This is edited and abbreviated transcript of the video interview with James Murray Wells by Jonathan Moules of the FT
JMW: My name’s Jamie Murray Wells and I’m the founder of Glasses Direct. We’re a company that sells online prescription glasses and I’m the founder of that, which started about two and a half years ago.
FT: And how did you start and why did you choose online glasses?
JMW: I was at university when I started the business, I was a student; I was on limited means, as it were, and I needed a pair of glasses and I was revising for my finals at the time.
I was actually living with five girls so I probably shouldn’t have had time to think about anything else really, but I needed a pair and I went to the opticians and I basically found that they were £150 and I just thought there’s got to be a business idea. This is a piece of metal with some glass and there’s more metal in a teaspoon than a pair of glasses and how come they’re so expensive?
And at that point I guess it’s the point every entrepreneur has, which is do you actually get up and do something about the idea or do you just walk over it and say, “oh, someone else will do it,” or, “it’s probably been done before.” I got up and I actually decided to put that into a business and I found a laboratory and I tested the business model and it worked.
FT: And had you had lots of ideas before? Was it something you’d been thinking about, in terms of being an entrepreneur, trying other ideas, or was it that this was a good idea and it led you down the road and you found yourself being an entrepreneur?
JMW: I’d had a few ideas beforehand, and I think the thing about being at university is that it does give you a period of time where, as well as your studies, you can be thinking about what you’re doing and looking for business ideas, and certainly with me I was down to do a law course but I was actually hoping I’d come up with a business idea in the meantime, and so I did in fact come up with a few other business ideas while I was at university.
I looked at each one; I weighed them up and took a decision on whether or not to take the plunge, and I think this was about my second or third idea, Glasses Direct, and when I finally got there I tested it and then I decided to go for it.
FT: What ones had you rejected?
JMW: At the time there was a craze about mobile scooters, actually importing electric scooters. At the time they were just coming in and I could see that this was going to be quite a cool thing and a craze and so I looked at doing that and I just thought that there were lots of other people in the market and that I didn’t have a very good proposition to the consumer, that I could do it better than anyone else and possibly a little bit cheaper than anyone else, but the margins weren’t great and so I decided to shelve that and move onto the next one.
I also looked at online betting and how that could be brought into other sports, maybe more obscure sports, but again I thought the regulatory environment was too oppressive in that industry, and judging by recent events with the Americans I think I probably made a wise decision there, but Glasses direct, when I saw the idea and the fact that basically people were being ripped off on the high street and I’d been ripped off myself and I knew I could do it better.
I knew that a website could be set up fairly easily. I set it up on the last instalment of my student loan using £1,000. A website designer and I sat down in the summer holidays. I knew the business could be created, as a student, on that kind of sum and that I could get the business up and running, and that’s what I did.
FT: And how easy was funding?
JMW: Funding was never easy to come by, and especially as a student, you’d have a hard time persuading [banks and other investors] to invest in you, and so what I did was I took the decision to test the model on a very, very small scale before actually going for it and approaching other outside investors, so I took my £1,000 student loan and I built a website and I found a laboratory. I convinced them to stock the lenses and hold the stock with the frame so I didn’t have any stock, I didn’t carry any stock at any time.
I then had a very good cash flow because we were taking credit card payments up front and we didn’t pay our suppliers for another month and so there was a very positive cash flow and I ensured all those bits and pieces were right so that there was minimal risk and minimum capital outlay for me as a student, and so with £1,000 I was able to test the model, and once proven I was able to go out to friends and family and say, “right, we’ve got a business model here that works and actually now’s the time to get involved, we’re at an early stage; we need investment”, and so the next round of funding came from within friends and family.
Now, since then we’ve gone on to take on another couple of rounds of funding for around £500,000, from private investors who I’ve approached who have been connected with the company and they’ve funded the business all the way, and since I’d actually tested the model it hasn’t been easy. It hasn’t been difficult to find the money. I think once you’ve got the business model up and running, once you can prove it, people will easily put money into the business.
