“I didn’t start my career as an entrepreneur, and I don’t think anyone does,” Murray said during a keynote speech at the Isle Expo conference on the Isle of Man at the end of May. She left university and decided to acquire what she described as some “business skills” – beginning first at PwC, and then moving on to Vodafone and Pearson.
Murray was sharing the story of her entrepreneurial journey to the room at Isle Expo, explaining first her role in revolutionising the way people added credit to their pay-as-you-go mobile phones and then regaling how many bumps she had to navigate along the way.
Her first foray in the world of startups came when she was headhunted to join a business that had $300m behind it. “It had some challenges with it though,” she added, “we had to build a service – a cellular network – and think about things like marketing, financial control and hiring and training hundreds of staff.”
The role got her thinking that one day she’d like to do something similar herself. Moving from her native New Zealand to the UK, she stepped back into the world of corporates whilst also keeping her juices flowing by starting an MBA on the side.
Taking all the entrepreneurship electives she could, Murray continued to open up her mind and eyes to the opportunities possible on her doorstep. It wasn’t long before she settled on the market problem to address, pre-pay top-ups. In 1999, the only way you could get a mobile was by entering into a contract. With the launch of pre-pay soon after, pretty soon ten million people had snapped up a pre-pay phone.
“This looked really interesting to me, but the only way you could add time was through buying a voucher and ringing up a number – it was a dreadful system, really clunky, manual and analogue,” Murray recounted to Isle Expo.
“A shoe box full of those vouchers was worth about £40,000, and sometimes it got dropped off the back of a lorry so there was loads lost through shrinkage. Here was a really big market, growing quickly, with a problem that needed to be fixed. If you can find a marketplace with a problem that needs to be fixed, and has big demand, you have potential for a business.” And potential for a business Murray did have, and the next six years would serve as the roller-coaster ride proving just why.
Murray’s story resonated with Real Business, so we decided to catch up with her soon after Isle Expo, eager to discover more about the scarcely believable situations that cropped up along the way.
We first started by addressing the challenges associated with running a business spending capital so fast. Her solution to the pre-pay problem, Omega Logic, was burning through cash early on as it looked to secure the all-important four carrier contracts pivotal to long-term success.
“The key then, and something we need to get back to now, was to find ways to get money in the door other than from investment,” she explained. “My fear now is that there are some entrepreneurs who have become extremely proficient at raising capital – they know the cycle and how to produce a pitch dec that hits the buttons of venture capitalists.”
Omega Logic, due to its need for cash, had to find innovative income-generating opportunities. This meant getting the product to market faster, making consumers adopt quicker and consulting along the way – selling the IP the business had begun to build.
“I remember thinking 18 months after founding the business that we were only just now getting revenue, and our first profit was made three and a half years after beginning and we never made a loss after that.” Murray agreed that this is dream thinking for fast-growth companies this year, exacerbated by Amazon-like sentiment that if you’re making a profit you’re not investing enough in future expansion.
“We had a lot of pressure from investors to get across that profit line. Pushing boundaries is one thing, but most start a business with a profit motive. So what are you doing if after ten years you’re not making a profit?”
Murray’s need to get money in the door early on did, inevitably, mean she found herself at the door of investors. As we’ve covered already, Omega Logic needed to win contracts with each of the four British mobile phone networks operating at the time – and it needed all four.
“We started applying for bids, supplying tenders and began to win – it was very exciting,” she said. “We got a lease on an office, but realised we needed investment beyond our life savings. We met a few venture capitalists and pitched our idea, and one said great, we’ll give you £500,000 to build your business.”
Murray and her team were overjoyed, and saw a serious future for their business. However, the sting in the tail came when the investor threw the agreed upon term sheet out of the window and said that the value of the business was half of what it was three months ago.
“We asked why, and they said we don’t think you have any more money left – so the new price is what we’re willing to invest at.” The good faith agreement Murray had with these investors was now not worth the paper it was written on, and she had a very big decision to make.
“Their belief was that if we don’t take the money we’re going to go bust, but I told him what he could do with his money,” she added. “But he was right, we had nothing left. So I rang creditors who were waiting to be paid, and then everyone I knew that had expressed an interest in my business.”
Murray cobbled together the £250,000 the business needed, paid off creditors, and the company was on its way again.
We wanted to know what gave Murray the confidence to tell that investor to stuff it, turning down the capital that both parties knew she was in dire need of. “It comes down to personality really,” she stated. “One of my co-founders was ready to accept it, from the viewpoint that we had worked so hard – but there was not way I was going to let anyone do that to me.”
So the response came from her personality. Knowing that all business owners experience hard days, whether it is staff acting in ways not preferred or suppliers breaching contracts, when faced with an existential risk to the business, Murray said you learn what kind of grit you have.
“There was no guarantee that we were going to be successful, and that investor could have been right in that inside two weeks the business could have gone bankrupt. But it comes down to how much you are personally willing to bear.”
Read on to find out about the shareholder who tried to screw Murray out of her business.
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