The Legal-Island Story (Part 1) – business start-up and roll out, decision taking and reflecting on the successes and failuresPosted in : Podcasts on 17 January 2019
In the first of 4 episodes tracing the development of the multi-award winning Legal-Island, its founder and chairman Barry Phillips talks about what prompted him to set up in business, his early challenges and some of his biggest mistakes.
Introduced by MD Jayne Gallagher this series of episodes (to be released over the next 6 months to mark Legal-Island’s 21st anniversary) is a must for all those with an interest in business start-ups and development, managing people and leading a company.
You might say the genesis of my company or if you like the once up on a time of Legal-Island can be traced back to 1976 when just age 11 I got my first ever paid job working as a paper delivery boy. I had phoned the local newsagent were I lived in Ottery St Mary, Devon and the proprietor showed up at our house in his superfast sports car. The interview, if that’s what you could call it took place at my garden gate. When he asked me if my Dad was okay about me working early in the morning I told him my Dad was at sea at present (he had returned to the merchant navy for a while after being made redundant) and that he didn’t know I was applying for my first job but my Mum was okay about it. I guess I thought he might take pity on the fatherless boy and this would be reflected in my wages. Looking back on it now I think my plan back fired and he thought I can pay this boy pittance and I won’t even have an irate father to deal with. He paid me just £1.90 a week which in today’s money according to the web equates to a miserly £15.18p. Bear in mind that this was for a paper round that took me an hour to complete every day and two hours on Sundays when the papers were twice as heavy with so many supplements. Oddly, my calculator tells me that at least rounded up this equates to £1.90 per hour in today’s money.
After almost two years at this delivering in all weathers and road conditions I decided to ask for a pay rise. I determined that if I opened the negotiations at £2.50 my employer might counter at £2 and I’d then offer to meet him halfway at £2.25p. I opened. He didn’t counter. Instead, he sacked me.
For days afterwards I reflected on the injustice of it all. I wondered whether the other paper boys would rally to my cause and whether I could persuade them to withdraw their labour until I was re-instated. But they were too dispersed, too glad of any money to risk their own and in truth I didn’t carry enough clout to lead them into this sort of workers’ uprising. Devon was after all the kind of place where nothing very much ever happened least of all an uprising of paper boys who weren’t delivering the Daily Telegraph to the well healed and well retired in time for breakfast.
But it did cause me to think about unequal bargaining powers and the absence of laws that should make things fairer. I became curious to know why it was that there was no law requiring this man to pay me a decent wage. At the time the only law that appeared relevant was one making employment of anyone under 13 illegal and my employer was even breaking that.
So this early interest in justice and law I guess stuck in the back of my mind for many years and led me to do a degree in law at university.
Fast forward to 1995 I had qualified as a barrister and had moved to Northern Ireland and was specialising in employment law. Ironically, one of the first cases I ever did in Northern Ireland was representing a paper boy who was demanding holiday pay now that the Working Time Regulations were in force or at least should have been inforce.
Early on, working as an employment specialist I noticed that the only way to keep up to date on employment law developments was to fly to an annual update conference in London every year. I noticed that there were a good number of us from Northern Ireland who attended. In those days pre the advent of budget airlines the cost of a flight to London from Belfast was at least a good £200. By the time you had paid for the event and a night in a hotel if you decided to go the night before trains and taxis you were out or your employer was a good £800.
The other draw back was that no one explained at this conference the differences between the law in England and Wales and the law in Northern Ireland. So flying home one evening I thought why not organise an event in Belfast using local solicitors and barristers and charge an entry fee which would be a fraction of the cost of a trip to London.
I ran the idea past a few friends and was warned firmly against it. One said that if it was an idea with legs it would have been done by now. An observation with some merit I suppose but ultimately a view that amounted to a charter never to do anything that’s new and not tried before. Another advised me to steer well clear of a world of which I had no experience namely business and entrepreneurship. A third, who I now know to be something of a true naysayer and doom mongerer immediately pointed to the embarrassment I would feel amongst my peers when I had invited lots of successful lawyers to speak to an audience of what could turn out to be just a few people.
