In our third part of our Building Successful Businesses series chatting to Colin Tenwick, ex-CEO of Stepstone and Bookatable, we discuss the secret to overseas expansion and how to build a successful digital marketplace in the modern age.
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Fiona: In our latest episode, chatting to Colin Tenwick, who internationalised a number of businesses as either CEO or chair, I ask him the secret to global growth in the tech sector and his view of digital marketplaces in the modern age.
Colin: I think there are a few things that you need to be aware of. You’ve got to think how applicable the solution that you’ve got is to the market, and that requires quite a lot of work. Are there competitors in the marketplace already? What are they doing? How they’re doing it, etc., etc.
And the other thing is really understanding what your route to entry should look like. And I see a lot of younger businesses wanting to go from the UK straight to America. You know, let’s go to America. They think because of the English language side, it’s easy, rather than actually understanding and say, well, no, it is a very, very different market. Just the sheer coverage of a different market means you have got to be really clear about what your coverage model looks like.
There are other European markets which actually are easier to enter. And I think if you look at the Scandinavian businesses, because of the size of their markets they are able to scale Scandinavia, and go to multiple countries. And so, a lot of the things that you see there put them in very good stead, which is why we see, I think, quite a good strong stream of very strong Nordic tech businesses that actually do very well.
So, I think there are certain things, I think understanding the differences in those marketplaces is critical. Understanding that people issues are hugely different. The motivations are hugely different. Then, you know, back to some of the basics. What’s your route to entry? Do you go through a distributor model? Do you go through third parties? Do you go direct? Do you go down the acquisition route?
And again, you know, if somebody’s in the space, an acquisition may be very attractive, but there are downsides to acquisitions as well. So, it’s a very complex thing and not one to be taken lightly, but it is one from a valuation perspective that can make significant differences to shareholders and investors.
Fiona: And those lessons you mentioned there, are those lessons you’ve learned the hard way, seeing globalisation of tech go wrong?
Colin: Inevitably, you know, you learn more from doing things wrong than you do doing things well, I think. I’ll give you an example, early on in my career, I was asked to turnaround one of the subsidiaries in Holland, so I moved to Holland with my family.
So, the UK, very hard-driving, very commercial-focused, you know, very driven. I took over a business in Holland and opened it in Belgium, and made the big mistake of thinking the motivations of the Dutch teams were exactly the same, and clearly they weren’t. Made the mistake of not recognising that, you know, putting a Dutchman in charge of a Belgium office really was not the right thing to be doing. And then when you go to a Belgian office, making sure is it Flemish or French-speaking, you know, basic, basic stuff. But when you look at it and you think, well, they’re all so complex, and they’re all things that actually you need to understand before you just go ahead and make some of these decisions. So, you learn more from your mistakes.
Opening up in Eastern Europe as communism fell down was quite interesting. Opening businesses in the Eastern Bloc. I mean, again, some of the stories are just extraordinary, but the reality is things that you expected to be the norm just weren’t. Therefore you have to take a step back to think about how you deal with that. Basics of, you know, no idea of what a salesperson actually did. So, when you’re recruiting salespeople, there weren’t salespeople in the Eastern Bloc in those days. So yeah, simple stuff now, but you know, crazy in those days.
Fiona: No, that is fascinating actually. It was something you wouldn’t consider. It’s very hard when you are not already embedded in that culture to have a good perspective on it.
Colin: Exactly. You know, having a conversation about somebody being a buyer, this is honestly true. In the Communist party headquarters in what was the Czech Republic, somebody turning around and pretending to be a buyer. And the salesman was going, “How many of these would you like?” And the buyer said, “I’ll take them all.” I said, “No, no, no, no. What’s going on here? You don’t say that.” And he said, “Well, we have so many shortages, we’ll take the lot.” Crazy.
Fiona: That’s very different, very different training. So you’ve obviously supported lots of very interesting companies from the sounds of it, through quite different challenges. If there was one business you’d love to sit on the board of, or have sat on the board of at some point in the past, what would that dream business be?
