From the brink of bankruptcy to BILLIONS: Sir Richard Harpin

18:20Sir Richard Harpin:That's so amazing. Richard, I didn't realize you're a magician. I did read on your LinkedIn profile, one of your first businesses was selling conkers. I mean, between conkers, rabbits, caring for rabbit, all the way through to home emergency repairs. I mean, the amount of businesses you've tested must be like in the tens, if not getting up to 100, right? Have you counted them?

18:42Steph Melodia:No, maybe we should. But I think the key bit is you learn from those. Yeah, exactly. They certainly weren't all successful, but you learn more from your mistakes. 100%. And that's why I'm a great believer that mentoring is so important.

18:59Sir Richard Harpin:Yeah, yeah.

19:00Steph Melodia:And I'm amazed by the growth workshops that I run in my home in Marleybone every week for entrepreneurs that are running a business turning over between three and a hundred million pounds that there'd be a show of hands around the table. Who here has got a mentor? And only one or two hands would go up. And yeah, I think that's one of the most important things because if you can find the right person that can help you with that problem or opportunity that you're trying to solve, they've got the gray hair, they've made the mistakes they've got the experience and most successful people have had mentors yeah more than one and so they're all happy to give something back you only need to identify who you want and knock on the door loud enough until they submit and say yes yeah that that value or behavior that is

19:56Sir Richard Harpin:persistence pays 100 % Richard I could not agree more hence number one the name of the show strategy and tragedy because the best lessons come from the biggest mistakes my regular listeners will know i say that on a weekly basis but also it's literally what i do for a living because i experienced that firsthand with my last company um and to mention very briefly on the way here i had some voice notes from a from a mentee of mine who uh was saying all of her friends were encouraging her to go down this direction if you're tuning into this right now then first of all a big heartfelt thank you i really appreciate it and secondly there's a very high chance that you're on your own entrepreneurial journey right now.

20:34Sir Richard Harpin:So whether you're a first time founder and you're figuring things out and you feel like you're on your own or if you've done it before and realize that actually this whole entrepreneurship business is a lot easier said than done, then I might be able to help you. If you feel like you vibe with my energy and feel like you need some of that professional big sister direction, support and advice, then I'm opening up a few select spots for that one to one coaching, mentorship and growth strategy for ambitious founders. There's a link in the show notes. So check it out. And I would love to hear from you.

21:03Sir Richard Harpin:All right, let's get back to the episode that I was absolutely adamant against them taking. They're like, this is this is why I don't have lots of grey hairs, but there's one or two mixed in there. But I do. I completely agree. Did you have any mentors then throughout your entrepreneurial journey? Or were all of these just testing and learning?

21:21Steph Melodia:I did, but my first main mentor was not until 2009. Wow. So a long time into HomeServe.

21:30Sir Richard Harpin:Yeah.

21:30Steph Melodia:And we'd been in America for six years at the time. The business, I'd got a great chief exec that was running it, but it was going much more slowly. And I was aware that America is a graveyard for many British entrepreneurs. and I identified a guy called Nigel Morris, a Brit. He was a co-founder of Capital One.

21:54Sir Richard Harpin:I know him too.

21:55Steph Melodia:The credit card company. He's also been on the show. Right. And so I thought he's cracked America and he's a Brit. He lived in Washington, D.C. for 18 years when I tried to get in contact with him. I emailed him. I sent him a letter, a DHL package. and still no response. One evening at 11 o 'clock UK time, 6pm, Washington, DC, East Coast time, I had his landline number and I called him. And lo and behold, he answered the phone himself. And I said, you don't know me, I'm a struggling British entrepreneur trying to make it big in America. And I just need one hour of your time, Nigel. And he said, Oh, I'm really sorry.

22:45Steph Melodia:I do do remember you now. Sorry that I ignored all your communications. Persistence pays. Next time you're over in America, I'll give you an hour of my time. I said, it just so happens, Nigel. I'm in Washington, DC tomorrow afternoon. Of course, I wasn't. I got on the next flight out of Heathrow, 2pm the following afternoon, I was in his office and he gave me two hours of his time and he helped me crack and conquer America.

23:12Sir Richard Harpin:Bravo, Richard. I love these. I was not expecting at all to recognize the name you were going to say there. So what a small world. Tune into my interview with Nigel Morris after this. I'm glad to hear I'm not the only one that he ignores sometimes. He's a very busy guy. I love, love, love hearing those stories of persistence, how creative you can be to kind of get someone's attention. That's such a phenomenal story. All right. Something we've touched on that I want to come on to as well. You've mentioned already a few times about hiring talent better than yourself. And I know you stepped down from HomeServe as a CEO.

23:43Now, I firmly believe that founder and CEO do not always go together, especially when you're at the growth stage of business.

