FOUNDER #19. £4 Billion Exit for British Entrepreneur - Richard Harpin

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1:37I've put$110 million into... What's it like selling a company for£4.1 billion? The scariest moments were almost going bust twice. I knew I wanted to be an entrepreneur from an early age. So we're taught at school that copying homework is bad. In business, you're much better to copy somebody else's model that's working and then do it slightly better. But I think entrepreneurs underestimate how difficult it is in America. They think, well, it's the same language and it's not. Gymshark, when they went to America, they were selling joggers and they didn't sell any. And that's because Americans call joggers sweatpants.

2:14Squarepants, yeah. Checker trade is small enough for me to put in a meaningful investment. I put in£20 million. Too many entrepreneurs sell up too early. I said I've only got one skill and that is to inspire breakthrough. This country is in a difficult time at the moment. I firmly believe that it's up to entrepreneurs to take life into their own hands and help other entrepreneurs. It just seems to me no one in government actually understands business. What's the solution here? One of my big recommendations for any entrepreneur that's listening to this show is...

3:13take care let's roll all the way back what's it like selling a company for 4.1 billion pounds yeah i mean there's a number of points in the the journey in a sale from um the share price rising by 15 back in may 2022 i was sitting in checker trade in portsmouth finished a board meeting and a text message from my cfo saying share price is up 15 we're trying to find out why and it turned out that Brookfield, the great Canadian private equity business, were in the early stages of making an offer for HomeServe. Wow, and it got out there. And it had leaked out probably from one of their advisors. And just explain to the listener out there, what is HomeServe?

4:01HomeServe is, it's AA for the home. AA for the home, okay. It's an annual membership that covers your plumbing emergencies, blocked drains, boiler breakdown, anything that could go wrong in your home that's not covered by your household insurance. And it takes away the big cost of an emergency repair and takes away the worry of who am I going to find that's going to come out straight away and not rip me off with a big repair bill. So it was providing that sort of peace of mind for a monthly fee. Fantastic. So this roll all the way back then, so 1993, what opportunity did you see in the market back then?

4:44Well, really, it was my first job was marketing Crotter & Gamble. I was the brand assistant on Fairy Liquid, which is why my hands are still so soft today. And I knew I wanted to be an entrepreneur from an early age. and I didn't just want to work at Procter & Gamble in Newcastle. I wanted to keep my entrepreneurial hand in. And the big opportunity that I spotted back in those days, so in the late 80s, was a lack of young professional shared accommodation in Newcastle. So with a business partner that was also Procter & Gamble, we bought about 10 houses with 10 mortgages. we refurbished them and then let out the rooms individually including the the dining rooms at 40 quid a week at the time yeah that was the model we ran it sort of in the evenings and the weekend we employed a few people but the biggest issue was tenants would ring on a Friday evening always a Friday evening saying we've got water pouring out of a radiator we've got a block drain in the backyard or the boilers broken down and that would always be in the winter and you could not get a geordie plumber for love the money in newcastle on friday night yeah they'd be out all the beers all out drinking night before the match yeah both ended up leaving procter and gamble and setting up an original business called a1 fast fix brilliant that was in the days of yellow pages where a1 would get you at the front of the listing for plumbing and for heating and we hired a couple of those Geordie plumbers on our payroll and said one of you has got to be on call on a Friday evening and we put our life savings into the business 50 ,000 pounds at the time and that was the that was the start and what was the journey actually like was there ever point in the journey you thought oh my god I could lose my business here absolutely yeah the the scariest moments were almost going bust twice running out of money having not found the right business model yeah so literally within the first six months of running the emergency plumbing business we saw our 50 000 pounds go down the drain we got to christmas 1992 knock on the office door with the bailiffs from customs and excise we've come to take away your office furniture and computers oh luckily we managed to talk them out of doing that yeah uh we uh rapidly borrowed money from friends and family including i managed to borrow 10 000 pounds from my mum yeah without my dad finding out because he was very the cautious member of the family and we managed to agree a repayment plan with um the vat man and we had enough money to pay the salaries for Christmas 1992.

7:43Yeah. But Thor, we think there's a business here. We haven't quite got the right model. We want to keep it going. And Thor, isn't there a good link between all of the water companies that were being privatised back in the 1990s and a high quality plumbing service? So we... Got you to bed with them, did you? We went round about 15 of them and said, do you want to invest in this fantastic business in Newcastle upon Tyne? We didn't say that's losing 10 ,000 quid a month. And they all said no. With one small exception, a little water company north of Birmingham called South Staffs Water. And they said, we'll put in half a million pounds, but we want 52 % of the business.

8:29What did you say? Well, I would never recommend that to any entrepreneur, to sell a majority share. particularly very early on when the business model wasn't proven. But we got another option. We were desperate. They were the only investor. So April 1993, half a million quid landed in the business bank account. And I thought, phew, what a relief. And now let's press the accelerate button and we'll go faster. And that will get us economies of scale by becoming bigger and bigger. and we'll get to profit. Okay, fantastic. And guess what? Why out of interest? Why did they choose 52 % and not 51 %?

9:12I don't know. They thought they could get an extra percent or it could have been majority with 50.1%. But that was a deal. We had to accept it. Yeah. And I kept growing the business. And every month it was fundamentally still a Yellow Pages model going into more territories. And it was a model that fundamentally didn't work. Okay. So we didn't get to profit through economies of scale. And how long did it take when you realized that this isn't making profit for you to then pivot into something else? It was about 15 months later. Okay. And I burnt through almost all of the£500 ,000. We were down to the last£10 ,000.

