‘Mr Mobile’: How Craig Smith turned old phones into millions

0:00So welcome everyone to the Naked Founder podcast and today we are on location. This is the podcast where nothing is hidden. Thank you to our sponsors, Financial, the home of money for women and our producer, Dan Brown of Renowned. Our guest today is best described as UK's Mr. Mobile. Craig Smith is the group managing director of two businesses called ICT Reverse and Mizuma. Now Mizuma was established in 2006 and has bought and sold more than 5 million mobile phones. We're in their offices in Morecambe where every month they deal with 20 ,000 mobile phones and they will wipe that data from that mobile phone.

0:34ICT Reverse is a data eraser specialist dealing more B2B and they've just announced record turnover of£11.8 million. Welcome, Craig Smith. Thank you. Thanks for coming along, Chris. It's really nice to see you. It's nice to be here. It's nice to be here. Craig, we always start every episode of the Naked Founder podcast with the same question. What didn't they tell you about founding a business which you wish you'd known at the start? nobody told me anything about finding a business uh what didn't they i mean yeah i think naivety is a good thing uh when you're going into business maybe someone disagreed but uh you know i think that when i entered the business world i knew nothing about i knew nothing about anything i knew nothing about over trading or cash flow or margin or vat and all the things that you're supposed to know yeah but um rightly or wrongly i think we just we just got going and uh i suppose they call it learning on the job, right?

1:26Yeah. So I knew very little apart from, you know, I wanted to work for myself. I passionately wanted to work for myself. And, yeah, I think everything I've learned, I've learned on the job, yeah. Yeah, I think there's a certain naivety as well and there's a certain innocence. If you overthink it, then you can talk yourself out of doing things. We moved into a warehouse across the road from here, yeah. And I always said, if we'd drawn that on a whiteboard and the pros and cons, we'd never done it. But thank goodness we did do it and it was the right call. But it just felt like... I just remember that particular point.

2:01Felt like we should do it. Yeah. Probably couldn't justify it at the time, just felt right. And we did. And it was right. What we're going to do... Later, you're going to take my mobile phone and you're going to show me the journey. Because basically, if I want to... I've got a mobile phone and like lots of us, we've got three or four mobile phones we're not using in our drawers at home. Literally gathering dust. And there's money to be made on those phones. but we'll worry because there's data on them. That's where Mazuma come in. This is the Makers Founder podcast. We try and talk about things that are a bit different but other founders can relate to.

2:32So I first met you when you were with your co-founder, Simon. Yeah. And you parted very amicably as well. But I talked you through that process as well in the sense that sometimes you enter into a relationship, a business relationship or any other relationship as well, and at some point in the future, you might be on different roads. and it might not be right for you to both stay in the business as well. So just tell us what happened with Simon Walsh, your co-founder. Yeah, well, Simon and I were, you know, inseparable and we're still very close today. I only saw him recently. You know, we are still very close.

3:10And I, you know, we got to a point, we had a couple of offers for the firm back then, which was 2016. We had a couple of people who wanted to acquire the business. um those deals fell over um and then Simon I was just talking um Simon had a view Simon had some other ideas some stuff other stuff that he felt um we should do um I wouldn't say we had a difference of opinion but you know we we we didn't we you know we we would I had a few ideas he had a few ideas absolutely nothing more than normal and um with these offers that had fell over um we just started talking about uh maybe maybe i should buy simon out of the business um difficult conversation to have yeah because we've been together a long time we'd literally been through everything together in the early days of business and you know from um starting the company name you know simon came up with the name shp at the time yes second hand phones uh that's simon's uh that's that's that was simon's and um and all those things that come with We started a business, all those problems, all those worries, you know, we'd shared.

4:24But then, yeah, you know, we chatted about it and we agreed that that might be the next step forward and very proud to say that we did that deal. I think we did that deal in four weeks. Yeah, so from him coming to you and from you having a conversation with him and you saying, listen, maybe the best option is for me to buy your shares out, you did that in four weeks. You're still friends today. I suppose the point is, it's a bit like a marriage. It was a work marriage as well. You know, better to leave quickly, amicably, do the right thing by both of you. And actually, the company's flourished, hasn't it?