Needless to say I ignored all of this advice and went ahead and set up a company that today turns over the best part of £2million pounds. It gives really meaningful employment to a lot of people and delivers I think great service. Knowing when to take advice and when to leave it where it’s given is probably one of the hardest skills in business. It really is so difficult. In attempting to filter out good from bad advice you can do a number of things. You can ask yourself whether the person offering the advice has any direct experience of the type of issue you want help with and discount it if he or she hasn’t. You can discount the advice if you know the person may have an ulterior motive for advising you one way or the other but you’re already running the risk of excluding advice that could be well meant and really on the money. You can over ask too and have just too many viewpoints to consider. Add to this as well the danger of over thinking. Academics they say are lousy at running universities because they spend far too much time analysing their next move and overthinking each step.
What’s interesting now however is that I never asked the one big question that I should have put to myself right at the beginning and it’s this. Am I am entrepreneur? Is this what I’m good at? Do I have the skillset to develop my own business and the self-awareness to know what I’m good at and what I’ll have to outsource or delegate pretty damn quickly once the juggernaut starts moving? When I look back now there were many indications that I had an entrepreneur in me but it’s interesting I never paused for one moment to ask myself the question. As a young boy I was always wheeling and dealing in the playground selling pencils and fancy pens, as a teenager the merchandise matured to cigarettes and magazines in brown envelopes (it was an all boys’ school after all). At university I was forever organising people and giving them things to do or try. A barn dance, a parachute jump, an ice skating trip, a weekend in Paris.
So, one morning probably about July 1998 I decided to organise the first annual event for Northern Ireland updating anyone who wanted to come on employment law developments here. I sort the help of a barrister friend of mine who specialised in employment law who remains to this day a friend and also shareholder in the company.
I went to the Belfast Library and got out the Yellow Pages and took a note of every organisation big enough to pay for a half page advert. If they were big enough to do that they’d be big enough to want to attend this event and have enough money to pay for it.
I knocked up a one page flyer (which I still have to this day) and a covering letter simply addressed to the HR manager. I bought some three hundred second class stamps and as many A5 envelope and I spent the best part of a weekend addressing them by hand before putting them in the post. I remember posting them not all at once but 50 every day for almost week and in a different post box each time. I’d figured that if they had all gone out on the same day from one box I was risking the whole venture. What if someone had set fire to its contents over night or the postman the next time had driven into the river and drowned along with all my flyers? Day 1 and I was already thinking about worse case scenarios and learning to spread my risk.
With six weeks to go to the big day I still had not got a single customer. But then the next day an envelope appeared with half of my flyer returned and completed and best of all my first cheque for £145 and one place at the event. It was from the Belfast Trust one of Northern Ireland’s biggest employers. Wow if they believed in it then surely others would too? Four weeks to go, five booked. Much better than one but barely enough to cover the hotel deposit (which they were insisting was overdue). Two weeks eleven booked. One week 26 booked, D-Day 32 people.
I remember the day very well we had some top line speakers there including one of the best in the business in NI, Beverley Jones. At the time microfiches were all the range and I had borrowed a projector from the hotel which had clearly seen better days. When Beverley was speaking she asked me to change the acetates. I sat next to the OHP. I noticed that after twenty minutes it was beginning to overheat. Smoke was coming out the back. I fanned it best I could without distracting Beverley and drawing delegates’ attention to the budgetness of the whole operation.
So that was the end of the first day’s trading. There had been 32 delegates in the room and I had made enough money to pay the hotel, speakers and then roll some profit forward.
Let’s pause the story here for a moment.
I’ve already talked about whether I was an entrepreneur now I’d like to turn to the question of what type. This was a classic example of try and see without risking too much in case it failed. You might say its like hopping into the shallow end of the pool and swimming towards the deep end instead of going off the high board and hoping you’ll make the dive and be able to swim. Any business activity since this first day has always followed this same principal. Little bit of risk, edge forward, try it and see. I’ve never been one to sit down and plan a massive project and then go to a bank or business angel with a request for a loan of £1 million together with a detailed business plan. In truth I’ve never had the patience to draft detailed business plans and most money making projects have been backed by very crude P&L forecasts at best. I have entrepreneur friends who develop and grow businesses very differently. Their business journey often starts with a serious amount of debt. I’m not knocking this as a business model but it’s clearly not me. Waking up every day in the full knowledge that I owe various parties a lot of money any one of which could turn on me at any point would be far too stressful.
People have asked where the name Legal-Island came from and I wish I could say that it came about after a lot of market research and consultation with a good few branding experts but this would be far from the truth.