9:58pounds this time round in running out of money was at worse than the first time uh because we've got 23 people in the business yeah they're all fearful or about to lose their jobs even my business partner came to me and said richard you've got to face it your life's dream of becoming a successful entrepreneur and buying that helicopter are over you better go back and work for procter and gamble and that's what your business partner said yeah bloody hell did you get rid of him no uh we're still best friends are you but um you know what when you've got a life's dream dodge you've got to what you've got to find a way of delivering it and luckily i'm an optimist and i believe that when you backs up against the wall sometimes you can have a little bit of luck and i had a little bit of luck well the more risks you take the lucky you beget the lucky you become the more risk you tell that's what i believe and certainly i think the the harder you work yeah so um and the more curious you are the the lucky you become as well the more questions you ask and looking at other business models and saying can i copy what they're doing tweak it did you was there was there a model when you were 23 staff in were you at a point going are we are we now we know what you know now from 30 years experience would you look back and go i grew it too quickly at that point with 23 staff absolutely yeah um should have kept it much much smaller until i'd found the winning model yes we should have kept it in one area of the country rather than growing it into multiple areas but luckily i got a call from somebody who said um have you seen this other little water company in surrey in sutton and they've developed a plumbing insurance scheme I remember getting in my car from Birmingham, driving down to Sutton High Street and stood with a clipboard and stopped people as they were shopping and saying, are you a customer of Sutton Water?

11:57And if so, have you bought their plumbing insurance cover? Yeah. When I got a dozen people that said, yes, they have. You know. Then I got them into the local town hall and ran a focus group. What do you like about their products? what don't you like about it and we we designed ours fantastic and was that the turning point yeah literally yeah okay with the last 10 000 pounds before the business went bust yeah enough money to design and send out a mail shop and our own plumbing insurance cover 50 pounds a year with the south staffs water brand on it 38 people sent in a check for 50 pounds yeah a 3.8 take up from direct mail i remember getting on my office desk in front of those 23 people are about to be made redundant and said yes we've made it and literally almost the rest is history the business went from losing half a million pounds that first full year yep to making three quarters of million pounds the following net net net profit wow the following year because we got the right business model fantastic we then went to angley and water and said um do the same uh you turned us down for investment but what about if we had a affinity marketing model where we use your brand name your customer base we'll run everything we'll fund the marketing and we'll pay you a risk-free commission for every one of your customers that signs up and every year that they renew brilliant and was that 50 quid as well that was for the year that was 50 quid as well what did you get them what did 50 pound get them plumbing emergency cover yeah indoors cover the underground water pipe in the garden and covered block drains cover okay and was there from that 50 pound when you built the confidence in them and they trusted you was there an upsell in there as well absolutely so after we'd sold plumbing cover then we go back to customers that had bought it saying what about the worry of your lights going off yeah so we'll sell you electrical wiring cover what about if your boiler breaks down and it's the middle of winter and you've got no hot water or heating and so we then sold boiler breakdown cover and so on so cross-selling is a lot more cost effective than acquiring a customer in the first place so just leveraging what you've currently got so where did so when you look at that model then and then how did you grow did you grow uh aerial after area and then did you say right we've wrapped up the whole of the uk yeah we grew area by area by going around each of the water companies and saying we've got this affinity model do you want to sign up there's no capital cost uh low risk you'll get the credit from your customers when they have an emergency the moment of truth we get a great quality plumber out there there within an hour and the bill is fully paid so we signed up almost every water company in the uk it was about saying i wonder whether home serve would work in a foreign country but that point there richard that's always the hardest point because sometimes you can sometimes in business you can grow too quickly and sometimes you can hit territories whether it's in sportswear or whether it's in festivals or whatever it may be and you go to that church and go that didn't work we're robbing Peter to pay for Paul here this is a big headache what did you come across when you went to go into another country well we picked um France okay and if you said why France I would I would joke and say because it's really difficult running a business in France the cost of employing people is high very difficult if it doesn't work to get rid of them so if we can make it work in france as the torture test and it will work everywhere okay but actually the uh the reason was that south staffordshire water group was a public company they were 30 owned by general des oh the um the biggest uh water company in france and so we thought there's a link let's go and pitch our model to them uh it still took a year to get them to agree okay and they were even more greedy and they said, we want to do a joint venture and we want 60 % of the business, not just 52%.

16:23But it was still worth doing. Wow. So just hold that thought there. That's interesting. So you've got investment and 52 % away. This new company in France wants 60 % of what? The whole business? No, just of... Of your 48 %? No, just of the NUCO in France. Just of the NUCO. So they wanted 60, you kept 40. Yes. So you had a separate company there, but it's still under the same brand name. Yes. Okay. Okay. So our 40%, then obviously the profits coming out of that then came back to the 52, 48 joint venture with the UK Wars company. Okay. But that makes sense to me, a 60-40. Are you thinking, well, they're going to look after it.

17:06We confront it. We know what we're doing. You take your 60-40, happy days. Were they running the whole business out of France? How much did you involve them? No, we were running it. We were running it out of Lyon in France. So we did set up in the General Deseau office. They did put in a couple of people, but I found the chief exec to put in there, operated eventually according to our model. in the first year they said your model won't work here in france direct mail will be non-effective um we shouldn't brand it as general deso service we should call it uh domio okay uh domio to me sounded more like a pizza delivery company than a home services business and we should do newspaper advertising and poster advertising and guess what uh didn't work after a year what marketing it via posters and flyers didn't work in france but it works in the uk it was a no it's a different model because um uh an unknown unknown brand name in domio not general dazeau not doing direct mail shots with an application form to get customers to sign up and it didn't work okay we'd probably put about a million pounds of investment just before we're saying well uh we better just be a uk company and focus there yeah we said let's go back to that original model in the uk that worked really well yeah and we've persuaded general de so to let us use their brand that we would test direct mail and guess what it worked and that was a breakthrough moment that said and if it works in france then we could make it work in other countries a big bit of learning for other entrepreneurs that are going into um a foreign country is don't be tempted to change your model too much and if you do have to change it too much then question whether you're going into the right country because one day if you're in 10 countries and the model is 25 different in each of those countries recipe for complexity and potential disaster yeah so i would call it the 10 rule if it is more than 10 different don't do it Okay, interesting.