4:58And Simon's done really well for himself as well. I mean, Simon is a big believer in getting stuff done. And, you know, he doesn't like to hang around, yeah. I'm sure if he listens to this, he'd agree with that and he'd appreciate me saying that. So once we decided that's what we were doing, it was never going to take long. And, yeah, I think we agreed to do that. I think it was early January. I think it was early January. And it was done by the end of January. OK. Which, yeah, it's pretty impressive, isn't it? I'm fascinated by people's stories. You know, how did they become an entrepreneur? How did they become a founder?

5:35Your story is fascinating because you take it back to your childhood. You know, we're in Morecambe. You're from, you're brought up in Morecambe. You described your dad, I think, John, wasn't it? Yeah. He was your hero. He used to work on Kensham Docks, was pro-union. He also ran a toy store in the Morecambe market, as well as worked as a bricklayer and a plumber. I think your mum once said that the thing he lacks is, what, focus or discipline? What was the line that's for you? I mean, I only tell you that because, you know, that's what my mum used to say. And my dad definitely had an entrepreneurial streak.

6:07uh and he also but he also you know he worked he generally worked for for different companies throughout his career um and we used to live uh we in morecambe used to live next door to uh to a guy who was um a self-employed joiner yeah and i just remember my dad used to say oh dougie's uh dougie's got it good you know he because dougie used to come on for lunch you see and he always used to say dougie's got it good hasn't he you know and my mum used to say yeah but dougie dougie goes out this house he goes out because we leave next door so we know what time goes out 8 30 every morning yeah back at 12 30.

6:43never more than an hour for lunch back out again back at 5 30. and if you're my mom always used to say my dad if you work for yourself yeah you have to be disciplined as if you work for somebody else if not arguably more so you know you i'm sure every founder out there listening knows that you put a lot more hours in him than the clock would demand working for somebody else yeah would you be fair to say that he was your he was your hero and your dad yeah i mean you know i think a lot of a lot of lads their dad's a hero i mean my dad was a mirror not not not particularly for for for the entrepreneurial stuff if you will it wasn't it wasn't just everything he did i mean he's my dad and i you know loved him very much and um i i look back on some of the things he told me at the time when i was younger and i always listened to him and he made a lot of sense and he said a lot of things you know he said a lot of good things that have stood me in good stead for a long time my dad yeah it sounds fantastic and you're you've always been entrepreneurial i think when you were at school you used to run a couple of books didn't you you know i've i mean i think i don't you know i think uh probably talk to a lot of founders and they excuse me they they probably tell you stories i'm sure they do but um of when they're younger and uh yeah i was always interested in business or making money and finding and you know a way to do stuff and yeah throughout school there's various things that i did you know that that probably would you could say were a little bit entrepreneurial and then you know when i when i i remember when i was working obviously i think you said when we're talking earlier you know it's a misconception that a lot of founders leave school and found a business something you know i think it's good to work for somebody else for a while, to get some sort of...

8:26get some experience under your belt. But I remember when I was working for people, even when I was... I've worked for some not-so-good people, I've worked for some great people, but when I was working, no matter even if it was very good, I always had this sort of feeling that, you know, it was never going to be good enough unless I did it for myself. Yeah. You mentioned people you worked for. I think when you were 18, you went to work for British Fuels. and I think you credit that with teaching a lot of the basics about business. I think you were taken under the wing of the boss and you were able to learn the basics of business.

9:01Just tell us about that period of your life. I was working for a removal company at the time and I think at the time I was on about£100 a week, which was good money. That sounds like my dad's, I would say. £100 a week and this job came up as an office junior, which was about£28 a week. And I went for that job. At British Fields. And everybody said, what are you doing that for? Because you're on£100 a week. And I remember saying, yeah, but I'll be on£100 a week in 10 years from now. Because the bloke next to me, he's 20 years older than me, and he's on£100 a week.

9:36So very fair, that employer, because they paid. It didn't matter how old you were. You got paid what you got paid. But I took this job, took a big pay cut to be on£28 a week as an office junior. Can I just say, you know, it's like, because we're similar ages as well. and we've got a varied audience as well. People think£28 a week, my God. £28 a week. Absolutely, and you were lucky to get£28. You could go out on a teller though, right? Well, Mars bars cost 10p. But, so, OK, you get£28 a week. Yep. But what was the benefit? The deal was I was going to be an office junior and I thought, and I was right, that I would learn how a business, you know, how does this all work, you know, what's...

