Boss of laser tech firm M Squared discusses growth and Brexit

Graeme Malcolm M Squared

The laser technology manufactured by Glasgow firm M Squared has applications ranging from the diagnosis of dementia to the detection of terrorism. Graeme Malcolm, its CEO and co-founder, discusses growth, Brexit challenges and the firm’s laser focus on the future

Exploring the colossal power of lasers in a laboratory sounds like the work of a sci-fi criminal mastermind, but that couldn’t be further from the truth in the case of M Squared, a Glasgow firm that’s developing tech with the potential to solve societal problems around the globe.

“Photonics (the science of light) and quantum technologies have applications in areas ranging from life sciences and biomedicine all the way through to process control, measurement and security,” says Graeme Malcolm, who founded the business in May 2006 with Gareth Maker, a friend from his days studying for a PhD in physics at the University of Strathclyde. “Lasers can be used to detect substances linked to terrorism. They’re also used in Earth observation to calibrate satellites and to help us keep track of gases such as nitrogen, carbon dioxide, sulphur dioxide and other pollutants in our environment. We can even fingerprint Scotch whisky to test its authenticity.”

One of its recent developments, a “quantum gravimeter”, can be used to detect fossil-fuel deposits and survey pipes and cables. The USP with many M Squared products, as with drone technology, is their ability to monitor inhospitable environments without compromising the operator’s safety. Meanwhile, a new partnership with the University of St Andrews will develop technology for diagnosing dementia and cancer.

It’s no wonder, then, that this multi-faceted enterprise is reaping the rewards. It has roughly doubled in size every two years since 2012 and currently turns over about £14m. In the summer the company won the coveted Queen’s Award for Enterprise for the second time, recognising its excellence in international trade. In 2016 it also won an award for innovation in the fields of quantum and material sciences.

As well as acknowledging the contribution of his innovative team, which routinely “looks differently at problems to find new solutions”, Malcolm attributes M Squared’s success to the huge strides made in important fields in the past few years.

“The laser was invented in 1960 and it’s been used widely in medicine for some time,” he says. “The internet runs on optical fibres and laser tech, which has largely replaced mechanical cutting when it comes to making things such as cellphones. But now we’re seeing developments in areas like chemical sensing and quantum technology – Einstein and Heisenberg were talking about the latter 100 years ago. Pioneering work is being done in universities by many researchers, including Nobel Prize winners. The UK National Quantum Technologies Programme was set up to this end in 2013. The Treasury has already invested £350m into collaborations that we’re involved with.”

This is another important element of M Squared’s success: it has a collaborative business model – one that sees no barriers between academic and commercial endeavour.

Uncharted territories

Malcolm’s passion for physics was instilled by a teacher at Eastwood High School in south-west Glasgow, where he was brought up. Earning both a BSc and a PhD in the subject at Strathclyde, he participated in a photonics research group with Maker before they devised their first business, Microlase Optical Systems, which they established – with investment from Scottish Enterprise and then a local private equity firm – shortly after leaving the university in 1992.

Soon their work caught the eye of a Californian firm called Coherent, a world leader in the laser industry, with a turnover of £250m. Coherent expanded its 25 per cent shareholding in Microlase in 1997 to purchase the firm outright in 1999.

“Development cycles are long, so we needed [investors] that would take a longer-term view of scaling up these technologies and start to see them addressing the target potential we had for our products,” Malcolm recalls. “We learnt a lot from Coherent – it was the next level for us. But starting again from scratch with M Squared was an incredible opportunity. We wanted to go and do new things, build an exciting new tech company, move ideas out of the lab and into the real world.”

This meant taking the technology into uncharted territories. “We wanted to tackle newer fields, such as quantum technology. We started doing research into how lasers could be used for technical sensing,” Malcolm recalls. “We picked out what we saw as emerging areas, rather than trying to get involved in the existing markets.”

Initially backed by Scottish Enterprise and Melville Capital, in 2009 M Squared was granted further funding to expand into the US by Clydesdale Bank via the Enterprise Finance Guarantee (it also received £3.85m from the Business Growth Fund for its R&D programme in 2012, in return for a minority stake). The company now has a presence on both sides of America.

