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With Metro Bank, Vernon Hill II had an ambition to bring a thriving consumerfocused brand to Britain’s stale banking sector. Given it now has 780,000 customer accounts and its share price has increased 40% since its IPO in March, it seems he’s accomplished his mission

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12/09/2016 17:20 25/08/2016 15:15


THE ELITE Interview

vernon hill ii We speak to Vernon Hill II, founder of Metro Bank, about creating the first new bank to hit British high streets in nearly 150 years



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CONTENTS 10.16 49

Retail’s red pill After the Pokémon GO craze, can augmented reality have a lasting impact on retail?


the smart hire

What’s the big idea of using big data in hiring?


The sea change The rise of CEO

activism has changed what’s expected of the entrepreneurs of the future

issue 40 OCTOBER 16

REGULARS 09 10 15 82

From the editor Upfront The big idea The crunch

columns 17 Jacqueline Gold 29 Mark Pearson 31 Alice Bentinck




bangkok is booming Given that startups are flocking

to Bangkok, Thailand’s capital is proving to be a lot more than a holiday resort


Queer as folk

Her has moved beyond dating and is now building a safe digital community for LGBT women


getting Debt Should startups follow Uber’s

example and use debt financing?


The home of the future 60 years after the first smart

home launched, are people finally ready to live like the Jetsons?


braced for a breach Protect your startup from cyber criminals


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12/09/2016 17:33

FROM THE EDITOR EDITORIAL Josh Russell – Acting Editor Maria Barr – Acting Web Editor Eric Johansson – Feature Writer DESIGN/PRODUCTION Leona Connor – Head Designer Jenny Allen – Junior Designer Dan Lecount – Web Development Manager SALES Gemma Campion – Sales Manager Jake Grinnell – Account Manager Kenny Balli – Account Manager MARKETING David Thomas – Group Marketing Manager Mark Walker – Marketing Assistant CIRCULATION Paul Kirby – Circulation & Data Manager ACCOUNTS Sally Stoker – Finance Manager Colin Munday – Management Accountant ADMINISTRATION Laura Smee – Administrator DIRECTOR Scott English – Managing Director Circulation/subscription UK £18, Europe £38, Rest of World £60 Elite Business Magazine is published four times a year by CE Media Solutions Limited, 4th Floor, Victoria House, Victoria Road, Chelmsford, CM1 1JR Copyright 2016. All rights reserved No part of Elite Business may be reproduced, stored in a retrieval system or transmitted in any form or by any means, without the prior written consent of the editor. Elite Business magazine will make every effort to return picture material, but this is at the owner’s risk. Due to the nature of the printing process, images can be subject to a variation of up to 15%, therefore CE Media Limited cannot be held responsible for such variation.

Ripping up the rule book O

ne of the reasons I’ve spent so many years covering startups is that I’m a big fan of iconoclasts and innovators. And if there’s one type of person prepared to rip up the rule book and start again, it’s entrepreneurs. Robyn Exton is a prime example. Not satisfied with the dating communities that were available to queer, bisexual and lesbian women, she created Her, an app that rewrote the rules on online romance for LGBT women by ditching the fast hook-ups and instead focusing on building a community. And Exton isn’t the only one turning things upside. This issue we also take a look at the CEOs speaking up and throwing their weight behind their

principles, whether that’s tech execs protesting against Trump or Salesforce’s Marc Benioff challenging legislation that would make it easier for states in the US to discriminate against LGBT people. But my award for iconoclasm has to go to our cover star Vernon Hill II. Bringing his model of a customerfocused bank to high-streets in the form of Metro Bank, he committed to toppling the old gods of British banking in the process and “killing every stupid bank rule” he could find. That should give you mavericks something to mull over. Josh Russell - Acting Editor


Emilie Sandy Fresh from bringing baby Fjola into the world, ace snapper Sandy has rejoined our ranks with a bang, providing some fantastic photos of this issue’s cover star Vernon Hill II.

Jacqueline Gold Ann Summers chief executive Jacqueline Gold famously reinvented the brand in the 1980s but she’s a believer that rebranding is something you should do constantly.

Alice Bentinck Having picked up a gong at the Investor Allstars 2016 Awards, it’s no surprise Bentinck is enthusiastic about Britain’s entrepreneurial spirit despite the results of the EU referendum.

Mark Pearson When he’s not tweeting about pumpkin spiced lattes, the founder of Fuel Ventures educates our readers on how to perfectly pitch a startup no matter what the circumstances


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Just Eat is feeling peckish

The investment rounds that rocked the startup community last quarter


$275m Series E

Ahead of London Food Tech Week kicking off on October 17, the Danish food delivery company has announced that it’s looking for five early-stage tech businesses. The chosen five will embark on a ten-week accelerator programme that will give them access to mentors, industry experts, venture capitalists and angel investors. Just Eat is no stranger to embracing new technology. It’s recently partnered with Starship Technologies to test drone deliveries and is teaming up

The food-delivery startup is quickly reaching unicorn status after taking away an impressive $275m in its latest founding round.


£50m Series c With the private equity giant KKR leading its latest funding round, the Cambridge cybersecurity startup is now valued at over £309m.

A £220m boost for tech

Notonthehighstreet. com

It’s time to strap in for British tech businesses

£21m Series E

$22.5m Series B Having closed its Series B round, the luxury restaurant-booking app is now set to push into 29 cities worldwide.


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Words: Eric johansson and maria Barr

With the company’s latest funding round, Elite Business cover star Holly Tucker is now aiming to expand the retail platform internationally.


with Amazon to give people the opportunity to re-order their favourite meals using the retailer’s new voicecontrolled Echo speaker. The company is now looking for early-stage businesses that can bring “a smart idea with amazing potential and the hunger to make it work”. If you’re a tech startup with an eye on a bigger slice of the pie, get yourself over to Just Eat’s website and apply.

With the Conservative party gathered for their annual conference, recently appointed chancellor of the exchequer Philip Hammond had both good and bad news. He warned that the country should brace itself for a “rollercoaster ride” but, in preparation, he’s announced plans to bolster Britain’s tech sector with a £220m package to ensure it remains competitive. The funds will help academic institutions, SMEs as well as government-backed initiatives turn their research into marketable ventures. Commenting on the plans, Hammond said: “This is a once-in-a-generation

opportunity for Britain to cement its role as a leader in tech innovation.” Given the talent of Tech City, it’s safe to say this fresh injection will help ensure the birth of the UK’s next unicorn. Watch out Silicon Valley.


07/10/2016 18:16

UPFRONT Musk’s Mars mission

Coming up

Space X could start populating the red planet in the next ten years Given that Rogue One – A Star Wars Story is bound to break box-office records this Christmas, it’s safe to say space travel is definitely trending. And now, adventurers may soon get to explore the final frontier themselves. Speaking at the 67th annual International Astronautical Congress in Guadaljara, Mexico, Elon Musk revealed that he hopes to start populating Mars within the next decade. The CEO and founder of Space X, a space transport company, believes that new technology – including reusable rockets and space ships that can make return trips to Earth – will enable him to establishing a colony on the red planet. The interplanetary journey will cost around £155,500 per person and take roughly three months, time deep space explorers can spend the

Literary Corner

October 14 Scottish EDGE Pitch Workshop Entrepreneurial Village, RBS, Gogarburn House G, Edinburgh, EH12 9BS

time bonding with other travellers in the on-board pizza shops. But while Musk was adamant that travellers will have “a great time”, it won’t all be fun and zero-G games. “The first journey will be very dangerous and the risk of fatality will be very high,” warned Musk. “Are you prepared to die? Then you are a candidate.” So let’s hope making history, not to mention the pizza, is worth it.

by Antonio Garcia Martinez

Ebury press Out now £12.99

October 27 Thames Valley Expo Green Park Conference Centre, 100 Longwater Avenue, Green Park, Reading, RG2 6GP November 1 BCC Global Business Network Live 2016 etc venues, 155 Bishopsgate, London, EC2M 3YD

Chaos Monkeys – inside the Silicon Valley money machine Imagine an irreverent chimpanzee driving a tank through the heart of Silicon Valley and you’ll get a good idea of the tone of Garcia Martinez’s autobiography. The former tech entrepreneur turned advisor for both Twitter and Facebook pulls no punches in this expose of the San Francisco startup scene. From his spending time on Goldman Sach’s trading floor in the early days to launching his own startup AdGrok through Y Combinator, the famous accelerator, and getting acquired by Twitter, the author shares every insight in a hugely entertaining way, dissecting the

October 21 Just Eat Accelerator Pitching Breakfasts Just Eat, Fleet Place House, Fleet Place, London, EC4M 7RF

backroom deals taking place in the holy land of tech every day. With a mixture of linguistic somersaults and profanities reminiscent of The Wolf of Wall Street, Garcia Martinez delivers a string of iconoclastic and literary knockout combos that are hard to pull away from. The book is full of provocative phrases like likening a simultaneous deal with both Facebook and Twitter to “trying to engineer simultaneous orgasm between a premature ejaculator and a frigid woman”. With its pure bravado and insights, Chaos Monkeys is a must-read for every budding tech entrepreneur worth his salt.

November 9 The Finance Professional Show Olympia, Hammersmith Rd, London W14 8UX November 10-11 The Scottish Business Exhibition SECC, Exhibition Way, Glasgow, G3 8YW November 16 - 17 Integrated Live ExCeL London, One Western Gateway, Royal Victoria Dock, London, E16 1XL A full event listing is available on our website: events


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There’s a lot of bad feeling about immigration and not a lot of good politics to counter it. The UK is a magnet for talent and that has a positive impact on our economy. The idea of shutting down our borders to satisfy the emotional insecurities of Essex housewives is completely backwards. The xenophobia embodied by UKIP ought to make our government nervous. Hopefully we’ll create a better visa system for former colonies, which may rebalance some of the losses of EU talent. Douglas Bell, founder, London Innovators

migration matters Businesses debate two politically charged hot potatoes: immigration and finding the right talent in a post-Brexit world Foreign secretary Boris Johnson recently caused a stir by stating that British businesses must stop “mainlining” immigrants like a “drug” while failing to invest in training and skills for British workers. And at the recent Conservative party conference, home secretary Amber Rudd outlined the government’s plans to take a far tougher stance on immigration, an approach other parties have branded “toxic”. Immigration is undoubtedly a hot topic but what do British SMEs think about migrant labour – is migration vital in plugging the skills gap or should UK-based businesses invest more in British talent?

I’ve regarded Britain as my home for nearly two decades but after Brexit, I was suddenly aware of the fact that I may no longer be welcome in the country. About 40% of our staff are EU migrants and that’s because they’re some of the most talented candidates. Results of the referendum saw many of our EU employees ask: ‘Do they really want us out?’ In my opinion, long may immigration continue. Like any other operation worth its salt, we employ on merit. Saurav Chopra, CEO and cofounder, Perkbox

There are more vacancies than there are people to take the jobs in a lot of sectors of our economy. To help British businesses and public services remain well staffed, the government needs a coherent approach to skills and immigration. We think this should address employability skills within UK education, promote apprenticeships, give quality careers guidance and create better routes into training for growth sectors as well as introducing immigration policies that reflect immediate labour market needs.

During my 20 years in immigration law, industries like engineering, IT, construction and hospitality have always sourced overseas skills to supplement their UK workforce. Migrant workers employed in these sectors are professionals with specific skills and qualifications that organisations depend upon to thrive. In the meantime before Article 50 is triggered, existing qualified employees can make their future more secure by applying for a registration certificate, permanent residence or British nationality.

Kevin Green, chief executive, REC

Jonathan Beech, managing director, Migrate UK


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07/10/2016 18:17

UPFRONT 500,000 businesses grow on Instagram

What’s the word?

“That’s called business, by the way”

The company just passed a major milestone

Presidential candidate Donald Trump responds to Hilary Clinton’s claim that he had previously rooted for the housing market to collapse

ArthurStock /

Sterling falls as Brexit date comes closer A picture may be worth a thousand words but Instagram is worth billions of pounds. As the photo-sharing platform grows in popularity, it’s made serious strides in turning its members’ snap-happy behaviour into cash. Last year the company launched an marketing platform and it now has over 500,000 advertisers. “We’re particularly proud that so many of the advertisers using our platform are smaller brands who are growing their businesses with us,” said Amy Cole, head of brand development EMEA at Instagram. Given that half of the company’s users follow a business, it’s safe to say startups should really consider how they can take advantage of the platform’s success.

