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Monday, August 02, 2010

why VCs don't get entrepreneurs

It has been a while since I have posted here, I will get back to regular posting now, it has been a busy time the last 6 weeks, after being made redundant, I took a week out to recharge and analysis the last job with www.narec.co.uk , it was interesting and a challenge, opened my eyes to the failure of the government to manage these sink holes for our hard earned taxes, but that is another story, anyway the article below, stirred me to step up my search for my next job, which is more and more looking like it will be outside the UK...hope you enjoy the article... " class="headline">William Chase: Down to earth
Spud king William Chase
Spud king William Chase

The founder of Tyrrells tells GB how he won a prestigious international award for his British-made vodka and explains why VCs don't get entrepreneurs.

It might come as a surprise, but the world’s finest vodka is distilled and bottled less than 50 miles from Birmingham.

Chase Vodka was named best in show at the San Francisco World Spirits Competition, beating 249 rivals from Russia, Poland, Sweden, France, the US and every other vodka-producing country. It’s produced in Herefordshire under the supervision of William Chase, still a ‘humble potato farmer’ as he describes himself, but probably better known as the man behind Tyrrells Crisps, which he sold for £40 million to private equity firm Langholm Capital in April 2008.

While he’s clearly immensely proud of his vodka’s international standing, Chase does his best to tear down any shreds of mystique surrounding what goes into it. ‘It’s all down to the equipment,’ he explains, adding that the spirit is turned from liquid to vapour 50 times inside a traditional copper still with modern add-ons. ‘We could make up stories about how it’s all about having exactly the right kind of potato, but when you’re mashing it up, distilling it...’ He has a habit of not finishing sentences, but the implication is clear: one mashed-up spud is pretty much like another.

In fact, that’s not entirely true. A large part of the appeal of Chase Vodka, and Tyrrells Crisps for that matter, is down to the fact that the potatoes that go into it come from Chase Farm in Herefordshire. That’s how he can be confident it is ‘pure, as good as it can be, fully traceable’. But in the vodka’s case, the distillation process and the lack of any filtration afterwards is the real key to its success. It comes at a price: Chase Vodka costs £33 a bottle, and Chase intends to hold the premium. ‘That’s why we’re in no rush to expand,’ he explains. He sells about 1,000 bottles a week and annual sales are around £1 million.



Slow burner


A late developer as an entrepreneur, Chase’s fame and wealth has come in the fifth decade of his life. The first 40 years were very different. ‘All the decisions you make in life, the crossroads – whether to go to university or not, the people you meet, how you get into one occupation or another – I find it fascinating,’ he says, the rhythm of his speech like a winding country road. ‘When you’re young, it’s all about the glamour – you might want to be a fireman, an airline pilot. I wanted to be a farmer. But I couldn’t make money. I tried as hard as I could, but I couldn’t make enough to have a nice lifestyle.’

'I didn't want to sell my brand at Walkers prices'

Though Chase’s account of his early days is softened by the success he has enjoyed since then, life was certainly no rural idyll. He borrowed money at the age of 24 to buy his father’s farm and struggled for years to try and make it work. By 1992 he was paying his bank ‘about 30 per cent interest’ on his loan, a consequence of the very high rates of the time and the fact he had exceeded his agreed limit. ‘That nobbled the business,’ he says. ‘I sold the car and started again with nothing.’

He now sees the bankruptcy as a formative experience – ‘it did me a lot of good’ – but it took him another ten years to hit on his winning formula for Tyrrells. In the meantime he made a living as a middleman ‘supplying supermarkets with pretty-looking potatoes’, an increasingly successful business as giants such as Tesco grew in strength and became fussier about the look of their products.

Love-hate relationship


Chase’s relationship with supermarkets has always been complicated. After a well-publicised fall-out with Tesco in 2006, he was depicted by newspapers as the winner of a David and Goliath struggle against the retail giant’s bully-boy tactics. In fact, he speaks highly of the soon-to-retire Tesco CEO Terry Leahy and believes that supermarkets ‘did a lot for the food industry’ in the 1980s by cleaning up hygiene standards and offering families food that was consistently safe to eat.

‘I have nothing personally against Tesco,’ he says. ‘If we didn’t have bar-coded, pre-packaged food, shopping as we know it physically wouldn’t happen. People will say “poor farmers” but the most important thing is that they want their food to be on the supermarket shelves and they want to know it’s not going to hurt their children.’

At the same time, Chase recognises that supermarkets’ buying power has made things very hard for farmers, forcing them to either go down the premium route, as he has done, or massively increase their scale and efficiency to drive down costs. ‘It’s tough out there,’ he admits. ‘When you are just supplying a commodity you’re at the end of the chain, and if there’s anything left for you then you take what you’re given.’

