The jam buster

David Martell is an impatient man. So he invented a gadget for his car to avoid the jams. Now everyoneis beating a path to his door andhis device is worth £650m.
Click to follow
The Independent Online

You know where you are with David Martell. He is the man who gave us the Trafficmaster, that screen in your car that takes the strain out of road jam pain. The bouncy 51-year-old entrepreneur thought up the gadget, and made it work. When he first told his business partner Ian Williams about his brainwave 11 years ago, Mr Will-iams said: "That's a bloody good idea." That idea is now worth £650m. Stock market analysts are falling over themselves to gush about the potential for a means of transmitting constantly up-dated information on traffic jams and conditions to motorists in their cars, without the driver having to listen to the prattle of a disc-jockey.

You know where you are with David Martell. He is the man who gave us the Trafficmaster, that screen in your car that takes the strain out of road jam pain. The bouncy 51-year-old entrepreneur thought up the gadget, and made it work. When he first told his business partner Ian Williams about his brainwave 11 years ago, Mr Will-iams said: "That's a bloody good idea." That idea is now worth £650m. Stock market analysts are falling over themselves to gush about the potential for a means of transmitting constantly up-dated information on traffic jams and conditions to motorists in their cars, without the driver having to listen to the prattle of a disc-jockey.

Actually, Trafficmaster started as more a suspicion Mr Martell had, that the basic technology existed to make his idea a reality. He found he needed to take the electronics a step further. "I designed the concept and I got the detail done by people with expertise in these areas," says Mr Martell. "I had enough knowledge to realise how it would all fit together." Easy, peasy.

Typically, the notion came to him on his honeymoon, a three-week cruise around South America. It is a rare entrepreneur who is not obsessed with business.

For some time, Mr Martell, a transport enthusiast as well as a businessman, had been ruminating about the irritations of the M25, which became a byword for congestion within months of Mrs Thatcher opening the final segment in 1986. Mr Martell empathised with the trapped drivers and thought it "ludicrous" that nothing was done about it. "I've got a natural impatience which I think I inherited from my father," he says. "Dad would never queue for the cinema. He seemed to have an allergy."

Mr Martell saw what the hapless M25 motorist needed was quality information about road conditions in the immediate area. What the driver got then was sometimes inaccurate and often late.

The process went like this: police officers reported a traffic jam to their headquarters; HQ would - in the fullness of time - tell the local commercial radio station; some time later, or when the disc jockey ran out of things to say, the information would be used. Drivers would often find congestion had already evaporated.

Mr Martell wanted a small screen for the dashboard on which a map would display the speed of traffic on all main roads in the vicinity. That was possible because of the technology used for pagers. Sensors on bridges, or at roadsides, could detect the speed of vehicles and relay it to a central point to process and publish the data. The motorist would select the area he was interested in and the speeds would be flashed up on the electronic map.

That was the easy bit. Far more difficult was persuading the authorities to allow Trafficmaster, Mr Martell's company, to place the sensors on state-owned "road furniture", mainly bridges.

Luckily Paul Channon, the then Secretary of State for Transport, was an enthusiast. This was at a time when Margaret Thatcher was Prime Minister and when the Government jumped at opportunities for encouraging private enterprise to provide public services. But bureaucracy stepped in. Junior officials regarded the Queen's highway as their personal property. They did not want their bridges sullied by presumptuous electronic gizmos, especially privately-owned ones. Then Mr Martell managed to secure the support of Neville Rees, a senior civil servant, who eased the way for a pilot scheme to cover the M25 and other motorways within 100 miles of London.

Mr Martell and Mr Williams - the joint founder of Trafficmaster who thought the whole thing was "a bloody good idea" - put £200,000 of their own money into the venture, topped up with £600,000 from Hambros the venture capital company. That was in May 1990.