“Believing you are either too big, or too small, for a successful attack could cost your business dearly”

Pound slumps to three-year low

The day after Theresa May announced she would trigger Article 50 by the end of March, the pound fell by 1%. Meanwhile, the news that the official negotiations for the UK to leave the EU would begin in the first quarter of 2017 shocked the markets and plunged the sterling to a three-year low against the euro. The prime minister delivered the news as the Conservative annual conference kicked off in Birmingham at the beginning of October. This means the UK could be out of the EU by the middle of 2019. With May seemingly pushing for a hard Brexit, it’s safe to say we’re in for some uncertain times.

Windsor Holden, head of forecasting & consultancy at Juniper Research in response to research showing that three -uarters of Britain’s SMEs feel they are currently secure from a cyber attack

“He wobbles a bit” Fuminori Kataoka, chief design engineer at Kirobo Mini on the company’s new childlike robot that will help keep lonely drivers in Japan company

Find us on Twitter @elitebizmag


Successful crowdfunding campaigns that have closed in the last quarter


Mindful Chef


London Doctors Clinic





9.34% Equity

11.76% EQuity

2.39% Equity

20.74% Equity

Its the crowdfunding platform that’s helped fund countless startups. And in July Crowdcube led by example by smashing its £5m target when it raised £6,696,160 on, what else, Crowdcube.

Securing the backing from sports stars like Andy Murray, Victoria Pendleton and Will Greenwood helped healthy eating brand Mindful Chef overfund by 250% and finish weeks early in tip-top shape.

Revolut turned to crowdfunding to contribute over £1m to its series A fundraising round, which saw it receive £7.75m. The round saw Revolut valued at £42m. Yet it was £20,000 off from reaching its £1.03m target.

The company got a clean bill of health from investors after it successfully beat its target by £200,000. The injection of funds will go towards London Doctors Clinic’s infrastructure, plus sales and marketing costs.


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BRIGHTER BUSINESS REPORT Download your copy today at

POST-BREXIT BUSINESS INSIGHTS TO HELP YOU BOOST YOUR BUSINESS Our FREE Brighter Business Report is now available. We’ve interviewed over 500 business decision makers to gather key insights into the big issues and challenges facing todays businesses. There’s a focus on confidence post-Brexit, practical guidance on tackling core issues, and what successful SME owners are doing to stay ahead.

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07/10/2016 13/09/2016 11:48 14:55


VIRTUAL VIEWINGS Keypla is using smart analytics and immersive video to help property companies get better quality leads BY MARIA BARR


o entice people to VIEW A PROPERTY, most estate agents rely on flattering photos and a flair for copywriting – which usually amounts to peppering descriptions with words like ‘charming’ or ‘well-appointed’. Too often, finding suitable properties and booking a viewing is laborious and misleading. But London-based startup Keypla is hoping to change all that using immersive 360° video that takes people on a virtual tour inside any for-sale property, right from the comfort of their sofa. It says, this will make things more efficient for estate agents, minimising viewings that turn out to be fruitless because the offline reality didn’t match its online profile. Some property companies have been offering immersive tours already but the startup claims that the cost of the hardware has come down to a point that it’s now much more affordable.

What’s more, its algorithm claims to be able to understand people’s viewing preferences in a sophisticated way and make data-backed recommendations based on their viewing history. Altogether, this could be a much-needed step forward for an industry that has tended to lag behind when it comes to adopting new technology. Founded in April 2016 by Kingsley Advani and Rafael Nunes, the startup says it will power 12,000 listings this year and its end goal is to build a 360° profile of every single house or flat on sale in the UK. But property is just the start: its founders see other applications for Keypla’s data analytics and virtual reality technology and the fact that they’re looking for a head of machine learning is a further sign of the startup’s grand ambitions. Having been chosen to be one of the 21 early-stage companies to present at tech accelerator Entrepreneur First’s Demo Day at Facebook’s London HQ earlier this month, it seems doors are opening fast for this startup.


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Jacqueline gold ceo, ann summers

brands must embrace constant change attitudes change; you have to adapt to stay relevant. Because of this, successful rebranding requires you to understand your customer and touch base with them regularly. It’s a big mistake – not to mention hugely egotistical – to think you will always be representative of your customer and that what you want is what they want. Our target demographic has shifted over the years and our main audience tends to be younger. These women are sexually confident, digitally aware and fashion-conscious. To connect with them, we aim to be an extension of their lifestyle. We look at what’s on the catwalks, read what they read, watch the TV shows they watch and work with celebrities they care about. Partnerships with other brands like ASOS and House of Fraser have also gone a long way towards changing perceptions of our brand. Understanding and listening to our customers in this way has spurred us on to be bolder or, at times, dial things back. In 2012, we launched a range of products to tie in with the 50 Shades of Grey franchise – a move that brought people who weren’t our typical customer into our shops. But while we don’t place too many restraints on what we do, we never want to be deliberately provocative. you have So when women told us to adapt they thought our 50 Shades window displays weren’t to stay quite hitting the mark, we relevant readjusted the campaign. But while you are changing, make sure you don’t lose sense of your identity. We never want to lose our edge entirely. There is such a thing as being too acceptable.

She may be known for casting off Ann Summers’ ‘raincoat brigade’ image and repositioning it as a female institution but Jacqueline Gold believes rebranding should be evolutionary rather than revolutionary


he 1980s were undeniably stuffy. Things were changing fast though and as women became increasingly empowered they were looking for ways to dial up the temperature in the bedroom. The trouble was they were too embarrassed to venture into high-street sex shops. I knew we had to make some big changes if we were going to start appealing to women so I closed our existing high street shops and launched a more female-friendly partyplanning model for the business. When we were ready to return to the high street, everything from the shop’s colour palette to the language we used was designed to put women at ease. This wasn’t just a cosmetic change. But that was by no means the only time we’ve changed our positioning. What I’ve learned is that rebranding isn’t something you do every few years: it’s about evolution, not revolution. I’ve seen how quickly trends and social


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As a Hermes Business Account holder we benefit from a range of benefits including free van collection service. Recent research from Mintel has shown just how health and appearance-conscious consumers continue to drive the sports nutrition industry, with sales jumping by 27% during the past two years. Significant industry growth is fantastic news for The Good Health Company, based in County Fermanagh in Northern Ireland. For more than 18 years, the organisation provided a wholesale service, before deciding to sell products directly from e-commerce platforms such as eBay in 2013, under the name Protein Warehouse.

We caught up with Owner Mark Armstrong and asked him to provide an insight into the inner workings of the company.

£66m on sports nutrition food and drink products last year, which was up by 27% from 2013 when sales stood at around £52m. That is quite a big jump!

Hi Mark. First of all, would you mind providing us with an overview of your business? Sure. The Good Health Company sells the very best products from right across the sports nutrition industry. Our substantial product range includes whey protein, mass gainers, diet whey protein, creatine and pre-workouts supplements, as well as recovery and energy drinks. We aim to offer quality products at extremely competitive pricing, all backed up with exceptional customer service. Three years ago we decided to start to sell online. At the moment we sell approximately 250 to 300 products a day, the majority of which go to the UK mainland. Our busiest time of the week is on a Sunday between 5pm and 9pm, when people are at home relaxing and browsing the web. This means we have to be up at 5am on Monday to start processing the orders, but it is all worth it!

Despite that growth you cannot rest on your laurels, or you will get left behind. We have a team of employees at The Good Health Company that are determined, ambitious and dedicated to hitting targets and providing the best service customer service possible.

It sounds like a very successful operation. What is your secret? First of all, the sports nutrition industry is one of the few consistently growing markets in the UK. Consumers spent more than

“As a Hermes Business Account holder we also receive a range of benefits including a free van collection service each weekday at 11am, as well as a flexible pricing scale.” Customer service is clearly important to your business. As an e-tailer, how do you prioritise that? It is important to reply to any online enquiries as quickly and comprehensively as possible - not only to provide the best service possible, but also to avoid lost sales. Our customer satisfaction score on eBay stands at 99.9%, something we are very proud of. In addition, it’s really important to choose the right delivery partner, as they deliver

and interact with the customer! Hermes handles 95% of our deliveries. Why did you choose to work with Hermes? Hermes’ range of delivery solutions are both reliable and cost effective, even if we opt for a signature delivery, which often occurs when delivering to flats or a business address. As a Hermes Business Account holder we also receive a range of benefits including a free van collection service each weekday at 11am, as well as a flexible pricing scale. We have a dedicated account manager, Nathan, who is always on the end of the phone when needed, whilst the customer service team is always on hand to help. Will you maintain this relationship with Hermes as your business continues to grow? Absolutely. As an SME we are suited to a Hermes Business Account, but as the company grows in size (and we have some exciting developments in the pipeline) we have the option of building that partnership. Over the last year we have witnessed how Hermes has invested in its network and technology, creating an overall better brand experience for online shoppers. This is great news for us! OCTOBER 2016 ELITEBUSINESSMAGAZINE.CO.UK

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Home away from Home In launch Inglove home Swap, Debbie wosskow haSbecome one of the uKSharIng economy’ S brIghte St Succe SS StorIeS, go Ing from wInnIngyoung enterpr ISe at 15 toIvIng recean obe from the Queen

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Home away from Home In launch Inglove home Swap, Debbie wosskow haSbecome one of the uKSharIng economy’ S brIghte St Succe SS StorIeS, go Ing from wInnIngyoung enterpr ISe at 15 toIvIng recean obe from the Queen

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BANGKOK MAY NOT SEEM like the most obvious place to start a business. In the past decade alone, there have been two coups, seven prime ministers, a deadly flood, power outages and regular protests. And yet many entrepreneurs are flocking to the capital – not just for its late night curries and thumping nightclubs but as a place to start businesses and set up a south-east Asian basecamp. Entrepreneurs who have been working and living in the city for years are largely unfazed and have learned to just get on with things. This upsurge in startup activity is most evident at the city’s packedout events, such as Startup Week Bangkok, which offers five days of free events, and Startup Thailand, an extravaganza hosted by the Science and Technology Ministry. There’s also plethora of more informal networking events that bring people together for drinks. Travis Bennett, founder of Studio Digita, the digital agency, has been based in Bangkok since 2009 and has seen the number of events and networking events swell relatively recently. “Five years ago, Bangkok’s startup scene was in its infancy,” he says. “It’s slowly been gaining momentum. While in the past I struggled to find events to attend, now there are so many that I struggle to make it to even a fraction of them.”




ba ngko k

g Given Bangkok is such a sprawling city with no real centre, startup activity isn’t concentrated in one spot like it is in London’s Tech City or Silicon Valley. Instead, you’ll find budding entrepreneurs and freelancers embracing the gig economy dotted around the city’s co-working spaces and cafes, sharing ideas and making connections. That said, if you’re hopping off the plane and want to get a sense of the startup scene, make a beeline for the Sathorn district, especially Sukhumvit Road, Bennett recommends. And once you spend a bit of time in the city, it starts to feel much smaller. “The expat and startup community is actually quite close knit,” Bennett adds. “If you spend enough time here you’ll get to know a huge number of people.” Besides its events calendar, the presence of co-working spaces is another good indication of a thriving startup community – and there are plenty in Bangkok. At HUBBA – one of the first in the city – and hipster-friendly Growth City & Co, a diverse mix of expats and locals can be seen peering at their MacBooks and lunching together on communal tables. Nithipont Thaiyanurak, founder of WashBox24, the laundry locker service, is a regular. “We’re part of a community of startups and we’ll often meet at HUBBA to exchange 24

ideas,” he says. “It’s just the place to meet like-minded people.” The fact that co-working spaces are popping up is not a huge surprise. In fact, it’s just the modern day equivalent of Thais setting up passion projects and small-scale businesses from their kitchen table or pitching up on the roadside to sell homemade snacks. Thais have a get-up-andgo attitude and a long tradition of starting their own ventures. But the upsurge in startups is fairly recent, according to Thaiyanurak. “Things have really started to pick up in the last couple of years,” he says. “A couple of things came together at the same time.” First, the cost of starting up is lower than in neighbouring cities like Singapore and Hong Kong, as is the cost of living – many expats and entrepreneurs live in comfortable condos. While demand for office space is hotting up, new developments are being built and cheap rentals are still up for grabs. Labour is affordable and the transport network is more developed than in up-and-coming hotspots like Laos and Vietnam while still being reasonably priced. According to CBRE, the consulting firm, Bangkok ranks 109th among 126 in a league table looking at which cities are the most costly to do business in. Bangkok appeals because it’s got the right balance between being relatively affordable while also being

