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SMB to Big Business: Interview with Andrew Xeni, Entrepreneur

SMB to Big Business: Interview with Andrew Xeni, Entrepreneur

SMB to Big Business

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12

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When talking about growing from humble beginnings to big business in the UK, one of the first names that springs to mind is technology, retail and manufacturing entrepreneur Andrew Xeni – Founder & CEO of tech start-up Fabacus, founder & chairman of eco-conscious fashion brand Nobody's Child and referral marketing and social sharing technology Soreto. A self-described passionate retail and technology entrepreneur, and founder of multiple businesses, he tells Dana Kessler about his fascinating business journey.

What drew you to starting a business/becoming a business owner initially?

I started as an entrepreneur at a very young age. Since running a business is something I saw at home, it came naturally to me. My parents owned a small factory making women's wear. Growing up watching them own their business gave me the self-belief that that's what I wanted to do, and can do. At 16, I started doing nightclub promotions, hiring out venues, printing flyers, selling tickets. I was lucky, because when I was 16, I looked 40, so I got away with it. I used to go into the venues, and nobody ever asked my age. I used to do all of the formalities, sign the contracts, book the talent, print the tickets and the flyers, and do all the distribution myself, because there weren't really ticket agents back then. It was pretty much on the street, outside clubs. That was my first attempt at setting up a business.

As a result of that I got into music which brought me to my next venture. I got close to a few artists and started working closely with a big management agency that I've become friends with. We set up our first music label, and a publishing company, then we set up a second label for another artist from the same group. But I realized, whilst all of that was fun, there was very little opportunity, and it was very hard to make money.  

So what did you do?

I decided to get a proper job. This was in the late 90s. I actually went and got myself a job in the in the city for three years working as an equity trader for Lloyds stockbrokers.

That was my first real corporate experience, but I loved it. I worked pretty hard, I got promoted five times and I did all of my professional qualifications. And then I realized how long it actually takes to try and achieve anything within those big corporations. People were talking about 15-20-25 year career plans to get to C-level and I just didn't have the patience for that.

So back to being an entrepreneur?

Exactly. I had a little bit of capital and I was thinking: it's now or never. I've got no kids, I've got no dependents, this is the time. So I left the bank and got involved in a tech business. We were producing content for the big network operators. I was trying to leverage my relationships in the music industry to get music ringtones. We were servicing music rights for different tracks to all the big operators and we had a good business, but we were about two years too early, before Crazy Frog and all the ringtones really blew up.  

During that period we tried another couple of tech businesses, and then I tried property – I was a partner in a nightclub in Soho for about three years. I had quite a diverse portfolio of interests. I ended up pretty busy across a lot of things, but none of them was amazing. Some made money, some didn't, and I was just trying to get one to really work.

What was your next step?  

Around 16 years ago, I offered my brother to go into manufacturing together. He had product sales experience, and I had some business acumen to take care of all the peripheral stuff, like production, operational responsibilities and everything else. So, in 2004, Europride (trading as Misfit Fashions), our family manufacturing business, was born.

We were making ladies fast fashion clothing for the UK High Street, for businesses like New Look, Arcadia, Primark, Asda, House of Fraser… We worked really hard, but it was an amazing journey. We turned over £4 million in the first year, then £7 million, then £15 million, then £25 million, then £38 million, then £50 million and £60 million... We were doing it, we were growing. We were making around half a million units a week, and doing around £100 million a year in turnover across all the different businesses. We invested in knitting, dyeing and printing facilities. It was a good operation that we built over 15 years. The business is still operational today, and it’s probably one of the top five in those product categories in the UK.

Nowadays you’re mostly associated with tech start-up Fabacus, which aims to transform the licensing and retail industries through the power of data. How did Fabacus come about?

I built a software solution for Europride. I realized how valuable it was to us, so I had an ambition to one day take that solution to market with an independent tech company and sell it to other manufacturers. That’s how Fabacus was founded, around seven years ago.  

At that point, I'd gotten back into music as well, so I set up a music management company with my best friend. It was more of a passion project. We were a little bit older, we were doing it for love, not because we needed the money. We only wanted to work with clients that we believed in and genuinely liked. Even today, that business still exists. We still have around six or seven clients.

And how did you start Nobody's Child?

My brother said: You seem to know what you're doing with technology, and because we're manufacturers, why don't we set up our own brand? It must be easy surely to set up a website and sell products. And I was like, yeah, why not? So Nobody's Child was born as an independent direct-to-consumer brand.  

