Guy Mucklow, the 51-year-old founder of Postcode Anywhere, reckons that most people start a business out of a burning passion to get back at someone or something. In some cases, it's a competitor.
However, in Mucklow's case it was his own father, who had chosen Guy's brother to succeed him as managing director of the family firm, A&J Mucklow Group. Having expected to run the company himself, he decided that working for his sibling would simply be "humiliating". So in 1999, he struck out on his own.
But Mucklow's first attempt to found his own business was unsuccessful. Forming a partnership with a senior manager from Punch Taverns and Jamie Turner (from the Birmingham Chamber of Commerce), he set up Pubowner.com, a website aimed at making it easier for pub companies to find potential landlords, senior staff and suppliers.
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However, the five companies who controlled the pub market its main potential customers were unenthusiastic about the idea. The slow speed of dial-up modems also meant that it was simply too far ahead of its time to be practical. After a few months, the three partners pulled the plug and Mucklow lost £40,000.
Undeterred, Mucklow and Turner looked for another area that could benefit from a move online. The Royal Mail had been selling its database of postcodes and addresses. This meant that firms could work out which street a customer lived on from their postcode alone, speeding up online and phone transactions a valuable tool at a time when online sales were in their infancy.
The big problem was that the database was sold on CD-ROM, so firms had to spend time and money copying it over to their own systems. With the database changing up to 5,000 times a day, errors started to creep in between every update.Also, the need to buy the entire database made it too expensive for many firms.
Mucklow and Turner realised that putting the data online would remove the need for individual firms manually to update it, while licensing it on a sale-by-sale basis would allow smaller firms to access the database.
It was a great idea. But their efforts to raise money in 2001 coincided withthe bursting of the dotcom bubble."It was as if a hose that had been running at full blast had been turned off," says Mucklow. Once-keen venture capitalists told him he'd "be eaten alive" by rival firm Experian.
However, the duo still believed in their idea, so they went ahead with the firm Postcode Anywhere anyway. It wasn't easy. Despite slashing costs and locating their offices in some barns that Mucklow owned, it took over three years to become profitable.
He remembers writing a £15,000 cheque to cover monthly losses, thinking: "this could have paid for a car". However, the firm gradually began towin customers a key turning pointwas winning a big order from the Passport Office. Mucklow likens the process to spinning a flywheel, "where the first revolutions are the hardest".
His perseverance has paid off. The firm's annual turnover is now £8m, derived from operations in over 50 countries. His advice to other budding entrepreneurs? "Never take no for an answer."
Matthew graduated from the University of Durham in 2004; he then gained an MSc, followed by a PhD at the London School of Economics.
He has previously written for a wide range of publications, including the Guardian and the Economist, and also helped to run a newsletter on terrorism. He has spent time at Lehman Brothers, Citigroup and the consultancy Lombard Street Research.
Matthew is the author of Superinvestors: Lessons from the greatest investors in history, published by Harriman House, which has been translated into several languages. His second book, Investing Explained: The Accessible Guide to Building an Investment Portfolio, is published by Kogan Page.
As senior writer, he writes the shares and politics & economics pages, as well as weekly Blowing It and Great Frauds in History columns He also writes a fortnightly reviews page and trading tips, as well as regular cover stories and multi-page investment focus features.
Follow Matthew on Twitter: @DrMatthewPartri
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