10:17And we had, it was only a small office up the road in Carnafurf. But they had a little sales department, they had an accounts payable department, an accounts receivable department, you know, they had stock takes, they had... And so I think more subconsciously, you start to breathe this in, right? And you start to understand. And you look at most companies, right? They've got these different things that, it doesn't matter what you do, you need all these different things that are the foundation of business. It just explains that in terms of, They've got all these different departments. Okay, and slowly but surely, you're taking...

10:50Who was the guy that... Was there anybody in particular at British Fields? Yeah, there was a... When I joined there, I think I was about 18. And there was a guy there, probably about mid-20s. But when you're 18, mid-20s is old, right? Yeah. But I liked him a lot. And he'd been promoted to office manager. They were called depots for British Fields. Depot manager. and his job was they ran as all individual pnl so his job he had an individual pnl for his depot and i just remember learning a lot you know he was he was absolutely driven to make his depot he wanted his depot to i think i can't remember how many depots he had now probably 40.

11:31he wanted his depot to be the best depot he was focused heavily on margin he was focused on you know how how we could how we could how to how do we make more money how do we keep everyone happy how do we keep you He was just a real inspiration to looking at it. And it was technically that depot that seemed enormous to me at the time. It was actually quite small when you think about it. But just watching and learning from him and listening to him, I found him really inspirational. And still when I think about him, I still do. It was a long time ago. People, young people, Gen Z won't realise it.

12:09Once upon a time, if you wanted to find a job, you'd look in the vacant section, in the job section of the local newspaper, the national newspaper. In your case, you picked up a copy of The Times and then you saw an advert to work at a company called Orange, which obviously became a heavyweight in the world of phones as well. That's how you got into mobile phones, wasn't it? Even though you thought you were going to work in Doncaster, but ended up in London. I loved... I enjoyed working at British Fuels and then I went on to work for another company. and the industry itself, I enjoyed it. But the problem with it was, it was all about making product last longer.

12:47You know, cars were running for more miles. I mean, I ended up working for an engine oil company, but the whole deal was, you don't want to service your car at 10 ,000 miles, you want to service your car at 20 ,000 or 30 ,000, whatever it may be. So the industry I was in, I felt, you know, for me, I mean, it was when you're targeted on selling litres of oil and the litres of oil are lasting longer and longer, which is a good thing, obviously. I just felt that I wanted some... I felt like I wanted to move away. Not that I don't love Morecambe and Lancaster, I do, but I was sort of early 20s, felt like I wanted to just do something more and I wanted to get out of the optical industry as I felt I needed something new and fresh.

13:31And yeah, those days, for your younger listeners, the way that you did it was you either bought a local paper for a local job or you bought a national paper. So the appointment section in the Times, as you remember, it was huge as well. The paper was massive, wasn't it? The paper was you'd get out of control very quickly when you opened it. And looked through the appointment section on that and applied for a job at Orange. My first experience, I thought it was so professional because that was my first entry into recruitment agents and recruitment days. So Orange invited me to a recruitment day in Manchester, which involved a full nine-to-five psychometric testing, interviews, pitch on yourself, role play, the whole thing.

14:20Yeah, I mean, I'd never done anything. I mean, my life had been, not that I'd had many jobs at that point, but it'd always been a one-to-one interview. this was a whole day of and just to get to the end of it felt like an achievement you know it lasted all day in the Britannia Hotel I think it was in Manchester yeah and um uh they called me up they said congratulations you've um you've got through the test now you have to go for the interview yeah and I went for an interview they had a place in Darlington went for the interview and they said we want you to do Grimsby yeah yeah um now not knowing uh Grimsby very well uh still don't but i'm just i believe it's a nice play but coverage was the thing then yeah it's all about you know people don't think about it now um but your mobile phone does it work doesn't it work does it work in glasgow does it work in newcastle does it work between glasgow and newcastle um anyway they they they then ran me another about two days later and said oh there's been a bit of a bit of a cock up um we haven't actually got a job in grimsby but would you fancy a job in in Kingston upon Thames.

