Ross Cooney

Name:

Ross Cooney

Business:

Rozmic Wireless

Web site:

www.rozmic.com

Years in business:

10

Number of businesses:

5

Entrepreneurs' Forum member

Success to me is not money, success is lifestyle. I believe that as a result of running my own business, I have lifestyle that I like. I can do what I want when I want, and I can run my business the way I want to run it. I’ve always felt that’s what success looked like.

Yeah it would be nice to have millions in the bank account- that’s a great pipe dream for a lot of entrepreneurs. In reality, I’m running my own business because I don’t feel I would fit in with any other company.

In 1998 I was studying physics in Dublin City University and absolutely loving it. What I really focused on was my work in the physics lab. One of the things I found was that you can set up an experiment and write a computer application to manage that experiment for you, and while that’s happening you can go off to the pub and get drunk.

So after a while I got very good at computer programming. I then began to organise other projects for different lecturers and after a while I had ads in Ireland selling web design and web application development services. It was really just something to help fund all those long hours I was spending in the college bar, although it was quite successful.

One day when a company asked me to set up a domain name and hosting and registration services for them, I rang up one of the largest internet companies in Dublin to help me. When they refused to give me commission or any kind of help or support in any way, I just thought, well, I’ll go off and set up my own service.

It was a quick decision, but a major one. It is a risk to set up your own business; to jump away from that monthly pay cheque that lands into your account and pays the bills for you, and it’s a big jump to go from there to actually running your own business.

It’s also quite comfortable to be sitting at home on your own working on a single project for someone else. I remember, I was working on a project for a Canadian company for a little over 18 months. I was working by myself in my kitchen and it was going quite successfully.

When the project was finished though, and I owned the intellectual property of that project, I made a very quick decision to then take on staff, open an office, sort my phone lines out, set up my company registration certificates, and all the processes involved in registering your business.

Although it was a risk to go from a position of having outgoings which were quite low to having outgoings which included other people’s mortgages, I think I probably did it because of boredom. I was bored as a consultant with one client and I felt I could continue and sign up some more.

What I wanted was a business, where I would have the challenges of managing it and running staff, and in addition I wanted to ability to jump between projects that were both interesting and complicated.

I think that working on one project for a long time can drive you crazy, but having several different projects and having lots of things to juggle- to me that’s an exciting prospect.

In my business, I come out with an idea and I get really excited about it and start bashing out code, and out comes a service that is 90% ready. At that stage I start talking to potential customers. Everyone using it knows that it’s not finished yet, but I find it hard to finish things.

That’s one of the big advantages about having staff. I’ll write the vast majority of our projects myself; my staff then finishes it and supports it. At the same time I’ll manage the sales process, I’ll work out what sort of price point we should be using and make contract negotiations. Once I’ve got that done, I then get my staff to replicate it.

It’s a great job description because I can do the coding which I actually love doing, but at the same time I’m quite a people guy; I like getting out and selling to people.

Taking on staff has been a big challenge though, mostly on a personal level. Your first and primary responsibility is that you’ve got a wage to pay. That wage, should it not be paid, has implications on other people’s mortgages and lifestyles and so on. That’s a pretty big responsibility to take on, and not the sort of thing that can be taken on lightly.

Once you’ve covered that risk, you’ve got a problem where you’ve got to delegate responsibility. The reality is that you’re never going to find somebody who will do it in the exact same way as you wanted it done or the exact same way as you’ve always done it in the past.

Quite often, delegating responsibilities is a tough situation. What I’ve found hard is that in some situations I’ve built up a level of trust with a team member, trained them up to a certain level, only then to come back six months later and realise I need to start taking more control in the day to day role and responsibilities of people.

As a business owner you’re pulled between two needs. One, you’ve got to give a team member enough responsibility so that they can finish a job, but at the same time giving it to them in such a way that they feel empowered to get the job done. Quite often it’s hard to get that right, but it needs to be dealt with early on in order to motivate the team and bring them together.

Rozmic is a high cash burn business, so the risks involved are very very high. In order to cover those risks we’ve taken on quite a few different investors.