FT: Because people complained about an equity or funding [unclear]. What do you think about…?
JMW: Well, I think it’s never been easier. For web-based businesses it’s never been easier to get funding, and that’s because the amount of funding is dramatically less in order to get a web-based business up and running. It’s much less than what they’d need say in 1999 where Boo.com spent £500,000,000 on just getting the first iteration of their website up.
Now if you’re a programmer you can get a website in the web 2.0 space, up and running for just £2,000 even, and like the Bebo guys; that’s no accident. It’s a website that was just thrown out on a very limited budget and then it was honed down, iteration by iteration, into what they thought the public would actually need and want out of it, so I think it’s very easy now for young people, for programmers, for anyone, to test a business model, in the same way that I did, on the web and do something very disruptive perhaps and just test it, and if it works then to carry on and push the website forward in other ways.
FT: Why do you think that people do sometimes have problems with access to funding?
JMW: I think that it can be difficult as an entrepreneur to know what your options are if you’re starting out. Certainly I had no business knowledge when I started out. I was an English student and I didn’t know the difference between gross profit or net profit, and so it can be difficult for entrepreneurs to see what different lines of funding are available to them, whether it’s debt or whether it’s equity investment or friends and family or lots of different options, but there are many out there, and I think provided the idea works and the concept’s tested and you’ve got the data to prove it, then there should be no issue there.
FT: It’s interesting you mentioned about not being taught about business. There’s a lot of talk about teaching entrepreneurship. Do you think it is a subject that can be taught or you can teach?
JMW: I think certainly business principles can be taught: economics, all that kind of thing can be taught. My learning curve as an entrepreneur has been incredibly steep, maybe even vertical, since I started the business, and certainly a lot of things that I’ve learned aren’t things that you can be taught: how to act in meetings. These are the things I picked up from the very early stages and I think they just come through experience, but I think the main thing is just to go for it. Even if you haven’t got a business background, you can just give it a shot and see what happens, test it in a very small way.
FT: Is there something in the education system that maybe discourages or are there things you’d say that encourage entrepreneurship?
JMW: I think it’s the job of teachers and schools and parents to create an environment where enterprise can flourish and can be seen to be a possible thing for someone to do, so for example I don’t think it can be taught in lessons but I think you can create a culture where, if people have an idea and want to do something, then they can go for it, and the same with parents; they can create an environment where doing something and failing isn’t a bad thing, that actually you have the opportunity to take.
I remember once I was helping out with the careers convention in Bristol for, I think it was, quite young people from 12 to 16 years old, I would’ve thought, and I was on a desk that was labelled ‘running your own business’ and I was talking to one of the children there. I asked him whether he’d actually set up and done anything in business and he was actually telling me about how he’d actually set up a small playground type business at school and the teacher had shut it down and said, no, you can’t do this, whatever it was, selling stickers, I don’t know, which I thought was tragic because that’s the perfect example of a situation where that child should have been given the encouragement to get out there and sell whatever he was selling and do whatever he was doing and not actually have it shut down, so I think it’s not something that can be taught and there shouldn’t be formal structured enterprise lessons, but it’s just an environment that parents and teachers can cultivate very easily.
One of my friends, Ollie Barrett, is involved in this year’s enterprise week. He’s started something called the £10 challenge, which I think is an awesome way where this enterprise culture can be created in schools when people are young, and what he’s done is he’s basically secured £100,00 worth of funding, I think, in order to give out £10 notes to children and the challenge is they have to go out with that £10 note and create a business or turn that £10 into profit.
They have to return the £10 back into the fund, which goes on to fund next year’s one, and they get to keep the profits, and I think that’s an excellent, excellent way of actually getting people out there and encouraging them to actually think about business and how they can create things out of small amounts of cash.
FT: What sort of advice do you give to young people when you meet them to talk about business, how they can get started in entrepreneurship?