Things really started to pick up in the last couple of years Nithipont Thaiyanurak, founder, WashBox24

developed enough to cater to the business community. There are also plenty of smartphone-carrying, e-commerce-using urbanites for whom shopping online and on mobile is second nature. This is a country where 50% of all online purchases are done via mobile devices and smartphone penetration is predicted to reach 90% by 2018. Hop on any train or visit one of the city’s sprawling shopping malls and one thing becomes clear: young people love their devices. They communicate on them, shop on them and, of course, take copious numbers of selfies on them. “It feels like everyone here has a smartphone, which means they’re connected and always online,” Bennet says. The fact Thais are highly engaged on social media also makes it possible for startups to build an audience quickly. “Everyone’s on Facebook and one of our malls has been named the most Instagrammed place in the world,” he says. “This is contributing to a thriving digital ecosystem.” Bennett puts the growth spurt in e-commerce businesses down to the arrival of Rocket Internet, the German startup accelerator, which entered the scene with Lazada and Zalora. “Rocket’s entry into Thailand changed everything, “ he says. Soon after the two


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EliteBusinessMagazine1016.indd 1 07/10/2016 11:25

ba ngko k

e-commerce platforms took off, Thais were embracing online shopping and new entrants started flooding the market, often with a local twist. But there’s still plenty of room, especially for companies that have come about to serve the needs of an increasingly affluent yet time poor population, such as Ginja, the food delivery business, and Wishbeer, the online craft beer ordering service. And once they’ve built up an audience in Thailand, the city’s prime geographical location means entrepreneurs in Bangkok aren’t limited to the domestic market. They also have access to booming economies throughout Asia like Vietnam, Laos and Cambodia, where the middle classes are growing in numbers and purchasing power. Additionally, that flow of people and ideas goes both ways, creating a melting pot of cultures, skill sets and ideas. “Bangkok offers something different because you have people from so many different walks of life,” he says. “When we were first starting up in Asia, we looked at Bangkok, Singapore and Jakarta. But we ended up choosing Bangkok because it has a good mix of people and a blend of suburban Travis Bennett, founder, Studio Digita and city life.” Bangkok’s ability to look outwards is also helping many Ko Samui, Phuket or other Asian countries. startups overcome the fact that “The great thing about Thailand is you’re never raising finance within Thailand far from a stunning beach,” says Bart Medici, can be difficult. Although the city startup advisor and founder of Bangkok isn’t exactly awash with angel Entrepreneurs, the meetup group. “I love going investors, there are plenty of to the beach at the weekends; it’s so easy to venture capitalists based nearby in reach from the city. Bangkok can offer a great Japan, Hong Kong and Singapore. work-life balance.” And while the proximity Throwing more funding into the of sandy beaches might not seem like the most pot, Thai banks have established obvious factor when it comes to judging a their own fintech units and there’s city’s startup-friendliness, it does help attract a lots of support from the likes of diverse talent pool. TechGrind Incubator, an incubator However, starting up in Asia’s second biggest for tech startups, and MSeed, city isn’t without its challenges. The red tape Thailand’s first gaming accelerator, can be off-putting, especially for a foreigner which mentors gaming startups looking to start up in the capital. But with the and helps them get in front of right local advisor, it doesn’t need to be an international funders. issue. “There are lots of laws and regulations But beyond its networking about foreigners doing business here,” events, finance injections and Bennett advises. “You either need to let the smartphone-savvy shoppers, Thai partner have control or create a board Bangkok is also favoured for its of investment company. Most governmental ability to offer entrepreneurs processes are in Thai, so you’ll need a local and workers a healthier workagent or law firm to help you navigate.” life balance, not to mention the The government, for its part, has made option to take weekend breaks in supporting startups a key part of its agenda.

It feels like everyone here has a smartphone, which means they’re connected and always online


And while not everyone feels they’ve seen the benefit yet, its commitment to improving public transport and making high-speed internet a reality for more people throughout Thailand will make it easier for businesses across the country to come together. It is also supporting startup events, offering tax breaks and taking an outward-looking approach, having just teamed up with Japan to encourage startups in both nations to cooperate. Whether the government can take credit or not, something’s clearly going right. There are plenty of companies setting up in the capital that are proving its entrepreneurial credentials. Just look up on the city’s rooftops, where EnerGaia, the startup founded by Saumil Shah, is turning otherwise unusable spaces into urban farms with the aim of providing people with fresh, sustainable produce. “I came to Bangkok nine years ago and wanted to test my idea around growing microalgae in closed tanks to make biofuel,” he says. “The low barrier costs helped me start up on a modest budget.” EnerGaia is one of the capital’s success stories. And no doubt there will be plenty more to come.


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LET’S GET BACK TO BUSINESS Our experts help businesses secure the right funding for them. Find out how they can help yours. UK businesses are waiting over 38 days for payment* - starving them of working capital and funding for growth. If a summer of unexpected events has put a strain on your cashflow, we want to help you get back to what you do best – running a successful enterprise. Our tailored funding helps businesses make the most of their working capital, from the invoices they issue, to the assets they own and their international trading arrangements. Call one of our experts today to help free up your cashflow. And for more information on some key business issues this autumn, download our guide at *Bibby Financial Services SME Confidence Tracker Q3 2016

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EliteBusinessMagazine1016.indd 1

07/10/2016 12:17

Mark Pearson co-founder, Fuel Ventures

Creating the perfect investment deck

Any enterprise hoping to stand out from the crowd and attract investment needs to tick a number of boxes 6 A closer look at your product You should talk about your intellectual property and elaborate on the elements that make your business different, whether it’s a bespoke ordering system or your prices. I desperately want to believe in the business featured in every deck I open, so convince me. 7 Your business model How do you make money? You need to communicate your monetisation model and show that it’s reliable and scalable. 8 Marketing and growth strategy Show us how your business can scale up and give us a sense of the strategy you’ll use to achieve this and reach your customers.


reating a convincing and thorough investment proposal – or a deck, as they’re often called – plays a key factor in a business’ ability to raise finance. You have to grab and hold people’s attention in a matter of minutes. So rather than putting together an epic document, it’s best to edit your deck down to these ten slides.

number of times I’ve encountered teams who’ve embellished on their backgrounds and expertise.

1 The elevator pitch This is where, in as few word as possible, I want to understand what your business does. Wishy-washy language or jargon-laced explanations won’t impress. Don’t tell me that you’re creating a paradigm shift – there’s no quicker way to turn an investor off than to over-intellectualise what you do.

4 The market You cannot sell to everyone, so you need to define your market for us as well as outline the challenges. What is the opportunity and who is your biggest competition?

2 Your team Introduce your core team with top level information but be totally truthful. I’ve lost count of the

3 Traction My advice when I’m asked about starting companies is always the same: just get started. Prove the model and prove that people will care.

5 What problem do you solve? Make it clear to potential investors why you exist in the first place. It might be that there’s more of an opportunity to be grasped rather than a problem to be solved. But either way, what drove you to create the business?

9 Financials and forecasts Talk about incoming and outgoing expenses. There’s no easily digestible way to do this, so add lines into a table and show your recent, current and forecasted financial figures based on everything you make and spend as a business. We need to identify which areas our investment and time could make an impact. 10 Your investment ask This is when you reveal what you want from us. Don’t skirt around it but instead be frank about how much money or time you’re looking for so we can make an informed decision. One last word of advice: save two versions of your final deck, one as a PowerPoint (or whichever programme you’re using) and one as a PDF. You don’t want to fall at the last hurdle because of formatting issues. OCTOBER 2016 ELITEBUSINESSMAGAZINE.CO.UK

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07/10/2016 19:22

Alice Bentinck co-founder, Entrepreneur First

Forget the Brexit paralysis

Despite a jittery summer after the EU referendum, the appetite for startup investment in the UK remains huge


t is still impossible to comment on the UK startup scene without mentioning Brexit. However, after a summer of stunned disbelief amongst business leaders and Remain advocates, the start of autumn represents a new leaf in more ways than one. There is no need for pessimism in the UK startup scene and here’s why. Socioeconomic volatility is the norm With the Brexit vote we’ve entered a period of uncertainty. However, let’s not forget that companies constantly have to deal with socioeconomic volatility and that well-structured, agile businesses are able to weather these storms. In the last 16 years alone, we’ve experienced the dotcom bubble, numerous wars and the 2007 global financial crisis. In comparison, the Brexit vote is seismic – but manageable. For some, a crisis can even turn into an opportunity. Take the fintech sector: with financial organisations entering a period of big change, innovative startups have the opportunity to move in and take their place. Entrepreneurs are by nature optimistic, quick acting and able to adapt to changing landscapes. Those that are willing enough succeed.

hubs. However, they forget a number of things: the UK benefits from being a large English-speaking market full of early adopters with strong links to Asia and the US, especially Silicon Valley. It has first-class technical universities whose graduates flock to London to be part of a well-connected and supportive network of industry professionals, mentors, VCs and fellow entrepreneurs. London’s Tech City offers fantastic facilities for entrepreneurs who need help with any stage of their business – be it in terms of training, mentoring or money. Investors are still keen to discover the next big thing The UK tech sector has seen £7.5bn

in investment since 2010 and in the first six months of 2016 alone London raised £1.9bn. Unsurprisingly, there has been a wobble over the summer following the referendum but that is only natural. Business and consumer confidence is up and investors are opening their cheque books again for ventures that show growth potential. News of a number of recent multimillion pound funding announcements for UK businesses such as Revolut, MarketInvoice and WeSwap is also a sign that investor thirst for startups with great potential remains strong. There is no denying that there’s change afoot in the UK startup scene and the landscape is likely to evolve. The world of business is always challenging and it’s never easy. However, you have to see opportunities in those challenges and adapt. In the end, one thing is certain: startups with the right product, people, attitude and growth plans will still attract investment and succeed.