23:53Sir Richard Harpin:At the beginning, it's fine. You're chief everything officer. But when it's time to let go of the reins, it's easier said than done. So for people who still have that double barrel job title, founder and CEO, what are the signs that it is time to let go and bring in a better CEO to lead the business?

24:12Steph Melodia:yeah it's absolutely the magic model it's my step number five hire your replacement and as entrepreneurs we're really really good at copying pivoting coming up with a business model that works when you get to the size that you now need to scale really important that you bring in a experienced chief exec that doesn't mean that the founder is leaving you just work out what you're really good at. That could be owning and designing the product. That could be chief salesperson, business development. Find your niche that you're really good at. Bring in somebody to run the day-to-day. Because I think as entrepreneurs, we're not that focused on the routine of the day-to-day business.

25:02Steph Melodia:It took me eight years before I realized that I was a rubbish chief exec, that at the time we only had a UK business. I'd hired somebody that was business development director. After a year, I thought, you've done an amazing job and called this guy into my office and said, Jonathan, you're promoted. I am giving you my job, MD, HomeServe UK. That then meant I could work on the business rather than in the business and started thinking about, I wonder whether HomeServe would work in a foreign country or not.

25:37Sir Richard Harpin:Yeah. What was it that made you realise that you weren't perhaps the best place to see you of HomeServe?

25:43Steph Melodia:Because I didn't like the routine of the day-to-day. I was good at the vision and the strategy, the door opening and figuring out international growth. And if you said, what was the biggest thing that then sort of turned HomeServe into a billion pound business? It was replicating that model and saying, as we go into each of the 10 countries. We're going to hire a great chief exec and put them in, give them a level of autonomy within our strict business model. And they will make that operation work in a big way in a particular country with people on the ground.

26:25Sir Richard Harpin:What are some of the other specific signs if someone is listening into this now, and they've still got that founder and CEO job title, and maybe they're at a point where business is starting to scale and it's definitely out of that early stage scrappy startup phase. what are some things that they could maybe resonate with to say, OK, it's time in order to take this business to the next level. I need to delegate my job here.

26:49Steph Melodia:I think it would be the time pressure of every weight of the business sits on my shoulders and I'm working incredible hours. And I need to be hiring that C-suite team of great, talented people. and then when you've done that say well actually maybe they should be reporting into a trained chief exec and you can then step up to chairman or chief product officer or something that is crucial within the business but you're working hand in hand with that professional CEO that's done it before and can help you turn your business into something really really large valuable and exciting.

27:35Sir Richard Harpin:Yeah. And from a more emotional perspective, because obviously when it's your own business, it can feel like your own baby. Have you ever had any community members, maybe within the business leaders program who have just struggled emotionally to let go of the reins? And if so, how have you helped them get over that?

27:53Steph Melodia:Yeah, I think there'll be some that say, well, I don't want to hire my replacement and I do want to grow and in which case that's fine but maybe they're overlooking an opportunity and they're not going to be as big as they possibly could take the business to.

28:13Sir Richard Harpin:And then what would be a checklist that you could give someone for a brilliant CEO to bring in? Obviously it's going to vary from business to business But again, what would you test for to be able to trust this person can lead my business?

28:27Steph Melodia:Let me turn it around the other way. When does it go wrong and why for a founder that is hiring a chief exec? And that is they bring in a big company person with loads of experience. And that person comes in and says, oh, I've got to hire all of these expensive people to do my work. I'm going to bring in management consultants to help advise me on what to do and there's a mismatch on cultural fit so I would say you've got to look for somebody that is proven on paper that they've been the MD of a business you can see that it's grown the revenue and profit and you want to say come to my business and do it again they will come from a medium-sized business not a large one And the key bit is recruit slowly, take a long time, make sure that you do a final interview, which is come and present on 10 slides your three year plan for how you're going to run this business.

29:34Steph Melodia:if you're not learning something from those 10 pages and getting so excited about wanting to hire that person right now keep looking don't hire them even if you're desperate the difficulty in hiring the wrong person and then having to let them go far better to know

29:54Sir Richard Harpin:that you found the right person absolutely it's one of the biggest truisms isn't it hire slow and fire fast.

30:00Steph Melodia:The other bit is take a 10 minute call on mobile to get a genuine reference from somebody that you know that knows this person and will give you a highly confidential off the record would you rehire this person or what do you know about them are they as good as they say they're going to be and that is so so important and you've got to do that call yourself.

30:28Sir Richard Harpin:Yeah great tips Richard I love that really practical great tips and as I'm listening to you I'm thinking to all these other examples but they've fallen into those same traps and not necessarily even just at CEO level but even bringing in you know my background is in marketing if they've suddenly they've got this venture capital funding and they've now got the resource to bring in a senior you know a head of marketing or someone they look at the shiny logos they've come from all these big companies but it's just such a mismatch because they've come from this world where they've had a team of 20 people to manage.

