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Chairman's Network Lunch October 08 - Event Review

The 21 October 08 Lunch Event with guest speaker Mr. Chris Martin

Chris Martin, ex Sainsbury Management Fellow and Founder/CEO of Xenva, addressed delegates at the 21 October lunch event at Claridge's. Chris talked about the highs and lows experienced during his career and the opportunities/challenges which lie ahead:

'Good afternoon it is a pleasure to have a chance to share ideas with a group of individuals who have all faced the excitement, promises and challenges of entrepreneurial business. Indeed when I look at the heights to which many of your ideas and businesses have soared I feel privileged to be talking to you and look forward to your input in the questions session.

We all work in fascinating businesses and face the challenges of the global market place. I thought that I should focus on those aspects of my experience that have been grounded in my engineering background or in biotechnology as I can see I am surrounded by expertise and experience in the tech sector.

I'd like to divide my talk into three parts, the breaks that got me started, what we have learned from the ventures we were foolish and ignorant enough to start and where my Sainsbury Management Fellow colleagues and I see future opportunities.

As a doctoral student at Oxford nothing was further from my mind than starting a business. I was, and still am, a keen sailor. A friend at the Royal Thames yacht club asked me if we could help them with the increasingly arduous task of timing races and producing time corrected results ready for the skippers when they came ashore. To cut a long story short the system developed by my flat mate, Simon, and his chum worked - sometimes. An early outing involved timing the round the island powerboat race. You might say inevitably, the system froze half way through the race, Simon as cool as ever used his wrist watch to time the race typing the results into the text editor. The club and helmsmen alike were delighted. I was bitten by the entrepreneurial bug and have enjoyed the ups and downs of bringing technology to market ever since. Even Prince Philip calling me a bloody young upstart at the time couldn't put me off.

Being trained as a Chemical Engineer is excellent for learning to thing through complex problems. There is a downside though, nobody wants oil refineries and nuclear reactors to blow up and so the whole ethos doesn't exactly encourage risk taking. To make matters worse my father is an actuary, I was bought up to see risk as something to be measured and managed and preferably not entered into. The one risk I would take was to knock on doors and that has always served me well. When I was at school I literally knocked on the door of an old mansion in Surrey that housed the Brewing Research Foundation. A summer job ensued, free beer, a swimming pool and a great boss, who went on to be a professor of brewing, added to the fun but more importantly I could see I was an engineer not a chemist. The next door I knocked on was on Cowes esplanade, a computer generated picture of waves breaking on an oil rig enticed me to knock and I walked out employed in the boutique engineering consultancy, Marex. Within three months we were working on Boxing day to submit a proposal to Esso for a large project that we won. I soon ended up running the consultancy business and enjoying the commercial side as much as the technical.

By now I was developing an appetite for risk; when I saw that David Sainsbury's Gatsby charity offering to fund engineers to study for an MBA at a selection of top European schools I applied and was lucky enough to get a scholarship to IMD in Geneva. The Sainsbury Management Fellowship as the scheme is known is a scheme to give graduate chartered engineers the business qualifications that can be a foundation for entrepreneurial, senior management or senior government roles. It has been very successful with many of the fellows fulfilling these goals. I got a lot out of the IMD MBA, mainly an international network of friends and colleagues and the added benefit of a Finnish wife, who keeps me in good order as Finns are inclined to do. I also gained a business partner in a fellow student Hamish Wilson.

Within two years of leaving Switzerland, Hamish and I had bought out the consultancy business, privatised a Croatian petrochemical plant and were presenting a case study in St Petersburg on privatising previously communist run businesses. Over the next few years we grew the consultancy opening offices in Holland, South Africa, Houston and Sydney in quick succession. One day however, a junior colleague returned from an assignment and told me of an encounter with a shop floor foreman who, having listened to his 'good advice' for some time, turned to him and said 'I know a long word too.. sausages'. When I asked my two year old son, Risto, who I saw on Saturdays and Sunday mornings between flights, where he got his energy he replied - 'Switzerland'. I knew consultancy was beginning to pale.