Managing investors and managing their expectations is a completely new skill but quite a challenge, and probably up until recently took about 50 to 60% of my time.

I found it quite easy to actually find the investors though. It normally only took a matter of weeks, and we tend to complete the investment no more than a few weeks after that. But it’s interesting that we spent more time negotiating post completion than pre completion, and that was quite a time consuming, emotional exercise.

I worked with North Star and raised money using their Proof of Concept Fund. In the North East there’s quite a few organisations who will help you find investors, and North Star were also proactive and helpful in introducing potential investors.

I also went to Entrust and used their North East Equity Matching Fund. It’s partly backed by government money, but is matched by local entrepreneurs and business people. We’re in the process of organising another round of funding involving two institutional investors.

I’ve had four businesses before Rozmic, but I always wanted Rozmic to be a lot bigger than my other companies and it’s my first business that has actually taken on proper investors. Previously, whilst we had investors, they were somewhat relaxed, business angels who would say, “Here’s a couple of pounds, give it back when you have the time or when you can afford to do so.”

Rozmic is my first business set up in the UK, with UK law and UK investors. UK investors had a little higher expectation than Irish investors. They’re also a lot more risk averse so it was a real learning curve adjusting to that.

Each of my businesses has resulted in a trade sale. An unfortunate problem with a lot of internet companies is that unless you have venture capital funding, the quickest and easiest way to exit from them is through a trade sale.

A trade sale is quite an interesting progression. I go from writing process and making sure the product works, then attempting to sell it, and providing the technical support necessary post sale.

It’s all about organising the intellectual property correctly, setting up your first number of customers, then you find somebody who has access to a larger number of customers where you can simply introduce your services to them, and you can organise a sale price somewhere in the region of your first, second or third year income.

In terms of finding buyers, we’ve used quite a few techniques, but the best is to simply write to the top 200 companies in our industry sector, tell them you’ve got some intellectual property, and you’d be surprised by the number of people who return your call or organise a meeting.

It’s really important to protect intellectual property. We have incredibly secure employment contracts and we’re also an active member of the Federation Against Software Theft. To date we’ve been involved in three different actions against people who have either stolen or used our intellectual property, but the Federation are able to take action on people who infringe against it.

In addition, every week we take a copy of all our software and stick it onto a CD and post it to ourselves in registered post. We can then show over a period of two or three years where a code has come from. That allows us to prove that we actually designed the code, thought about it, and built it over a very long period, rather than it just simply appeared as a finished product. It’s much easier to prove ownership of something if you can prove it over a long period.

A lot of people ask me how I value intellectual property. It’s our most important asset; the only item of stock that we hold so it’s very hard to value as it’s only worth what somebody’s going to pay.

In a trade sale, what we do is we prove that we own a code, prove that we own the service that we’re selling to the trade purchaser, but we value it on the amount of money or savings the new owner’s going to get out of the intellectual property.

For example, a block of code that might have taken six months to write, might save somebody or increase the sales value of a potential purchaser by perhaps a million pounds. Whether anyone pays for that is a different matter; then it’s a negotiation. But the easiest way to value intellectual property is to find out what people will pay for it, or how much money they’re going to save by using it.

I’ve made heaps of mistakes; I think I’ve probably made every mistake possible. One mistake cost me £180,000 so it was a pretty serious one.

We had an email management product which we spent two years developing and was quite an expensive process. We sold the intellectual property to a company based in Stoke on Trent. The sale price was quite high, but we ended up not being paid the final £180,000.

The real reason for it was because we didn’t spend enough time with advisors, and we didn’t secure the contract correctly. They paid us part of the money, refused to pay the final part, but at the same time claimed that they owned the intellectual property.

I think we would have sidestepped that problem if we’d taken on proper advisors at the time. I may have spent £20,000 on lawyers, tax advisors etc., but at the same time £20,000 is cheap when you’re about to lose £180,000.

When I speak to friends who are sitting in jobs but perhaps have aspirations to run their own businesses, they often come to me and say, “I’m not really sure about this. The risks are too high.” I say, sometimes as a joke, “Perhaps it’s because you’re risk averse, or perhaps you’ll never make a decision because you analyse it too much.”