London is a strong startup capital Some people in the industry seem worried there will be a mass exodus of innovative startups to other European


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H er

QUEER folk

When Robyn Exton launched the app Her to improve the dating experience for gay women, she never expected how it would change the lives of millions of people around the globe BY Eric Johansson

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He r


obyn Exton was on a mission. Outfitted with pink fluorescent tights, a white vest and a holster around her waist with a bottle of liquor dangling from each hip, she dashed between groups of women in nightclubs. Making them lean in to hear her over the roar of the music, Exton said: “I have a new app called Dattch and if you sign up now you’ll get a free shot of tequila.” Short for “date catch”, Dattch was the pre-cursor to Her, the dating app for queer, bisexual and gay women that is now matching people across the globe. Much of that success can be attributed to Exton’s nightly escapades in 2013, trading However, the idea to launch a dating shots for signups. “We got our first app didn’t come to her until a Sunday 1,000 people that way,” she says. she spent at the pub. “My friend If you’re shocked by her no muss, had just split up with her girlfriend,” no fuss approach to marketing, keep explains Exton. Wanting to get back in mind that Exton is far from your into the dating game, Exton’s friend average tech entrepreneur. “You asked her what dating sites she was hear a lot from founders who say using. As the conversation progressed, they’ve always run a business or it became clear that the range of quality that entrepreneurship runs in their dating sites and apps for lesbians wasn’t families – that’s not me at all,” she just limited; it was non-existent. says. In fact, up until a few years While straight people swiped away ago, Exton worked at the marketing on Tinder and gay men matched on agency Calling Brands, which Grindr, there wasn’t an app designed bestowed her with her first peek for women who were attracted to behind the curtains of the dating women. “Queer women had no real industry. “One of my clients was options,” says Exton. Tired of seeing a dating business and I got really her friends make do with subpar excited about the sector,” says Exton. matchmaking communities, she set

out to improve gay women’s dreadful digital dating experiences. “I wanted to make something better and more relevant to women that would actually mean something to them,” she says. Her first step towards launching the app was to immerse herself in the London tech scene. “I started to attend events and become more involved,” she says. As a part of her efforts to sharpen her technological know-how, Exton signed up for an eight-week coding course at the General Assembly, the tech school. She also took on freelancers to supplement her own knowledge and help her out with early versions of the app. However, signing up techies doesn’t come cheap: Exton had to inject some serious capital in the business. In lieu of investors, she bootstrapped the startup by ploughing in £10,000 of her own savings, moving back in with her dad, taking an extra job at a pub and selling many of her possessions. But these sacrifices eventually paid off when the team finished the first version of Dattch. “I quit my job the day we submitted it to Apple,” she says. Her first infusion of real money came in March 2013 when Dattch joined Wayra, Telefónica’s startup accelerator. “The initial investment was really important to me because I could hire full-time team members,” she says. “That made a huge difference.” But the startup didn’t just benefit from the ¤40,000 awarded by Wayra: it also benefitted from joining a community of other startups. “You were all doing similar things, you built great friendships and there was a fantastic knowledge exchange,” she says. OCTOBER 2016 ELITEBUSINESSMAGAZINE.CO.UK

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H er

It became more of a way to connect with the wider community

Scaling up - HER.indd 3

Having secured funding and technological knowhow, Exton was left with the challenge of marketing the app, which is how she found herself frequenting London nightclubs slinging shots of tequila in exchange for signups. But this wasn’t the only trick she had up her sleeve. “We used to go to pride festivals where they use those gross porta-potties that always run out of toilet paper,” explains Exton. Not one to miss an opportunity when it presents itself, she simply stapled flyers on toilet paper rolls and handed them out in the queues. “Really glamorous stuff,” she laughs. However, while she now had some money and a full-time team, the dating app didn’t take off at first. “In the first six months, it had very little response, engagement and pick-up,” she said. The problem was that the app was very similar to the way male-oriented dating apps like Grindr worked, focusing on clear pictures, fast meet-up times, short interactions and making it easy to form quick judgements. “It’s the total opposite of the type of experience women are looking for,” says Exton. “They want to browse a lot more content, read more information and chat for a longer time before meeting up.” The team noticed something else too: women didn’t just use the app for dating. In fact, a lot of the users were in relationships and used it to find out what was happening on the gay scene. More often than not, people would sign up to discover local events, read news, meet new friends and get advice. Catering to the way members of the community were using Dattch, Exton’s team redesigned and relaunched the platform as Her, transforming it from a simple matchmaking app to something greater. “It became more of a way to connect with the wider community than just helping people meet up one-on-one,” says Exton. The rebrand coincided with Her’s series B round during which the app secured $1m funding from investors such as Alexis Ohanian, co-founder of Reddit, Garry Tan, co-founder of Posterous, and the British serial entrepreneur Michael Birch. About the same time, Her went live in the US and Exton was given the opportunity to pitch the

07/10/2016 18:04

He r

app at an American conference. “The reaction was phenomenal,” says Exton. “To be fair, I was pitching it at Lesbians Who Tech, so it couldn’t have been a more suitable group of people.” But it wasn’t just the venue: Americans seemed more switched on to the idea than Exton’s countrymen had been. “British people are really sceptical,” she says. “But the Americans were like ‘I can’t wait to download this’.” The overwhelmingly positive response combined with a desire to be close to its new American investors made deciding Her’s next step easy: the team decided to relocate to the US. So that’s how in the spring of 2015, Exton packed her bags and ventured across the pond. Having settled into the new headquarters in San Francisco, the expat and her team are now gearing up for the next stage. For starters, Exton plans to release a premium membership at the end of the autumn with new features. What those will be still remains to be seen but Her is not stopping there. Today, the app has over a million users and is available in the UK, the US, Canada, Brazil, Japan, Australia, Mexico, Thailand, Germany, South Africa and the Netherlands. But Exton plans to expand the business even further. “Next we’re focusing on growing internationally and building our community across the world,” she says.

I wanted to make something better and more relevant to women

When Exton does decide to grow the app, more women will be able to get access to a community that’s already changing the lives of thousands of people, something evidenced by the scores of positive stories Her’s users have shared with the company. “We have a wall full of them,” she says. Each story is a testament to the fact that Her is more than a hook-up tool; it’s become a way for gay women to feel accepted for who they are. “Sadly, a lot of people won’t get acceptance from their families, friends or communities,” says Exton. “But we can give them that by providing a community that understands them.” The first time she realised the impact the app was having on women’s lives was a few years ago. “A girl came up to me in a pub in London and said she’d been sleeping with her roommate,” says Exton. The girl explained to Exton that she hadn’t been sure whether she was gay or not but after joining Her she realised that it didn’t matter: here was a group of people who accepted her no matter what. “It was incredible,” she concludes. “I’ll always remember that story.” OCTOBER 2016 ELITEBUSINESSMAGAZINE.CO.UK

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V ent u r e d ebt




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Ve nture d e bt

debt given it Provides a valuable option for startups that want to raise funds without unnecessarily diluting their equity, it’s worth entrepreneurs wrapping their heads around venture debt BY JOSH RUSSELL

Equity often dominates conversations around raising investment. Whether it be doing the rounds of VCs or putting together a crowdfunding campaign, entrepreneurs are often encouraged to trade away some of the control of their company every time they want a fresh injection of capital. However there is another option. By providing debt finance to venture-backed companies at a fraction of the equity cost of traditional investment, venture debt can prove invaluable for those looking to grow without excessively diluting the value of their shares. One of the reasons venture debt is increasingly coming to the fore in the British investment landscape is down to the way it complements existing funding solutions. “We think about venture debt as a very flexible solution for venture-backed companies looking to supplement the equity they’ve raised,” says Erin Platts, head of commercial banking at Silicon Valley Bank UK, the international tech-focused bank. Because venture debt is often used in conjunction with, rather than as replacement for, equity investment, the increasingly mature equity environment in the UK in recent years has inevitably created demand for increasing numbers of venture debt funds. “A really healthy and robust equity environment will always lead to a healthy and robust venture debt Erin Platts, Silicon Valley Bank UK environment,” she says. Startups are increasingly taking advantage of venture debt for a variety of uses. “In this market it’s used in many different ways,” says Platts.

If you look at debt, it’s obviously significantly cheaper than equity; it’s a drop in the ocean

The purpose venture debt is put to entirely depends on the model and sector a company operates in: for example a seasonal business Platts recently met with utilises the solution to fuel its marketing in advance of Q4. Alternatively, some startups may just use venture debt to give themselves more runway and meet their next milestone. “Some people have specific use cases they apply it to, whereas others think about it more as general growth capital,” she says. No matter the purpose it’s put to however, venture debt is often structured the same way. As with any debt-based lending, one of the first things to consider is the collateral the loan is secured against. “The usual thing is that investors will have a first secured charge over the company,” says Mark Taylor, head of growth finance at Beringea, the venture and growth investor. “It’s like a mortgage but it will be leveraged against the business’s assets.” This is fairly straightforward in the case of startups working in hardware or manufacturing – which potentially have equipment, premises and stock to use as collateral – but things are a little more nuanced when it comes to SAAS startups or app developers. “In those cases, you’re probably looking more at leveraging the repeat revenue of the business to service the debt,” Taylor explains. The next factor for an entrepreneur to consider is how the drawing and repayment of the debt will be structured. Off the bat, it’s important to recognise that startups don’t necessarily have to take all the funds in one lump sum. “The company doesn’t need to draw down the full amount on day one because they’re usually flush with cash,” says Platts. As a result, there is usually a tranching period that lasts anywhere from three to 12 months on venture debt, which allows a startup OCTOBER 2016 ELITEBUSINESSMAGAZINE.CO.UK

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V ent u r e d ebt

to draw down the funds in instalments and only make interest repayments on what it draws. “Once that 12-month period is up, then the facility would amortise typically over a three-year period with principal and interest payments being made on a monthly or quarterly basis,” she explains. But given startups are a high-risk business, this isn’t the only thing that venture-debt lenders will expect in Mark Taylor, Beringea return for their investment. “Typically investors will take a warrant in the business that maybe equals 1% or 2% of the company,” says Taylor. Effectively these warrants will grant venture-debt lenders an option to buy shares at a predetermined price, albeit at a much lower quantity than expected by an equity investor. Conversely, some venture-debt lenders like Beringea take a variable exit fee instead. “That means if we came into a company that was valued at £10m and it sold for £20m, we’d get an additional fee,” he says. “But if it just sold for £10m we wouldn’t get anything on top.” Even taking this into account, venture debt can cost a startup much less in the long term than raising larger equity rounds. “If you look at debt, it’s obviously significantly cheaper than equity,” Platts says. Whilst an entrepreneur raising a series B might be looking at giving up 15% to 20% of their company, the amount of equity they would be staking on venture debt is nearly an order of magnitude smaller. “For a debt round at a similar stage you might be looking at 2.5% of

fully diluted ownership,” she says. “It’s a drop in the ocean.” In light of this, venture debt is a very attractive facility for startups looking to raise series A and B rounds without significantly diluting their equity. “When they raise a £10m round, instead of taking all of it as equity, they can take some as equity and say £3m in debt,” says Platts. And because the startup is having to draw less capital from their VCs, these combined rounds offer a winwin for entrepreneurs and investors alike. “Not only does that blended debt and equity save the management team on dilution but it also allows venture investors to keep some dry powder to help the business going forward,” she explains. However, it’s important to note that this value for money doesn’t necessarily scale with the business and larger startups might not get the same benefit when compared to other finance options. “Once a company is approaching series C, it usually tends to have revenue traction, repeat customers and clients and could be on a £5m, £10m, £15m or higher run rate,” says Platts. At this stage, trading off even a little equity becomes far more costly than the other myriad debt solutions available to late-stage companies, whether that be recurring revenue lines, revolving lines of credit or covenants of debt. “Venture debt is actually a really expensive tool for companies of that stage,” she says. And this is the real art to utilising venture debt: finding the right balance when compared to other funding options. “There isn’t a scientific answer to that,” Taylor says. Overleveraging venture debt can spook investors that don’t want their funds to be wiped out meeting repayments; leaning too heavily on equity can leave an entrepreneur with scarcely any stake in their own company. “You’ve broadly got to feel comfortable that you’re going to have enough revenue to service the debt going forward,” he says. “But don’t take more equity than you need because once you’ve given it away, it’s gone.”

You’ve broadly got to feel comfortable that you’re going to have enough revenue to service the debt going forward



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Running a small business? Here’s one less thing for you to worry about

Whether you’re thinking of starting a small business, or are already running one, it’s important to make sure that you’re properly insured. At the beginning of last year, the government estimated that there are more than 5.4 million small businesses* operating within the UK. That’s why Direct Line for Business offers a range of insurance solutions for all types of small business and allows you to tailor your cover to suit your needs. So where should you start? The types of insurance available can often be confusing to start-up businesses, however the following guidelines should help you choose the right insurance plan for your business. Here are the three most common types of insurance taken out by small businesses, which can give you peace of mind and allow you to focus on running your business. Professional Indemnity Insurance Do you provide professional advice or services to your clients? If so, they could claim for compensation if they think your advice was negligent and caused a financial loss or damage to their reputation. For contractors and freelancers – ranging from accountants to IT consultants – professional indemnity cover could make a real difference if things go wrong and will allow you to work with more confidence. Digital companies in particular should consider this type of cover in case of claims around data handling, copyright infringement, and intellectual property. Even sending an email containing confidential information to the wrong recipient could result in a civil case. Clients often request proof of professional indemnity insurance before they work with you, especially if you’re working with local authorities or large companies. What’s covered? • Up to £2m cover that’s tailored to your profession • Trade associations compliant • No admin fee for changes made during the policy period

Public Liability Insurance If you, a business partner or an employee are responsible for an accident that causes injury, loss or damage to a customer – or a member of the public – you’ll be covered under this type of insurance. It’s worth bearing in mind that small businesses falling into this category could include mobile hairdressers, tradespeople and tutors who work in customers’ homes. For small businesses that exhibit at craft fairs, summer fetes and Christmas markets, event organisers will often ask for proof of liability insurance before they agree to let you take part.

you’re making crafts, selling cakes or keeping stock at home, protecting your business requires specialist cover. Cover for stock, equipment and loss of income is included as standard and you can rest easy knowing that you’re protected against some of the most common business risks.

