Shaper: Martyn Dawes

Show aired on 11th June 2016

Transcript

Elliot Moss
Honeysuckle Rose from Jason Moran. Good morning this is Jazz Shapers with me, Elliot Moss here on Jazz FM. Thank you so much for joining me. Jazz Shapers is where you get to hear the very best of the people shaping the world of jazz, blues and soul and alongside them we bring in the very best people who are shaping the world of business and we call them Business Shaper. I am really pleased to say that my Business Shaper today is Martyn Dawes; he is the founder of that very clever coffee business called Coffee Nation which then has become Costa Express so you have probably heard of the former and maybe even the latter. You will be hearing lots from Martyn about how he just went about creating a coffee revolution here in the UK. In addition to hearing from Martyn you will be hearing from our programme partners at Mishcon de Reya, with some words of advice for your business and then we’ve got some music and it is fabulous today, Stacey Kent is coming up, Dr John and right now this is Dizzy Gillespie.

Dizzy Gillespie with the rather light Bang Bang. Martyn Dawes is my Business Shaper here on Jazz Shapers and as I said, he is the founder and former CEO in fact of Coffee Nation way back from 1997 and also the successful seller of that business and then that business was so good they sold it again. Martyn thank you so much for joining me.

Martyn Dawes
Morning Elliot.

Elliot Moss
Tell me why you set this thing up way back then? What made you decide you were going to be an entrepreneur?

Martyn Dawes
Well I started off in a corporate environment but worked out I think that big business really wasn’t for me. Moved to London and I started a small consulting firm which I then grew with my wife but after a few years, we were very successful but sort of felt that I wanted to build something bigger with a brand and a product and the idea for Coffee Nation came about firstly because I saw a photocopying business putting photocopies in to newsagents and so on and thought ‘great if I could find something else that I could put into those locations, that would be a great business and very different to sort of the people reliant business of consulting.’ Went to America looking for some ideas and saw how big coffee was there so that’s how it started, coffee into newsagents and off we went.

Elliot Moss
You make it sound so simple. To jump from photocopiers and location through to coffee is, you know, most people wouldn’t do that. I like the idea that you were moving from this people business to a product. Do you… was there a reason why apart from all this is an easier way to make something big in the world? What is it about your relationship with things versus, versus the more you know, the tricky world of professional services as it were?

Martyn Dawes
I think that was exactly the point. At the time, as I said, the consultancy was successful but one of the challenges I think with that at the time was scaling it and so finding something that was a product where I could build a brand and I think the thing that I thought was that looking at those photocopiers, you know they were all potentially units you know making money literally sort of it’s a cliché, but while you were sleeping you know. So I thought if I could have thousands of machines or whatever it would be out there, you know, all selling a product, a little bit of revenue from lots of locations that was a…

Elliot Moss
A good thing.

Martyn Dawes
…it seemed like a good thing.

Elliot Moss
But what is interesting is you found a slot as it were. You were actively looking for something I mean before the photocopier moment. Had you said to yourself ‘I need to do something else, I’m going to make my mark’?

Martyn Dawes
Yeah it’s funny actually because I said to my wife at the time, I said, ‘I’ll grow the business, the consultancy up to sort of X turnover and then I am going to start looking for something new’ and she sort of jokingly but sort of you know, perhaps not so jokingly sort of said, ‘Don’t let me get in your way, you crack on’. I think she was sort of glad to see… get me from under her feet. So I think I was a bit frustrated and wanted to do something that would, you know, grow and that’s how it started really.

Elliot Moss
Stay with me for more from my Business Shaper today, that’s Martyn Dawes; he is the founder and former CEO of Coffee Nation. Time for some music, this is Stacey Kent with Only Trust Your Heart.

The very gentle sound of Stacey Kent with Only Trust Your Heart. Martyn Dawes is my Business Shaper today; founder and CEO of Coffee Nation. So you had this idea, you went ‘I know what, it’s not going to be photocopiers, it’s going to be coffee’. All very well to have the idea. Then what happened Martyn. How did you actually transform it into this business that you sold for many millions of pounds some almost ten years later.