At that point, I also had a sports brand that I set up as a favour for my personal trainer. I had a passion project in music, I was building technology and running the production team for one of the busiest manufacturers in the country for women's jerseys and wovens – so the cracks started to surface. I started to feel the strain of doing all of these different things. And I was never going to be able to execute any one of them with the right efficiency without giving it full focus. But nevert noheless, we persevered.  

Then I got offered a few other opportunities in technology, so I got involved with that. I decided to make a few small investments in complementary technologies that were focused around retail. Fabacus was now starting to take shape, my partner joined and co-invested, and I started to find myself across these three verticals: music, fashion, and technology.

How did you cope with these different verticals?

It was a tough period and I knew that the only way I could cope was to build a solid team. At that point we discovered this amazing opportunity in the licensing industry for Fabacus that we decided to focus on. At this point we also developed an MVP (a minimum viable product) for Soreto, which is a social marketing technology. I had somebody running that for me, and then I had somebody running Nobody's Child for me. So I slowly started to build these different teams around me to give me the right level of support and expertise that I needed.  

I assume that even so, you worked very long hours?

Definitely. I've consistently worked – without exaggerating – 18-19 hours a day for probably the last 15 years. But I love what I do. I do overdo it, but I genuinely love it, even when it's hard. Last night, for instance, I got a message from two new investors who had some questions and I was replying to them until 10.30 PM. It's relentless, but I love the diversity and I actually perform better under pressure.

How do you divide your time? Do you have certain days for some types of tasks or for a particular business?

No, I literally tackle the biggest fire first. It's as simple as that. But that can breed frustration with my teams.

Each one thinks their fire is the biggest...

Absolutely. Each has their fire and for them that’s the biggest, but in my world, there may be two forest fires behind me somewhere else. It's very tough for me to always give 100% focus on stuff, but all my team members need to rest assured that everything I'm doing is for the greater good. They're all my businesses and as they all grow together, my profile grows, the business profiles grow, our capacity to do more financially grows, which by default, we then leverage across all the businesses. By having a common goal, to become stronger together, we don't have so much of a risk of dependency on third party capital, it means that we can go into discussions and hold our own, and it means that we’re learning.

Please tell us about that learning.

 

I have an incredible pipeline of knowledge because I'm in a very privileged position where I get new businesses pitched to me every week of different shapes and sizes: from pharma to advanced tech, AI and medical, marketing and retail.  It comes through me, it makes me more knowledgeable and stronger, and I love to share that with my wider team when I can without distracting them. So having this ecosystem, I will argue naturally, is a lot more beneficial than distracting.  

We planted these acorns 6-7 years ago, and now we have three incredible oak trees, which we are very, very proud of. But then again, I know where we're falling short, and where our ambitions lie. There's a lot of work to be done.

How much have you grown in staff size?

Because of the nature of the manufacturing business, at one point we were responsible for around 4,000 people across the factories in the supply chain that we were in control of and owned. Producing garments is much more labour intense than what I’m doing today. You've got the factories and all the different components. Back then, we had a squad of 60 or 70 in our head office alone, administering and processing orders and styles and inventory. So, if I was going to boast numbers, I would focus on that. But the nature of what we do now is very different.  

Now the headcount across the three businesses is around 75-80, which is a small number, but very meaningful. We've invested around £50 million-55 million in those businesses to date.

How did that change come about?

Three years ago, I decided to leave the family business. It was a bit hard for my brother in the beginning, but he's coming around now to the fact that I had to leave that role where the business had a dependency on me. I needed to focus on the other businesses. But I still babysit that business. I still support them, I’m always at hand. I pop in and they give me tasks or if there is anything high level with their partners or finance, they draft me in for support.

Can we assume that being so different, each of your companies has very different marketing strategies?

Yes, absolutely. The family clothing manufacturing business, for example, does no marketing. It doesn't have to; we've got two or three key retail customers, which generate all the business and therefore we don't need any exposure. Our strategic partnerships with two or three of the big UK retailers have been intact for the best part of 10 years. It's a very simple strategy for that business, just to make sure we don't mess that up.

What marketing do you do for Fabacus?

We do some marketing, but due to the nature of Fabacus – the product and the way that the business was born – we engaged the largest player in the industry to start with, which gave us leverage, and a network to engage most of the top-tier licensers globally. We were able to engage Disney, Warner, Universal, Viacom, Hasbro and all of these guys, dare I say organically. So, the only marketing activity we do there is really about profile building and brand preservation. Things like LinkedIn… making sure our collateral and any press releases are intact.  

At Fabacus we don't proactively go out and do any marketing. We have ample engagements to focus on. Our most effective strategy is physical presence. Now that's back, thankfully. We had an expo back in the last year. It was amazing to get back out into the wild and meet prospective clients. So we don't do a lot of activity there, but we are about to do a bit more for the first time this year, now that we're a bit more courageous because we have industry critical mass. This protects us a bit. We're not bulletproof, but it does give us a bit more comfort and confidence to be a little braver with our messaging.  

