17/06/2011

Where are they now?

By Modwenna Rees-Mogg, Founder & CEO of AngelNews

Jamie Murray Wells, Founder of Glasses Direct and Hearing Direct talks to Hatty Stafford Charles about the support of Business Angels, finding a niche and Start-up Britain.

Jamie Murray Wells, the youngest person ever to win the Queen’s Award for Enterprise Promotion, is a perfect example of an entrepreneur commercialising a concept so obvious that we all kick ourselves for not thinking of it ourselves. He is modest about his ability to spot an opportunity, saying that anyone can be an entrepreneur, but he just happens to be one of those people who can see a gap in the market, find a way to fill it and do it right so that his business grows until it is selling a pair of glasses every couple of minutes.

It began in 2004 during Jamie’s last term of University when he found, on a student income, the £150 price for his first pair of glasses to be outrageous. Curious, he asked around until he discovered that the cost of manufacturing glasses was only a few pounds, enabling the huge mark-up required, in part, to pay for the high street opticians’ premises and staffing costs. A child of the internet generation, it was obvious to Jamie that here was a chance for a genuinely disruptive business model which would fit in neatly with growing consumer experience with – and confidence in – the internet.

With £1,000 of his student grant, Jamie began to test and prove the Glasses Direct model from his parents’ home, with the aim of following this with a friends and family round of fundraising. In three months, however, he was already into Angel investment territory, having realised that professional investors would not only help him with capital but also with vital expertise in areas such as marketing. He was also aware that if he could prove the concept to Angel investors, there was scope to go further still. Jamie is a fan of Angel Networks, feeling that they have a big role to play and useful services to exploit. He was able to pitch to forty or so investors, and got three to back him. This demonstrated at a higher level that the business proposition was viable, although cashflow, at this stage, still was not sufficient to employ the high calibre board members he needed.

Jamie carefully targeted his dream board, asking for advisory support in marketing, ophthalmology and so on from the best people he could find. A combination of investment – over £600k – and brain power allowed the business not only to start but to grow very rapidly and meet the instant consumer demand which Glasses Direct had tapped into.

Over Christmas 2006/7, the next step was to look at how much further the business could grow. It was already doing extremely well, but to get to the next level and make online prescription glasses more than a successful niche, would require a substantial push. Jamie’s target was to build online retail in optics from a fraction of the market to 15%, so that the web option was a significant element of consumer choice, in the same way that fashion and other sectors were co-existing online and on the high street. This was going to require quite a bit of capital and so the next step was VC (Venture Captial) investment with a Series A round soon followed by a Series B round including some venture debt.

Jamie is very clear about the value of his early backers in getting to this stage. His first Angel investors not only supplied money, but crucial skills and experience in pushing the business forward. At 22 years of age, he was already confident enough to be selective about his backers, getting references and investigating their experience so that they were a good fit both with him and with his business. He says, “Just like an employee, you have to think about how they are going to contribute to the business,” and that is a brave, but certainly sensible, approach to take, even when fund-raising can be an uphill struggle.

This successful model has been used again in Jamie’s new venture, Hearing Direct which is, of course, an online digital hearing aid company, operating along similar lines to Glasses Direct, but run as an entirely separate enterprise. Hearing Direct has been up and running for a year, although the idea had been in Jamie’s mind for some time. Addressing a much smaller audience (2.2 million using hearing aids, up to 8 million probably needing them), it is likely to remain an Angel-funded company and is already on course to turn over £1m this year to the delight, no doubt, of his canny backers. Again, Jamie was careful to target investors with relevant experience as a starting point, before going to Angel Networks for a wider investment, although in the end Alex Fortescue, formerly of Apax, completed the round which suited Jamie very well, a single partner being a more practical proposition than a multitude.

For both companies, Jamie’s premise has been the same; to meet the needs of customers, not salesmen, in the most cost-effective way possible. He bemoans the culture of selling hearing aids with unnecessary extras (how many people really need Bluetooth connectivity?) and making outrageous profits, with Hearing Direct charging between £150 and £350 against his rivals’ £1,100+ prices. The business is also giving consumers more control, with online hearing tests conducted on the customer’s own computer and advice from a qualified audiologist and hearing aid specialists if required but no pressure to buy or upgrade.

Like so many entrepreneurs, Jamie’s mindset had always been about selling and thinking of new ideas. Also like many entrepreneurs, he is passionate about supporting others and is a co-founder of Start Up Britain, launched at the end of March and supported by David Cameron, Mark Prisk and George Osborne. The idea of Start Up Britain is that it be “by entrepreneurs and for entrepreneurs” and the government’s support does not mean government hand-holding according to Jamie. “The idea is to support a new generation of business without a cost to the taxpayer,” he promises, “the approach we are taking with it is very different from what’s gone on before. Under the last government, there was a culture of doing everything, so for example you had Business Link with a £35m website and an attempt to provide for all the needs of companies. What we are doing is pointing them in the right direction because there is plenty of support out there in the private sector, companies just need to know where to find it, not have it done for them.”

Longer term, Jamie is thinking about his next business – which will again be a consumer-facing company – and has no plans to retire at the tender age of 27. He says that he has always been good at separating work and leisure and is far from tired of founding companies. He is Entrepreneur in Residence at Atomico, the VC founded by Niklas Zennström (co-founder of Skype), which specialises in disruptive, innovative technology companies of the kind in which Glasses Direct is a perfect example. Start Up Britain will doubtless keep him quite busy – it is a startup itself – having only just launched, but the most fascinating thought is that when he does embark on his next business, it might be the third in a row to turnover £1m in its first year.

For more information, visit the following:

www.glassesdirect.co.uk

www.HearingDirect.com

www.startupbritain.org

www.atomico.com

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