“Our main office is in Massachusetts: we operate out of the Cambridge Innovation Center, across the road from Massachusetts Institute of Technology,” Malcolm says. “We’ve also got a sales office in Palo Alto, California.”

The firm has one eye on Germany too. “We had familiarity with the US because our previous business was acquired by a Silicon Valley company,” Malcolm says. “We often ask our customers what they need more locally. Asking your existing customers how to internationalise is a great way to learn, because they will tell you what you need more of, what needs bringing in, what they’re looking for. We spend time trying to understand the local vibe, the culture, of wherever it is we are expanding to. We travel to these locations to see what they’re all about. Seeing is understanding. We also have HR advisers and employment lawyers who will educate us on how things work there.”

Skills and Brexit

Today M Squared has three core science specialisms: quantum technology, biophotonics and chemical sensing. “A lot of what we do is high-quality, multi-disciplinary engineering, so we’ve mainly got mechanical, thermal and software engineers. Our company’s very much about observing the signs and then engineering them into practical instruments,” Malcolm explains.

Such a range of activities requires a diversity of talent, of course. Given the skills shortfall – 43 per cent of Stem vacancies are hard to fill, according to a 2015 study by the UK Commission for Employment and Skills – is recruitment a constant challenge?

Proximity to the leading academic institutions, he says, has been part of the solution. “In Glasgow there’s a great tradition of science and engineering. Local companies have been developing optical tech for over 100 years. The universities of Glasgow, Strathclyde, St Andrews and Edinburgh are all within reach. We’ve got a site close to the Oxford-Cambridge-London golden triangle of life sciences too. We have to be close to the communities we want to interact with.”

Inevitably, Malcolm’s team has become more international, meaning that the impact of Brexit on the flow of talent from overseas is a big concern.

“With Microlase in the early 1990s, most of the workforce came from Glasgow,” he says. “Today about 30 of our 100 staff come from outside the UK. We are very diverse at M Squared and the search for skills is global. We want to access the best talent and bring it in to work on the challenges we have. Also, about 90 per cent of our products are sold overseas – 60 per cent of our sales are in the US, 20 per cent are in Europe and 15 per cent are in Asia Pacific –  so we want continued sensible access there once Brexit is clearly understood.”

Malcolm advises budding entrepreneurs with a technical idea bubbling away to grab their chance early. Always be ready to take risks and learn patiently via osmosis, he adds.

“A growing business such as ours goes through different phases,” Malcolm says. “We try to glean understanding from people who’ve been through such phases themselves. That, to me, is one of the best learning experiences you can have. We were involved with the London Stock Exchange’s Elite programme, which showed us what it’s like to scale up as a company from any sector. We were feeding from some of the UK’s real success stories, but also from guys who have had real problems. It was great to get both sides of the story there.”

Being an avid follower of developments in the field is a must, he stresses: “I like to keep up with the best thinking, learn from it and ‘reboot’. We learn from a community outreach programme that we participate in too – you get to hear a variety of perspectives when you’re giving talks in a different setting. We also go to a lot of seminars and conferences, both on the business side of things and also on the more deeply technical elements.”

A kind of ongoing quantum monitoring of their field? How apt.

M Squared Vital info

Business M Squared

Founded May 2006

HQ West of Scotland Science Park, Glasgow

Turnover £14m

Employees 100

High point Malcolm
was awarded an OBE in 2015 for services to science and innovation

Low point “Guiding a business through the challenges that came with the credit crunch in 2008 was like one of those moments when, having climbed a hill, you see another peak up ahead. But, given that about half of our business at the time was in the US (where the recovery was relatively fast), the effects weren’t drawn out”

Did you know? Glasgow’s prominence in optics began during the first world war, when the Admiralty placed an advert in a newspaper for a job with the Royal Navy in the campaign against U-boats. A University of Strathclyde physicist took up the post, spun out his own firm and a hub was born

About author

Nick Scott

Nick Scott

A former editor-in-chief of The Rake and deputy editor of the Australian edition of GQ, Nick has had features published in titles including Esquire, The Guardian, Observer Sport Monthly and Rolling Stone Australia and is a contributing editor to Director magazine. He has interviewed celebrities including Hugh Jackman, Daniel Craig and Elle Macpherson, as well as business people including Sir Richard Branson, Charles Middleton and Nick Giles and Michael Hayman MBE.

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