What I decide to invest in - Jamie Waller

Sep 19, 2019 / Ambition Nation Media

Ahead of the Ambition Nation Summit on October 2nd, 2019 - REGISTER HERE - speaker Jamie Waller, serial entrepreneur, investor and author of Unsexy Business, tells his story of spotting opportunities in business sectors that are seldom seen as 'exciting'.

In a world of apps, new tech, digital transformations and constant disruption, it can be easy to forget about those other companies – the ones that make your coffee, sell you your mattress, build your house, perhaps even collect your parking fines – the type of company that entrepreneur, serial investor and author Jamie Waller would describe as an ‘unsexy business’.

Indeed, that’s the title of Jamie’s book. ‘Unsexy Business’ - which is available to buy here - is a look into the decisions made by a number of investors into businesses that are characterised by their fairly traditional or run-of-the-mill industries.

Risk removal

“They tend to be in proven market spaces,” Jamie explains. “For a sexy business, you might think of an app or some new-fangled technology. The risk associated with those things is often high. Is this technology the right technology? Is it going to work? Is there even a marketplace for it?

“With an unsexy business, like selling coffee, the question of whether there is a market for it is negated. What’s attractive is you are removing something like 50% of the risk associated with this business.

"You could of course argue that the return is reduced by the same amount so what’s the difference? That’s more about where you are personally – perhaps you’re happier investing in businesses where the majority succeed, rather than expecting most to fail and you’re waiting for that one business to break through. For me, the former is a much better place to be. It’s a space where I can add value and, to be honest, it’s overlooked.”

The other thing about an unsexy business is it doesn’t tend to rely on a piece of intellectual property, and if some of the team are wrong or the business model is slightly wrong, it can all be adapted. For example, with a wealth of talent available in an established marketplace, people can be potentially swapped out and replaced. Then you’re taking that risk profile down to, say, less than 25% of that of investing in something new.

Park that thought

Something doesn’t have to be ‘new’ or rather ‘untraditional’ to be disruptive. Disruption happens in an unsexy way, too, and it can be a place of equally great innovation. Take Coffee Nation, which was acquired by Costa Coffee owner Whitbread for £60m, as an example:

“Coffee Nation took gourmet coffee out of the coffee shops and into the service station, sold today as Costa Express; that’s disruption,” says Jamie. “The business model wasn’t unproven; we know that people are willing to spend £2 to £4 on a cup of coffee. What was innovative was that people didn’t have to find a parking space to buy their coffee.

“Similarly, I think of Dreams beds. They took the beds out off the high street and into big warehouses next to the big Tescos out of town, where the costs of selling and production are significantly reduced.

“And again, it sounds mad, but something as simple as being able to provide parking is a total disruption.”

Funnily enough, car parking plays a central role in the story of how Jamie made those big decisions that created the investor he is today. Going back to his earlier life, he sold the majority of his company JBW Group – an outsourcing services business for debt collection – in in 2016 for £24.5m, and the remainder in 2017 for £8.75m.

Now, you might consider debt collection an odd choice for a young and hungry entrepreneur when he set the company up in 2004. And you’d be right, until you see how Jamie’s long-term vision was side-tracked and reshaped in a wholly unexpected manner.

“Before JBW, I sold cars. I had a showroom on the Woolwich Road in South East London. At the time, Transport for London was a relatively new authority. They had just introduced red routes on London’s roads, where you cannot park at any time, not even to drop someone off like you could on a double yellow line.

“The double red lines came immediately outside my car showroom. Woolwich Road is a dual carriageway where cars speed by at 40-50mph and the next available turning where someone could park was roughly 180m up the road. I knew instinctively that my business would suffer. My main market was dads buying daughters their first car; they just want convenience above all else. And in any case, how much car can you actually see when you whizz past it at 50mph?”

At the time, there was outrage in London. The retailers and market traders went on local news channels angrily expressing that they would tell customers to park outside their shops anyway and refuse to pay the fines. Transport for London responded by politely informing people that enforcement agents – bailiffs – would be authorised to get involved if this happened.

Jamie’s business appeared to be going bankrupt. And yet, as one door closes so another opens; consequently, here he was, faced with a fresh, burgeoning opportunity. Debt recovery, on behalf of government, was about to blow up. He spoke to bailiff firms about getting a job, worked as a self-employed collector for about a year, moved quickly into a management position, before setting up his own agency – JBW Group.

“I saw that decriminalising parking offences was going to have a huge effect,” Jamie explains. “The reason it was given to local authorities was it was a waste of police time; parking was not going to be the end of that. Soon it would be speeding fines, not wearing a seatbelt, speaking on your mobile phone while driving. As these things decriminalised, local governments were being given more and more authority over collecting the fines.”

Finding fresh purpose

What continued to drive Jamie’s decision to continue in this industry was not just the financial opportunity. He saw that it was badly run, with debtors simply members of the public who might have forgotten to pay a fine, that were being terrorised by bailiffs.

“The industry exploded; it increased by 400% overnight. That meant that the incumbent organisation, in their haste to take advantage of the opportunities presented, over-recruited and undertrained their staff.”

What’s interesting is this vision of the industry – to leave a positive legacy – was ultimately what drove Jamie’s decision to carry on for some time before selling JBW in 2016.

The industry was tough, with Jamie facing aggression from debtors, from competitors, from the media; even clients themselves were hard on the sector, reason being that local governments were acutely aware they needed to have a process of enforcement in place to ensure compliance, but on the other hand didn’t particularly like employing the infamously harsh enforcement agents.

“When you’re in a sector which literally nobody likes, it gets hard to deliver a service for a long period of time. I had done it for 12 years by that stage.

"My intention was always to sell, but it was also my intention to get government to stand up and take responsibility for the way that they employed enforcement agents.

"I worked very hard lobbying for a new set of regulations that standardised against a lot of the bad practice. We got those regulations implemented in April 2014. So, in June of that year I decided to get the company ready for sale. My purpose was to make this industry better; that was very much the moment where I felt I’d achieved what I wanted to achieve.”

Awoken investor

It was here that Jamie’s investor mindset was born. At the time, Jamie had spent a significant amount of time working separately with Addison Lee on developing his own technology, subsequently divesting that tech into a standalone company called Hito.

“When I put JBW up for sale I was licensing the technology back to JBW. My intention then became to sell JBW and set up a financial services tech business that leveraged all of that good stuff that JBW did with tech, and provide it to other sectors like banking.”

Jamie ran Hito for just nine months, selling tech into their first client during that period, before he was suddenly offered just under £10m. He accepted – this was the day of his second daughter’s birth. Now having found more free time to spend with his family, and having proven to himself that he could apply his knowledge and find success in very different sectors, Jamie sought the help of a new business coach to re-evaluate his next steps. Over six months they discussed Jamie’s new purpose – to continue diversifying his portfolio of experience in varying, ‘unsexy’ sectors, while creating a better work-life balance to spend more time with his family – and how that would shape his next decision.

“That’s when we came up with the idea for Firestarters, my investment company. Which looks to invest in good, ‘traditional’ businesses.”

Run by an entrepreneur rather than a banker, Jamie explains how the fund offers not only more patient capital, but also the value of having his experience and contacts on board to add value, rather than just writing a cheque check on day one.

“When I look at a potential investment, I ask myself ‘what more can I bring to the table to make this business worth more within the first 12 months?’

“I look for businesses with the potential to scale, that have a good market and good people. Though in today’s world, you introduce a new bit of technology to an unsexy business and suddenly it’s sexy. More and more, those opportunities are becoming a rarer breed.”

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