Martyn Dawes
Well it was a long journey and the idea actually came about as I was in New York and I saw there was a Star Bucks on one corner of the street and there was a sort of 7/11 convenient store on the other and I thought the Star Bucks, I didn’t know anything about real estate and it had lots of employees so I thought I’ll avoid that. The convenience store there was coffee sort of flying out the door. People were buying you know, coffee a dollar a cup and it was walking out the door and I thought ‘that’s the model’. So I came back. I started with instant coffee machines in corner shops. I was using Nescafe, Nestle said that the future was instant coffee and I figured that’s what we drank all the time at home so a cappuccino was kind of what you had when you went on holiday and that’s how it started and it was a gradual process Elliot of trial, lots of experimenting and lots and lots and lots of failures but of course that’s how you learn and gradually over a period of time made the transition from instant coffee and powered milk to real beans, ground for each cup, freshly steamed milk, put the price up – the sales rocketed.

Elliot Moss
The more expensive it is the better it is.

Martyn Dawes
Absolutely. I mean, you know I was selling sort of 45p a cup and I was lucky if I was selling sort of fifty cups a week. Putting the drink price up you know, it was a premium product you know and so…

Elliot Moss
I imagine and I mean you are mentioning these things and you are kind of en passant as it were but it must have been the steepest learning curve ever because you know, you talk about, people always talk about placement and they talk about product and they talk about price but you were literally going through it and as you said, if you are keeping a tab on number of cups you sold, you would know what X would do to the business and what Y would do to the business. Was that exciting not knowing?

Martyn Dawes
It was exciting but I think the entrepreneur at that stage, they have a huge amount of self-belief and confidence in their model and that’s what propels them forward and you know as you get the bit between your teeth you just decide at some point not to give up and keep going so it I think it was more exhilarating. It got a little scary because I was getting awfully close to running out of money so there were lots of pivot points and… but it’s a journey that you know, all entrepreneurs go through. You don’t start a business and you know, what you start out doing becomes what is ultimately successful. I think more than nine out of ten businesses that do become successful achieve their success through doing something somewhat different to what they started out doing so it was a very steep learning curve.

Elliot Moss
In those early years, just very briefly, were there moments when you went ‘I’ve got belief but do you know what, this is testing me enough’.

Martyn Dawes
Oh there were many times, I mean I got close to thinking ‘Am I flogging a dead horse here?’ You know I had offers of money and then the money wouldn’t come in, I tried everything to try and sell more cups of coffee. You know, it was coffee with a free newspaper, with a free… you know I think the most daft one was a free sausage roll and I thought well if people aren’t going to buy a cup of coffee, you know they are not going to buy it if we give them a free sausage roll really are they so you know, it got to be pretty desperate and the eureka moment really was when I, you know, actually went around some of the locations I had, turned the phone off and I just thought I am, you know, it was sort of the 11th hour and I actually bumped into a, he wasn’t a customer but he said, ‘Look this is a great idea but I can make what you are selling with a kettle and a jar of coffee back in the office so it’s got to be a product that really wows me and knocks me off my feet’ and that was the lightbulb moment really that got me into gourmet coffee, you know the real stuff.

Elliot Moss
Stay with me for more about the real stuff and how it evolved with my Business Shaper, Martyn Dawes; founder of Coffee Nation. Latest travel in a couple of minutes and before that some words of wisdom for your business and I am sure if you are on that steep learning curve you are going to need it, from our programme partners at Mishcon De Reya.

You are listening to Jazz Shapers here on Jazz FM with me, Elliot Moss every Saturday morning from 9.00am I meet someone fabulous from the world of business and my fabulous person today is Martyn Dawes; founder and former CEO of Coffee Nation and we were talking earlier about that revelation of ‘well I can make this back in the office, give me something special’. Where there other epiphanies along the way Martyn? And how were you tuned into those because often we are surrounded by people that say smart stuff even if they are not trying to be smart, they are just stating the obvious and we are just too close to see it. How did you as an entrepreneur ensure that you were open to those things because self-belief can sometimes lead you down a cul-de-sac?

