Enterprise: Elateral thinking

Richard Watney may be no tech-head but he is already on to his second successful e-commerce venture, writes Roger Trapp
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The Independent Online
Richard Watney is the first to admit that the technical side of computers is hardly his strong point. And yet by the age of 35 he has found himself at the helm of two successful technology start-ups.

It's not bad for a man whose first job in the information technology business was "primarily showing directors how to plug in their computers". The chief benefit of being a highly paid "systems consultant" was that he had the time and money to indulge his passion for sailing and, via working with a hospitality company, to follow motor racing's Grand Prix circuit around the world. It made up for the gap year he didn't have after leaving school, he says of this rather unfocused period.

His latest venture is a business called Elateral, which has produced a tool that goes some way to helping multinationals achieve the holy grail of "acting local, while being global".

Like many of the best ideas, it is based on a deceptively simple concept. Essentially, the Elateral technology enables firms operating around the world to simplify their marketing by using the internet to link them with their design agencies and printers. Rather than having to go through the laborious process of approving the design of leaflets and other promotional materials for each country to which they sell, they can store a range of images on the web and allow individual dealers in the various territories to adapt the designs for their own needs.

So alluring is the notion that in just a few months the company has picked up such customers as Compaq, Xerox and Mercedes-Benz on the way to achieving a pounds 200,000 turnover in the last three months. Moreover, with sales doubling every quarter, Elateral is attracting so much interest from venture capitalists that it is currently in the midst of a third financing round aimed at raising about pounds 8m to fund international expansion.

This dizzying growth rate and the resulting attentions of outside financiers are in marked contrast with Mr Watney's earlier experience of building up Compliance. That business - launched in the mid-1980s as a means of using computers to help financial institutions deal with the regulations about to be introduced by the Financial Services Act - grew slowly and was financed from its own revenues.

Nevertheless, it became substantial enough for the publishing giant Reed- Elsevier to buy it for "quite a lot of money" three years ago. The Anglo- Dutch company was keen for Mr Watney to stay on, but he had suddenly become an experienced hi-tech entrepreneur and was asked by venture capital firm 3i to advise on its investments in technology firms.

One business that particularly caught his attention was Romsey Communications, a Southampton-based printing firm. He was especially impressed by the managing director, Martin Mason, who is now leading Elateral's move into the Asia-Pacific region, and by the award-winning research and development team, acquired from another company.

That team's brainchild is the basis for Elateral's tool. But when the printing company could not support the investment needed to commercialise the idea, Mr Watney and 3i teamed up to buy the company and launch the current business.

That was in January 1998 and Mr Watney and his small team spent the next year developing the prototype and ensuring that it provided a real solution before launching the product earlier this year.

To Mr Watney, the notion of using the internet to help provide a solution rather than as an end in itself is crucial. He only got into computing because he did not gain the A-level grades needed to study English and philosophy at Manchester University. And he does not think he picked up much in the way of specific skills doing computer science at Bristol Polytechnic. But he is convinced that he acquired something more valuable - an understanding of the opportunities presented by the arrival of the personal computer. "I realised a lot of people had no idea how this was going to change their lives," he says.

Not that he is totally fixated by the technology. While many internet businesses are sounding the death-knell for their traditional counterparts, Elateral claims to be boosting one industry that is facing tough competitive pressures. "Printers are getting customers they would never have been in contact with otherwise," says Mr Watney, who is adding printing capacity in different countries to his network in response to demand.

He does not claim to be the only business offering this type of link- up. There are various operations in the United States, but they have been largely put off expanding into Europe and elsewhere by the language complications, he says.

However, he is confident that Elateral works on a business model that is strong enough to resist new entrants. "It's an extremely profitable transaction model," says Mr Watney, claiming that the charging structure gives customers no reason to move away from Elateral. Customers pay only a minimal charge to sign up, and Elateral makes its money by requiring printers to pay 10 per cent of the value of finished print jobs from the network. But even this is attractive, says Mr Watney, as the printers avoid the usual pre-press costs by having press-ready files pre-approved by the customer delivered electronically. "It saves a massive amount of time and the financial cost saving is about 25 per cent for the printer," he adds.

As Mr Watney says, the concept is easy to understand, and so to sell. Much more difficult is managing the growth. As with other hi-tech companies, recruitment is a big headache. The company currently employs 30 people at its headquarters in a converted estate greenhouse near Basingstoke, but it reckons that it will need another 110 by the end of next year.

"We've got to find people that fit, and deliver the results we need. The skills are less pure internet and more project management," says Mr Watney. But with a flotation planned within the next 16 months, he is hoping that share options providing "a good return for a year or two's work" will seduce the sort of professionals he needs.

One thing is for sure. Mr Watney, a qualified pilot who has added downhill mountain biking to his list of pursuits, does not intend to be doing the nitty-gritty development work himself. Stressing that he does not know how to create the complicated programming required, he says: "I just have a grasp of the opportunities."

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