What’s covered? • Up to £1m public liability cover with the option to increase up to £10m • 24/7 legal helpline • £1m product liability protects the products you provide

Direct Line for Business guarantees to beat any quote for the same cover.

Home Business Insurance Don’t fall into the trap: it’s a common misconception that if you’re running your small business from home, your equipment and materials are covered by your home insurance. In most cases, however, this simply isn’t true. Whether

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Breaking banks In Vernon Hill II’s eyes, the big banks have ignored the needs of their customers for too long. With Metro Bank, he has changed the face of high-street banking and rallied 780,000 account holders to his side PHOTOGRAPHY BY EMILIE SANDY

Cover Interview.indd 1

07/10/2016 18:11

We’re not a little different from the big four; we’re a lot different

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V er no n H i ll II

After a stint in real-estate helping McDonald’s source and develop new sites, the 26-year-old Hill decided he wanted to start a bank from scratch. While he stresses this wasn’t as unusual in the US as it was in the UK, this still didn’t mean it was a walk in the park. “When you start with one office and nine people, you’ve got no brand, no capital and no clue,” he says. With time, Hill was able to raise $1.5m to get the business off the ground but he quickly became aware that he didn’t want to deploy the standard model startup banks followed in the US. “Guys start them up, raise money, grow relatively slowly and when they get to a certain size they sell up,” he says. “I didn’t want to do that.” Instead Hill knew that if his new venture Commerce was to rival the 24,000 chartered banks that already existed in America, he would need to find a different approach. “Over the years I’ve learned you need to develop a differentiated model,” he says. “So how were we going to grow and be different?” Hill decided to focus on his crusade to put customers at the creating a retail-style concept for the heart of the UK’s high-street banking bank, concentrating on providing service and convenience in suburban system, Vernon Hill II certainly isn’t locations. By 2001, Commerce’s assets afraid of ruffling a few feathers. had reached $8bn; over the next five “The British banks basically had a years this figure increased six-fold. “When we sold to Toronto-Dominion cartel going here for 50 years,” he Bank in 2007, it was worth $8.5bn and says. “They believe they’re doing you a had 450 offices and 14,000 people,” Hill says. favour by letting you bank with them.” Given that Hill had spent 35 years living the entrepreneurial life, it was inevitable that after the sale of his This has led Hill to throw down the gauntlet with Metro business he wasn’t going to rest on his laurels Bank, the high-street bank blazing a trail and creating a for long. Within a matter of weeks a friend had radical new approach that puts local branches back at the gotten in touch to tell him that he should bring heart of the community. “We’re not a little different from the his banking concept to London, saying the big four,” he says. “We’re a lot different.” brands here were “not very good” – although its Hill is certainly no stranger to the banking sector. Growing possible Hill may be paraphrasing there. “That’s up in the suburbs of Washington D.C. in northern Virginia, my charitable way of saying it,” he says. “I’m he worked part-time in local banks whilst he was at school. becoming British.” The opportunity to launch After graduation, he attended the Wharton School of the the UK’s first new high-street bank since 1840 University of Pennsylvania to study economics with a was one Hill felt was too good to pass up. “In true concentration in finance. “My father always wanted his son American fashion, we didn’t hire consultants and to go to Wharton,” he says. Whilst studying, Hill continued didn’t do market studies,” he says. “We thought: working in the banking sector, taking a full-time role at a ‘what the hell: let’s go try it.’” bank near Philadelphia. “I went to Wharton at nine or ten A short transatlantic flight later and Hill was o’clock in the morning and then worked for this small branch meeting with the former Financial Services in the suburbs,” he says. “The joke was you couldn’t get a Authority to seek approval for his new venture. commercial loan until noon because I wasn’t out of class.” “They really didn’t know how to approve a bank charter,” he recalls. “I had to help them along.” Despite this, he believes that the burden on 44


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business is significantly lighter in Britain than it is in the States; even during one of the trickiest economic climates in history after the global financial crash, Hill found the regulators were very supportive of what he was trying to do. “Did they really believe we could deliver?” he asks. “I’m not so sure. But the market had been screaming for competition and we showed up with a service-based model, funded with deposits. It was their dream.” Even once all the i’s were dotted and t’s crossed however, there was still the question of adapting the model to the British market. Fortunately, in Hill’s eyes, there wasn’t much tweaking required. “It was a pretty easy translation,” he says. Given the US’s financial system is styled fairly closely on the British one, the basic mechanics of running a bank were the same in the UK as they were Stateside. As a result, Hill wasn’t willing to listen to naysayers who believed that Brits wouldn’t accept the American model. “We decided we weren’t going to listen to people who said ‘we don’t do it that way here’,” he says. When an entrepreneur is doing something as ambitious as launching a new high-street bank, clearly capital will be

The numbers went into orbit right off the bat; it was actually amazing to us how fast it started

key. As an experienced banking entrepreneur, Hill had an ace up his sleeve when it came to raising finance. “It was probably easy for me because I had a great track record with these investors,” he says. Just off the back of the initial idea, Hill was able to draw down $75m of investment. While investors in the UK were slower off the mark, securing the backing of large US funds like Fidelity and Wellington has been very easy for the startup bank – over the course of four rounds it has raised over £1bn. “It’s very easy to raise capital for sustainable growth stories in the US,” Hill says. “And Metro really is the only financial growth story in Europe or America.” Even with this capital injection, finding a home for Metro Bank took some time. As with his branches in America, Hill insists on inspecting every potential site personally to make sure it measures up. “I spent so many days riding around Greater London,” he says. “I’ve been to a lot of places [most Londoners] have never been.” This process was complicated by the fact that finding property in town centres is far harder in the UK than the States. “You can’t just go buy a piece of ground here because you don’t have suburban sprawl,” he says. “You have to manufacture sites, put deals together, buy out existing tenants.” Eventually Hill found a prominent site in Holborn opposite the tube station and before long everything was ready for the grand opening of Metro Bank’s first branch. “The morning we drove here, everybody was really excited,” he says. “But with every branch you always wonder ‘is this the one that’s not going to work?’”


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Thankfully Hill had nothing to fear. “It was a total mob scene,” he recalls. Not only was the branch crammed with customers but the BBC based its morning show at the branch. Additionally, the launch was attended by 14 different news crews – Hill was even interviewed on North Korean TV. “We were lucky enough to show up at the right place at the right time: the banks had failed and were universally disliked by their customers, the press and the government,” he says. Disrupting large incumbents takes more than a high-profile launch however: the key to success is encouraging their customers and clients to jump ship. “Some of the sceptical press in London loves to write that the Brits never switch banks,” he says. “‘You’re more likely to get divorced than you are to change banks’ – that’s one of their favourite lines here.” But Metro Bank has shattered this illusion. In its first year alone, 48,000 new customers accounts were opened; now in its sixth, the bank has 780,000. “The numbers went into orbit right off the bat,” he says. “It was actually amazing to us how fast it started.” Part of the reason for this rapid growth was undoubtedly Metro Bank’s stridently iconoclastic spirit and commitment to slaughtering the banking sector’s sacred cows. “British banks are over the top with rules,” says Hill. “We’re out to kill every stupid bank rule we can find.” One that particularly mystifies Hill is the refusal of most high-street banks to allow dogs into their branches: this is something he quickly set out to remedy with Metro Bank. “You can bring them in, we have events, we give them treats and stuff to take home,” he says. “It was pretty popular in America: it’s going berserk here.” Additionally, whilst many other brands are closing branches altogether and moving services online, Metro Bank has also committed to seven-day BRITONS HAVE NOW opening hours. “If I was Lloyds and I SWITCHED TO had 2,000 branches that looked like METRO BANK theirs, I’d shut them all down too,” Hill





jokes. Rather than forcing customers to use online services against their will, Metro Bank has focused on smoothing the user’s journey across the board, whether that’s on their tablets or in town centres. For example, it has introduced machines in branch that allow the printing of new customers’ cards there and then, massively reducing account opening times. “At other banks, just opening an account takes an act of god; we can do it in ten minutes,” Hill says.

LMOST EVERY ELEMENT of Metro Bank’s service is tailored toward turning casual customers into brand advocates who rave about its service – and this is no accident. “Fans join your brand, remain loyal and bring more fans,” Hill says. “They’re working for us while we’re working for them.” This is something he has embedded throughout Metro Bank’s culture: for example, when a customer asks for something in branch it only takes one employee to say yes but two to say no. “You have to build a culture to match the model,” he says. “Everything we do is almost the reverse of what you’d see from a normal bank.” And Hill believes in this philosophy so fervently that in 2012 he put pen to paper and wrote a book on the subject: Fans Not Customers. What did he learn during his time authoring his first book? “That it’s a pain in the ass to write one,” he says. “No, it is fun but it’s a lot of work.” Having recently released an updated version for 2016, Hill explains that the book’s main focus is on providing a primer for those who want to learn how to create value by making fans. “It’s about the fact that if we can turn the mundane business of banking into something exciting, fun and high-growth, everybody should be able to do it to their own sector,” he says. Certainly Hill is taking a strong interest in the evolving entrepreneurial culture in the UK. However there are still areas he feels the entrepreneurial community in Britain could learn from its neighbour across the pond. “One of the barriers here is that failure is considered a death sentence,” he says. “Not so much in America: the tech investors there don’t want to invest in you unless you’ve failed once or twice.” Additionally Hill finds that investors in the US typically have a longer-term focus, concentrating more on significant growth rather than chasing revenue. “I’ve called institutional investors here ‘bond buyers in disguise’,” he says. “The culture is just naturally less growth-driven: they care more about yield and price-to-book.” Given this emphasis on scaling up sustainably, it’s hardly surprising to hear that Hill is a strong advocate of organic

growth. “The great brands have either bought nothing along the way or the few acquisitions they’ve done they say they wished they hadn’t,” he says. Rather than focusing on acquisitions, he believes the best businesses create a model, refine it and grow as naturally as possible. And he certainly practices what he preaches: when building Commerce to 450 sites in the States, Hill acquired just ten, an approach he intends to adhere to at Metro Bank. “If you do acquisitions of size, you risk your model, culture and brand,” he says. “And when we’re growing roughly 100% a year, we don’t need to take those risks.” You really cannot argue with the results. Metro Bank currently employs 2,400 people and is expected to end this year with 48 branches across the UK. Additionally in March this year, it floated on the London Stock Exchange and has seen its share value increase 40% to £28.47 at the time of writing, even despite the brouhaha following Britain’s Brexit vote. But what are Hill’s aims for the future of the UK’s most recent high-street bank? “We want 100% of the market,” he laughs. “Isn’t that the typical American answer?” Speaking more seriously, he explains that even 10% of London’s deposit market would see Metro become a £100bn bank with a market cap of £18bn, something that will put it on target to have 110 branches in Greater London by 2021. However you look at it, Hill is ebullient about the future. “This is the greatest time in my life for entrepreneurs to create businesses,” he says. “The sky’s the limit.”