19:42What did you learn on your journey? Because we all become who we are today on the journey. Like the ultimate goal of selling your company is a dream of most people in selling businesses. You've sold an amazing business. I'm lucky to have sold two businesses. But actually, when you sell the business, it's this big anticlimax. It's like you're thinking people are going to come out with like, and everything like that. It's kind of a massive anticlimax. did you really enjoy the 30-year journey and at any point did you feel this is not for me i need to get out no i was uh i was always there for staying as long as i was enjoying it and i think the critical moment was hiring my replacement yeah and so i was eight years into home serve this was when we were pre-france this was when this is early 2000s uh this would be sort of the year 2000 yes and uh we're a uk only business so effectively my role was md of home serve uk i'd hired a great guy called jonathan king brought him in as business development director he was signing up more of the uk water companies account managing the um uh the partners yeah after a year i thought you know what i think he could do a better job than me is that the MD for Home Serve UK.

21:05Called him into my office one day and said, Jonathan, you're promoted. I'm making you MD of Home Serve UK. That then meant I could work on the business rather than in the business, knowing that he would keep delivering great customer service, keep growing the UK business. I was a rubbish MD, not keen on the day-to-day. I was driven by new new ideas, international development, but it did enable me to focus full time on, I wonder whether HomeServe would work in a foreign country. Let's get France opened up and then look at how we developed from there. How exciting. A lot of people who own businesses sometimes find it hard to let go, let go of their business and give the freedom for people to run it in a position where they'll be better, whether you think they'll be better than you.

21:58Did you find that hard to let go no i think i found it quite easy because i self-realization that i was a rubbish day-to-day managing director that if i hired people that were much better at me at just focusing on the core business and running it really well and then ultimately replicating that model in 10 different countries including america that was the the magic model okay but it it also took a bit of figuring out of what is the international model what's the blueprint and how do we make that work okay what countries were you excited by you went and done you've obviously nailed england you can run a bit of france now and worked on 60 percent when you go into other countries were you did you have in your mind going well if i go into spain if i go into italy i'm prepared to do a 60 40 deal or did you did you let them make you an offer whether it's 60 40 70 30 51 49 give an example of the next country you went to if it's 60 40 in france what was the next one in all other countries that we did it uh it wasn't a joint venture okay we owned 100 percent set up a new co and then went out to sign up the local utilities on a affinity commission model affinity commission model okay so give an example of that so that would be um paying those local utilities so the next country we went to was australia and i thought well they speak the same language uh it's a bit of a way to get there but um hire some locals put a uh somebody from the uk in there as well to help the setup and we'll just replicate what we did in the in the uk sign up each of the individual water australian water companies pay them a commission for every one of their customers that joins up to plumbing cover and every time they renew or buy another product electrical wiring cover or boiler breakdown cover they get a commission and um but there's no risk to them they're just going to get a kickback on everyone who signs up for a year for you they just need to be happy that we're going to deliver the required quality of service okay because if we're using their brand and the service is rubbish it's going to backfire on them okay equally if If we're delivering great service, which we did in every country for every utility, they're getting the credit because customers are reassured that it's the local water company that's providing it.

24:26Be it that we sat behind them and that we owned each of those customers that signed up. Yeah, okay. But it didn't work in Australia. It didn't. Why? It's a very protectionist country. and we were talked about in parliament and this was there's a british company called home serve they've turned up in australia they're trying to sign up our local water companies and they're going to make every australian plumber redundant oh god well of course we were no of course we weren't going to fly fly our plumbers in by helicopter from the uk to um to do those emergencies we're going to use local australian plumbers and pay them a good price to go out and do those jobs but that's not the way that um it was communicated unfortunately they get the fear do you think they were thinking english were coming over here stepping on their toes yeah yeah so um there's a balance between knowing when to um pivot and knowing when to keep going and after a year we probably put about a million pounds into australia we thought this is too hard so let's take the team and move them to the u.s they can check out the market there and sort of a year after that we said let's open in the u.s and um uh hope that it works there rather than the issues we had in australia okay and what did you find when you were in the u.s because anything whether you're music or whether in sports or whatever trying to break the u.s market is the key with 360 million people there in your mind what was going through your head were you thinking well i'm going to go and target new york or miami or california well i don't know where you targeted but were you saying what can we just do one area there and then and then grow into different states i think first of all when i first went there which was in uh 2002 yeah and um while i was flying over there i thought this is amazing my teenage dream had been go to america copy a business over there and bring it back to the uk because many businesses start in america and then get copied and b &q is a copy of home depot is that right many other examples and um lots of franchise businesses that start in america and end up in the uk and so when i went to america and found that the wasn't utility branded home assistance cover i thought amazing bingo yeah i am actually able to take my model and put it into america and but i think entrepreneurs underestimate how difficult it is in america yes they think well it's the same language yeah and it's not um gymshark when they went to america they were selling um joggers online on the american website and they didn't sell any and that's because americans call joggers sweatpants sweatpants yeah only when they hired some americans and knew that they were using the wrong language and that american is different to english that they got it right and we know of many entrepreneurs that have failed in america and I'd been there for six years.

27:51I'd taken that guy that replaced me in Home Serve UK and sent him to America and he did a really good job. But we failed to sign enough big American water companies over there and the business was still really small and I needed to work out what I was doing wrong. Okay. One of my big recommendations for any entrepreneur that's listening to this show is get a mentor. They are, normally they'll come free and you just need to figure out who's the right person that could help you that's got the gray hair, made all the mistakes and can give you a bit of help and advice. It's interesting that we talk about mentor, mentorship.

28:34One conversation with a mentor could save you hundreds of thousands of pounds or could save you five years. One conversation. Absolutely. and so my conversation was with a guy called Nigel Morris he was the co-founder of Capital One that was big in America the credit card and bank before Capital One came to the UK and I'd spotted his name and thought he's British and he's succeeded in America he'd lived in Washington DC for 18 years at the time when I tried to contact him. So I thought he's Americanized and I need him as my mentor. So I emailed him, no response. Wrote a direct mail letter, nothing.

29:23DHL, important, urgent. And he still didn't respond. For some reason, one evening, 11 o 'clock UK time, 6 p.m. Washington DC time, I had a landline number for him, not his mobile number, and I called it and lo and behold, he answered the phone. And I said, Nigel, I'm a struggling British entrepreneur trying to make it big in America. I think you can help me. I just need one hour of your time. And he said, Richard, persistence pays. I do remember you now. I'm sorry that I didn't respond. Next time we're in America, I'll give you an hour of my time. straight exactly i said just so happens nigel i'm in washington dc tomorrow afternoon of course i wasn't going on a flight out of heath row yeah 2 p.m the following afternoon i was sitting in his office and he gave me two hours of his time fantastic and what did he teach you in that two hours he asked me two really searching and intelligent questions and the first one was so where are you based over here I said oh we're in Miami because Matt Frey assistants are based in Miami they do our claims handling and they underwrite the insurance risk on our policies over here and I'm a Yorkshireman I'm a bit tight with my money and they offered me a bit of free space for an office at the end of their call center in Miami he shook his head violently saying absolutely not if you want to be a serious american business and hire some really good americans to run it you need to be based in boston new york or washington dc east coast five hours time difference and um he was right all the people that we had into home serving the early days either wanted to go to the beach at 4 p.m or spoke dope yeah and that's not the way to build a a big American business.

31:23Quite a nice lifestyle though. Second question he asked me was, who have you got running HomeServe over here then? Said, oh, great guy, used to run HomeServe UK. And he said, a Brit? Yeah, yeah, absolutely. And he said, no way. Americans buy from Americans. If you want to sign all of those big utility partners that you're struggling to do here in America, then you need an american chief exec to be taken seriously and he was right that was the that was the bottleneck so i think if you've found the right mentor and you're happy that they've given you the right advice you need to act on it we left miami and we moved to norwalk connecticut north of new york opened up a big catchment area of great americans that would come and work for home serve and then i hired a guy called tom rusin that came out of a similar sort of business called athenian he joined in 2010 when home serve america was making 10 million dollars annual profit 10 mil net profit yeah of america in how long in 2010 so that took us um seven years to get to that level of profit from zero wonderful tom is still with the business today 16 years later home serve last year made nearly 300 million dollars annual profit my god wow the power of going global with locals yes it's key so what's the learning it's um if you want to be an international business you've got to have people on the ground not necessarily everybody but a good team you've got to have a local team you might send one person from the UK to be part of that team for a while yeah so that you have the same culture in your American business that you do in your British business that you've got the same business model because you want to be ideally 97 % the same and certainly at least 90 % the same as what you're doing the UK what was that feeling like for you sending your man from the uk over to america was it an easy sell for you to say you would like you to go to america and run the uk run the american arm of the business and how much was he on salary back then if you can remember no it was um i my one of my key objectives is to make sure that i hire great people and then we work together for ideally decades yeah Jonathan King is still in home serve today uh and he's been there for 26 years he's now the chairman of home serve in Japan maybe that he ends up being at home serve longer than I was which was as we know um 30 years so was it an easy sell for him to go to America for you no it definitely wasn't but he um he said he would do it but it was going from running a really big business in the uk to start half a dozen people in america a few people that we'd moved from australia but he agreed to do it and then um he also agreed that um he would come back when when he was replaced by tom roosan the american jonathan came back and rerun the uk so how long was jonathan out there in in total years before uh roosan took over um six or seven years and how How easy was it for you to get him to America?

35:04Did you have to put a nice package for him? Did he say no at any point, say no, no? Did you have to go back and forth different packages to say, there's your package, that's your accommodation, there's your bonus structure, there's a nice dangly carrot there for you? No, I think I turned it around the other way and said, you're the person I'd like to go and run HomeServe America and it would be bigger than HomeServe UK one day and tell me what you need financially in order to do it. but that was still a lot less than when we hired a proven american ceo right okay and americans typically would earn between two and three times their uk counterpart so for example when bruceon took over how much salary was he on when he started uh more than i was earning as the founder and the group chief exec wow okay you needed him who identified him um we hired a local headhunter and did a proper selection process and um he came through but actually what was interesting i'd hired a lot of his team at a finian before he joined okay was he on your radar at all did you know who he was um no and he'd um he'd left a finian um the headhunter had sort of said how about this guy tom rusin and i thought oh yeah well afinian people are really good yeah and i remember being at a board dinner in america and talking to some of the team in home serve america that were ex-afinian and saying oh didn't you used to work for this guy tom rusin what's he like i was trying to be really subtle yeah yeah yeah and the following day they all knew that i was going to hire their ex-boss and i was anything but yeah yeah what was the what was the feeling like when you actually have found the right person to know god the pressure's off now we've got the right person we can grow this business and i'm going to have fun dealing with him because he knows what's going on on ground level i think you generally know it in the final interview when somebody's come and they've done a case study presentation which was um so here's home serve america uh we're making sort of eight or ten million dollars uh here's some information on the business tell us what we're doing wrong and what your three-year plan is for the business right okay and i remember tom pitching his presentation and me thinking wow this is exactly what we need to do and getting that warm feeling in your um the best feeling ever in your heart which says i can't wait to work with this person yeah um or equally get a lot of people i'm interviewing and they come and do a rubbish presentation and you think um uh definitely the wrong person you've got to keep going until you get that warm feeling yeah and even then occasionally i've hired somebody and i've got it wrong yes have you found that over the year how How many people do you reckon you've hired full time over the years?

