair and co-own a leading club in the early years of professional club rugby as well as create new charity initiatives. Today, he runs ScaleUp Group, which he founded, to help growing tech businesses grow even faster. He discusses lessons learnt with Smith & Williamson's Hall of Fame.
John O’Connell’s entrepreneurial career has spanned the development of the technology industry - from the vast, energy-intensive computer rooms of the 1970s to the modern world of mobile apps and artificial intelligence. His journey started when he was asked to go onto the ‘computer committee’ for the company he was working for, at a time when no one really understood the power of computers or what they could do. Computer specialists tended to be too technical, unable to articulate business benefits, while the wider business world was sceptical.
“The company wanted me involved because I was the only one they could understand. A classic case of being the ‘one-eyed man in the land of the blind’, I think. This was a wonderful training in retrospect. I could learn what I needed to about computing, making the mistakes with someone else’s money.” The latter included persuading his employers to set up a commercial computer business, re-selling hardware and software to other organisations, as well as offering online computing via a ‘timesharing bureau’ – which we now know as ‘cloud computing’.
He branched out with talented salespeople. They initially offered financial planning software, which enabled finance professionals to create business plans online - considered state of the art at the time. He admits there were some odd moments, such as when the company, Financial and Corporate Modelling Consultants (FCMC), was listed in the Yellow Pages as a modelling agency and he started to receive endless letters from mothers wanting him to meet their daughters. FCMC eventually led to the establishment of a new company: Staffware.
Staffware’s big idea was ‘intelligent email’. Unfortunately, email itself was pretty nascent in the early eighties. “This taught me an important lesson,” he says. “It’s the equivalent of pushing water uphill with your hands, trying to bootstrap the creation of a new market. In those days, even the word ‘entrepreneur’ was rarely used; venture funding was very hard to get and of dubious quality and reputation. I remember being congratulated by our then-adviser for holding the record for the number of rejections by VCs. But our determination was stronger than our judgement and, after more than ten years of dogged persistence and financial juggling, our moment had come.”
In 1996, Staffware, with only 40 staff and £4 million of revenue, floated on AIM. The rigours of a public listing exposed flaws in the business model, in particular the difficulty of forecasting sales – “We sold one-time perpetual licences, meaning we had to win new business constantly to pay the bills and had few consistent predictable revenues. Our inability to accurately forecast revenue meant we missed our first year revenue forecasts. A near death experience for a newly listed business. It also meant I had to avoid all my friends in the local pub who had bought shares – at least for a while. We learnt fast and got our act together.”
Staffware plc grew to twelve times its original size, moving to the main London market in 2000 – just before the dot com crash. “Our shares tanked again - by 95%, from a billion dollar plus valuation. Trying to keep family, staff, clients and shareholders sane while still believing in the cause was one of the hardest things I ever had to do,” says John. Nevertheless, he managed it and, without the froth of the dot com era, Staffware grew more steadily.
By 2004, it was the global leader in Business Process Management software. It had £25m in the bank, no debt and operated in sixteen countries. It received an approach from California-headquartered TIBCO Software, at a 60% premium to the then share price. Two other tentative approaches were received, but the TIBCO one was the firmest; a valuation of $200 million+ clinched the deal.
Soon after the takeover, John recommended to TIBCO that Staffware should be fully absorbed into the organisation, rather than run as a semi-independent entity. He said: “It could be argued that my recommendation was somewhat self-serving: TIBCO didn’t need me to lead the Staffware business any more. I knew that it was only a matter of time before this would happen anyway. It was a shame, made worse by the Sarbanes-Oxley Act, that the already problematic cultural misalignment resulted in the majority of my core team leaving – another lesson learnt.”
Towards the end of his time with TIBCO, John became a major shareholder in London Wasps, becoming Chairman in 2006. That period, 2004-2009, has been the most successful one in Wasps’ playing history so far. The trials and tribulations of these early years of professional club rugby meant John’s role was no sinecure.
From 2005, John turned his attention to tech start-ups and early stage businesses, which included chairing three other AIM-listed businesses. He enjoyed getting back to the grassroots of a smaller fast-growth business, as a contrast to leading a PLC. He has evolved from pure start-ups: “There are just too many uncontrollable variables to make the odds on success a sensible investment,” he says – “exciting, though it is.”
John knows that early businesses need the expertise of seasoned entrepreneurs. “Getting ready for Series A funding, finding the right investors, organising board structures and getting new talent may not be part of a founder’s skillset. This is where I and my colleagues in ScaleUp Group come in. We as individuals will also personally invest in our clients to demonstrate our commitment and confidence in their future.”
John set up ScaleUp Group UK, in partnership with established entrepreneurs and investors, such as Michael Tobin OBE (formerly of Telecity Group). “We are on course to support six Series A fundings this year – approximately 10% of the Series A market for tech in the UK.” In doing this, he hopes to help the next generation of technology entrepreneurs build and sustain their businesses.
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