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Aug m e nte d re a l i t y

Augmented reality: retail’s red pill? Have we witnessed peak augmented reality or will small businesses incorporate it into their marketing mix long after Pokémon Go? By Maria Barr


okémon Go was the summer blockbuster that few people saw coming. The game made use of a very basic augmented reality (AR) mechanism that superimposed digital characters onto the real world and we all went a bit Pokémad. Singletons used it to find dates. Grown adults found themselves going on elaborate detours to graveyards and braving the elements to score points. A man even quit his job so he could dedicate himself to the game full-time. Some smallscale restaurants and coffee shops have used in-game items on local Pokéstops to attract gaggles of hunters. The initial hysteria has died down a little but now that we’re feeling a bit more sensible it’s worth considering whether augmented reality can really help bricks and mortar retailers lure shoppers into offline shops. Or will it go the way of QR codes and Google Glass? At its simplest, AR refers to the layering of information onto something in the physical world. It can project a digital image into a room to help you imagine what an armchair looks like in your living room or make a Squirtle appear in a dentist’s waiting room. This information could be accessed through a tablet, smartphone, specialist eyewear or a digital wall. It’s not a shiny new technology by any means: AR has actually been all dressed up with nowhere to go since the 1990s. But the hype is starting to build now, with Digi-Capital, the digital entertainment company, projecting that the AR industry will be worth £69bn by 2020. A few factors have come together that OCTOBER 2016 ELITEBUSINESSMAGAZINE.CO.UK

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are propelling the technology to the forefront, helping it to go mainstream. For one, it’s now on the radar of the average shopper, thanks to the ubiquitous Go. “Suddenly everyone from enormous corporations to small players and one-man-bands have woken up and gone ‘what’s AR?’,” says Georgina Wilczek, programme director for VR & AR World. “And they’d be stupid not to utilise it.” There are also a host of third-party apps making AR affordable by doing away with the cost of building a new app. “Pricewise, developing an AR campaign is comparable to creating a singlepage website right now,” explains Kaan Aydogmus, creative director at Magnetic, a creative agency. But perhaps the kicker is that a critical mass of people now have access to the hardware needed to enjoy AR: a smartphone. Most models come with the fast internet speeds, decent cameras and the GPS technology that’s needed for AR to be delivered. And unlike virtual reality, there’s no clunky headset required – although wearing

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80% of AR right now is pure

gimmick and does not belong in a retail space Jonathan Chippindale, Holition

one does enable a more immersive, hands-free experience. The ubiquity of the technology required to drive AR experiences means they have enormous potential for retailers. For example high-street stores can engage the shopper at different stages of their purchasing journey by enticing them to walk in and then nudging them towards buying something with a digitally imposed price offer. Additionally, people actually have very little product information in a physical shop compared to what’s available to them online. In light of this, AR can be used to enhance shopping experiences by giving detail-hungry consumers digital information they wouldn’t otherwise have access to, like extended product specifications and customer reviews. AR also allows retailers to virtually offer shoppers more choices, Wilczek points out. It’s not beyond the realm of possibility that in the future shops will look more like digital showrooms that are powered by AR, with less stock being held in-store or perhaps even being 3D printed on demand. “There’s so much you can do, like giving customers a preview of a car that’s not even available yet, allowing them to open a car door and explore inside,” Wilczek says. “It’s definitely not a fad.”

But at the end of the day, AR is merely an enabling technology and small businesses must stop themselves from jumping on the bandwagon just for the sake of it, says Jonathan Chippindale, CEO of Holition, the creative tech agency. AR has to be useful if it’s going to stick. “If it’s not solving a problem, it becomes a gimmick that’s artificially inserted into a conversation,” he says. “And those don’t have longevity. Right now, 80% of AR is pure gimmick and does not belong in a retail space. I don’t understand how adding fairy dust around a perfume bottle makes me more likely to buy it.” Yes, a smallscale retailer with a modest budget could make their in-store products AR-enabled. But should they? And who would care? The technology may be simpler than virtual reality but it is still introducing more steps into the customer journey. “Content is king,” says Kaan. “You have to give people value-added content or they’ll wonder why they bothered downloading the app if it’s just taking them to a website. But if you show them great content they’ll become brand ambassadors,” says Kaan.

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“There’s also a danger that instead of enhancing the init’s magic and imagine it’s going to be pricey,” he store experience it creates a barrier between the shopper says. “But that’s not necessarily true.” and their environment. “They should be looking around, More than that, though, it’s not yet mission picking things up and engaging with their surroundings,” critical in the way that having a mobile site is. Chippendale says. “People talk about AR immersing people “A lot of firms are interested in AR but not a lot into a world but it’s not really immersive at all if you’re just of consumers are yet,” says Chippendale. “No looking at an itty bit of content on your phone.” Besides, consumer has ever turned away from a brand when people are in a small-scale highbecause they don’t do AR.” street shop, they may well want a shortWilczek, though, is optimistic. term break from the digital realm and have “Given the rate at which the a conversation with a real person. technology is developing and the Many brands, however, are embracing interest is growing, the feeling the creative possibilities. Kaan is helping from the experts is that this isn’t clients like the Fly-Inn Beach Club in something that is going to go away,” Turkey use AR to give diners insights into she says. “It’s plausible that within the provenance of their dinner. It’s not five years we’ll all have eyewear in essential information but it does make the our top pockets that will enable us experience more enjoyable. And isn’t that to have an augmented experience Georgina Wilczek, VR & AR World enough? In an age when shopping online as standard.” Kaan’s prediction is and getting your dinner delivered through that AR will become more accessible an app is easier than ever, can AR help soon, potentially being integrated people fall in love with the offline shopping experience all into a phone’s camera, which will negate the over again by adding a sense of delight and surprise? Does it need for an app at all. really need to be useful to have any value? AR is undoubtedly useful for bringing a 3D So far, though, it tends to be larger brands that have product into a home, allowing shoppers to embraced the technology, while examples among the small visualise how products would look like while business community are much rarer. Kaan thinks this is shopping from the comfort of their sofa. Whether because there’s a misconception that AR is expensive. it can also draw people into physical shops and “When you first show people the technology, they think help them decide what to buy is another matter.

It’s definitely not a fad


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07/10/2016 18:19

With the dawn of CEO activism, speaking out on political issues is no longer considered career suicide but something the public expects from corporate chieftains. However, entrepreneurs are advised to tread carefully, as the risks are as great as the rewards

sea a nge BY Eric Johansson

Say the word activist and most people wouldn’t think of Marc Benioff, the CEO and founder of Salesforce, the cloud-computing company. But while he favours bespoke Berluti suits over Che Guevara t-shirts, he’s become the face of a movement of business leaders speaking out on red-hot political issues. Or as he put it: “There’s a third political party emerging in [the US] called CEOs.” While business leaders have historically avoided dabbling in politics – save for throwing the occasional fundraiser – the rise of CEO activism means the times they are a-changing. “We are seeing a pivotal shift in society,” says Chris Gorell Barnes, CEO of Adjust Your Seat, the content agency, and founder of the Blue Marine Foundation, the non-profit organisation

devoted to preserving the oceans. And Benioff is leading that revolution. In the past two years, he’s openly opposed legislation aimed at annihilating protections against discrimination targeting members of the LGBT community in Georgia, Indiana and North Carolina. But rather than shouting from the barricades, the tech entrepreneur uses two far more effective weapons: Twitter and his personal network. By publicly denouncing the bills and proclaiming that he’d stop investing in those states, he not only raised awareness but also convinced other business leaders to do the same. Amongst the corporate chieftains who joined him in criticising the federal laws and withdrawing investment were the CEOs of Apple, Disney, IBM, Intel and Bank of America.


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But that’s not the only topic the head honchos of companies have voiced an opinion on in the last two years. Howard Schultz, CEO of Starbucks, launched a campaign for gun control and over 146 tech entrepreneurs have signed an open letter against Republican presidential hopeful Donald Trump, referring to him as a potential “disaster for innovation”. And in January, Max Temkin, co-founder of the company behind the board game Cards Against Humanity, famously sent 50 gallons of lube to the Ammon Bundy’s Oregon militia, an American right-wing organisation that occupied the Malheur National Wildlife Refuge, after the public had mailed it hundreds of dildos as a protest. And this political awakening amongst business leaders isn’t confined to within the US. In Europe, Spotify’s co-founders spoke out about the cost of living in Stockholm this spring and several UK CEOs argued both for and against Brexit in the months leading up to the referendum on the UK’s place within the EU. So while the business leaders of the past would have kept their mouths shut, it seems the CEOs of today are ready to sing the song of angry men. “There is definitely a sea change going on,” says Leslie Gaines-Ross, chief reputation officer at Weber Shandwick, the global relations firm. In June, Gaines-Ross was one of the authors behind a report released by the agency on the dawn of CEO activism and what has brought about its rise. “It’s because CEOs have started to feel it’s their moral obligation to speak out on issues that impact their employees, communities and society as whole,” says Gaines-Ross. But this ethical stance is only part of the story. Another is closely related to Benioff’s weapon of choice: Twitter. Given that social media and the internet have become such an integral part of society in recent times, it shouldn’t surprise anyone that the connectivity of the web is enabling people to easily find out what businesses’ head honchos think on most topics. “You can’t hide anymore,” says Gorell Barnes. 56

“With that transparency, you have to give people what they want: they’re expecting companies to do better things.” Jonas Almgren, CEO and founder of Artfinder, an art retail platform, believes that this level of transparency counteracts business leaders secretly trying to influence policy makers behind the scenes. More than ever consumers are aware of the values CEOs possess and expect this to be a public conversation, rather than a clandestine affair. “Customers want to see who they are betting on,” he says. It seems this is borne out by the evidence. In fact, four out of ten customers expect business leaders to speak out on hot-button topics, according to the Weber Shandwick report. “That’s an incredible number and it will only continue to grow,” says Gaines-Ross. Certainly the report supports the conclusion that this expectation will only become more prevalent as the population ages, with 35% of millennials being open to CEOs taking a public stand compared to 29% of Generation Xers and 27% of baby boomers. As a result, a CEO sticking to their principles can have untold benefits for a brand. Weber Shandwick’s survey showed that 40% of people are more likely to buy from a company when they agree with its executives. For instance, the intent to buy Apple products increased after Tim Cook, the company’s CEO, publicly supported gay rights and joined Benioff in his condemnation of the bill in Indiana, according to a study by researchers from Harvard Business School and Duke University. In other words, CEOs speaking out can help businesses grow their brand and increase their profits. “People want to purchase products from companies that support their ethical stance,” says Gaines-Ross.


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The risks of speaking out on political issues can be significant Hugo Burge, Momondo Group

For some brands this may not necessarily be a revelation. Starbucks, Unilever and Ben & Jerry’s all have a long and profitable history of building their brands by attempting to fight climate change and supporting local communities. But with the increase in CEO activism, business leaders may be encouraged to take an even more open position than before. “CEOs are seeing a direct correlation between doing good and actually making a profit,” says Gorell Barnes. “The companies that have a social purpose will be more successful than those that don’t.” However, that doesn’t mean business leaders should take every chance to

publicly vent their opinions. “The risks of speaking out on political issues can be significant,” says Hugo Burge, CEO of Momondo Group, the parent company of the travel businesses Cheapflights and Momondo. “If a CEO strikes the wrong chord or appears selfserving, they can swiftly alienate their potential customer base and even cause long-term damage to their brand.” Certainly going public with a poorly considered position can prove incredibly costly for the company involved. According to the Weber Shandwick report, 45% of customers say they are less likely to purchase products from a company if they

disagree with the CEO’s position. This is a lesson Dan Cathy, CEO of Chickfil-A, the fast food franchise, learned the hard way in 2012 when he spoke out against gay marriage, resulting in boycotts of his restaurants. And CEOs taking a controversial stance might not just see fewer customers through their doors: hitting the wrong note on a social issue could also end up hurting your employer brand. “If they strongly disagree with the views of their boss, employees may begin to feel that it’s not the right place for them to work,” says Gaines-Ross. In fact CEOs need to be aware that taking any sort of political position might risk alienating staff: Weber Shandwick’s research revealed their head honcho taking a political stance would erode the loyalty of 19% of employees. Comparatively, 26% said they’d feel more loyal towards their employer and 55% were ambivalent either way. The risk of alienating his workforce was certainly on Almgren’s mind when he decided to publicly speak out against Brexit in the run-up to the

Should CEOs speak out on political issues? Daniel Hegarty, founder & CEO, Habito CEOs should voice their opinions on politics. We’ve all got a responsibility to raise the debate quality around important issues. But it should be taken as a personal view and not a reflection of the business or staff. The risk is that a CEO’s views can be polarising for staff or customers as people struggle to separate the business from the individual involved.

Hugo Burge, CEO, Momondo Group Companies play broad, major roles in society, so it’s natural that CEOs speak out on certain political issues, especially because so many could impact their business, employees and customers. The best businesses should be a part of these discussions to help make things better for people, so having a strong voice should be a positive thing and part of the responsibility of the job.