15:23I didn't know where that was, but I knew it wasn't around here. So I said, yeah, yeah. It was a worse looking effort. And then before you knew it, I was in the London office for Orange, and I was working Kingston upon Thames, yeah. It's where you met Simon Walsh, your future business partner. I did, I did. And fairly soon after that, you decided to set up SHP, second-hand firms. We've done about five years. I mean, like I say, I met Simon. I've been there a couple of years when I met Simon. And we were about five, I think I was about five years into my career at Orange and thoroughly enjoying it.

16:00Brilliant firm to work for. Really early days of mobile. So it was wonderful. But then we, like a lot of, you know, good businesses that are founded, we saw there was a problem, you know, a problem, I don't know if you want to call it a problem, but we saw there was something that needed fixing and that's why we set up the business. Originally, you had a storage unit in Wimbledon, didn't you? We did. But then you wanted to come back up north, so you decided to come back up north and then the business has gone from strength to strength ever since, actually. I'm going to, I want to talk about one thing before, if it's OK with you, we'll go for a tour and you can explain what would happen to my mobile phone if I were to send it in here.

16:44So you're growing quite nicely. You get SHP to around£4 million turnover, half a million pound EBITDA, and then you secure somebody called Lord Digby-Jones as an advisor. Well, for people of my generation, you know, Digby-Jones is a former Director-General of the CBI, Minister of State, you know, well-known, high-profile TB personality. You're a punchy little start-up, which is based in Morecambe. I hope you don't mind me saying that. Not at all. OK, and then you secure him as an advisor. And the better still, you're not paying them anything. How did that happen? I think people talk about it a lot these days, don't they?

17:18But, you know, you really do need to put your head up and politely and respectfully ask for things. We won a competition run by HSBC, and we won the Northern finalist of the Business of the Year for HSBC at the time. and the prize was a trip out to Shanghai and with other people around the country who'd also won similar awards in their region. And the idea was, and it was probably before Dragons then, I think, you know, certainly around that time, the idea was you had to pitch your business to four or five business experts. One of them was Lord Digby Jones.

18:12And as I pitched my business, I think you had three minutes to pitch. And at the end of it, three minutes is difficult for me, Chris, as you probably already realised. So I did my pitch and then he very kindly gave me his business card and said, listen, if you ever want to reach out in the future, please do. Which I thought was great. So I arranged to meet him. I kind of contacted him a few times. And like I say, he's a busy man, so you've got to keep going. Don't be put off by the first time he doesn't come back to you. And I ended up meeting him in a hotel in London and just said, just be honest, you know, I just said, look, we're not a big company.

18:58We haven't got a gazillion pound in the bank. I know you work for some very, very large businesses, but we'd really, really like some help. And do you think you might be able to help us? And I think if you're honest and if you say it sincerely as it is, then people will help you. And he said, I think, because I've met Lord Digby Jones, and he said, listen, you couldn't afford me, lads, but I'll do it. I think he covered his expenses. In terms of opening doors and adding credibility, I suppose that's what he did, was it? Because he didn't understand the mobile industry like somebody who'd worked in it all their lives.

19:28No, I mean, he's really kind. I mean, he's working for, you know, at the time, he was working for, you know, Balfour Beatty, he was working for Jaguar. You know, like I say, he was heavily involved with the government. He was, he's obviously a peer. He was, so yeah, he didn't really have any, he was doing a TV show shortly after that. He did a, like, it was that guy from ICI who did it. So John Harvey Jones, right? He was doing a similar thing to him. So he said, look, I don't know why I'm doing this because I really haven't got the time. But I'll help you. So he used to come up occasionally and we used to run through our numbers and tell him what we were doing and what the strategy was.

20:15And he invited us to some dinners that we would never have got in the door if it hadn't been for him. And therefore we could meet all the people we met. We met some really influential people through Lord Jones that we wouldn't have met had we not had that introduction from him. I'm going to have a break in a second because we're going to go downstairs and you're going to give me a quick tour of the site. But just correct me if I'm wrong. So like SHP, second hand phones, rebranded, became ICT reverse because you expanded beyond mobile phones. And then in 2018, by which time Simon, your co-founder, had left the business.

20:50The company was acquired by an agent firm called EcoNew, which also bought Mizooma. You became the MD. why did you do the deal then and did it change the dynamic in the business we'd had a you know we had no no plan to sell the company uh and uh you know my view was uh we'd uh i'd taken control of the business uh i'd given i'm very proud to give 10 of the business back to some some of the employees who'd been me on the whole journey uh which i was really proud about and that came to a really nice fruition for them when we did sell. But we had no plan to sell the company and we actually got an offer from a very large American billion-pound organisation that came along.