Martyn Dawes
Yeah I think the, once I had the big breakthrough you know that lightbulb moment of realising it had to be gourmet coffee, you know the real stuff as I called it earlier. That was the, usually if you look at the success of a business it is usually one major insight that causes it to be hugely successful ultimately and that was the insight for me and for us as I grew the business and from that insight came the phrase ‘self-serve gourmet coffee’ that was the category that we then created, we owned it, I was determined to own it and lead it so it was that single line of attack. I think then there were lots of other small eureka moments and insights along the way that enabled us to build the whole what we call, operating system that enabled us to you know, keep these, you know we used to say keep the planes in the air, these were unmanned coffee stations now operating in all sorts of locations such as motorway service stations at 3.00am, 24/7.

Elliot Moss
Logistical nightmare though isn’t it ensuring that all the planes are running on time?

Martyn Dawes
Yeah we, well we outsourced the logistics, we outsourced maintenance to start with although we brought that in-house eventually because we realised that that we, you know, we had to do it better than the industry best as it was at the time so but all of that stuff that we did very well built if you like a sort of moat around the castle and gave us a very strong advantage so it was difficult ultimately for others to get in and compete with us.

Elliot Moss
What that business became though from photocopiers to gourmet coffee to processors, that’s quite a big shift isn’t it because then you are creating a machine that others would find hard to replicate and therefore has some intrinsic value. When you are running that kind of business, that’s very different to the steep learning curve isn’t it? Then you are talking about incremental changes which drive margin. You talk I know a lot about helping people, entrepreneurs transition to bigger scaling, scalable you know CEO roles, you were doing it yourself, is that why you are the sort of the most qualified person to talk about it and in that journey did you realise you had morphed into a different kind of leader?

Martyn Dawes
I think there is a huge, I wouldn’t say I am the best qualified to talk about it but I mean you have touched on that point and part of what I do now is mentor other CEOs and entrepreneurs and I think the reason I enjoy that and get asked to it is because I went through that whole journey from start-up entrepreneur where you know a very small business inside out and backwards and you’ve really got, I remember my chairman saying to me, ‘you know it will take you a couple of years to really get to know your business’ and I was still learning about my business ten years later. The next thing then is actually once you have nailed the concept is to, you’ve constantly got to have this ability to stand back and look at it from a broader perspective and not get too close to it but then you’ve got to start to bring in great people that will build the bigger business for you so the single entrepreneur can’t do it all themselves but there is a huge transition. I mean I went from you know, start-up entrepreneur to a more mature round CEO and you know, over a period of time that was perhaps as challenging as starting the business in the first place.

Elliot Moss
Stay with me for more from Martyn, my Business Shaper today. Time for some music, here is Dr John with a cracker, it’s Right Place Wrong Time.

Dr John with Right Place Wrong Time. We’ve talked about this transition. The biggest transition obviously that happened for you was that you sold the business. Did you feel ready to sell it? I mean what were the imperatives driving you right then or do you still, as I look at you even now, you are a bit wistful. Do you kind of think now, maybe I should have held on a bit longer?

Martyn Dawes
I think business, you know, like a lot of things in life, it’s not a perfect scenario, there’s no such thing as a perfect scenario so when we were raising money we were very fortunate it was late ’99 and Coffee Nation needed a lot of money to get it going so we could buy the assets and roll out and get going quickly. So we were very fortunate we were able to secure four million pounds of private equity investment at a time when, you know, pretty much the world was focussed on Internet start-ups, the first dotcom boom which meant that we could move on it quickly. Along with part of that deal, the deal conditions was that there would be an exit and that was intended to be within 6 or 7 years so I knew that that was built-in, I couldn’t avoid that so it was really part of the landscape everybody did very well from it and yeah of course I think in some ways I would have liked to have carried on with it but it’s great that it carried on successfully and I wouldn’t be where I am now if I had not, you know, done that deal.

Elliot Moss
But those three bits, the creation of the idea, the scaling it up and then the money. Which of those three was the most exhilarating as you look back?

Martyn Dawes
It’s funny I look back and I think the… I remember sort of ’99/2000 and I remember thinking ‘My God this is absolutely living the dream’ you know, we were, you know it was a tiny business, it was all ahead of us, it was very exciting, we got large retailers saying yes we’d like to work with you and somebody said to me, ‘you know it will never be this much fun again’ and I thought ‘no, no, no, you know when we are a much bigger business it will be twice as much fun’ but they were right. You know that early stage was so much fun. It was, you know the whole process of scaling the company was hugely rewarding and I think it’s… you know I hardly look back on a day where I think it felt like work, it was always great, you know a great experience.

