`I paid for my business lunch with my giro'
In the latest of our columns by entrepreneurs, Dan Wagner, founder of Maid, explains how he transformed his idea into a business information group which is now worth pounds 157m
Sunday 24 March 1996
I had to save for three weeks before arranging lunch with Derek Smith, a director at the Economist, the first publisher I signed up to put information on to the system. I had scouted all over St James's looking for a restaurant I knew I could afford. But as we got near it he said: "Oh no dear boy, let's go over here." I was absolutely terrified all the time we were eating but fortunately the bill was about pounds 1.50 less than my entire working capital.
The idea for Maid had come to me while I was working as an account manager for WCRS, the advertising agency. I was researching for a pitch to BT, who wanted us to advertise their data communications traffic. The only reason you would use their service was to connect to a database, and at that time only science and medical databases were available. I said: "Blimey, what if I were to put together a market research database. Then I wouldn't have to do all this work."
It became an all-consuming passion. I was thinking about it every spare moment I had. I was making pounds 8,500 a year at the agency, which was not bad for a 21-year-old. And I knew I could get back into advertising if things didn't work out. So I spent my savings on a second-hand IBM, what you'd now call a desktop, and quit the job.
I used to carry that computer around everywhere, the monitor under one arm and a bag full of cables under the other. It was heavy and slow, one character at a time ticking across the screen. The amazing thing was that it was useful even then.
Originally I was planning to put the database on a bigger IBM, costing about pounds 100,000. But because I couldn't afford that I had to look at other ways. I discovered I could rent computer space from a bureau, so I arranged to meet the chief executive of Thorn EMI's DataSolve in my "office", the tea area of the Churchill Hotel. I explained my idea to his marketing team and programmers at their Park Lane offices.
Two weeks later we met again and he said that DataSolve had been thinking about doing something similar and he'd give me pounds 20,000 to walk away. My first thought was unprintable. Then I said that if he made it pounds 100,000 he had a deal. He got up and said: "I'll meet you in the market place," and walked out. I just sat there absolutely shocked.
Fortunately I got along better with the next bureau I tried, Pergamon InfoLine. I spent six months closeted with programmers, and had the software completed by September 1985. By that time I had 300 market reports on- line, a bill from InfoLine for pounds 200,000 and not a single customer. I put their bill with the others I'd been collecting under my couch.
The father of a friend of mine was a merchant banker and I got him to help me put together an investment document which I touted around the City to venture capital companies.
Hoare Octagon liked it and put in pounds 187,000, and a group of Business Expansion Scheme investors put up another pounds 80,000. We launched that October. In our second month we made a single sale for an annual fee of pounds 3,400. Over the first nine months we signed up just three accounts in the UK, and five in the US.
Then our competitor, DataSolve, came to the rescue. They had been selling their service for pounds 2,995. But in June they slashed their price to pounds 250 a year. My board was really freaked out.
I was the most boring post-teenager you could imagine, and spent all my spare time reading business magazines and books. Somewhere among them I'd picked up the idea of premium pricing, so I suggested that instead of slashing our prices too, we put them up to pounds 4,250. It was a brilliant move. We signed 25 new accounts in three months.
There were other crises, like the time I refinanced my Aston Martin DB6 for pounds 80,000 to fend off a hostile takeover that we saw coming from British & Colonial, but by 1989 we were finally turning a profit. At least, I don't have a problem taking the director of the Economist for lunch any more.
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