Phil Foster, managing director, Love Energy Savings When you’re in a position of influence, it’s important to understand your audience’s diversity and always comment on potentially divisive issues with sensitivity and awareness of the bigger picture. As long as you can back up an opinion with evidence and reasoning, there should be no reason why you should not provide advice and insight to help others become better informed.

Thomas Villeneuve, CEO, Weroom CEOs should speak out on issues affecting their workforce or consumers. When I’ve made political statements, I’ve been driven to do so on topics linked to themes like housing policy changes or Brexit, which ultimately will have an impact on those who use our services. If you are fortunate enough to have a platform to speak from, you should use it to give voice to those who do not.


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Most businesses usually have a shared mission that everyone feels strongly about Jonas Almgren, Artfinder

referendum. “You should never impose your private views on your employees,” he says. “Having said that, most businesses usually have a shared mission that everyone feels strongly about and I feel that my opinion was a reflection of the company’s mission.” Considering that speaking out on a loaded subject such as whether or not the UK should remain part of the EU could have turned both workforces and customers against them, Almgren wasn’t surprised that the CEOs he encouraged to follow his example declined to do so. And while he didn’t notice any decline in sales, Almgren is aware that his decision didn’t sit well with some of the artists who sell their work through Artfinder. “People obviously had very strong opinions both for and against,” he says. “Not all of them agreed with me but fortunately no one left the site after I spoke out.” Another thing to keep in mind before speaking out on a social topic is the fact that even if the public may agree with you, they might be sceptical if they don’t understand why you’ve taken a specific position. In fact, according to Weber Shandwick’s research, 32% would be less favourable if they couldn’t tie the CEO’s activism to the company’s bottom line, compared to 20% who would be more favourable.

Given the public’s scepticism and the fact that CEOs are the faces of their companies, entrepreneurs are still advised to tread carefully before climbing the barricades and proclaiming their political allegiances. “Make sure to share your views with the board, your senior team and try to find out what your employees think beforehand,” says Gaines-Ross. “Make it clear why you are speaking out, whether you feel it’s a personal moral obligation or if it’s tied to the values of the company.” She also encourages entrepreneurs to ensure that once they’ve taken a public stance to stick to it. “You can’t just do it once in a while,” says Gaines-Ross. “Once you’ve put your stick in the ground, you have to say it again and again and not try to return to the sidelines.” Doing so will not only show you mean business when proclaiming to back hotbutton issues, it will also help insulate your startup for the 21st century. “The companies of the future have seen that they have to have a social purpose,” says Gorell Barnes. “CEOs are realising that they have to strive for something and therefore their voices are hugely important.” Given that the potential benefits startups can gain by having their C-suite speak out and the fact that millennials endorse entrepreneurs that do, those future companies look destined to see their corporate chieftains take a stand in the years to come. “This is not a trend,” concludes Gaines-Ross. “We are going to see a lot more of this.” OCTOBER 2016 ELITEBUSINESSMAGAZINE.CO.UK

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THANKS TO INCREASING LEVELS of computational power and an ocean of available data, algorithms and artificial intelligence (AI) are increasingly gaining sway in the world of business. And having seen how these tools have informed better decisions and boosted efficiencies across disciplines such as marketing or finance, it was inevitable businesses would start trying to harness them in the war for talent. “The world is starting to see the usefulness of data and software to help solve really difficult problems,” says Alistair Shepherd, cofounder of Saberr, the HR analytics tool that uses algorithms to improve hiring decisions and internal team formation. “It makes sense that they might also be applicable to the way we hire.” As a result, many recruiters have been exploring the ways in which algorithms and AI can help them better acquire talented candidates. “One of the earliest applications involving data or software within the HR space was in CV 62






A I r ec r u i t m ent

screening,” Shepherd says. Recruitment experts have long used simple algorithms to filter applications based on positive or negative keywords, making it easy to draw up a shortlist of candidates with the preferred skills and experience. However, as this technique became more commonplace in business circles, it became clear that keywords alone teach companies very little about what potential candidates are actually like. “If you just look for buzzwords, you end up with a cookie-cutter employee,” says Shepherd. Fortunately, with time the way analytics and algorithms are deployed in the recruitment space has become increasingly sophisticated. Recruiters have at their disposal more data sources than ever before, meaning they can dig far deeper than just mining CVs for keywords. “There’s a wealth of information available to recruiters,” says James Eiloart, senior vice president of Tableau, the data visualisation and business intelligence company. “Some of today’s best data analytics tools make it easy for anyone to connect to a variety of sources.” Whether they’re harvesting data from candidates on social media or through recruitment portals, startups’ ability to form a data rich picture of candidates is rapidly improving. “More than ever, data [can provide] valuable insights about whether someone is suitable for a specific role,” Eiloart says. Beyond factors like capabilities and competencies, perhaps one of the biggest considerations for many startups looking to bring talent on board will be how it fits in with the company’s culture. However, keeping a firm handle on an evolving culture isn’t always straightforward. “When you’re trying to grow your business, launch products and hit sales targets, it’s hard to consciously pause operations and take a good hard look at the culture you’ve built,” says James Peck, UK managing director of Jobandtalent, the international jobs marketplace. As a result, any software that can help a business ensure the candidates coming through the door will be the right fit 64

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We don’t want people getting passed over because of an overly aggressive algorithm James Peck, Jobandtalent

before they even walk into an interview will significantly salve its growing pains. “Tools and technologies that can help you have that awareness right up front are very valuable,” Peck says. But understanding these factors can be tricky enough for a person – let alone for some lines of code. “Predicting human behaviour and interactions is complex,” says Shepherd. “It’s quite a nebulous problem.” Despite this, there are some shortcuts that can help an algorithm assess how well a potential hire is likely to work within a team. For example, gathering datasets that pertain to candidates’ values means a recruitment tool can better assess how well they’re likely to fit within the company culture. “What are the intrinsic motivators that dictate your decision-making? Are we aligned on those?” he says. “If we are, we’re likely to have higher levels of performance.” However, while algorithms may be able to top human talent spotters when it comes to experience, capability or cultural fit, surely they can’t rival intuition? Certainly gut instinct still plays a significant role in many hiring decisions, with research conducted by Come Recommended, the HR-tech PR firm, finding that 33% of bosses know within 90 seconds whether they intend to hire someone. “Most interviewers tend to place a large emphasis on the way a candidate comes across and makes them feel in a conversation,” says Eiloart.


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A I re c rui tm e nt

This kind of instinctive reasoning can prove incredibly powerful. “Human intuition can take in an enormous range of inputs in order to come up with a decision,” Shepherd says. Historically AI and algorithms have struggled to deal with these kinds of heterogeneous datasets but as the technology becomes more sophisticated it’s increasingly able to make the kind of split-second judgements that human beings excel at. “The algorithms of today are getting better at taking into account this broad range of inputs to then synthesise more nuanced decisions,” he says. One large drawback of relying on intuition however is that there is a higher risk of introducing biases into the hiring process. Given that human beings have a tendency to hire candidates they relate to, even the most impartial individuals can have unconscious predispositions towards certain kinds of people. “People are fallible,” Shepherd says. “Even though we try to mitigate them as much as we can, we all have biases.” But adopting an algorithmic approach to recruitment can help make things that are typically implicit become explicit, taking into account the factors that matter while being blind to others such as race, class, physical appearance or gender. “It’s a really exciting opportunity,” says Shepherd. “By using software, you can make a business a more inclusive and diverse place to work.” Algorithms aren’t entirely impervious to errors in judgement, however. While machines are hardly likely to let personal prejudices get in the way, unintentional biases can still creep in during software development that could end up excluding candidates of certain demographics and skewing the nature of the talent a company eventually hires. “We don’t want people getting passed over because of an overly aggressive algorithm,” says Peck. “If there’s a bug that somehow prevents people being treated equally then it needs to be fixed.” Thankfully addressing these issues is comparatively

With software, you can really test, interrogate and probe it to prove beyond doubt that it is not biased Alistair Shepherd, Saberr

trivial, as rooting out biases in software is much easier than in human beings. “Just by the fact that I am human, my decision making is a black box,” says Shepherd. “My brain can’t be interrogated; you can’t understand the biases that I have internally.” Conversely, algorithms can easily be opened up and dissected: if a startup suspects that there are flaws with its recruitment tools, its fairly easy to open them up and shine a light on their internal workings. “With software, you can really test, interrogate and probe it to the point where you can prove beyond doubt that it is not biased,” he says. Without a shadow of a doubt, the role of AI, algorithms and big data in talent acquisition is only set to increase as time goes on. However, will we one day see a future where robots handle all of our recruitment without a human in the loop? Given the huge value human beings can bring to the interview table, Eiloart feels it’s unlikely. “Anyone who has ever conducted an interview [...] knows that there are unexpected moments – from feeling the unique passion of an individual come across in conversation to building a level of trust when looking a candidate in their eyes,” he concludes. “These moments make us all human and should always be part of the hiring process.” OCTOBER 2016 ELITEBUSINESSMAGAZINE.CO.UK

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Sm a rt H o mes


home future of the

People have been talking about smart homes for 60 years and with the advent of connected tech like Amazon Echo, it finally seems like the ­Jetsonian fantasy may materialise BY Eric Johansson


p until recently, living in a smart home was more trouble than it was worth. While the allure of putting on the kettle without getting out of bed may have convinced some early adopters to pursue a Star Trekesque fantasy, using it often proved irritatingly complex. “I basically had to give everyone who visited me a guide on how to turn the lights on,” says Philipp Schuster, UK managing director at Loxone, the smart homes solutions startup. Given his background in electronic engineering and cybernetic control systems, it’s hardly surprising he set out to make his first house a connected one. “I’m a typical early adopter,” he says. However, setting up a smart home proved both expensive and demanding, requiring him to rewire the whole house and design his own circuit board. Schuster’s experience is hardly unique. Early adopters have faced similar hassles ever since James Sutherland flicked the switch on the first smart home in 1966. Afterwards, his wife was relieved that he hadn’t blown up the house: instead of finding herself in a crater, Ruth


Sutherland watched as the Electronic Computing Home Operator – or ECHO IV – hummed to life. The system was able to control the thermostat, switch appliances on and off, balance the family’s finances and predict the weather. Not bad considering that Sutherland had built the machine out of junk and spare circuits from work. But impressive as it was, ECHO IV didn’t result in mass adoption. While potential customers may have been excited about the vision of controlling their entire house with a single device, they were usually put off by the prospect of installing a computer that would take up half of their living room. And if that didn’t nix their enthusiasm, the price of wiring the house and the complex coding skills required usually did. However, things have most certainly changed. In the last few years, the internet of things (IoT) has enabled different smart devices to connect and interact with each other via Bluetooth and wifi. Expensive wiring, a house huge enough to accommodate the devices and advanced technological knowhow are no longer required to realise consumers’ fantasy to live in a house


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Sm a rt Hom es

resembling that of Marty McFly’s humble abode from Back to the Future II. “Smart homes are not only for the geeks anymore,” says Lionel Guicherd-Callin, head of product marketing for Europe at Nest Labs, the smart-home solutions provider. And developers have been sitting up and taking note. “It’s a very interesting arena for startups,” says Schuster. “But it’s also an incredibly crowded marketplace at the moment, with a lot of smart home devices being introduced.” However, given that smart homes are intimately linked with the market for IoT devices, the fact that customers aren’t snapping up connected gadgets should give developers pause for thought. While 81% of UK adults have a smartphone, adoption of other connected devices is below 10%, according to the Mobile Consumer 2016 report published by the auditing firm Deloitte in late September. Less than 5% are interested in buying connected security systems, thermostats and light bulbs. “Consumers need to see more value,” says Kevin