JMW: The kind of advice that I like to give to young people when they are thinking about starting up in business is to keep your mind open. Ideas come and go, and it’s the idea that’s really what makes an entrepreneur, is whether they actually take that idea and run with it, and I think it’s about keeping your mind open to those ideas and rejecting them, and if another one comes then maybe take it, and when you find one, to get up off the sofa, put down the Playstation two controller and actually do something about it, and I think that’s the kind of encouragement, that get up and go attitude, that I like to maybe give to others who are interested in starting a business.
FT: What did you find the hardest part of setting up?
JMW: Well, we’ve had a lot of pressure from within our industry. We were doing something very disruptive, as many web businesses do. They do things in an old way, selling glasses, but they apply a very new way of doing it through the internet, and our business is extremely disruptive and within a few weeks of actually starting out in business our main frame supplier, the guys that supply our glasses, stopped doing business with us under pressure from high street opticians, and that actually brought our website down for two weeks, which was when we were receiving a phenomenal amount of traffic, and it almost actually ground our business to a halt in the very early days.
But I think it was a case of the more they kick and scream, the more that you know you’re doing something right and it’s that perseverance. We all got out on the road. We were travelling round trying to find a new supplier, one that would be loyal to us, one that wouldn’t buckle under pressure from these big high street giants, and we made it through that rocky patch, but we’ve had some pretty testing times.
FT: And you say you faced quite a steep learning curve. Could you pick out a particular lesson that you’ve learnt that’s been particularly useful?
JMW: One specific lesson I’ve learned is to basically recognise where your weaknesses are and surround yourself with great people that can do the things you can’t, so when I started out in business I recognised that I didn’t know how to read a P&L sheet and so I actually rang up my old boss who I’d worked for in the summer holidays and cheekily asked her if she’d like to come and work for me and she became my finance manager.
Then later on down the line we were very interested in marketing and so I found the best marketing guy I could and brought him into the company, and also a couple of the top guys in optometry even, brought them around into a board, the best management team, the best board, and just generally surrounded myself by the best people that I could get.
I didn’t want to be an optician when I was younger. I’ve got no optical background as such, and so I needed to bring in the kind of people that could actually help me power the business, so it’s something that I’ve learned, to surround yourself by the best people, and as a aspiring entrepreneur, people want to give advice, they’re very up for that, and so that’s one tip I would give.
FT: And how does someone who, like you say, has never been in the optometrist business, who’s coming out of university, get those experts and people to come and join Glasses Direct?
JMW: Well, quite simply I went out and found them, so for example, the optometry experts, I approached Bristol University and they recommended their professor of optimology and I wrote to him, and the same goes with my marketing expert, David Magliana, who I saw giving a speech, and after dinner speech, about how he won the London 2012 Olympic bid and how he marketing that to the Olympic committee, and I was so impressed that after dinner I just went and approached him and said “hey, I’ve got this business and it’s really flying and I need some help with marketing”, and as I say, these guys really want to give their advice and they’ve been extremely generous with that. I haven’t had a problem getting the right people involved and I think young entrepreneurs are very well positioned to do that.
FT: Is red tape and regulation an issue?
JMW: Regulation is an issue for small businesses and we’re lucky because we are not in, let’s say, the chemical pharmaceutical foods businesses. I know two entrepreneurs that have just recently started up, or tried to start up, in an awesome business that was going to sell packeted ready to go porridge in lots of different kinds of flavours and I don’t know if you know but in New York there are great porridge bars opening and it’s becoming quite fashionable, and I think they were perfectly positioned in the UK.
Now, these guys actually had to shut down recently their entire business because the amount of government red tape around the area meant that basically someone in a company of two, getting a company like that off the ground, they would have to employ someone full time just to handle the government bureaucracy, and those guys have closed down.