Colin: I think the thing that I find extraordinarily exciting now is working with the current generation of people who have this really unbridled attitude that they can be hugely successful. So, there is a naivety, you may argue, about the barriers or the issues or whatever which we bring into our boardroom, you know, what if, what if. But actually working with people that don’t see those, that actually don’t think they’re relevant and actually want to bash through them and be hugely ambitious. That to me is just extraordinarily exciting. And being able to do that with generations of people irrespective of race or culture, is really exciting.
And actually, there are more companies today than I think are grasping that and actually leveraging that than we’ve seen in the past. People are united by the best argument wins. That actually is an extraordinary, powerful way of building a business. So, for me, the types of businesses I like working with now are where the CEO and the management team are joined with a common view and vision, but actually also a need and a want to be not only successful but to do it in a really good way.
Fiona: And I suppose digital marketplaces, you mentioned you worked as CEO of Bookatable, which was the first digital marketplace. That was tech companies taking quite a new approach, quite innovative at the time. Given often those businesses don’t actually own the product they’re selling, it can be harder to differentiate yourself and stand out and, you know, win that argument as you say. What do you think it is that makes a great digital marketplace?
Colin: Well, I think you need to possibly broaden what you think a digital marketplace is. To me, the core attributes for digital marketplaces are that you’ve got somebody over here that has got certain assets and certain content, let’s say product content. And over here you’ve got mass audiences, and your job actually is to join the two, and to do that in a relevant way.
So, I would actually argue that StepStone was an early marketplace. You know, we had multiple jobs and we had to match those with multiple candidates. And actually, if we didn’t match those correctly, then you failed. So, if you had a load of banking jobs, but, you know, all you had was a load of carpenters. The reality is that you know, that business doesn’t work. So, you have to match the two and ladder the two up.
I think the cost of getting to market for individual product owners is prohibitive. Particularly if it’s a product that is a relatively small ticket. Recurring revenue is great, but it’s how you get that built up at a fast rate. So, I think that’s the role that marketplaces can play.
That’s true for all of the marketplaces business I’ve been involved in. ATG was a marketplace, if you look at one of the ones I’m now involved in, which is Oxford International – it’s education, but actually what we have is a lot of content from multiple universities, and we are providing that to thousands of people across the world in order for them to select how they want to continue to develop their lifetime learning. What you are seeing interestingly, is certain large brands now saying, we want to create our own marketplace, and we want to go direct.
And there’s a lot of technology now, technology suppliers that are doing white label to enable that. So, I think the model is migrating and is evolving, but I think the concept itself, which is about routes to market, being able to market itself, distribution, etc., etc., All of those logistics, all those things, which the marketplace actually does, actually applies not only to a product owner but also to multiple products.
Fiona: You mentioned Auction Technology Group as a marketplace. So, for those unfamiliar, it’s a platform for curated auctions, and that operated quite interestingly on a circular economy model. There’s a lot of discussion about consumers changing behaviors, making more choices around sustainability. Is that something that from your perspective when thinking about marketplaces, you’re starting to see come to fruition now?
Colin: I think it’s still relatively early days, but I do think it’s increasingly important. I think, you know, if you actually did the research, and the last research I saw that said something like 15% to 18% of purchases now, that is a key factor that people are looking at. So, I think the auction marketplace is a wonderful, wonderful way of reuse of products and services. So, for me, that is more about bringing a lot of technology to a method of distribution of product, which really had not been fully exploited. I think there’s a lot still to go there. I think, you know, the team there that we put in place with ECI continues to develop and thrive. But there’s no doubt that you know, reusability and sustainability are critical factors. I think the whole ESG discussion debate is here to stay. And it’s not something that we should treat lightly.
Fiona: Colin there discussing the sector evolution, from recruiting salespeople in the Eastern Bloc who weren’t familiar with selling to a new generation of talent, driven by creativity and a focus on sustainability. In our next episode, we chat about the private equity relationship and the differences between choosing public markets or private markets when thinking about the next stage of growth.
Listen to the next episode here: