A £10m tale of trouble
4 min read
05 July 2011
Ian Millner, founder of creative agency Iris, explains how winning an interest-free loan was almost the undoing of his business.
Iris was set up in 1999 by Ian Millner and five other co-founders (all from marketing giant IMP and all under the age of 30).
The agency’s first client was Sony Ericsson. Other blue-chip clients, including Shell, Adidas, T-Mobile, Coca-Cola and Bacardi Brown Forman, soon followed. The Department of Health also came looking for the agency’s expertise to promote safe sex among young people. “Once you have blue-chip organisations, it gives you enormous stability. You’re no longer eating hand to mouth,” says Millner. “You have a better reputation – and agencies are driven by reputation.”
In 2003, Iris moved into America, securing deals with Adidas, among others. By 2008, the company was pulling in sales of £33.6m and had 256 employees on its payroll. That same year, Iris won the Bank of Scotland Corporate Entrepreneur Challenge.
Er, no actually.
“Ironically, this was the beginning of our problems,” says Millner.
The prize was a £5m interest-free loan. “Actually, Bank of Scotland doubled that and gave us £10m,” says Millner. “We didn’t need the money but we started to act like we did. We became lavish. We lost sight of everything we’d learned and went on a spending spree.”
Iris made its first (and only) acquisition: a management consultancy firm called Concise. It also launched offices in Munich, Amsterdam, Madrid, Mexico City, Paris, Beijing, Shanghai, Melbourne, Dusseldorf and Atlanta (plus some time-consuming near misses in San Francisco, Jakarta, Moscow and Toronto).
“We’d think of somewhere exotic, then we’d send out a team with our logo,” says Millner. “We had money and we were spending it in a hurry.”
Iris also recruited a bunch of “grown-up professional types”: approximately 30 accountants, three HR staff and a few lawyers. “We thought this top-heavy structure would smooth our pathway to growth,” says Millner. “But those people were expensive. And they just got in the way.”
And then, disaster struck.
HBOS was taken over by Lloyds TSB.
“Suddenly we were working with a bank that didn’t know us. They changed our terms of agreement and we were hammered on debt repayments,” says Millner. “Most of our new offices were loss making and our second oldest and second biggest client, COI, stopped spending.”
Painful, yes. But it taught Millner some crucial lessons:
- If you have money to spend, do it slowly
- Don’t lose sight of what made you successful
- Always be client centric
- Banks are not really into relationships
- Don’t just stick flags in different countries. Stick to areas where you have a strong client base or high potential
Millner closed down offices in areas of low strategic importance, got rid of the expensive management layers and reduced central costs.
“It took time but we’re moving forward,” he says. “We’re making money every month again and we’re nearly debt free. We’ve grown up and we’ve gone back to what we do best.
“Whatever you do, don’t make growth your one and only master. You’ll end up making stupid mistakes.”
Ian Millner was a guest speaker at Marketing for Start Up Britain, which runs all week. Tickets still available.