Simply Oats is no more, simply because of government regulation. My business, in terms of the kind of insurance and personnel and all the other matters we have to go through, certainly I find it’s taking up a lot of my management time, and my management team’s time, but I’ve mentioned that’s it’s parents and it’s a teacher’s role to create the enterprise culture, well, the best way the government can help that is actually to ease off on businesses in terms of how much they have to touch those businesses in terms of legislation, in terms of taxation.
If the government can get out the way and let us get on with it, then that will be the biggest driver for enterprise, much bigger than anyone else can do. The most powerful thing the government can do is just relax on taxation and legislation I think.
FT: And is that a matter of just not having so many rules or is it about the way that it’s implemented, or what sort of changes would you propose?
JMW: Yes, I think you’ve got to look to countries like Australia and America, which are very legislative light. The DTI would be an interesting place to start in terms of what they’re doing and have a look at, for example, what’s actually strictly necessary there. I read that there’s a new companies bill going through where we’re going to have to disclose who our suppliers are to the government in our annual reports. Why?
FT: So how could they improve what they’re doing? Is it about talking to businesses like you or just actually going through rules and cutting them down?
JMW: Yes, I think they need to do a lot of legislation pruning in the law and I don’t necessarily think they need to talk to us. I think they can just let business get on. We don’t need to be told whether or not something’s a trip hazard, because if it is then people won’t work for us because that will trip over. Do you know what I mean?
FT: A lot of people talk about fear of failure, holding back entrepreneurship, in the UK. What’s your view on fear of failure?
JMW: I don’t think entrepreneurs are afraid of failing. I think they’re afraid of being different, especially young entrepreneurs, and I think that’s the problem. For me, when I was at school and when I was at university, I wouldn’t have started a business because I was afraid of failing. I would be happy to fail. I would not have started a business because I was afraid I was doing something, which was different to what my colleagues were doing.
At the careers conventions, at the different bits and pieces, and largely I think it still is the case that being an entrepreneur isn’t promoted, as such, as a career choice, and so I think there’s a culture that if you do it, if you take an idea, then you’re doing something which is outside the comfort zone of career, so I think it’s not a fear of failure, it’s merely a fear of being different that we’ve got to try and tackle.
FT: And how can you do those kind of things?
JMW: ’m talking about young people here really, because my knowledge is one of going through university and just having two years in business out of a business I started at university, and so for me it’s one that things like Young Enterprise, things like teachers and parents, can cultivate. It’s an atmosphere of can do, let’s get up and go for it. If someone’s got an idea in class, let them do it. It’s a liberal attitude I guess.
FT: It’s interesting you said entrepreneurs are not fear of failure. Is there an issue that certain people are born to be entrepreneurs or can you encourage people to find an entrepreneurial spirit in what people are being taught?
JMW: I don’t think people are born to be entrepreneurs. I think they’re definitely made into entrepreneurs based on influences, peer pressures, families, school surroundings, that kind of thing, as they grow up, and if there’s a sense of ‘risk taking is okay’, even when it comes down to how you treat slightly eccentric people or just odd ball characteristics, these are the kind of things where, if that kind of thing is more seen to be acceptable in students and even teachers let’s say, then I think you’re going to get a culture where being different is seen as being acceptable and so entrepreneurship will breed.
I think one of the things the government could do is to take the pressure off teachers, if they ease up on teachers. I think teachers’ hands are tied, so it’s not their fault; it’s just the fact that they’re so heavily regulated.
FT: And when you say, ease up, what do you mean? Is it about the league tables?
JMW: Well yes, league table structure of the curriculum. Maybe there’s not enough scope for doing innovative, different things on the curriculum. Maybe there’s not enough time that teachers can decide what they do and what they want to do with a class. Maybe we should just free up the teachers a lot more. I don’t know; it’s just an idea.
FT: What are your pet hates?
JMW: I love what I do but I’ve got a few pet hates and they are that I really totally can’t deal with people who basically put up barriers in the way of when you’ve got an idea. If someone has an idea in my company I say, just go for it.
I don’t want yes men but I can’t deal with the kind of people, who you’ve got an idea and they go, “oh well, this might happen or this might happen.” I want people that are just going to go for it.
