Gareth Senior: What I wish I’d known
Article Date: Apr 21 2005
Gareth Senior is the founder of software concern Axiom Systems, a business demerged from network reseller Connectivity Plus. It grew 250 per cent last year and just recently moved into profit.
Don’t ignore the basics of business
We launched Axiom Systems after raising million in venture capital in 2000, at the height of the dotcom wave. Investment figures were way ahead of any revenue projections and money was available for businesses that had no more than two real customers. When the bubble burst, we spent nearly nine months in the wilderness, wondering where we had gone wrong. We had been running a business [at Connectivity Plus] for ten years that had been profitable.
We had to go back to basics and take a long hard look at what to invest in going forward. It was frustrating for new employees, who joined a company with the expectation that a lot of money was going to be made.
The devil is in the detail with VCs
The fundraising deal we structured in 2000 beggars belief. I don’t want to speak ill of my investors as they have been very supportive. But we were very naive when we went into it. The venture capitalists threw money around and our eyes glazed over.
If I were doing a deal now, I’d make sure simple issues such as ownership structure and voting rights are in place. Lots of clauses appeared in the contracts saying, for example, that VC control would increase exponentially if more money needed to be raised. This meant our ownership was potentially under threat.
Judge on output and performance
In a small business, your people are vital and it can be incredibly difficult to believe they are getting their work done unless you can see them doing it. But I have created a much more relaxed atmosphere in the office and now measure performance on work my staff produce rather than the time they put in.
We have game consoles in one corner of the office and I am happy to let my staff play on them when they choose. We have had an internal debate where others are concerned by the amount of time people are spending playing games. My response is very straightforward – I don’t find it necessary to monitor those who are producing the work to the required standard.
A flexible environment can work wonders
In the early part of 2000, I hired people who had a long commute. As we operate in a relatively small industry, some people were coming from as far away as Newcastle, commuting on a weekly basis. They couldn’t hack it and resigned, meaning we lost extremely valuable resources.
Time was also an issue, as recruiting the skills we need can take anywhere from six to nine months. It was a big eye-opener when we introduced broadband and promoted flexible/home working to staff located both near and far. There is no mileage in staff who have a long way to travel.
Money is not everything
I was one of three directors at the original business, Connectivity Plus, and we were very happy with the way it had been run to date. When the VCs came along and demerger talks started, the deal became more about money than our lifestyles. When people wave cheques you tend to forget who your friends are.
Money can divert you from the important things in life, causing you to burn friendships, which you later regret. It can be terribly distracting when one minute you are used to earning a good salary, the next you are getting cheques for several million.
