Dragons’ Den star Piers Linney on funding struggles and the secret of a great pitch

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Piers Linney Dragons' Den and Outsourcery

Piers Linney stepped into the limelight when he joined Dragons’ Den last year. Now the tech entrepreneur aims to nurture young talent while also taking his cloud computing business global. He talks to Director about his funding struggles, the secrets of a great pitch and how Sir Richard Branson helped him enter the Den

When Piers Linney first appeared on our television screens last summer few people outside of the tech sector had heard of him. He was one of two new faces joining the fearsome Dragons’ Den panel (the other being interior designer Kelly Hoppen), but little was known about the cloud computing pioneer, who hails from a small mill town in Lancashire – the son of a Barbadian mother and English father. And yet last year his cloud and communications business Outsourcery, which he co-founded in 2009 and is now turning over £7m a year, floated on AIM for £34.6m and he was named as one of Powerlist’s 100 most influential black Britons of 2013.

Now Linney is back in the studio for the next series of the show, which this year was nominated for a Bafta after a decade on air. During a break in filming, he tells Director the programme has been brilliant publicity for his business. “It’s been great for Outsourcery, for my team, and the charities I’m involved in. Obviously being a public face sometimes has its downsides but, for me, the pros far outweigh that one con.”

Despite his success, life hasn’t always been rosy for the entrepreneur, who started his first venture – a Sunday paper delivery business – at just 13.

“I failed my 11-plus and went to the local comprehensive,” he recalls. “I got a place at Manchester University to read law and accounting, but it was hard for me, with my background, to get a job as a lawyer afterwards. I didn’t tick the usual boxes and it was only after nearly 70 applications that I received an offer from SJ Berwin in the City of London.”

Linney’s stint as a lawyer, however, was short-lived. “I was spending most of my time in the venture capital and private equity department, and quickly decided it was far more interesting. Soon after, I got a job in the equity division of Barclays [Barclays de Zoete Wedd], which was later acquired by Credit Suisse. I was working all the hours God sent and learnt a great deal. But when the internet boom happened [in the run-up to] 2000 I saw the potential, and I took my bonus and walked out because I wanted to set up on my own – I haven’t worked for anyone since.”

Linney was involved in a string of businesses from music to telecoms in the years before 2007, when he and Simon Newton – a friend and former colleague – bought up a mobile phone reseller from Dixons.

“The plan was to build it, mix it up, and grow it. Then we bought another mobile business and merged the two. We had a company of about £45m, had several hundred employees and were making millions of pounds in profit, but we realised that mobile was only going to go in one direction in the long term and it didn’t excite us, so we started considering the possibility of email.”

The duo bought a third, internet-based, company and that, says Linney, is when they realised the vast opportunity it presented. “We refocused our resources, bought another company to help build the business, and launched a cloud-based business. There were four different organisations, with four diverse cultures and we merged them and rebranded under one name – Outsourcery.”

The company now employs 125 staff and has offices in Manchester, London and Leicester. But it hasn’t always been plain sailing.

“The biggest challenge from the outset was raising money – it was an utter nightmare. Simon and I had already invested around £10m each and some of our friends and former colleagues put money in, but for the first two years we struggled to attract investors and had to fund the business ourselves.”The problem, he says, stemmed from the fact that people didn’t understand the idea or term ‘cloud’.

“We were sweating every month writing cheques, but we were confident that the world was going to transition eventually, and we didn’t want to miss out.” The decision to float Outsourcery in May 2013 was another bid to get more cash. “It was a big risk, but we needed more money and we also knew it would offer credibility to our partners and end customers, which it has.”

So what’s his advice to entrepreneurs looking for funding? “If you come up with a unique intellectual property that is scalable and consumer-driven there will be investors who are interested. With us, people couldn’t really understand the intellectual property of what we did. You need to spread your bets and don’t assume you’re going to raise money in the usual three to five months – it could take a year.”

Linney also believes that technology is key to gaining a competitive advantage. “It’s a leveller. Historically it was only very large businesses, supported by huge systems integrators, that had the money to deploy technology in a way that added value, but now it’s readily available to small businesses and start-ups. If these companies embrace new technologies when they first become available it’ll give them a competitive edge.”

Piers Linney inside the Den

Linney is often asked why he joined Dragons’ Den, but he answers with a wink: “Because I was asked.” More seriously, he admits Sir Richard Branson had an influence. “He’s the only entrepreneur I truly admire. I went to Africa with him and we talked about life and business, sitting in his private game reserve in South Africa. I asked him whether he thought I should join the show. We went through the pros and cons, and finally he said ‘Screw it, just do it’. And I did.”

It was strange, says Linney, seeing himself on television. “Dragons’ Den presents an edited version of me. The person on TV that people see and think they know is a caricature. Admittedly it’s pretty accurate, but it’s me in a potted way.” But he is still clearly relishing the role. “Kelly and I are the new kids on the block and have created a fresh dynamic,” he says.