"Government officials asked us when we'd have the pilot up and running," says Mr Martell. "We said, 'September'. They said, 'September which year?' We said, 'This year'. They said, 'You're mad'." Apart from obsessiveness, it seems successful entrepreneurs also need a degree of mental instability.

The system opened in September of 1990 by which time Mr Channon had been replaced by Cecil Parkinson. The experiment was a success. Over two years some 2,000 drivers bought the necessary equipment from Mr Martell's direct sales team. Then Trafficmaster was granted a long-term licence to place its sensors throughout Britain's motorway network. This was the transformation. A small, speculative venture with ideas above its station was turned into a company capable of making serious money.

With official encouragement, the company raised more capital and immediately encountered what it believed to be the "hockey stick effect". This describes the shape of the graph showing net income dropping with the initial massive outlay then recovering quite steeply when subscriptions from motorists begin to pour in.

By 1994 Mr Martell decided the City was ready for a Trafficmaster flotation for the money to populate all Britain's motorways with its sensors. The share issue was three times oversubscribed. "My mother bought shares back then for £3,000," he says. "They're worth £60,000 now, but she still moans because she doesn't get a dividend."

The company posted its first pre-tax profit in 1997-98, a surplus of just £241,000, following it up a year later with £3.27m and £3.83m in the year to December. Mr Martell accepts that some more optimistic predictions about the potential market have to be treated with caution, but he believes his company's £18m turnover will treble by 2001.

The man hates being called a workaholic, but he does spend 70 hours a week being chief executive of Trafficmaster. At weekends he sometimes disappears from his home, a Victorian vicarage in three and a half acres at Shillington near Hitchen, and takes the 25-minute drive back to company headquarters, at Milton Keynes.

"One Sunday my wife Karen tried to find me to get me home for lunch," says Mr Martell. "She had to speak to five different people in the office before she could track me down. Karen thinks I'm obsessed with the business. But it is something I live and breathe."

Last week his wife and two young children were on holiday, but, predictably,Mr Martell was at work. Sometimes he manages to pop down to the south of France to his 120ft antique motor yacht. Occasionally. he indulges his love of motor sport. Now and then he plays tennis.

But his real hobby is Trafficmaster. "I'm in a fortunate position with such a young public company," he says. "It's a wonderful feeling to know that in five years' time we will be a very different company to the one we are now.

"It's fun. It certainly helps if you enjoy it. I wake up on Monday morning and look forward to the week ahead. Not everyone can do that. We've got a tremendous commercial opportunity to show we can be a world-beating company. I get a buzz out of getting things done."

For all his infectious enthusiasm, he is not one of nature's extroverts. Nick Redfern, an analyst at Desdner Kleinwort Benson, says: "He's a very sensible guy with a wealth of experience in his chosen field, but he's not particularly charismatic." Mr Redfern nevertheless clearly believes that he is made of the right stuff. On ultra-conservative assumptions he believes the shares, now 655p, are worth 950p.

Mr Martell is a demanding boss. He is a trained accountant, not known for throwing high salaries around. "We don't pay particularly well. I expect my pound of flesh. We are pretty lean and mean, but you don't see many people leaving us."

But some investors have deserted the company. The share price tumbled from a high of 1139p in March down to 354p in May and yesterday was trading at 655p. Greg Johnson of Charterhouse Securities believes the fall was partly because Trafficmaster is associated with other high-tech companies. When the market caught a cold over shares recently the virus spread to other stocks in the sector. Mr Johnson also points out that recent profits were less than exciting, and returns this year will be worse because of high capital expenditure. Obviously, some investors were not prepared to wait.

But Deutsche Bank sees the potential market for "telematics" - systems which transmit information into cars - as huge. The financial group's analysts says that within three to five years telematic systems will be "ubiquitous" and the size of the industry will grow from $1bn in 1998 to $42bn in 2010.

Mr Martell believes there will be an electronic revolution in the car as there has been in the office - although safety constraints, presumably, will prevent drivers from surfing the internet while driving at 70mph on the motorway. Deutsche Bank says one danger in the brave new world of telematics is that drivers might suffer "information overload".