Elliot Moss
And the money, once it was in the bank?

Martyn Dawes
The money’s great of course. It was part of being able to say ‘yep okay job done’. It, you know, it created a result. That was nice to have but I think I certainly found, myself and subsequently you know, talking to other entrepreneurs, I think the money and you know post-exit there is often a bit of a lull because you know, money in the bank, great but what next sort of thing?

Elliot Moss
Final chat coming up with Martyn and we will be talking about what next happened after Coffee Nation and indeed what’s going to happen now a few years later too. Plus we will be playing some music from Robert Glasper; that’s after the latest traffic and travel.

Robert Glasper with I Stand Alone and Martyn is with me, Martyn Dawes for just a few more minutes so I hope we are going to make the best use of it. So post the money, you’ve got money in the bank as you said and then the question is what next? You have moved into as you said, the coaching world a bit. What else… when you stopped and actually reflected and obviously it was as you said, job done. What was in your mind that you would do? Did you think, ‘I’m going to have another Coffee Nation’ or did you think ‘you know what it was fantastic but I’m done’?

Martyn Dawes
I think I was pretty tired at the time. It had been a long process. The exit process had been quite exhausting and at that time I just wanted to take some time to kick back a bit but then was keen to or at least I thought I was keen to go and do it all again. To be honest I did spend some time looking at various other businesses and potentially starting something from scratch but to be honest over time I think I worked out that actually I wanted a different approach to life. I love business, I thoroughly enjoyed it and still wanted to be active but didn’t necessarily want to commit another 10/15 years, long hours in quite the same way as I had done with Coffee Nation.

Elliot Moss
It strikes me that you weren’t proving a point you were merely doing something you always wanted to do and the reason I say that is that many people I meet here are kind of proving a point to somebody, whether it is themselves because there is some insecurity or whether it’s… there’s the father relationship, there’s the mother relationship, there’s the brother whose doing well or the sister whose doing well. Your motivation seems different?

Martyn Dawes
Actually my motivation to start the business and to make a mark was absolutely, it goes way way back, I was adopted so it was very much about, you know, I was different so it was kind of like proving myself for certain but I think you hit on a good point, I think what I realised over a period of time post-exit was that actually I have done that proving so I don’t need to do it again, you know, I felt sort of quite comfortable with that decision.

Elliot Moss
And being comfortable with that decision comes within yourself. Did that then mean you were liberated to say ‘well what do I really want to do’?

Martyn Dawes
Absolutely and I think that, you know to be honest, it’s different things for different people, horses for courses but you know I think I have seen some entrepreneurs that are piled back in to the same sector or they’ve acted perhaps a little irrationally and then regret it later and I think taking the time it gave me the space to reflect what I really wanted to do. I wanted to you know, spend more time with my family, I wanted to travel, I reconnected with some previous passions in life such as flying aeroplanes, I also joined the board of another company and then the mentoring of other entrepreneurs that sort of kind of happened by accident so yeah. So it was a gradual evolution really.

Elliot Moss
And that last part, the mentoring piece. There are some people who aren’t very good at it and there are some people who are. What makes you good at it do you think? Assuming that’s what people say about you Martyn. I am sure they do.

Martyn Dawes
Well yeah, I think the part of the process that led to the mentoring as well and it was I wrote a book, it’s called ‘Wake Up and Sell the Coffee’ and it was, a lot of people said you should, you know, write the story of building Coffee Nation and post-exit I thought, ‘oh we’ve done well’ but you know so many other entrepreneurs have done well you know, also. But then when I got out and I started reconnecting into the entrepreneurial eco system I saw a lot of people had made sort of similar mistakes or were still making the same mistakes that I had made at the start and I thought ‘hang on, I’ve got something to contribute here and share’ so I wrote the book, the book we well received and that was about telling the story of building the business but not in a sort of zero to hero anyone can do it kind of way. It was really sort of warts and all, this is what it’s like. If you are ambitious, if you are determined and you are serious about building a high growth business so from that the mentoring started to develop and I think the key thing is that you know, I went through the whole journey Elliot from a blank sheet of paper and an idea through pretty much, you know, most scenarios regardless of what the product or the sector is you know, it was recruiting, it was surviving, it was getting it to be profitable, it was raising money, it was dealing with people issues, it was dealing with customers you know, all the stuff that you know, growth companies have to deal with, positioning themselves, knowing what they are not about as well as what they are about and so on and developing as an individual and as a leader as well so that’s how it happened.