“We do deals in ways that the Dragons who have been there for years might not. I don’t always need a big stake in a company – if I think five per cent is the right number, and it’s a growing business and the person’s evaluations are right, then I’m happy with that. People always ask, ‘Are [the Dragons] competitive?’ We are all friends in the green room, but there are only so many deals that you want to do that come through the door, and you’re investing your own money, so it does get competitive.”

So, is he pinning his hopes on someone pitching a technology idea this season? “I have a natural interest in technology, media and telecoms, but we probably won’t see a huge amount of those types of businesses,” he says.

“I’m after two things – something that’s investable and an entrepreneur who can deliver their idea. Building a business is never a straight path, so the person needs to be able to put up with difficulties. I also need to be able to work with them. As an investor you may not be operational but you will be spending time with the individual so being able to work together is key.”

There are some deals, he admits, that are made on television but don’t actually happen. “Sometimes the entrepreneur backs out and sometimes what they say on the show is not quite right in reality. There are times when you can work through that, which I’ve done, and other times when you can’t. Luckily, all the deals I’ve wanted to do have worked out.”

Linney invested in three businesses in the last series – curry sauce brand Vini & Bal’s, in which he invested £50,000 for a 30 per cent stake; travel start-up Mainstage Travel, which saw him receive a 15 per cent share for an investment of £100,000; and Skinny Tan, which saw him join forces with Hoppen and invest £60,000 for a 10 per cent share. “It’s early days so it’s hard to say how the companies will do in the long term, but they’re all doing very well at the moment. I’m pretty involved and I talk to all of them on a weekly basis, and feel very positive.”

So, what is the secret to a successful pitch? “It’s about explaining succinctly what the opportunity is, how you’re going to monetise it and ensuring that you, as the entrepreneur, can instil confidence in the investor – because opportunity without execution ability doesn’t work. I’m investing in the individual first and foremost.”

Since becoming a Dragon, he adds, people are constantly pitching him ideas. “It happens all day long,” he says lightheartedly. “I get approached on Twitter, LinkedIn, on the street, and regularly by taxi drivers. Usually it’s fine, but sometimes people want you to write them a cheque in the street, which is interesting. Typically it’s because people like the programme – the ratings have gone up dramatically in the last year and everyone’s happy with the show, so that’s great.”

Tomorrow’s leaders

Being named one of the top 100 most influential black Britons last year, he says, was an extremely proud moment. “My mum was very happy,” he recalls. “But the former attorney general, Baroness Scotland, asked me what I was going to do about it. We decided to start a charity called the Powerlist Foundation. We run a summer school with Deloitte and take high-achieving young people and put them through a week’s leadership programme,” he explains. “We’ve also put in a bid, under a government programme, to set up a sixth-form college, which will be a leadership college. The goal is to expose the young people to leaders of different types and to inspire the next generation.”

When it comes to evaluating his own leadership style, Linney describes himself as firm but fair. “I tend to shoot from the hip. I think my training as a lawyer and a banker has taught me to temper my entrepreneurial urges with a bit more thought and analysis. I’m not super-detailed, but in terms of vision, structure, financing, momentum and bringing people along, I think I’m pretty good.”

Linney points out that his firm faces a greater challenge than most when it comes to recruiting talent. “There is always a skills gap when something is new. We can’t go and recruit people who know what we do – they don’t exist. So we bring people into Outsourcery, nurture their skills, and transfer them to our operational model.”

The business retains them, he adds, by ensuring it’s an interesting place to work. “It’s somewhere they will continue to learn and grow. I’ve had employees who have been approached by other companies and offered a lot more money, but they don’t want to go because what they’re doing at Outsourcery is cutting edge and offers greater career development.”

Businesses, he says, should be doing more for young people. “Collectively we are a very powerful machine and can be a force for good alongside the government and third sector. This year I’m launching a charity called Work Insights, which allows organisations of all sizes to engage schools and colleges and provide work experience.” The fantastic thing about it, he says, is that there are no selection criteria. “The companies don’t get to choose by academic capability, social background, sexuality, gender, race or religion – it will only allocate people based on their age and location. The aim is to remove all the barriers to entry locking young people out of work.”

With Outsourcery, his charities, Dragons’ Den and his young family, it’s hard to see Linney ever finding the time to relax. So what keeps him sane? “My two little girls bring me down to size very quickly. I also ride bikes a lot, but not as often as I’d like. With Outsourcery, though, I never feel like I’m going to work, and there is never a dull day – it’s something I believe in.”

And what are his future ambitions for the company? “I think we can double revenues every year with what we’re trying to do.
We haven’t even scratched the surface yet. We’re also the first company to offer a cloud solution that is fully integrated with Microsoft’s unified communications – nobody has done that on a global level. But we need to educate the market so people understand what we do and why we’re different from traditional providers.

“The opportunities are enormous and our challenge is placing our bets and delivering what the market expects us to, but this ship is going to sail. It’s a question of how much and when, not if.”

www.outsourcery.co.uk

The new series of Dragons’ Den will begin in July

About author

Hannah Baker

Hannah Baker

Hannah Baker is deputy editor at Think Publishing. Previously she worked as a features writer and sub-editor for Director magazine

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