Mr Martell says: "I've never met anyone who didn't want to know if they were heading for a traffic jam. There certainly seems little point in listening to national radio to find out.

"I wouldn't want to know what's going on in Glasgow if I'm driving in Birmingham. We try to give them information they want. We think it has to be focused and relevant."

Trafficmaster wired 8,000 miles of British roads - trunk routes were added to motorways in 1998 - and raised £65m in December last year, spreading its electronic tentacles to the Continent.

The company has covered Germany's main roads with its sensors and hopes to be open for business in France and Italy early next year. The US is also in Mr Martell's sights: Trafficmaster is running a pilot scheme in Detroit.

The massive investment means profits are likely to dip considerably this year to around £2m or less as the business digests the expenditure. Analysts say the company will turn the corner a year later with estimates of returns in excess of £8m pretax. In the year to December 2002, the market expects Mr Martell's vision to yield a bonanza with Dresdner Kleinwort Benson looking for a surplus of £41m.

Mr Martell accepts his company will not retain its near-monopoly in traffic information. Yet Trafficmaster has a head-start. A competitor would need up to £35m to replicate Trafficmaster's hardware in Britain - and even then some of the equipment is under patent, says Mr Redfern.

Perhaps the only way a rival could muscle in is by developing sensing equipment to work quickly and cheaply withoutplacing devices throughout road networks.

Mr Martell believes satellite technology might be an alternative and he is co-operating with Dresden University to explore that. So far the technology is expensive and unable to surmount cloud cover. Perhaps the real key to success lies with the big motor companies. The signs have been encouraging.

In April 1996, the company launched its voice-based system, Trafficmaster Oracle, which was taken up by Vauxhall Motors for its Vectra model, then for Omegas. Two years later Citroen said all Xantia models would have the device. In 1998, Jaguar Cars decided to integrate Trafficmaster's information flow with technology tuned to the American-owned Global Positioning System (GPS), a series of satellites which will tell the vehicle where it is. Drivers of the new "Jaguar S" Type will be shown automatically how to get from A to B and how to avoid traffic problems.

The company has also developed strong relationships with BMW, Fiat, Renault Subaru Toyota and Motorola and believes other companies will join. A link-up with Mannesmann in Germany proved less successful. The company tried to amend the sensors and suffered disastrous results. Trafficmaster moved in to correct the mistakes.

The Automobile Association has signed a five-year agreement with Trafficmaster to take raw data from the company's traffic sensors. Mr Martell has also set up a joint venture with the Royal Automobile Club, which has developed a vehicle security system using Trafficmaster technology and GPS which instantly pinpoints the exact location, speed and direction of a vehicle.

Emergency and breakdown call buttons allow the motorist to notify the emergency services and tell them of the car's whereabouts. The product is being fitted as standard to the Subaru Impreza P1.

Mr Martell believes that in four or five years every car will be fitted with sophisticated telematics systems.

"It will be available in the Ford Fiestas of this world," he says. "You will be able to jump into your car and tell it you want to go to 24 Bridge Street, Clapham. The system will recognise your voice, know where you are and it will virtually take your destination.

"There will be spoken instructions on how to get to Clapham, using our traffic information. And it will cost less than £100 to incorporate it into the car."

The Deputy Prime Minister John Prescott, despite his recently acquired enthusiasm for private enterprise, is actively pursuing a policy aimed at undermining Mr Martell's business by trying to reduce traffic congestion.

He has an uphill task. Even his own advisers tell him the only way of cutting traffic jams substantially is by engineering a recession.

"I don't think anybody truly believes we are not going to have congestion on the roads," says Mr Martell.

"John Prescott is trying to do a good job , but he has said the Government is to build more road capacity. More roads mean more cars. More cars mean more congestion.

"And I can't see anything in the foreseeable future replacing the motor car. It's such a convenient way of getting about."