I’m a fluid dynamicist. I wanted to get into consulting or move across into big corporate management so I did an MBA. In the second year I started getting interested in entrepreneurship. It was 2002 and there were lots of people younger than me running round with one-page business plans and getting funded. That got me thinking. It started dawning on me that I could actually do this.
From engineer to entrepreneur
It’s a big leap from the mindset of an engineer to the mindset of an entrepreneur. It did take a few years. Entrepreneurs are always assessing the riskiness, not avoiding risk, but just assessing it and understanding the risk-reward balance in everything they do.
Sell, sell, sell
What I’ve learned about being an entrepreneur is you have to sell. You’re constantly selling yourself to yourself, to your wife, to your family, your employees and investors. Over the years I’ve become adept at telling the story of our own products and telling our own story. You pull out those elements that you think may be most appropriate for the time. I have had quite a chequered career. I started off as an engineer, and then went into engineering consulting, did a PhD, then I was an academic and then worked for BMW.
Intelligent Fluid Solutions was the first business I started. It was out of that business that I was able to incubate the yoomi bottle idea. It needed some incubation because it was a new technology. Intelligent Fluid Solutions (IFS) is a virtual prototyping business. Rather than put a car in the wind tunnel, I would put the car on the computer and use very complex software to model the flow over it. So we wouldn’t have to put the car in the wind tunnel, we wouldn’t have to make prototypes, using the results from the analysis we would jump straight to a more mature design. What we were able to do with IFS was apply that high level technology to something as (what we thought was) mundane as a baby bottle.
The plan was we’ll nail the design development in a year, and it took us three. It’s actually quite a complex system with air and milk and feed and heat, and all the rest of it. With babies, you take the milk and put it on your wrist to see if it is warm enough. Now, that test is for body temperature. If you want it for breast milk temperature, that’s slightly cooler. But still we had a target. There’s no point heating up to 28 degrees, because parents would reject it. We had to get to 32-33 degrees. And that was the benchmark. If we couldn’t get from fridge milk temperature to 32-33 degrees, there wasn’t a product.
That goes down to my wife. My first son, Daniel, was born prematurely. He was an emergency caesarean and by the time we got him home we were fixated on feeding him every two hours or every four hours. My job was to take the expressed milk from the fridge at night, warm it up in a pan of hot water, watch it for ten to 15 minutes, and obviously I’d fall asleep. So I then put it under the tap — too cold, too hot, too cold. My wife basically said, you’re an engineer, do something useful, fix this. Being a fluid dynamicist, you think well, it’s a baby bottle, surely there’s a better way of doing this.
David Hartwanger and I decided one afternoon not to go back to work after an IFS team meeting at a restaurant. We took the afternoon off and, being engineers, rather than talk about anything else we talked about this project. After about three hours on the back of a napkin, we started sketching something we thought might work. And that was the genesis. That was back in 2003. Once we filed the patent, I then invested in writing a business plan. It took me three months of Sundays in early 2006.
Over the period of months we got probably about six angels interested and the money started to come into the business in January 2007. We had about £250,000 and managed to spend all of that to come up with our first prototype.
Friends and family
Then a few friends of mine started to get interested and said why haven’t you approached us? I said I didn’t want to. But then they started to come on board. Now we have a large group of investors who know me through some form or other, either school friends or people I used to play rugby with. A large section of my rugby club has invested. It’s more pressure on me. I have to be very frank with them. Most of them come in with between £10,000 and £20,000.
We launched in 2009. The really good thing is there’s always an influx of new customers — around 830,000 babies are born in the UK every year.
Share of teet
Unfortunately we’re also in a market dominated by two big players. They own about 75 per cent of the market and are bruisers. They targeted us fairly early on with pricetype promotion.
It’s focus, focus, focus. And then also changing the model and having the courage to maintain prices when your competitors are slashing theirs. We’re constantly debating the correct price for our product.
Now we are in 300 Boots stores, 28 Mothercare stores and 22 John Lewis stores. Distribution in one year has expanded many-fold. We have gone from four to ten full-time people in a year. We need to crank up the volume to drive up our margins. We’re in the valley between a possible small business and a possible large business.
Beyond being a start-up
Raising money is a big problem. Once we got our product in stores, we came back to the office and realised that we had entered a different business. You’re no longer a start-up; you’re a growing business. You need different capabilities and suddenly your fixed costs are soaring. At the beginning everything was in my head. I knew everything. I don’t and can’t know everything now. We need those processes.
This article was taken from Business Strategy Review, for the latest business thinking from all London Business School faculty