Just before the first conference I was messing about on my PC having just purchased a magazine all about this new thing called the Internet. On the front page the magazine was promising readers that it could show you how to get a web page up using the floppy disk that came free inside. After a couple of hours playing about I had managed to do two pages and joining them together I had created what was in effect a very basic web site with links to sites I thought might be of interest to those in HR. One page was relevant to those working in Northern Ireland. The other for those in the Republic of Ireland. After two hours of playing I wasn’t really sure if I had anything worth saving but I was asked for a file name to drop onto the floppy disk. It was legal and it was to do with Island so I called the file “Legal-Island” which is how the name came about.
This “internet thing” proved critical to the early development of Legal-Island and it did so for two reasons. First it provided me with a way to structure the company and grow it at little cost. Second it provided me with a second income stream at just the right time.
Allow me to elaborate on both now.
As we all know what accounts for most businesses in their infancy is cash flow.
Whilst my opening business salvo had been a success the few hundred quid profit made wasn’t enough to justify the rent of an office and hiring core staff. So for the first few years of Legal-Island’s precarious life I recruited only home workers. I set them up with a PC, Internet and phone connection. It suited them as most were working mothers with duties to do before logging in at 9a.m. and it suited me because it effectively meant I didn’t need any bricks and mortar – an overhead which might have wiped me out at that early point. I was the doing the same too working from home. At one point the joke was that I had the shortest commuting distance of any worker. My office was also my bedroom. At night the sofa in my office would pull out into a bed. When I awoke in the morning I could press the start button of the PC with my big toe hanging over the edge of the bed and was then effectively at work.
The other reason the internet proved so important to the development of the company was because it gave to us a really important second income stream at a very early stage. Of course, the internet didn’t only give us web pages but also this other thing called email which was still only known to a few people.
Sometime in about 1998 I figured that it would be worth starting a weekly review of employment law developments specific to Northern Ireland that I would send out to people via this medium called “email”. After 12 months of doing this I had just 10 subscribers. Ok they were paying £85 a year to receive the emails but writing reviews of new case law and legislation was time consuming and at these figures it wasn’t worth the candle. But then something happened. Everyone just seemed to get email. I had clearly got in just at the right time. By year 2 100 people had subscribed by year 3 400 and by year 4 over 600.
Allow me to pause here for a moment to reflect on this.
A big consideration in business is when to move forward with something that you see is going to disrupt the market. The answer is not always to go first and get first mover advantage. Remember the second mouse is the one that gets the cheese. Many early developers of online shopping learnt this to their cost. Early adventures were badly burned because they had moved when the technology wasn’t quite sufficiently developed.
But it seems I had caught the wave just right. Not only were the numbers going sky high the marvellous thing was that every additional subscriber was pure profit. There was no extra cost of slipping them onto the email service other than the admin cost of processing their fee and adding their email address to the database.
My big mistake however was not to roll out a similar service in GB where the potential numbers of subscribers was huge. What I should have done was purchase the names and addresses of the top 10,000 employers in the UK sent them all a brochure informing them of this brand new service fronted by a few employment lawyers I still knew from my days at the London Bar. That was my first big mistake. A second blow to the roll out of the email service was probably just as disappointing although this time events conspired against me rather than my own stupidity.
In year two of the email service a lawyer and fan of it working for a very large legal support company approached me and suggested that I should offer it to their company in GB for them to repackage and to sell as their own to their clients. Same cornflakes just different packaging that sort of thing. He said he didn’t have the authority in the company to set up the deal but he could set up a meeting with the three relevant people who would make the call. I knew this was going to be a big meeting. I figured their client base must consist of at least 1,000 companies. Even at a special knock down rate of £50/head I knew this was a lot of dough.
I must have spent a week prepping for the meeting working on figures and making sure I had the information at hand to cover off any queries they might have. At the meeting they disclosed that their client base was actually nearer 10,000 clients not 1,000 and when they didn’t baulk at my opening offer of £50 per client I was trying not to break out in a cold sweet as I saw the pound signs spinning round in my eyes.
For days after the meeting that seemed to have gone really well I tried my hardest not to think too far ahead or even mentally consider the deal in the bag but hard as I tried occasionally I had already purchased the yacht, the fancy car and was visualising all the trapping that often go with them. A week went by. Then two. Then three without any news. What should I do? Phone and it might look desperate. I’d left the meeting gently hinting that others were interested in the email service too. Then after 1 month I heard from my lawyer friend with the inside information. It was a complete disaster and shock. The three who had met me and would have taken the deal into the company had left to set up their own organisation in direct competition with their former employer. Everything they had been doing and advocating for had been contaminated by their troubled exit from the company. It was clear that the fancy car and the yacht were going to have to wait. Come to think of it I’m still waiting.