38:18Hundreds and hundreds. Are we into the thousands or not? Not thousands because it would be, there were 10 ,000 people in HomeServe, but I certainly didn't interview all of them, but they were in other countries and different languages. So it'd be only the senior people in each country, but would be more than just my direct reports. It would be hundreds. And I didn't always get it right. And I look back and think, why didn't I get rid of some of those people where there was a mismatch quicker? Do you fire with your head or your heart?

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39:38with my heart yeah because it's not about firing somebody it's about confronting the brutal fact and having an honest conversation with them in a kind way which says um you're really great you've done a fantastic job over the last few years for home serve but uh we're looking for somebody different now in in your role we've now got a mismatch i'm going to give you a good reference help you to get another job i'm going to give you a financial settlement but um i want you to leave the business i hope that we're going to remain friends that you'll join the home serve alumni club and we'll keep in contact and i think i only ever did it badly once yeah called somebody into my office in the very early days i think it was professional properties my property management business before home serve and said you're doing a rubbish job you're fired yeah that conversation didn't go very well never did that again and said do it in a nice way uh stay friends with people life is short and um that's the way to do it 100 and 100 and you end up working with them they're They're giving you good references.

40:59You're giving them good references. Just keep it clean and sweet. What was the turning point in America when the numbers got so big you're like, oh my God, we've hit jackpot? It's not in my personality to say we've hit the jackpot. I think it was... You know, when you've seen something grow, you're like, wow, this has grown way beyonder than my dreams I ever thought of America. And I feel like we might have cracked America here. What year roughly would that have been? i guess it was probably 2013 three years into um uh developing home serve with an american chief exec and could see that this was going to be a very big and valuable business and by then had probably outgrown the uk and when we sold home serve it was probably 65 percent of the total value of the group was home serve america right okay so just go to show if you do smash america and crack america that's when it's a game changer but don't go there is your first country it's too big it's too far away it's not the same language um a couple of businesses that um have come to my growth workshops recently and they went into ireland after um after the uk and that's i thought was a really good model a test bed for uh it's close and it's small see how you're going to make it work in ireland yeah then maybe go to the european country of france or a spain or a germany and then think about uh cracking the big one which is america okay what deal did you do with america what percentage deal was it or was it you you kept a whole lot and you you gave them percentage of the turnover yeah we uh we owned 100 of the business the individual water companies and electricity companies and we're today i think we're working with over 1500 partners and they get a percentage of the revenue yeah each year uh we aim to sign five and ten year agreements so these are long-term partnerships but the important bit was that we uh retained 100 of the equity fantastic so basically the model let's break this model down into a real simple form you're getting as many people on board to pay you 50 pounds a year and you've got the upsell and then your goal is to get as many plumbers on board as many people who've got access to go around to people's houses and fix people's houses well there must be headache in that in terms of someone's just phoned up and got in contact with hq or a line to say my boiler's gone down.