How about Nobody’s Child? Being a direct-to-consumer brand, that obviously requires a lot of marketing?

Yes, Nobody’s Child is very, very marketing focused. Everything from full digital strategy, full Ambassador Program. With influencers, activations, and events… We've now launched the store that hosts our events and we've just secured a big funding round which is in the public domain. We sold a piece of the business to Marks and Spencer, so that is our growth capital to get a lot more aggressive with our marketing. Of course we can leverage their existing customer base. We have a few hundreds of thousands of clients, while they have 32 million, so it's very different. That gives us organic reach, which is amazing.  

As a referral marketing and social sharing technology that leverages the power of your existing customers to acquire new ones, how do you go about  Soreto’s marketing?

Exactly, Soreto is a referral marketing technology for e-commerce businesses. They use it as a tool on their website so that when you buy something, it offers you the ability to share it through social platforms. So it is a really interesting one from a marketing perspective.  Our customers for Soreto are our retailers, so our messaging and our strategy has been B2B. But actually, we're about to launch our own marketplace, so for the first time we're now going to switch that messaging to B2B2C. We will also be targeting consumers and our messaging to the consumers that use our technology on other brands is driving them to the Soreto marketplace. So that one's going to get really interesting in terms of marketing.  

So, your marketing strategies are just as diverse as your businesses.

Yes, it gives me complete breadth of knowledge from B2B to B2C to different channels, different platforms. I'm constantly looking at what we could be doing, trying to look for the lowest customer acquisition, the most efficient customer acquisition, the most impactful brand positioning and brand messaging. It's broad and there is a lot of trial and error, but we keep it relatively active to ensure that we're always trying to discover those best channels.

What changes have you made to your business strategy over the past few years?

We evaluate daily. I'm very active, I have an addictive personality, so I'm very much into the details. I review what we're doing every day, and try to think of new ways we can do it. But in the underlying strategy, we've been pretty consistent from the beginning. When setting up each of these three businesses, we thought about our strategy for each, and we've stuck to it. It's just taken longer than we'd like. But that's not our fault, especially with the nature of clients we’re going for. They’re big conglomerates, so they have much bigger sales cycles. Brexit didn't help either, followed by a pandemic, to be followed by who knows what – there's always something to cause delay.  

In terms of our go-to market strategy, there's nothing we're doing today that wasn't a topic of discussion five years ago. But the peripheral activity changes every day - whether it's messaging or a slight nuance in the language that gets amended or tweaked. We're constantly polishing our narrative and evolving. We're building credibility, we're building profile, we're building case studies, we're building customers. So the messaging looks and feels very different today versus five years ago, but in the underlying strategy, I'm very proud to say that we've stuck to our guns, and it's coming to fruition across all three. There are definitely no surprises there.  

Do you have a favourite out of these three businesses?

No, I’d get shot for answering that question! Obviously, I have a view on each one of them in terms of their potential. They all have different potential, they’re all in very different landscapes, but they’re all very big. Ten years ago, I couldn’t have dreamed of achieving this scale of success for even one of these businesses. I had ambition and appetite obviously, but we come from very humble beginnings so I would have been grateful just having a really good job.  

But now we’re talking about businesses in the hundreds of millions of pounds, and even in the billions for some of them, so it’s hard for me to pick. I’m not money motivated so I don’t necessarily gravitate to the one that’s most valuable. I think that Fabacus has more potential, more diversity. The nature of the product and the problem we’re solving is more in line with me personally, which is why I’m operational in this business full time.

Where do you see the business in three years from now?

There's a direct correlation between my age and my activity. So I'd like to think that in the next three to five years, I will taper my activity a little bit. I've been doing this now for a solid 25 years. I want to focus on these three businesses that are incredible, and are in great shape. I want to exceed my ambitions at all three of them, and I think we'll definitely do that in the next three years. In three years, if we continue on this trajectory, then we'll be exploring our options on possible exits. It remains to be seen, but we are having all sorts of weird and wonderful discussions already, which is amazing and flattering, but there's no appetite. I think we will keep both hands on the wheel and drive growth for the next three years, focus on successful execution, and then have a nice problem to talk about.

What would you say is the secret to your business success?

Perseverance and patience. And, more importantly, making sure that whatever you're doing, you're the best. It's as simple as that. It's hard to achieve that, but if you aspire for that, and you endeavor to continue trying to make sure that you are best in class, I think success will follow.

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