I did roll out the email service in the Republic of Ireland however with huge success and took the opportunity to improve how we produced it too. Instead of writing it in-house we got others to do it for us and this is how it’s done today. It’s written mainly by solicitors and barristers specialising in employment law and grateful for the opportunity to get their work and name in front of a lot of potential customers.
Since we started the email service many law firms have offered an email update service of their own and for free too. But none has got traction and to this day we have no main competitor in this space. Lesson: first mover advantage proved crucial here.
The third and final main income stream for the company came some ten years later than that of their two earlier siblings. It was e-learning.
I had thought for a long time that many employers were not doing equality and diversity training and leaving themselves very exposed to costly litigation because of it. As a former lawyer who used to stick claims for harassment on employers and find it too easy to do so I could never understand why they would expose themselves to a spot penalty kick without so much as a goal keeper in front. In short whenever an employee sues claiming harassment it is never enough for an employer to show that he responded promptly and fairly. He has to show that he did all he reasonably could to prevent the harassment taking place in the first instance.
This is best done by showing all of three things. First an equal opportunities policy, second that it has been implemented and third that equality training has taken place and for all staff not just senior employees. The first two are easy enough to do with the right advice. Logistically the third can be a nightmare. It is so because with conventional training it can be difficult to get good availability from a good trainer. Getting everyone together on a date that suits him or her can be challenging too particularly where an employer has multiple sites or employees that spend a lot of time out of the office on the road or even abroad.
The solution was not only to provide quality training but to deliver it in a way that would be convenient to the purchaser rather than the deliverer. E-learning had been around for a while. Legal-Island certainly didn’t invent it. But what we did invent was an e-learning product that was bespoke to Northern Ireland and perfectly positioned to help an employer point to meaningful training in defending liability for a workplace equality issue.
So how did we go about developing the product from scratch. The first thing I did was to the give the development project a very generic name. I think I called it something like the Chitty Chitty Bang Bang project. I’ve always liked how Caracticus Potts wheeled into the shed a beaten up old car destined for the scrap heap. For days his children wondered what was being created behind closed doors to much banging crashing and cursing. Then out he wheels a magical product the like of which had never been seen before. Over time I’ve realised that the name you give even a product development assignment can shape it and an early stage and not always for the better particularly when others get involved. Give an R&D project a very specific label at the start and you risk unduly restricting the creativity juices.
At the time I had just joined an Invest NI course to assist business leaders develop new products. This proved invaluable because it provided me with access to an entrepreneur with direct experience of product development in the IT space a man by the name of Martyn McKay who was one of the founders of TextHelp based in Antrim. His initial advice was pivotal in telling me what formats I should consider for my e-learning modules. At the time 3-d animation products seemed to be the next big thing and I was keen to get in early and catch the wave at just the right time. Very helpfully he set me straight quickly by pointing out two key things to me:
- User technology just wasn’t ready for 3-D (and it’s still not incidentally) and that my product had to be cross platform compatible – in other words, user-friendly and accessible to as many potential customers as possible
- All the most popular cartoons in the world are two D not three from Tom and Gerry right through to the Simpsons.
It’s interesting that very often you can access an external resource and ask yourself how much further did you get along the journey as a result of doing so. But often the value to be found is from people that can save you from making expensive and time consuming mistakes.
Another early activity in the shed so to speak was to look at existing products. The first I saw was so bad it almost deterred me from thinking about producing an e-learning product at all. It was well produced but had far too much content and music playing in the background presumably to stop the user falling asleep so bad was its ability to engage the user. It amounted to little more than a PowerPoint presentation up online
But then I found a great example of e-learning made for a firm in the Far-East. Clearly it had been cheaply produced on a minimal budget but somehow it was very engaging and hard to leave as I tried one product after another. I showed it to colleagues who agreed it was good and then set about asking myself why determined to be sure to import the magical ingredients into our own product. I then sourced a company in India with the expertise to develop the product and at a very reasonable cost and quickly set about finding a second in the event the first relationship didn’t work out.
A big decision when developing a new product or service is to decide when it is you have something good enough to sell. Any well regarded manufacturer will tell you that you must never wait until you consider you have a perfect product before taking it to market. But when do you know you have a minimal viable product that’s good enough to at least start bringing in some revenue? I was really proud of our first product but looking back at it now it appears crude and I’m glad its content dated and we had to take it off the market. I try to look at these changed feelings as a sign of progress. I say to managers here at Legal-Island if you’re not thoroughly embarrassed about the manager you were five years ago you’re not developing fast enough.
The module or I suppose package we eventually offered to the market place came with its own web portal. The HR or trainer officer could the portal and track user activity in an instant. Not only could an employer see whether an employee had done the training they could check to see whether they had understood it too by passing an online assessment. Within no time this module was flying off the shelves and others on child protection in schools, or data protection following GDPR for any employer added to the income stream. What we had done from the start we were still doing. We’d test it in Northern Ireland; if it worked here we’d roll it out in the ROI and sometimes in GB too.
There were other products I developed as well. I wrote and marketed an e-book on how to make a best man’s speech. I developed an online application to help business leaders understand how to use Twitter for their own branding and to market their businesses. Both sold but the returns were too low to justify more time marketing either of them.
Since starting Legal-Island I have owned a property investment company and am about to start up a luxury travel business with my wife.
Some business initiatives will work, some will not. There’s a great skill in knowing when to preserve with a new idea and when to abandon it. Undoubtedly I’ve held on to ideas for too long in the past that in hindsight were destined to fail. But it is easy to be wise after the event. What I do know is that you have be prepared to fail. Vulnerability is part of being an entrepreneur and a leader. If you don’t have it in a company you won’t achieve the right levels of creativity and innovation in the first place.
So what learning can I conclude with for this first episode of the Legal-Island journey? I think it’s this.
Anyone who starts a business necessarily starts with an idea of what it is they want to do, or sell. But you soon have to morph from being a person with the vision to the person who has to sell the vision to others. Dan Pink would say we’re all in sales selling if not the end product then ideas, or plans or even ourselves as we go out networking. Rob Moore would say that primarily every company ever created is a marketing company because however good your product or service is if no-one hears about it you’re going to fail.
Marketing was something I guess I was reasonably good out. I enjoyed it and I particularly enjoyed seeing the opportunity for a product and service and then quickly stimulating demand for it with timely clever marketing. But you have to be good at admin too. This to many who do vision (and tend to be more of the creative type) is the boring bit so I knew I had to get some administrators in pretty quick to tidy up the mess otherwise they’d be chaos. The other big thing is of course the financial control of the company. Not only watching the cash flow but paying wages, keeping receipts, paying the VAT and so on. As you morph from a company that employs 1 other staff member then 3 more and then another 5 timing is critical. At one point your next recruitment needs to be a finance officer and he or she is a big expense. Get them onboard too early and there will be huge damage to your bottom line. Too late and you could tank because you’re doing stuff you don’t enjoy and which isn’t earning you money.
Whilst this is a huge skill you have to rely on quite a bit of luck too for you never really know how much business is going to be around the corner. Sure after trading for a while you can do projections based on previous sales, you can be deliberately conservative so as not to create unnecessary difficulties for yourself but there’s little you can do about how governments allocate budgets that your company may depend on the economy and absolutely nothing in terms of how the economy performs. Someone also said in the time it takes the consumer to wise up to the value of your offering even where your marketing is perfect executed you could have gone bust.
I don’t know how many business books I’ve read over the year certainly I would have liked to have read more. Maybe 100 maybe 200 but I’ve never read one that mentions the critical stage in a company’s gestation which for me is 5 employees or more. For me that’s when it’s starts to get very different and serious. Let me explain. Most sole traders I know begin to grow by recruiting people they know. It might be someone they used to work with. They might head hunt someone who is highly recommended to them. Often they know someone who might account for the next vacancy but after about 5 people you tend to run out of people you either know or come to you highly recommended. At this point your growth processes needs to completely change. You have to take on complete strangers. People who may have a very different work ethic to you. People who don’t get what you’re trying to do perhaps don’t even care.
In the early days of Legal Island my recruitment techniques were truly awful. It was nothing better than meeting for coffee and a chat. Whilst we were lucky enough to recruit some exceptionally talented people in the early stages, we also picked up a good few howlers too who caused us all sorts of angst and problems. In part three I want to talk a lot more about recruitment and talent management but for now I want to flag this up as something I should have spent far more time on.
In the next episode I’ll talk about the things I think I did well developing Legal-Island but also my mistakes and there were many of those.
For now I hope you have found this interesting and useful. Thanks for listening and catch you soon.
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