Crisp moves


It was this squeeze on prices that in the end drove Chase to the conclusion that he needed to move up the value chain – to create a brand that people would pay a premium for and keep it out of the mainstream supermarkets.

Tyrrells was born in 2002 with the help of a bank loan: the start of a ‘fantastic educational process’ that taught Chase about branding, marketing and PR, just as being a middleman between farmers and supermarkets had taught him how to use personal charm to get a deal done.

Chase believes passionately that ‘there is no book of rules in life – if you believe there is, nothing ever happens’. He got his crisps into Russia by sending a single container to a retailer, who came back for another one. Before long, the product had spread all over the country. ‘To get your brand overseas, people will say you need to pay listing fees, you need marketing, advertising and so on. All we did was seed it,’ he recalls.

There were mistakes, too. In the early days of Tyrrells, Chase tried to get by with a packaging machine that wasn’t up to the job and spewed out every other crisp packet onto the floor, wasted. ‘That almost caused the business to implode,’ he notes. In the end he had to buy a proven model.

Arguably, Tyrrells benefited most from Chase’s natural flair for PR. He lost half his potatoes one year due to flooding. Rather than drowning his sorrows, he took a boat out into the middle of a flooded field, took some pictures and sent them to all the newspapers.

Cut to the Chase


What really raised Tyrrells to prominence, however, was the spat with Tesco. The supermarket, not an official supplier of Tyrrells crisps, got hold of some and started to sell them at a reduced price. Chase’s objections were ignored until he sought legal advice, at which point Tesco unexpectedly backed down.

‘I didn’t want to sell my brand at Walkers or Kettle Chips prices,’ says Chase. ‘The next thing I knew I was doing about 20 interviews. It was a hell of a decision, a difficult thing to do.’ But it paid off: not only did Chase win the important battle to control his own prices, but the story was covered by all the major newspapers and the BBC.

Chase maintains that he had no intention of selling the business until he was approached by Langholm. ‘It just came up. I didn’t really want to sell. Some days anyway, I wish I’d never sold.’

Langholm had a persuasive argument. Its offer valued Tyrrells at £40 million, ten times its annual profits (sales were £14 million). For a man whose understanding of the value of assets had been shaped by decades of hard business experience, the offer was simply too good to refuse.

‘If a company is worth £40 million but just on its profits, not on its assets, it wants selling,’ he says. ‘At the time I was getting divorced and I thought it would help with all that. It didn’t, in the end.’

Goodbye Mr Chips


There is definitely a tinge of regret in how Chase talks about the sale. Although he still has a 20 per cent stake in Tyrrells, the deal with Langholm involved him leaving the company immediately.

‘A lot of entrepreneurs are mavericks, and the first thing VCs want to do is get rid of them,’ he muses. ‘Nobody prepared me for that – the fact that they see the entrepreneur as a total nutcase. They can’t deal with the fact that this person is coming into work every day doing everything by feel. They couldn’t possibly do things like that. Everyone has to be responsible, accountable. And of course they have to work like that.’

'I didn't really want to sell. Some days, I wish I never had'

It’s a bit like his view of the supermarkets. Both intensely practical and deeply idealistic, Chase understands why things have to be the way they are, but he can’t help a rebellious tendency to challenge the status quo. If someone gets out a laptop to show him a presentation, he tells them to put it away. ‘I’m not a corporate type. I’m quite arrogant about it. I’ll tell people I don’t want to see all that rubbish – just use your charisma and charm and see if you can sell me something.’

Tyrrells’ current management team, on the other hand, are ‘proper corporates who believe in a book of rules’. Though they still call him for advice on occasion, decisions are sometimes made he doesn’t agree with – like the launch of three flavours of crisps before the general election, one for each of the major parties. ‘That bombed. You must never get political. I had the idea for a credit crunch crisp – I thought it was a great idea but they didn’t do it.’

Fortunately, Chase still gets an adequate outlet for his creativity. The man who brought us parsnip, beetroot and carrot flavoured crisps is now selling marmalade vodka and has visions of potato-based cosmetics. ‘Premium cosmetics is a market I would love to get into, but it’s very difficult,’ he explains, before his sensible side kicks in. ‘Of course, vodka is number one. We don’t want to become a jack-of-all-trades.’

He hasn’t lost his flair for PR, either. Recently, he stepped in with an offer to save the government website lovechips.co.uk, which has been threatened with the coalition’s axe. If people didn’t know there was a government website to promote potatoes, they do now.

It’s typical of the way Chase likes to do things – audacious, attention-grabbing, but with an underlying message about his values, which for all his grasp of marketing remain firmly rooted in the soil.



from Growth Business


http://www.growthbusiness.co.uk/channels/entrepreneurs/business-leaders/1270728/william-chase-down-to-earth.thtml




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