43:42Was your business model say we'll be with you within an hour or three hours or six hours or 12 hours? What was the model there? And then there must be headaches when you're saying, well for example, in North Wales something happens to someone on a Friday night and they are freezing cold in their house and it's up to you to get someone around there as quick as possible. There must be times in there when people haven't turned up and that for you is your reputation. How do you deal with that yeah not only our reputation it's the reputation of the utility partner that have backed our program so therefore we've got to get there yeah uh it's the moment of truth a customer might have been paying their membership fee for two or three years before they use the service they call a free phone number we want to make sure that phone is answered in 10 seconds and in most cases we want to get somebody there within the hour if it's a an emergency that's going to be causing stress and water damage and we have a mix between employed plumbers and heating engineers and subcontractors okay and so on plumbing over 90 percent of the jobs are done with our own directly employed engineers in the red home serve vans but we need to have subcontractors if there's a a peak yes of lots of frozen pipes yeah okay you've got a safety then we've got to have a backup network and we've got to trickle them some work so that we're not just using them in the peak periods so it's a combined model and it's difficult but that's that's the key recipe for we're only as good as our worst engineer or subcontractor on their worst day yes and if you think about in those terms it's scary yes and you've got to really have the quality controls the right operating model to deliver that moment of truth for the customer that is we get there in their hour of need that could be um several hundred customers calling in the uk on christmas day and we want to make sure that we um we get the plumber out there and we save their christmas yeah i get it totally get it what were you like in your 30 years because not many people can get to past five years in business and only a very small percentage can get to the 10-year period you've built a business for 30 years here what was your lifestyle like how obsessed and relentless were you on protecting your brand always knew that customer service was really important and actually it was less about protecting the home serve brand because most people saw our brand through the eyes of their local utility company but i think it was um it was really important but the key for me and i think if i look back it was um i tried to do too much okay and we'd got a great operation very focused model and i was a fox always coming up with new ideas like most entrepreneurs we got into water leak detection with a very clever device called leak bot and that worked really well but we're not going to be able to compete with big american companies on smart home devices we got into doing furniture warranties for furniture retailers we got into doing home repairs for household insurers for the things that were covered by home insurance like a break-in or a fire or flood damage and those were low margin activities yeah so what i learned over the years is stop doing those things don't distract the team and have a a very focused strategy but that's entrepreneurship isn't it sometimes you can get that shiny object syndrome we need to try that but you have to go and trial this to see if they stick to war and whether they work or not but you always end up coming back to what works best did you ever come across charlie mullins at all on your journey i did yeah yeah pimlico plumbers yes and i thought he did a great job in um running a high quality high quality plumbing business in uh in london yeah uh the fact is though he uh the cost of his emergencies was really expensive and therefore people were much better to take out home surf cover um but uh that was his model and he did well and he sold his business and i think he also developed it in um in spain that's right what were you like were you were you were you a dad in this period and a husband and a husband and i want to get to the point i guess what i'm trying to get to here which is when you're building a brand and building a business we all become very obsessed what was and people talk about this work-life balance only people talk about work-life balance is once they've made it but when you're in it there's no way it's very hard work-life balance because you're on it 24 7 and especially your business where it's at you not you you probably are on call the whole time to making sure this operation is working what were you like as a person back then when you were building your business in the first decade yeah i was absolutely focused number one on building a successful business and uh i ended up living in a year 2000 in uh yorkshire and i was from yorkshire and wanted to establish roots for my family for my three kids and that meant that i was um picked up in a car at 5 25 in the morning i get into the car in my tracksuit and my trainers having had my breakfast my in tray would be on the back seat sort of pre-computers and stuff printed out at the time and i'd sit and work in the back for two hours stop at the gym for an hour then start doing calls at 8 30 in the morning get to the office at nine yeah and some days we'd be doing that journey there and back be it that um i would leave the office at uh 4 p.m be back home at 6 30 but it was a really long day including five hours in the car yeah and so i look back and think my kids didn't see me in in the morning for breakfast I was away a couple of nights a week and I didn't spend enough time with them but actually I then look at it and say they saw how hard I was working and all three of them have got a real work ethic I made sure on the holidays that they went out and got holiday jobs and earned some money and I now say i'll spend more time with you got a little bit more time on my hands post home serve and i'm going to buy you experiences as presents not material gifts and i think that works well so when my daughter was 21 we did a horseback safari the two of us in botswana brilliant i was absolutely terrified i'm a rubbish horse rider and i just just aim to stay on for the week yeah but she took a friend with her as well so but it was spending a week doing an adventure with my two boys that uh when they were 18 and 21 we did off-road motorbikes in new mexico on ted turner's estate 2 000 miles of dirt tracks this was a wild west it's a history lesson we'd be going up steep rocks and falling off the motorbikes every day we'd be riding them through rivers and streams and getting absolutely soaked and so i think it's those sort of making it up to my kids with experiences and i think that helps what what would you change knowing what you know now knowing you said you make it up to your children for any entrepreneur out there who has got kids and is obsessed and is building a brand and trying to build a better life for your family is there such a thing as work balance when you look back i would say don't feel too guilty about it but the the big thing that i was very strict with myself about was uh when i was on the touchline watching my kids play play sport then i wasn't looking at my phone and checking my emails and uh when you're there at the weekend or in the evenings you've got to be all in yeah prepared to switch your phone off uh not dip in and out yeah very it's very work hard when you're working but then when you're um when you're playing and it's family time then you've got to be yeah you've got to be full in but that's very difficult the way everyone's connected these days with social media happening with emails with your calendar on your phone and things whatsapp it's very very difficult but that's why you've got to have that rule otherwise i think um in 10 years time an entrepreneur would look back and say regret i missed that try i missed that goal i had to pretend i saw it but i wasn't i was checking my email or thinking about business that's the beauty of having your own company and being an entrepreneur we can be at all the kids sport we can take time we can you've got time to do stuff it's just making sure you manage your time well what year was it in your period when you sold from 93 to 2023 what year was you going we need to gear this up to sell this company one day was there was there a year you remember no because i i never said that okay what i did do is um i started planning for the day that uh home serve would be sold or that i decided that i got out of bed at five five o 'clock in the morning and thought oh i i don't want to go to home serve anymore i've done it long enough i'm bored uh that never never ever happened by the way that's unreal by the way just hold that thought 30 years and you loved the whole thing for every single day for those years uh i didn't love every single day of course we had hard days yeah overall uh i did love the journey and uh love the people i work with did you love the growth because we can all love the journey but there's many businesses out there you think you've got a good business model you're trying everything you possibly can and it's not just turning over the money you thought it would turn over and it's not bringing you the net profits you thought it was going to bring you but your business seems to be bringing in the net profits because you hit the market very you you hit the market at a perfect time and you're also bringing in the money the turnover and net profits with it that must been really enjoyable but it was it was that um it was growing and i could see it was successful and that was the um that was the main reward that i wanted for my hard work um but i did go to harvard business school for three days and that was to work out if i do ever want to leave home serve what am i going to do next yeah and i'm a bit slow on the uptake so after three days i could only come up with two words that describe what i wanted my career to be after home serve and those two words were inspire yeah breakthrough yeah i think dodge if you went to any of my 10 chief execs in home serve and said what was my contribution they would say i challenged them and inspired them and as a team we delivered more than we ever dreamt of yeah and i thought i never want to do that in any other business as chief exec what i do want to do is start backing other entrepreneurs at an earlier stage in their career with some of the money that i've made in home serve only minority investing because i want it to be their business not my business so i'd never say I want 52 % or even 50.1%, um, 10 or 20 or 30 % behind great entrepreneurs with really fast growing businesses, help them to avoid all the mistakes that I made.

56:30So that was actually 10 years ago. I set up growth partner, hired a team of people that could run my investment business without me when I was still running HomeServe and then now with me in helping on those investments. And we've backed 17 entrepreneurs. Fantastic. Achieving a lot of success. We've only actually exited one business so far. And my reward is actually celebrating the success of that entrepreneur and saying, look at what you've achieved. Good for you. And all I did with my team was help you a bit, inspire you, and making sure you didn't make all the mistakes that I made in HomeServe.

57:19Wonderful. Give me some examples of the industries that you've invested in. Yeah, they're mainly around consumer, retail, health, leisure, and tech. Yes. so the only business that i reinvested in as a co-owner with brookfield after home serve was sold was uh checker trade um are you invested in checker trade did you yeah okay checker trade i bought as part of home serve and then before the sale uh before the sale that was back in um end of 2016 and brookfield said if you'd like to reinvest in any of the other businesses and I thought CheckerTrade is small enough for me to put in a meaningful investment.