21:40Again, out of the blue, we got a phone call off somebody who said, look, this is who we are. It was Exertis, wasn't it? No, no, that Exertis was pre-Cyber leaving. That was pre-Cyber leaving, OK. So we got a phone call off a very large business. we were really flattered by that and although we didn't have a plan to sell we couldn't ignore that we had to look at that and that was just six months of that was a learning curve you know six months of distraction us putting numbers together you know they'd come on the phone on a Tuesday and say we need this, this, this can we have your cash flow can we have your forecast all the things that you'd expect them to ask can we have them by tomorrow and then you'd deliver all this stuff and then you wouldn't hear from them for like six, seven weeks and you'd almost almost thought the deal was over then they come back this went on and on and in the end uh i kind of said look uh we i don't think i don't think this is going to happen so we feel for it don't you we just we just we didn't we didn't we never went back to them and said we're not doing it but we felt that we felt that it wasn't uh it wasn't going to happen and um i remember i actually remember uh saying to my senior team this deal is not going to happen yeah i'm about i'm i'm going on holiday i'm going to write a plan uh because i've always got a notebook i'm going to write a plan and the way i come back off holiday i'll present the plan to you and then you know we're not selling we're going to do this we're going to do this and this is what we're going to do and um while i was on holiday i got another phone call uh off the guy from eco renew yeah the the eco is owned by two guys but he was the uh he was the md at the time ceo and um he rang me up and and said, we'd like to buy your business.

23:22It's Eco Renew. Yeah, Eco Renew. Yeah. And he said, we'd like to buy your company. And I said, no, thank you, I'm not interested. And he said, what's wrong with you? Yeah, I've just rung you up and said, I want to buy your company. I know, but I've just done six months of this. And he said, well, hang on a minute. Who was that with? I told you. And he went, well, look, we're not that. We're not a multinational billion pound American company. We're a decent sized company, but we're effectively owned by two guys who um who run the firm and if they if they like you they'll buy you and if they don't they won't and it'll you'll have a decision quickly so would you mind sending me some information and uh and uh we'll we'll talk further and again talking about deals um that deal was done in six weeks you did the deal so you sold um icc reverse to eco renew yeah and then they bought mizuma um after that so there are two companies they asked you to be group md of both ICC Reverse and Mizuma.

24:22Gonna come back after a quick break, you're gonna give me a quick tour, so you can show me what happens, the journey of a mobile phone. Okay.

24:34Okay, so here we are, okay. My phone's been taken in, it's been scanned in, I've got the QR code. Okay, talk me through the process now. Okay, so the first thing is we wanna check, you'll have gone on our website and you'll have said what it is. So you'll have said, for example, it's an iPhone 14 and then we want to check first of all that it is what it says it is once we've checked it is what it says it is we want to check the grade uh you you get when you go and do a trade with Mizumi you get three grades excellent good poor so we want to check that it marries that once we've done that um we'll put it through and we'll pay you okay um i won't show it on the video but you've got a dashboard there you've got a big screen so you can see you know in real time what devices you're working on what you're sending out etc etc yeah so um i mean we process uh at peak around a thousand units a day um which as you can imagine is quite a lot of kit so we want to check uh how long we're spending on kit what's taking longer we also i think it's really important that we say that people are one of our problems at mizuma is people think they only can send working phones in but we take broken phones broken phones have got a lot of value So, yeah, we check every day.

25:48And as I said earlier, we've got to get you paid by 5 o 'clock. Your phone comes in here and it hits us about 8.30 in the morning, 9 o 'clock in the morning. We're under pressure to get you paid by 5 because that's our promise. So, yeah, there's a lot to do. And where we are now, this is where the magic happens. So this is where your phone's erased, polished, buffed up, call it what you will, and then they go through and then presumably they're sold to insurance companies or retailers or whoever? Yeah, so at this stage here, we've brought your phone in. We've tested it, graded it, we've paid you.

