If you fail to ignite potential investors and sell yourself, you won’t raise money, regardless of how good the business is. Investors know any business is only as good as its management. My early-stage investors came on board because my vision was believable, I had evidence it worked and I presented myself well. They were attracted by my confidence.
Coffee Like It’s 1999
A chairman joins
One of the business angels I met in Cambridge was a little different to the others. Whilst they all brought money, Derek offered more. He came to meet me in Islington, where he asked intelligent questions and we arranged to meet again.
Derek had an interesting background. For some years he had chaired a number of growth companies and had been successful at it. We had solid discussions about Coffee Nation and he was genuinely enthusiastic about what I had and where it could go. He also brought real experience of how to get there.
We continued to talk over a period of some weeks, doing our own due diligence on each other. His previous business had been the largest independent operator of public payphones across Europe, so there was logic to his interest in Coffee Nation. There was a similarity between Coffee Nation machines and payphones; both were remote, unmanned, revenue-generating assets. I figured he could add a lot to my business. Derek proposed that he became chairman of the company and I was happy for him to do so.
Right from the start we were absolutely clear with each other that regardless of how painful the truth, it must always be told. Complete honesty was essential. It formed the bedrock of a very successful relationship that weathered various ups and downs over the next nine years.
Putting development funding to use
With £190k funding now available for proper development and a chairman in place, there were two areas I needed to focus on:
1 Get the offer right – great coffee from easy-to-use machines which were clean, reliable and attractive.
2 Get big customers that could commit to a substantial numbers of sites.
I set to work on the identity of the company first. I met with a small brand and packaging design consultancy in London who had good credentials.
We started with a new brand logo. When they showed me a picture of a cappuccino in a takeaway cup on one side with coffee beans behind and a girl and a guy on the right, I knew instantly this was the logo we should use.
It worked for me because it was more about people (Nation) choosing our product (Coffee) instead of standing in line at a coffee shop. We also came up with a strapline: “Express Yourself”. This was intended to have a double meaning. Be yourself, be who you want to be and press yourself, i.e. self-serve coffee.
The next challenge was to find a robust espresso machine. The machine I had been using was little more than a beefed up home coffee maker. Almost three years earlier I had met a coffee machine company in Minneapolis and they had the perfect machines.
They were big pieces of kit, very sturdy and with easy-to-use touch buttons that we could configure and brand as we wanted. I could see that they would be tough enough to withstand any trading environment. They had an onboard fridge for the milk and no parts to remove for cleaning. I thought this would be much easier for store staff to look after.
I met with their UK distributor in North London and then planned a trip to visit the factory in Seattle to meet their CEO. Those few days in Seattle were the start of a long and successful collaboration for both companies.
We now had the machine we needed so the next task was to develop the shop front, or concession that the machine would sit in. I had learnt that the more space we could take up in a store the more chance we had of attracting customers. We settled on a fibreglass unit 1.5m wide that would be backlit to stand out in a busy store. We had regular and large cups and – just like in a coffee bar – tiny espresso cups. I didn’t expect to sell much espresso but it was the signature product and a mark of authenticity.
There was an integral bin, wooden stirrers, storage inside the unit, an automatic chocolate duster for cappuccinos and even an aroma pump at floor level to pump out the smell of coffee beans into the store. It had to be easy to use for customers, easy to keep clean for staff and easy to work on for maintenance purposes. This unit had to work and look good for at least four years, which was the time period over which we elected to depreciate the installation.
Good management disciplines
Things were now moving fast and there was a terrific momentum building. Derek thought it would be a good idea to hold an annual AGM with our business angel shareholders. We arranged for one of our new machines to be powered up in our lawyer’s offices so everyone could try the coffee and see the progress we were making. The night was a great success. I did a presentation, Derek fielded questions about future fundraising and there was some food and wine laid on. Martin – my first angel investor – was there too.
Two recollections stand out from the evening: being so nervous just before my presentation I had to run to the loo to throw up – funny how now I actually had the investment I got nervous – and Derek asking Martin if he thought I could make it as a CEO. I didn’t like the question but I knew it wasn’t personal. I had convinced people to back me with my business but there ultimately comes a time when the start-up entrepreneur has to grow into the role of CEO. I needn’t have worried; I was to lead the company for the next eight years.
By now we had set up proper monthly board meetings at Baker Tilly’s offices. The board comprised Derek (chairman), myself (founder/CEO) and Martin (non-executive director), with Christine from Baker Tilly in attendance. Right from this early stage I was exposed to good management disciplines which were to prove invaluable.
I wanted to test out the new concession design and espresso machine on the public before installing it on a customer’s site. We couldn’t build one – as a one off it would cost too much – so instead we had a full-size mock up created out of foamex and installed it for a day in a busy shopping centre in Leicester. We used a professional retail consultancy to ask passers by what they thought it was. Most people understood that it was a self-serve coffee machine. They said they thought the design looked high-quality and virtually everyone said they would be prepared to pay more than £1 for a coffee from such a machine.
Pitching to retail partners
All we needed now were great locations for our machines where people would have a reason to buy a coffee. No more neighbourhood stores. I compiled a long list and researched names. The sectors I thought could work were oil companies (petrol forecourts), motorway service areas, supermarkets, cinemas, bookstores, fast food outlets, DIY superstores, the London Underground, airports, music retailers and health clubs.
Summarising the Coffee Nation idea
To achieve success with major retailers I needed to be in the sweet spot with my message. Part of this was getting the language right and communicating it concisely. I put together a set of notes – a presentation to myself really – on Coffee Nation.
I worked out my simple core idea:
“Smart urban gourmet coffee stations – a way of life in 21st-century Britain.”
This could then be expanded to:
An exciting new category
Wherever people are, 24/7
Self-serve
Playing to a long-term trend
In my mind I purposely downplayed talking about the coffee; I knew that as soon as people heard coffee I would be categorised in their mind either as a vending company or as a coffee supplier. I had to keep the dialogue focused on how we were