58:09How much did you put in? I put in 20 million pounds. Quality. I was thinking I was going to say 250 grand. That business is really exciting. Got the best digital tech team in the whole of the UK. a great chief exec that leads that and that hopefully will be for trades the equivalent of a auto trader for car dealers and right move for estate agents and it's taken us longer to get there okay but there's some really exciting growth to come and the business is growing like mad um what percentage did you get for your 20 million for checker trade uh 10 percent Wow, so it's valued at a good 200, as it said, before you jumped in.

59:03Wow. Yep. Secret Food Tours is a recent investment. And what's that? That is you go around six different restaurants in a city that you're visiting as a tourist. It's normally a three-hour journey with a guide. And you taste different versions of the local food. you get a lesson about the the history of the city or the country and i've done a few of them when i've been traveling i was in the u.s a few weeks ago and did one in greenwich and village in in new york fantastic they take you to places that you um restaurants that are hidden away that you wouldn't otherwise know or go to and um that business is growing like mad it's in 110 cities around the world with a plan to get into 170 cities over the the next few years what excites you richard when someone approaches you said i've got an idea i've been building this business i'm sure you don't want to jump into a business that's maybe early early stages do you like a business that got a good three four years five years under its belt and it feels more secure before investing money yeah so my model is the business needs to be making between a million and five million of profit today a bit dull as you sit today yeah because there's a lot of backing for startups and early stage businesses uh venture capitalists i'm a yorkshireman so i know the value of money and making a profit so i want to back those businesses that have got a proven model they're already in that level of profitability but we can then see that uh maybe they could be the the next billion pound business yeah when you exited at 4.1 what share holdings did you have what percentage shareholding do you have of that 4.1 a combination of me and my family we had about uh 12 of the business happy days what's that roughly 500 mil roughly five oh wow respect that's unreal this is unreal this is fascinating boy done good from from yorkshire really is fascinating your book here how to make a billion in nine steps simple lessons from making extraordinary wealth the real deal this is what jake humphrey said by richard harpin tell me about the book and when you decided and why you wanted to write the book yeah i'm uh it's in my character that says i didn't so much celebrate the sale of home serve than looking back and saying uh all the mistakes i made but also the nine things that i know now that i wish i'd known at the start of my journey okay and tell me tell me what those nine steps are for any entrepreneur out there that may help them number one is copy and pivot so we're taught at school that copying homework is bad in business you're much better to copy somebody else's model that's working and then do it slightly better don't have the risk of having to completely invent a new business that has a high likelihood of not working if you've copied and it's not quite working and pivot it test and learn and come up with something that does work do it small scale yeah second one is you will need to get an investor don't sell half your business aim to bring in a bit of capital only when you've proven the model and then you want to press the accelerate button and go quicker but sell 10 20 or 30 percent and it's not just about the money it's finding somebody that can show you how to grow but without telling you yes okay i should third one is get some coachment um get a business coach you'll have to pay for them uh get a mentor that will give you might be free advice or you may decide to have them as a paid advisor or a non-exec on your board but somebody that can give you that advice join a peer group that's part of coachment I look back and think my journey at HomeServe was lonely.

1:03:34I didn't have nine other founders and CEOs that I could learn from, and I wish I had. Next one is have an omni-channel model, bricks and clicks and paper. It's really tough to make a business work online. Cost of Google AdWords is higher than it's ever been. Direct mail shots still work. ideally if you're a retail consumer business then have a few stores as well and or get your product into other people's stores where they can help you build your brand showcase your product and send some of their customers direct to you to your website number five we talked about have the courage to hire your replacement somebody that will be better at running the day today than the entrepreneur that has too many ideas.

1:04:30That's the key. That's the key from my experience. Hire someone better than you. Off you go. Give them the freedom to be an entrepreneur within your business without the financial risk. I'm not saying the entrepreneur needs to leave the business. We're saying focus on product development or focus on business development or international growth, but bring somebody in that has run the day-to-day for somebody else is proven, knows how to do it. Number six was go global with locals. We talked about hiring people in a local country. Number seven is evolution, not revolution. If you try and do something that is two steps removed from what you're doing today, it's high risk and could end up bankrupting your business but equally if you don't keep evolving it year after year look at what happened to yellow pages look at what happened to nokia and blockbuster and um to uh blackberry blackberry yeah yeah that was remember remember the blackberries all singing and dancing like this is unbelievable they never they never developed did they no i i remember that cartoon and it was the couple on holiday and it was the investment banker and his wife and were lying by the pool and this guy was or maybe he was an entrepreneur that was constantly on his blackberry and not relaxing not in his family holiday and she grabbed a hold of his blackberry rang the helpline and said, could you tell me whether these BlackBerry devices are waterproof?

1:06:16The helpline said, oh no, they're not. She said, right, and threw it in the swimming pool. I don't know whether that helped them on the family holiday or not. But we've both seen the Netflix movie on BlackBerry, a really important lesson that you've got to keep evolving. step number eight we all have a to-do list because business is about getting stuff done and you need a way of keeping track how many of us have a not to-do list that is step number eight and i've learned that it's more important to have a not to-do list than a to-do list actually you need both and that's because you've got to stay really focused and lots of ideas and distractions should go on the not to-do list or the the not now list we'll come back to them in a few years time but we got to focus on the core model right now of course and step nine was the one that i originally forgot and that was the personal characteristics of the entrepreneur and i've called that hone your character because we all try and improve what we're not really good at and there was masses of stuff that I was really bad at and I learned don't do that focus on the couple of things that we're really good at and then hire people to do the things that we don't like doing that we're therefore not good at that they can do a lot better and that was the that was the magic model wonderful so I say if you um follow those nine steps and I think all along my journey I thought people overcomplicate business.