Elliot Moss
It’s been really good to talk to you and super insightful stuff too as well. Thank you so much. Just before I let you go you can’t dart off just yet; what’s your song choice and why have you chosen it?

Martyn Dawes
I chose The First Time Ever I Saw Your Face by Roberta Flack. I have been very fortunate in that I have been married twice in my life but both times to the same woman so we met when I was 23, we married a couple of years later and then separated a few years later after that but we got back together and just got married last year so this song was played as we walked down the aisle so it’s for Trudy and it’s a very special song.

Elliot Moss
That was The First Time Ever I Saw Your Face by Roberta Flack, the song choice of Martyn Dawes, my Business Shaper today and what a brilliant reason for it, it’s the first time I’ve heard that one, he remarried the same person, his fantastic wife. How brilliant was that. Someone I found really interesting because he was so focused on finding a good idea and he did and that became Coffee Nation. Understood the importance of knowing how to scale up a business, so critical when you go from start-up to scale up when you make that leap and Martyn has done that and then incredibly self-aware. Understood why he had become the entrepreneur and understood why actually for him having done it once it was enough. I think really authentic and good advice to think about if you are thinking about setting up your own business. Great stuff. Do join me again same time, same place, that’s next Saturday, for another cracker here on Jazz FM’s Jazz Shapers. In the meantime stay with us though because coming up next, its Nigel Williams.

Martyn Dawes, Founder & former CEO Coffee Nation & High Growth Business Mentor

Martyn Dawes is an entrepreneur and high-growth business mentor. He founded Coffee Nation in the late 1990s and quickly developed the business into the UK’s leading brand of takeaway coffee, sold from 600 locations across the UK. Coffee Nation has been ranked year after year as one of the UK’s fastest growing private companies, has been a recipient of the Sunday Times/Virgin Atlantic Fast Track Innovation Award and Martyn is an Ernst & Young Entrepreneur of the Year Award Winner for Consumer Products.

Martyn’s vision was to create a bold new market category in the rapidly growing coffee marketplace. Despite many telling him that he’d be squashed by Starbucks or that no one would pay for a coffee in a petrol station, he stuck by his vision and by 2006 over 1 million people per month were buying Coffee Nation. Since then the company has gone on to be sold successfully – once in 2008, and again in 2011 to Whitbread where it is now known as Costa Express, securing its place as a great British entrepreneurial success story.

Martyn now mentors and coaches CEOs, Founders and Boards of growth companies and larger organisations. He is a Non-Executive Director of his original consulting company, Coachmatch – now a high-growth company itself – which exists to increase the success and happiness of individuals and organisations, shaping companies for the next 100 years. He is also a keynote speaker at prestigious business events and is regularly invited to address entrepreneurial and corporate audiences.  Martyn’s book, ‘Wake Up & Sell the Coffee’ – published by Harriman House – has been ranked as one of the top six entrepreneurship titles of 2013 by The Centre for Entrepreneurs.

Martyn is a Board member of the Greater London Chapter of the global Young Presidents Organisation (www.ypo.org) having previously served as Chairman and Education Chair.

Listen live at 9am Saturday.

“It was a gradual process… lots of experimenting, and lots and lots and lots of failures.”

“I think nine out of 10 businesses that become successful achieve their success through doing something different to what they started out doing.”

“It got a little scary because I was getting awfully close to running out of money.”

“There were many times I got close to thinking ‘am I flogging a dead horse here?'”

“I went from start-up entrepreneur to a more mature CEO and that was perhaps as challenging as starting the business in the first place.”

“I tried everything to sell more cups of coffee. I think the most daft one was a free suasage roll.”

“You know, I hardly look back on a day where I think it felt like work.”

“Post-exit there is often a bit of a lull because, you know, money in the bank. Great, but what next?”

“I have seen many successful businesses get to a certain point but then are blocked from further progress because of the limitations of the founder.”