It’s a very interesting arena for startups Philip Schuster, Loxone


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Sm a rt H o mes

Meagher, senior vice-president of ROCConnect, a smart-home provider. But defining that value is easier said than done as it’s not always easy to discern what benefits some IoT devices bring. For instance, gadgets like Kuvée’s internet-connected wine bottles and Samsung’s $6,000 high-tech fridge raise the question: should some smart devices have stayed dumb? “Yes, definitely,” says Schuster. “Sure, these gadgets will probably appeal to a niche audience but they won’t lead to wider adoption of smart-home devices because they don’t really supply any tangible benefits.” And it seems the cool factor isn’t impressing customers either, as only 6% of people would be persuaded to invest in smart devices to keep up with techsavvy friends, according to a study from PwC, the auditing firm. “It’s like buying a 42-inch TV,” says Jonathan Melhuish, head of customer experience at Heat Genius, the smart-home solutions startup. “It looks cool and impresses your mates for a few days but then you forget about it.” However, developers have another reason to prioritise functionality over the cool factor: the fact that Generation Y isn’t buying homes. A recent survey from the Resolution Foundation, the think tank, shows that less than 42% of millennials owned a house before they turned 30, compared to 63% of baby boomers. So while Gen Y is usually seen as the tech-savviest generation, developers are advised to focus on other age groups. And that means not only focusing on the cool factor. “Older people aren’t afraid of technology but they want functionality,” says Melhuish. And the PwC study backs him up, revealing that 35% of people would be persuaded to invest in connected devices if they could bring benefits such as reducing energy bills. However, that doesn’t mean millennials are entirely out of the equation. In fact, ensuring that Generation Y is switched on to your products can still indirectly lead to baby boomers buying devices. “We’ve noticed that a lot of parents ask their kids for advice on if something is a 68

Smart homes are not only for the geeks anymore Lionel Guicherd-Callin, Nest Labs

good product or if it will work on their phones,” says Guicherd-Callin. Given that complexity became a hindrance for mass adoption in the six decades since ECHO IV, it’s hardly surprising that reducing it could ensure the take-off of the smart-home market. One step in that direction would be to establish a one-stop solution for all IoT devices, ensuring a unified customer experience. “The race is clearly on to see who will provide the dominant smart-home platform and there’s everything to play for,” says Melhuish. “It will mainly come down to two things: who can nurture the best ecosystem for manufacturers and developers and who can offer the best user experience.” One challenger for the title was launched in the UK in late September: Amazon Echo. With its ability to turn up the volume on your speakers, order pizza, switch off the lights and regulate the heating when you simply ask for it

out loud, the device seemingly packs a winning knockout combo. But not everyone is convinced it will take the title. “Amazon is up against stiff competition and I’m not sure they’ll manage to convince everyone to develop for their platform,” says Melhuish. Ultimately, there’s something to say about the old adage that you always fear what you don’t know. That’s true for connected devices too. “Smart homes as a whole becoming mainstream will come down to people actually experiencing them,” says Schuster. And once they do, customers may find themselves unable to live without them. “It’s like in the car industry, where lot of features that were considered luxuries have now become standard,” he says. Given that he’s seen the evolution from heavily wired houses to modern connected smart homes first hand, Schuster is convinced that mass adoption is on the horizon. And while he might have struggled in the past to show his guests how to turn on the light, his passion for it has been reinvigorated by the new tech. “I couldn’t imagine living without it,” concludes Schuster.


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N WERNER HERZOG’S documentary Lo and Behold, Reveries of the Connected World, legendary hacker Kevin Mitnick recounts how he got his hands on confidential security information from a company’s overly helpful receptionist, simply by asking nicely and sounding like a trustworthy sort of guy. The threat from cyber criminals to small businesses from methods like these, along with sophisticated software designed to latch onto data, is very real. And the resulting cost might not just be reputational damage but could land you in some pretty steamy legal waters too. CRIMINAL MINDS According to the The National Crime Agency, the number of data breaches reported to the Information Commissioner’s Office (ICO) has nearly doubled in 2016. That may mean businesses are getting better at reporting breaches but there’s little doubt that the criminals are also getting smarter and finding new ways to get their hands on data. But if you think your firewalls will protect you, it’s not as simple as that. The easiest point of entry is through people, says Rose Bernard, analyst in 70


A BREACH the cyber threat intelligence team at Control Risks, the risk consultancy. “SMEs often underestimate the threat posed by social engineering, where an individual is targeted by a cyber criminal and persuaded to disclose information that helps the perpetrator get to the data they’re really after,” Bernard says. One of the other ways hackers can get the data they crave, like a username or password, is through a phishing email or instant message, where they’ll pose as somebody from the company so people let their guard down. COMPLACENCY BREEDS CRIME If you’re reading this and thinking “meh”, you’re not alone. According to a report by Juniper Research, 74% of British SMEs think they’re safe from cyber attack, despite half of them having suffered a data breach. Andrew Starr, managing director at OpenIPStarr, an IT consultancy, agrees

that SMEs can be blase when it comes to data security. “Our biggest challenge when working with clients is to get them to take cybersecurity seriously,” he says. Some small business also tend to see cybercrime as a problem for the big guys with the big data, not least because they’re the ones who make the headlines when sensitive information is leaked. But if anything SMEs are even more at risk, says Bernard. “Small businesses often represent attractive targets for criminals who perceive them to be more vulnerable than larger companies with dedicated cybersecurity departments,” she warns. Jason Hart, chief technology officer of data protection at Gemalto, the digital security company, points out that most cyber criminals don’t discriminate against small businesses. “From a bad guy’s point of view, all they want to do is consume data,” he says. “Any data.” And given how reliant businesses are


Todd, partner and head of digital and data at Olswang, the law firm. “There is a long to-do list and companies must start preparing now.”

becoming on data, there’s a lot more of it around to steal. IMPLICATIONS OF BREXIT: UNTANGLING EU LAW For now, the main legislation businesses need to concern themselves with is the Data Protection Act. But having come into effect when Mark Zuckerberg was just 11 years old and the online world was in its infancy, it’s starting to feel a bit archaic. The EU’s response has been to introduce the General Data Protection Regulations (GDPR), which come into effect in 2018 and introduce more stringent rules around the way companies collect and store data. Some of the areas it touches on are related to

getting consent, reporting breaches and transborder data transfers. And if you’re wondering whether it matters how in or out of the EU Britain is by that stage, the message from the legal experts is loud and clear: it doesn’t. Regardless of the negotiations, you could be held legally accountable and fined if you aren’t compliant in time for the deadline. That’s because we live in a digital world where data flows freely across borders. Even if you’re not in the EU, you can still be held accountable to its laws if you hold information on its citizens or trade with any authority or company in the EU. And Britain may well have to implement near identical laws if it’s to trade freely with EU countries. “Companies can’t assume that the Brexit vote means that data protection obligations won’t apply,” says Elle

From a bad guy’s point of view, all they want to do is consume data. Any data Jason Hart, Gemalto

GETTING THE HOUSE IN ORDER So what does good cybersecurity behaviour look like? According to Hart, your first step should be mapping out exactly what customer data you have. This audit should look factors such as whose data you collect, the permissions you seek to obtain it, who’s responsible for it and where it’s stored. “The number one question small businesses need to ask themselves is ‘what data would cause me the biggest pain, if compromised?’” Hart says. From there, you can then assess whether there’s any data you’re collecting unnecessarily and make sure you’re getting adequate consent. Once your audit’s completed, Starr believes small businesses need to make technology their friend to comply with most laws. “We use the newest technologies to achieve compliance with data protection, including encryption, identity and access management and network security,” he says. But sometimes the solution can be relatively simple. Many SMEs only change their password every 30 days or use very basic passwords – an elementary gaffe but one that provides a hacker plenty of time to gain access to their systems. Hart recommends using one-time passwords, which are only valid for only one login session, adding that they aren’t nearly as expensive as many businesses think. There is help on hand, of course, and small businesses may well consider looking externally for legal advice or technical help. The government has also announced a partnership with tech startups aimed at developing cuttingedge cybersecurity technology as part of its £1.9bn National Cyber Security Programme. But the onus is on business owners to be proactive when it comes to compliance because prevention is better than cure. And cybersecurity is not just an IT issue. OCTOBER 2016 ELITEBUSINESSMAGAZINE.CO.UK


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VERNON HILL Each issue we profile some of the most inspiring entrepreneurs in the UK

07/10/2016 19:24

A dv ert i s i ng f eat u r e


ow in its 6th year, MADE 2016 - the not to be missed event - will include a main conference to be held at The Sheffield Crucible and a full week of fringe events. The conference will see industry experts from around the globe speaking on subjects such as finance, technology, creative thinking, leadership and market development. MADE 2016 Conference has moved to a brand new location the Crucible Theatre, in Sheffield, which will offer room for more audience interaction, as well as increasing engagement opportunities and networking. Taking place on November 8, MADE will provide meaningful, practical advice and inspiration from experts and peers who will share their views, advice and experiences on growing and succeeding in business. Be inspired. Be motivated. Be ready for the challenges ahead. This year’s lineup will feature a team of the best and brightest business investors, seasoned entrepreneurs, leaders in technology, industry disruptors, experts and thought-leaders. “For me, MADE inspired me to build a brand that people could both connect with and understand,” says Tom Charman, cofounder and CEO at Kompas.“Hearing from representatives from both Microsoft and Innocent, helped me realise how important it is to understand your market, and how to develop your


product to meet the needs of that particular market.” While every attendee at MADE is a valuable source of knowledge and inspiration, those featured will be taking the microphone and sharing with you their stories, advice and knowledge, everything you need to help inspire you to achieve great things with your business. Lisa Wood, Chief Marketing Officer, Atom says: “We are delighted to partner with MADE, the UK’s largest and most inspiring celebration

of entrepreneurship. We know what it takes to build, grow and run a small business and this is part of our commitment to support entrepreneurs that fuel growth, increase employment and grow communities. Now is the time for the banking sector to support small businesses and individuals who are key to the UK and global economy and we’re proud to be a part of that. There’s a fantastic line-up for the festival and we’re very much looking forward to being part of it.”

Pitch for six figure investment from key angel investors at MADE2016 All MADE ticket holders have the chance to pitch for a six figure investment in front of five key northern angel investors live on stage. All delegates will be guided on how to submit a compelling MADE Crowdfunder project to raise investment from the crowd

using the global platform. The five entrepreneurs that raise the most will receive specialist coaching and will be put forward to pitch for further angel investment and mentoring live on stage. This means that all MADE delegates can raise significant investment by attending. To find out more and to book a ticket visit

Conference Programme 9:00 - 9:05 Welcome - To Inspiration 9:05 - 10:30 The Disruptors - Learn To Behave Differently 11:00 - 12:10 Future Business Tech, Today - Stay Ahead Of The Game 12:55 - 13:25 Afternoon Keynote - Inspire The Olympic Spirit 13:25 - 14:10 The World Is Your Market - Make Sure You Grasp It 14:10 - 14:40 Building A Social Business - Benefiting You and The Community 15:10 - 16:20 From The High Street To The Crowd -The Great Financial Debate 16:20 - 17:00 Enter The Dragons’ Den - It Could Be You 17:00 Closing - After show party


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THE CRUNCH The stats that matter. And some that don’t


of CEOs are psychopaths

52.8% 57%


cups of tea will be drunk by the average British employee during their working lifetime

say their degree is not related to their job at all

£660m will be invested in British SMEs by private equity firm Livingbridge.

£250m hasq been received by UK entrepreneurs from the government’s Start Up Loans programme

18% 52% 38% 4.9% say overtime has caused arguments with their partner

were unemployed in the UK in the three months leading up to July


of parents regret the name they chose for their children


2% of FTSE350 boards have a tech representative

of Britons are more afraid of crime than they were ten years ago


of women have experienced sexual harassment at work

of microbusinesses don’t have a website

77% of millennials would take or decline a new position based on the company’s technology offerings


is how much more likely men are than women to get a raise when they ask for it

Sources: Dell and Intel Future Workforce, CV library, Expert Security, Bond University, Trades Union Congress and the Everyday Sexism Project, Avery UK, Coople, ONS, Cass Business School, the University of Warwick and the University of Wisconsin, 123 Reg, Mumsnet, Russam GMS.

do not use their degree within their current position


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07/10/2016 11:24

Elite Business Magazine October 2016  

IN THE BANK: With Metro Bank, Vernon Hill II had an ambition to bring a thriving consumer focused brand to Britain’s stale banking sector....

Elite Business Magazine October 2016  

IN THE BANK: With Metro Bank, Vernon Hill II had an ambition to bring a thriving consumer focused brand to Britain’s stale banking sector....