And one of my pet hates, it’s not really a hate, I just find it exhausting, is when you are doing a road show for an investment round, and my first investment round, I don’t think I appreciated that we had a good proposition for investors, or as good as it was, and so I did a month, it felt like a float kind of like seeing maybe 30, 40 investors. I was doing presentations left, right and centre and it was a marathon, and I think it was unnecessary in retrospect because there was a very big appetite from within the people that we saw, so I think if we were going to go down that route again, you’d have to assess what the take up was likely to be, how you physically go about promoting that investment round accordingly.
FT: What is it about small print that annoys you?
JMW: Well, small print, I’m talking about lawyers’ contracts and stuff. I like people to be straight down the line with me and if I can’t see something straight up, if there’s an asterisk there that refers to something else then it’s outside my comfort zone.
FT: And what do you think is the most exciting technology at the moment?
JMW: Well, personally I totally dig what’s going on on the internet at the moment, in terms of this buzz word that people are talking about with Web 2.0 and all the different types of disruptive businesses that are coming out of it, and I’m interested in it on a personal note in terms of the fact that the world really is now getting totally wired up in terms of, not only people having computers but they’re also using the internet to its full potential finally, really connecting with each other in terms of the social networking buzz, and so I think that there is a lot of scope.
I’ve got three or four ideas of my own, but I think there’s a lot of scope for looking at new industries and a new way of doing things that involve complicated interconnections between people that are now possible because people have faster computers and there’s better technology and all the rest of it.
FT: How long is it before you practice your next business idea?
JMW: We’re totally focused on building Glasses Direct and I’m under a lot of pressure from my board to make Glasses Direct a worldwide household brand name as quickly as we possibly can, so that means laying down foundations in IT, it means intense marketing, more fundraising.
We’re heading towards a much bigger round, next year, of investment. We’ll be looking for around the £10 million mark, which will be venture capital backed, or conceivably possibly some kind of Aim flotation or something like that, so there’s a lot of work to be doing in terms of pushing out the Glasses Direct brand internationally.
I’m also interested in bringing the proposition of cutting out unnecessary overheads and bringing products direct to the consumer, into other industries, and I’m looking carefully at one or two other ones, and I’m also, as I said, interesting in what’s going on in the web space at the moment, so I’m still working a few ideas around that, but certainly mine and my management’s primary aim is to build Glasses Direct up.
FT: What keeps you awake at night?
JMW: Nothing. Usually I’m so tired by the time I go home, I’m just straight out, but no, there’s not enough hours in the day to think about that.
FT: And who do you view as your key competitor?
JMW: Specsavers. Our market’s dominated by the four high street chains: Boots, Dolland and Aitchison, Vision Express and Specsavers, who are completely dedicated to keeping the monopoly that basically they have on the optical market, which is a £2.5bn.
Now, we compete directly with Specsavers particularly, because we offer value and Specsavers claim to offer value, but we offer prices that are 10 times cheaper than them and so there’s some friction there, and certainly the Specsavers customer is the perfect customer for Glasses Direct. I think it’s important to keep your friends close and keep your enemies closer, and so for example I don’t actually consider that these guys can compete with us directly on the web because they have franchise models. The real competition will come from some much bigger firm that will see this business model’s working. I don’t want to give anyone ideas here.
Let’s say maybe a Gus or a Virgin or someone like that, and so it’s a case of I say, keep your enemies close, and when we see someone who wants to make moves into the glasses market, we actually pre-empt a decision, if we hear about that, by white labelling, and we’re in the process of establishing two fairly major white label agreements, which are now in long form legal stage, with two blue chip high street firms in order to set up a glasses company for them, so it’s half a case of if you can’t beat them, join them.
It’s half a case of keep your enemies close, but it’s also a case of we need to give us time to grow. We’re growing as fast as we can in marketing and at the same time we feel we can do a great job for these other companies too.