A lot of people try to find a way of covering all the gaps and the holes. The reality is, those gaps and the holes that you’re thinking of today, there’s going to be different ones that’ll appear a couple of months down the line. So just simply do it. This is a bit of a cliché phrase, but in order to be a successful entrepreneur, you need to have a ‘can-do’ attitude. That attitude where you simply have to get things done.

It is a risk to leave that monthly pay cheque behind, but you’ve just got to get on with things. A lot of people spend years analysing business plans, and either the business or the market moves on, and it ends up that by the time you actually want to make the decision, the opportunity’s gone.

A lot of entrepreneurs analyse a situation and make a pragmatic decision to go one way or the other, and that decision is usually made very quickly. There’s no point sitting around for weeks and months trying to make it.

I’m not saying that you have to make a decision immediately, but I think that quick, fast decisions is what makes the difference between an entrepreneur and a business manager.

While you’re building the concepts behind your ideas, whether it’s a new product or a new service, or whatever you want to base your business around, get out there and meet potential customers. Say, “Hi, I’m a nice guy, I’m thinking of this new service, what do you think?” And you’ll be surprised by the number of people who spend hours with you helping you to fine tune your product or service. Quite often, they come out at the far end as customers too.

It’s a good experience, and the best way to validate your ideas. Without a doubt, if you want to set up your own business, bring it to the next level and start talking to people about it. Once you’ve done that, it’s quite an easy step to jump away from that monthly wage cheque and onto a nice little rollercoaster of running your own business.

When I meet friends of mine who have normal, full time office based jobs and I describe my day to them and all the different things that I’ve done, they’re gobsmacked and they say they would love to have my lifestyle.

The reality is, when you work 9-5 you do your 37 and a half hours a week, or if you do overtime you might do 50 to 60 hours a week, but outside those hours you have your life.

When you run your own business, you might work twice the amount of hours that ‘normal’ people do, but the difference is you can do all sorts of other things when it suits you. For example, if you have a doctor or a dentist’s appointment, you simply go.

I have a share in a boat down in Tynemouth, and it’s fantastic- I can just decide after lunch, I’m going to go out on the boat. It’s not a decision I make all the time, but it’s an option I’ve got.

I have a number of different mentors who have really helped me to run my own business. I have my Dad who I ring quite regularly and he gives some incredibly apt advice- the sort of advice along the lines of “Just do it. Find a way of shoving that square peg into that round hole, and if you need a mallet, give me a call.”

I also ring my brother a lot and we have a weekly mentoring session. My brother has a small factory based in Liverpool, so we talk and exchange ideas.

I’ve also had successful relationships with my business partners. I’ve always had intelligent mentors as business partners and shareholders in my business.

I’ve been working with Robin Mackie, our Chairman over the last two and a half years, and over that period I think I’ve spoken to him almost every single day.

There’s a combination of mentors who’ve been there and done it and are happy to give you advice and signpost you, down to mentors who are just simply gung ho, who say to you, “Get out there and do it. Stop moaning, stop complaining, stop being so negative and just get on with it.”

Without a doubt, I wouldn’t have had any of my businesses without strong mentoring, and I hope in a couple of years time I’ll be able to return the favour and be a mentor to a budding entrepreneur.

When I came to the North East, I fell in love with it. Setting up a business in the North East is one of those things that is incredibly well supported by the different support agencies. There’s people who will provide you with subsidised office space, or people who will help you with a capital grant to purchase a couple of computers for your office, or people who will help you find equipment or perhaps a new website.

Also, most of the universities up here run graduate schemes, and you can take on graduates at an incredibly low cost. Setting up a business in the North East is strangely easy; just because there are so many people out there who can help you.

We’re looking to grow Rozmic, from several thousand turnover a year to several million. The Entrepreneurs Forum will be very useful for that. They can put you in touch with people who taken businesses from a couple of hundred thousand a year to a million, and they also put you in touch with people who have taken their business from a couple of million to tens of millions. They make their time available to you, and provide you with advice that you simply can’t get anywhere else.

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