30:58Sir Richard Harpin:Well, even though you're out of that scrappy startup phase, you're still, you know, going through that scale up journey. So fantastic tips. We mentioned some of the common traps that founders fall into maybe it links into my next question here. But we've got here how to make a billion in nine steps. You're fantastic book. Thank you for bringing this in. Can you give us a bit more of a teaser of maybe one or two of your favorite steps from the book?

31:19Steph Melodia:yeah let's take um step number four and um you know a bit about this given your marketing background Stephanie uh this is um it's quite surprising I think this step given that surely we're in a digital marketing world and why am I saying that my step number four is bricks and clicks and paper. And I'd like us all to just wind the clock back 10 years and think about our doormat at home. How much direct mail did we get 10 years ago? And how much do we get today? And the answer is far less. Therefore, people who are still doing direct mail get a higher percentage share of the doormat. And therefore, it's more likely to make it to the coffee table or the kitchen table, more likely to be opened, and more likely to be acted upon.

32:18Sir Richard Harpin:Honest answers only. How much of this is your bias, given that's exactly what saved you when you ran out of money 20, 30 years ago?

32:27Steph Melodia:It's the proof of, if you said how many of the near 9 million members that HomeServe has today, how many were generated via direct mail? I would say it's over 7 million. A business that I personally reinvested in that was a HomeServe business when the operation was sold is Checker Trade. And that business puts 25 million leaflets through doors in the UK six times a year. And the clever part of that model is it generates paper, generates clicks that customers that are potential customers that are reading the door leaflet, there's got a list of trades in there. And some of them are calling the track telephone number for the trade, but many others are using it as a prompt to go to the online marketplace.

33:24Sir Richard Harpin:Yeah, it's that omni-channel approach, isn't it? Richard semi-interviewed me before we got the cameras rolling here. And it kind of tracks with the answer I gave you on best marketing advice. It's start with your market and work back from there. And what we're seeing now, I do agree with you, even though I wanted to kind of test you a little bit on your bias, because it's all about cutting through the noise and meeting your market where they are at exactly. And I think what you pointed with the bricks, clicks and paper, they all need to feed into each other. I do believe a lot of people fall into that trap of being channel first, of shiny object syndrome.

33:55Sir Richard Harpin:We should be on TikTok, we should be on this, that and the other. But actually work back from your audience and go from there. Any other tips you want to share?

34:04Steph Melodia:Yeah, I think still linked to that bricks and clicks and paper is the importance of bricks. And that is about how do you get your product in front of consumers or if it's a b2b business then in front of other businesses and you've got to be out there that doesn't need to be necessarily your own retail store you could be putting your products into the wholesale channel great example is i'm invested in passenger clothing oh yeah great outdoor colorful clothing it was a copy of patagonia and when Passenger first got into John Lewis on Oxford Street, we did a look at our online business, B2C, in the postcodes around the John Lewis store and guess what?

34:56Steph Melodia:They hadn't gone down because people could now buy in John Lewis, they'd gone up because a lot of people were buying in John Lewis but also they said, oh this is great clothing, I love the brand but they haven't got my size or I want to see the full range and would then go to our website. So it was retail, the wholesale channel, generating some direct B2C business.

35:23Sir Richard Harpin:Yeah, fantastic. You can actually touch and feel, especially with clothing and yeah, again, meet the customers where they're at. I love also that you mentioned it doesn't necessarily need to be your own store because I was going to push back on reconciling that advice with your earlier advice around sort of the lean startup methodology. And of course, it's very expensive to have your own bricks. So I love that how you can still get in your creativity, your optimism as an entrepreneur. You can still find opportunities. It could be a concession in John Lewis. It could be a pop up. It could be different ways.

35:52Steph Melodia:Pop up, I think, is a great way to prove the model. Yeah. Stubble & Co, great backpacks and they do pop ups at part runs. a business that was at my growth workshop this morning, Midland Health. They did a pop-up in the centre of Birmingham, which was doing medical checks on the spot and that generated follow-up health assessments. Fantastic.

36:23Sir Richard Harpin:Love that. I love that so much. Richard, before I ask you my traditional closing question, you've obviously done a lot of fantastic other interviews. Is there something that no one else has ever asked you that you wish they had?

36:35Steph Melodia:Whether I wish they'd asked me, but definitely the question I think I haven't been asked before is, when are you going to retire? And the answer is never. So I've got a real passion for business and I will work until the day I die. Hopefully I've got 25 years left of my career. and I remember about 10 years ago going to Harvard Business School for three days and that was to work out what my career objective was going to be for the remaining part of my career and I'm slow on the uptake so I could only come up with two words but those words were inspire breakthrough and I hope if you went to any of my team at HomeServe, the chief execs, the MDs that really made it happen rather than me, they would say, I challenged them and I inspired them.