26:24So now we've bought the phone, if you will. And then from there on in, what we're trying to do within the circular economy is make that phone the best it can be to then put it back into the market. So people sometimes confuse us and think that we kind of crush the phones and recycle them and get the gold out of them. but if you if you take any time to read anything these days there's very little gold in an iphone these days yeah um so the the way that we operate is that we want to improve that phone and then we want to we want that phone to have a second life

27:00well welcome back to the naked founder podcast okay we now know what's going to happen to my mobile phone when i send it to these clever people at mizuma as well it's worth saying we're in a wardroom at Mizuma and you can see in the back, you can see the magic happening over my left shoulder. So it did the deal for ICT vs and Mizuma, but it didn't go so well. So Mizuma, I think, were making about 2.3 million, EBITDA. Mizuma was making about one, I think together they were making 2.3. 2.3. So between them they're making 2.3 and then the deal was done and then afterwards they were losing 4.7 million okay so so that's not great news clearly and you went to them with a solution and yeah i mean it was awful and again i'm sure lots of people out there listening can can resonate with that you know selling your company and and then it really not going well at all uh you know i hope that you know so it was really upsetting uh i kind of i did i remember ringing somebody i know and i said what do you think about selling your company and they said the only thing i can tell you craig is remember when you sell your company it's not your train set anymore yeah um and uh that was that was so pivotal because it wasn't my train set anymore i'd sold 100 of the company they'd asked me to stay for 12 months they held back 10 of my money um in order that i'd get paid that money in 12 months like an earn out i had to stay it was it It wasn't an earn-out because the money was guaranteed.

28:29But the deal was I stayed for 12 months. But within that 12 months, they brought in a whole new group of people to run the company. Important to say that the owners, the two guys who owned the company, had nothing to do with that. They were in Hong Kong. One's actually in Hong Kong, one's in Manila. They were leaving it to the people they'd employed. So I always knew they weren't really aware of what was going on, which bothered me again. But my instructions were quite clear. I couldn't necessarily talk to them guys. I was talking to the CEO, quite rightly. But, yeah, it was an upsetting period of time because the business was going from bad to worse.

29:13Both companies were going from bad to worse. I think the founders of Mizuma, one had left and one stayed. and and the one that stays good friend of mine today you know i think he felt the same as i did that it that it was really upsetting to see something you've built yeah start getting broken down by people who don't care like you do and and and don't and don't don't understand it like you they don't see what you see and obviously the company by then was um what you know we were 14 years old say i'd worked with a lot of people for a long time and um seeing them seeing the culture uh seeing the culture dilute um seeing people's view it was it was terrible awful you you became a group md and yes i think you renegotiated your contract didn't you well yeah i mean i remember the uh the two owners talking to me they came to the uk and and we were talking and uh and i i'm a very honest person chris i i think that that's how you get things done and be straight with people always and I just said look this is terrible absolutely terrible and and I think I'll I think you know when my 12 months is up you know I did I mean I for the first time in my life I remember I didn't really have a job I came I was I used to come to the office every day and not really knowing what to do I mean I came with them annoying people just wandering around like trying to see if anyone had anything to talk about which was not my style yeah and then uh again in the complete honesty i said look um when my 12 months is up you know i'm gonna be gone yeah i don't i don't actually think i mean the two the two guys who owned it were putting money in to keep it going he wasn't making any money anymore and i just said um i think um i think i'll leave you know i'm definitely gonna leave when when this is up um i've served my time served my you know and uh anyway we had a chat and they were like look can we not can we not put something together um and we agreed that that um i would uh take over running the uk and i've been doing so ever since and i say you did that on your terms as well um effectively were brought into a turnaround really weren't you yeah yeah it was a completely turnaround i mean it was it was you know it wasn't in a good good place i'm i'm not happy to say And turnarounds are based on, like successful turnarounds are based on making tough decisions.

31:37You had a tough decision to make early on because Mizzou were based down in the south, Watford I think. You wanted to bring them all up, the whole manufacturing team, hook line sinker to Morecambe. They didn't want to go, you know, so you effectively brought them up from Morecambe, but had to build a new business effectively, bring new teams. And that's not, you know, there's a lot of tough decisions that we've made over the years that I still stand behind today. You know, I always think those decisions, they have to be made for the greater good of the business. And when I decided that I was, you know, when I took the job on of running both companies, and equally, you know, the two guys I talk about had offered me equity in the business.