McKinsey had told a Dutch multinational that one of our consulting businesses was the missing piece in their strategic jigsaw. They were a price insensitive buyer, I now had the capital to do what I wanted to do; to create a portfolio of technology based businesses. In 1997 I teamed up with John Campbell ex CSO of Cookson and established Xenva . Xenva started as a seed capital provider, as seed investors we made every mistake in the book and it rapidly evolved into a virtual business incubator.

To move on to the second part of my talk now. What have we learned from the ventures Xenva has started?

We have always looked for big opportunities driven by the confluence of changes in customers' ambitions and in enabling technologies. A good example is Sciona. We set up Sciona in 2000 to take the benefits of genomics straight to the consumer, advising individuals on their diet, lifestyle and exercise regime based on their unique genetic make-up. Customers love the product and we have probably sold more genetic tests than any other company other than Myriad's breast cancer test. The medical establishment, civil servants and above all genetic pressure groups all hated it with a vengeance. The headlines ranged from 'Greatest Medical Innovation in twenty years' to 'Snake oil'. Eight years on and we are flattered that Google and Kleiner Perkins have imitated us starting up 23andme and Navigenics.

Sciona was in the 'don't do it' box in all of those neat consultancy analysis grids. A new product, in a new market, based on new technology. We had no idea that to get the product to market and sold to mass consumers we would need to develop the technology, the products, the services, design new channels to market, file intellectual property, master public relations, including crisis communications, move the company to the USA and recruit a new management team - all the while being studied under the microscope of regulators, medical ethicists, global food and pharmaceutical companies and as ever our venture capital backers. If we had dreamed that we would be attached by the same NGO lobbyists who had given Shell the run around on Brent Spa and that we would have Anita Roddick helping to defend our position in front of Nobel Laureate John Sulston we would have probably decided to open a chip shop instead. Faced with consumer appetite but a hostile business environment in the UK we decided to accelerate the international roll out and test the USA market. Illustrative of the difference was the USA launch in the Miami basket ball stadium in front of 14,000 potential customers. We sold more in those few hours than in the first 18 months in the UK.

From this and other Xenva businesses we have learned that today the consumer is ahead of industry in the ambitions individual consumers have to access the benefits technology can bring, to demand high quality and to be prepared to pay a reasonable price for a personalised service. There is a massive inertia in institutions, government, NGOs, large corporations and learned societies, that ends up impeding enterprising efforts to give consumers what they want. It is perhaps ironic that while government had more people studying Sciona than worked in it; the banks were partying while the regulators slept.

To move on to the third part. The Sainsbury Management Fellows being engineers by bent; have much experience in the energy, materials and environmental sectors. The whole issue of sustainability, global warming and sustainable feedstocks are very familiar to us. At Paras, we started measuring noticeable increases in the severity of storms in the North Sea back in 1987 and adjusting the design parameters we specified for offshore platforms as a result. The big ethylene complexes of Billingham and Ludwigshafen are some of the most energy intensive sights in the world and efficiency is at the heart of profitability.

The Industrial Revolution was literally fuelled by cheap, almost free, energy. We treated the engine as an open system, that is we could throw exhaust, polluting waste and heat over the fence and not worry about it again. Satellites, Facebook, Google Earth, Ryanair and so on mean that the impact of our engines, of our engineering; are now apparent to everyone. The challenge ahead is to find ways to enjoy the nutrition, shelter, security and fulfilment we are all used to in a much less disruptive way. Perhaps we can call this minimum entropy wealth creation. British society, technology and engineering and political systems evolved together to lead the agrarian revolution that enabled the industrial revolution, again led by the UK, the question is can we lead the minimum entropy revolution? It may just be that the turmoil in the world right now will create an environment where we can innovate socially, technically and economically to do just that. The most active group in the Sainsbury Management Fellows is the Energy Round Table, the aim of which is to Accelerate UK industry's contribution to the global energy technology revolution. We see enormous potential for profit in this. Personally I expect to see the next stage in my career being something of a full circle back to the energy sector but now informed by my experiences in the IT and Biotech sectors. We are currently working on the plans for a distributed power company. At power stations 40% plus of the energy goes up the chimney. The distributed power company will move the power stations into peoples' homes where the heat can be used for hot water and heating. We will provide electricity as any other power company but with effectively free heat and a lower carbon footprint.'