37:34And as a team, we delivered even more than we ever dreamt of. So I wanted to apply that only

37:41Steph Melodia:skill, inspire breakthrough to other entrepreneurs in an earlier stage of their career and help them to turn their midsize businesses into large ones. That's why I can never retire. That's why we need in Business Leader to find all of those medium sized businesses that are turning over between three million and a hundred million and say, come to one of my free growth workshops and learn about the nine steps, hear about our growth programme and how we can help you to become the next large businesses in the UK, because we dearly need it. This economy is struggling, but out of every problem there's a bigger opportunity and I'm determined that we double the number of large companies in the UK.

38:30Sir Richard Harpin:Incredible Richard thank you so I feel like that's a mic drop moment I love that I do have a follow-up question on that which is going back to the killer questions you said that you ask it whether it's for an investment deal or you know hiring a CEO what then motivates you because given you've achieved financial success you've had all these different businesses. It isn't money that gets you out of bed in the morning. So why will you never retire? What is it that still, why are you still so excited by entrepreneurship?

39:01Steph Melodia:Because I made so many mistakes. And I now know the magic nine steps, and I've got to get them out there.

39:09Sir Richard Harpin:You just don't want anyone else to make the same mistakes.

39:11Steph Melodia:I've got to see many more large companies in the UK. And I will look back in future years and say, look at these amazing entrepreneurs that follow those nine steps and we've transformed the UK economy. And I just enjoy it so much. But I do also think it's about getting a balance in life. So I've got a bucket list of holidays that I do every year. I want to spend weekends doing sports with my three kids. We've

39:50Half Ironman triathlon in Berlin in September.

39:54Steph Melodia:So I need to start training for that. I'm not going to beat them. I'll be lagging behind at the back. But I think that sort of the family stuff is important. Big believer in sport. And I'm in the gym at 25 past six every morning. Wow, incredible.

40:15Sir Richard Harpin:Why do you care so much, especially with going back to entrepreneurs and not making the same mistakes you did. Why that fire? I'm kind of peeling back the layers of the onion a little bit here.

40:25Steph Melodia:Because I'm a big believer in Great Britain, the UK. Americans do it a lot better than us. And I was very fortunate in being able to conquer America. But we need to do more in the UK. And whatever the government, whatever the circumstances, it's a duty for entrepreneurs to create growth and through that will become future prosperity.

40:53Sir Richard Harpin:Fantastic. I love that mission, Richard. Thank you so much for sharing. All right, finally coming to my traditional closing question. As we mentioned earlier, the ethos of the show, as you said yourself, is often the best lessons come from the biggest mistakes, also known as tragedies. Richard, what's one tragedy that's taught you an unforgettable lesson?

41:12Steph Melodia:It was actually a tragedy from an entrepreneur and a business that I've invested in through Growth Partner. And that is a guy called Craig Waddington, who set up a business called Easy Bathrooms. And we're taught at Harvard Business School that anybody that has been through a crucible, which is a personal or business crisis, can come out stronger at the other end. And Craig went through both. First of all, he was in business with his twin brother, who unfortunately died in the bath at age 21. And Craig said, for the sake of my brother, I'm going to grow my bathroom business bigger. and he borrowed a load of money from the banks.

42:05Steph Melodia:Along came the banking crisis in 2008 and excuse the pun, but the banks pulled the plug on his business and he said, I'm going to start up again because I'm even more determined now. And he copied the housing model of putting kitchen showrooms on industrial parks. He did the same, but with easy bathrooms. And he made a success of that business. When I invested, he got about 40 showrooms opened and we're now at about 140 showrooms. The business has grown significantly. We opened about a year or so ago the biggest building in Wakefield, 360 ,000 square feet national distribution center for easy bathrooms.

43:00Steph Melodia:so had Craig not gone through that personal crisis and business crisis I don't think easy

43:10Sir Richard Harpin:bathrooms would be where it is today what a triumph Richard that's a fantastic story to share here and you know this is also part of the purpose of the show is is drawing back the curtain on the reality of entrepreneurship because especially in recent years where it's been so glamorized and we only see the linkedin humble brags the press coverage we see all this stuff but it's these stories we don't get to hear about so thank you so much for sharing that richard thank you so so much for coming on the show i really appreciate it thank you stephanie and thank you so much for listening if you enjoyed this please hit that follow or subscribe button wherever you're listening episodes are weekly so i hope to see you next time let us know what you took away from this episode leave us a comment if you learned something new or if you really resonated with some of these stories we always love to hear from you thank you so much and we'll see you next time bye