1:08:07And I wish I'd known those nine steps at the start of my journey. So I'd love you to buy my book. But more importantly, check it out, guys, here. How to Make a Brilliant in Nine Steps. Wonderful. If you're a founder or CEO and you're running a business turning over between three and a hundred million pounds, I don't think you're getting enough support because this country focuses on startups. Yes. And large companies look after themselves. And nothing in between. So you are the forgotten middle. Agree. And that's why I set up Business Leader. Okay. And where can people find Business Leader? Businessleader.co.uk.

1:08:53Yeah. And that started life as a magazine. and then we said we're going to create the nine steps growth program and that kicks off with a growth workshop i run them six of them a month in my home in marleybone in london 14 entrepreneurs around the my dining table uh it's three hour time commitment it's completely free of charge only come if you want to really grow your business if you're turning over between three and a hundred million and we will help you i'll run through my nine steps it's a discussion rather than a lecture yes and you can then decide whether you want to join business leader as a member and go through our full growth program fantastic and i guess when people are there they're meeting like-minded people they're also meeting you to a potential investment if that's right as well and both of those so we match up those entrepreneurs and put them into peer groups with nine others all in the right stage of growth so some of those businesses that are turning over sort of three to fifteen million we call that the professionalizing stage so they're still professionalizing the model getting it all right making sure that it works and it's profitable then in the 15 million to 75 million turnover range it is scaling and that takes a different discipline bringing in a more proven team and then the third level is if you're turning over over 75 million that is fortifying that's making sure the business is still going to be around in 25 years after you've left or sold and making sure that the business can go international and that it's going to be enduring fabulous before we finish up here when you sold your company tell me three luxurious things that you bought once you sold your company i didn't because I'd already bought that helicopter that I dreamt of from the age of four and it was Lord Hanson flying into land in his parents garden the big house at the end of the cul-de-sac in Huddersfield in West Yorkshire where I was born and my father put me on his shoulders and said I said I want one of those and he said well don't be a civil servant like me earning a pittance you need to run your own business and that was lord hansen and he was my inspiration from the age of four lucky enough to buy my first helicopter in the year 2000 and learned to fly it myself and uh i bought a couple of um ones that were bigger and safer after that and so now i sort of um uh bought a country house um bought a house in london as everybody was coming out of covid and selling up in london so i got a big discount on mine uh but did that uh prior to selling home surf so it was more about saying what was the biggest investment i made yes um i put six million pounds of my own money into business leader and buying the magazine hiring a great team and then funding the growth until that business gets to profitability and then I put 110 million into growth partner into investing in more businesses so to me those investments in business leader yeah and then into growth partner and the portfolio companies that i'm helping those businesses to grow putting in my money yeah that's where i got my pleasure through seeing those come to fruition and creating growth do you think that's keeping you super sharp by investing in other companies investing entrepreneurs keeping the conversation alive keep putting people bringing people together like-minded people is that keeping you giving you that buzz of you've left home sir but this is now what i'm doing and i really like this journey absolutely and um i've got a passion for business dodge and uh i want to be doing it until the day i die too many entrepreneurs sell up too early retire to their desert island get bored but then don't know what to do so you've got to plan what you're going to do and I said I've only got one skill and that is to inspire breakthrough this country is in a difficult time at the moment and I firmly believe that it's up to entrepreneurs to take life into their own hands and help other entrepreneurs by becoming a coach or mentor and i wanted to do it by doubling the number of large companies in the uk yeah there are only seven and a half thousand that employ more than 250 people would you believe it no i wouldn't no not at all there are 80 000 mid-sized companies that employ between 15 and 249 people and they're the ones that we need to help to become the next large companies and that's the hardest part in business when you're employing 15 you're in that desert zone you're thinking my god i'm too big to be small and too small to be big you're finding things aren't working like that that's the danger zone for a lot of businesses yeah and most don't make it to large companies right so that's why a business leader can help okay and um uh we really want to see seven and a half thousand of the eighty thousand mid-sized businesses to become large companies.

1:15:02Large, okay. And I can look back in the future and say, You played your part. that's the thing that I helped to achieve. And I really enjoyed my 30-year journey in HomeServe. I want to enjoy my final 30 years in business before I drop dead. And that's got to be about investing through Growth Partner and helping businesses on the nine steps journey through Business Leader. Have you ever been approached by government? I don't want to go into full on government chat, but you've been approached by government where there's a real good number of us entrepreneurs who speak sense and been there and got the T-shirt and we understand of building and hiring.

1:15:41But it just seems to me no one in government actually understands business. What's the solution here? i joined the the nat west mid-market council which has been going a year the objective there is to get more focus on mid-market companies and to get engagement with with government and to make some tangible things happen so so slow you and i work quickly we want to put mid-market companies on the map and say we need to focus more on those so we've got a definition and we have achieved that in the first year a group of us were at 11 downing street last night meeting the the chancellor and talking about we need more government engagement and focus in helping those mid-market companies can you believe only 21 percent of businesses that get an investor use an advisor to help them okay to me that's scary and there are a couple of problems there number one is um more businesses need help because they haven't raised investment before so they need to make sure they're doing the right things getting the right investor or borrowing money from the right bank at the right interest rate and secondly there's more money out there than most entrepreneurs think or know but they need somebody that guides them through that landscape and helps find the money that can then help their business to grow yeah richard absolutely love this what a journey you've been on what a what a fascinating entrepreneur and what you've lived and breathed for 30 years but well you know what i love about the whole thing one your honesty two most people say oh when i sold my company and i end up with 500 million about why I didn't bought this I wouldn't bought no no no I'm investing back in entrepreneurship I believe in British entrepreneurship and we've got to be helping these people wonderful thank you Dodge yeah really enjoyed it yeah thank you very much you're a proper gentleman good man thank you thank you really enjoyed that if you'd like to see someone on the show leave a comment below and if you haven't already do us a favor show us a bit of love press the subscribe button and it allows us to grow the show even bigger and bigger each week nice one Thank you.