Posts by Candice Krieger

Healthy times for Holland and Barrett head of non-food, Emma Cockerill

Candice Krieger — Thu, 24 May 2012 13:59:52 +0100

Europe's leading health-food chain are on an ambitious expansion drive.

It was not so long ago that Emma Cockerill was buying herbal teas, liquorice and popcorn seeds at her local Holland & Barrett store in Ilkley, West Yorkshire, where she was a regular customer. Today she is head of non-food for the famous health-food chain, Europe’s leading retailer of vitamins, minerals and herbal supplements.
Holland & Barrett is in the midst of an aggressive expansion plan — 50 new stores have opened in the past 24 months — and business is growing despite the tough conditions on the high-street.

Mrs Cockerill, 32, says health-consciousness has boosted demand for health products and supplementary foods. “There isn’t a price you can put on your and your family’s health. In fact, when times are tough there is a feeling that you can’t afford to be ill. You must be at your best in all aspects of your life to cope with what could be thrown at you, and that includes your personal health.

“When you look at the Irish market, they have got one of the most developed and thriving health food industries in Europe, all because the population is investing in self-prescription rather than having to pay a high price every time they want to visit their GP.
“With the wealth of knowledge now available online, it is far easier for people to research a condition or illness and find ways to proactively manage their health naturally.”

The ageing population and desire to remain healthy are proving to be important factors in driving the nutritional supplements market. Global sales for health and wellness products are expected to exceed $772 billion by 2015, according to the Euromonitor International 2011 report compiled by the National Food Institute.

There are over 700 UK Holland & Barrett stores, attracting 800,000 customers a week, and the brand is expanding in “a big way” with the launch of in-store “Good Food To Go” counters selling hot and cold healthy snacks and drinks, a dedicated “natural beauty” section and a recently launched training academy.

There is also a strong emphasis on the growing sports nutrition industry. UK sales of sports nutrition products rose 14 per cent in 2010 to reach £200 million and are expected to reach £312 million by 2015 as consumers continue to pay attention to their health, with an increasing number of people engaging in sporting activities.
“Something we’ve worked hard on is the explosion of sports nutrition in the UK, particularly with products like Whey Protein — taking it from a product for die-hard muscle–builders and making it accessible for the masses.” Holland & Barrett’s Whey Protein is the store’s best-selling item with more than one million units sold in the past financial year. And with the impending Olympics, Mrs Cockerill acknowledges that this is something that will only increase. “The Olympics will bring greater focus on sports and fitness as a whole. We’re expanding our energy and endurances ranges in anticipation of customers getting the Olympic bug.”

Holland & Barrett, which is today owned by NBTY, was founded by Lancashire businessman Samuel Ryder — a golf enthusiast who gave his name to the Ryder Cup — in 1922. Called Heath & Heather, it sold herbs and seeds. It was renamed Holland & Barrett in 1970 and has expanded its range to include health-food, vitamins, minerals and beauty products. Today, best-selling products include cod liver oil, glucosamine, evening primrose oil and vitamin D. Mrs Cockerill is also seeing a “surprising” boom in natural beauty products. “We are seeing a new type of customer who sees through the marketing hype of the big brands and simply wants excellent quality products with no additives. Products like our Dr Organic range, Coconut Oil and Argan Oil have flown in the past 12 months, growing a category in which we are predicting will go from strength to strength.”
The chain is one of the few names that has increased its high-street presence over the past few years. How has it managed to stay ahead of the game? Promotions such as the Penny Sale, and loyalty scheme Rewards for Life have been particularly successful.

The brand’s e-commerce division has also been significant. “We know that 70 per cent of our customers go online to research products before purchase, so the information we provide has to be in-depth and meet their needs.
“If our website was a store it would have the highest turnover in the business. Essentially it’s our first shop front, and we’ve invested heavily in it.”
There, are of course, challenges, most notably the introduction of new legislation from the EU. Mrs Cockerill says: “It is something which the wider industry has been lobbying against for some time. It will, if passed, restrict the amount of products that can be sold in the UK. It’s counter-intuitive really, applying legislation which was designed for the pharmaceutical industry to natural products which have been used by millions of people for hundreds of years. From a retail point of view, it’s potentially very debilitating and could require thousands of products to either be reformulated or re-labelled.

“It will be a huge challenge for all health food retailers, and as the market becomes more developed, the need to find more innovative and functional products increases. We are always on the look-out for new and exciting health concepts which could be the next big thing, and I dedicate massive amounts of my time and resources to seeking new products from around the world.”

Based in Leicestershire — a stone’s throw from the company’s head offices in Nuneaton, Warwickshire — Mrs Cockerill joined Holland & Barrett in 2002 as a product manager, becoming head of non-food three years ago. She says she was destined for the retail industry, studying product development and management at De-Montfort University before landing her first part-time job with clothes store Pitlochry Knitwear, part of the Edinburgh Woollen Group, selling kilts and cardigans to the over-50s.

A member of Edgware Reform Synagogue in Middlesex, Mrs Cockerill acknowledges that there are not many Jewish people in the company — she is the only Jew in her team. “NBTY is not a Jewish firm, but you meet many people who are. I met one supplier recently for a brief meeting — when he next visited the office he brought me fishballs. It’s the small things that make you feel part of something bigger that remind you of the bigger picture, and seeing as there’s not many of us, I feel I owe it to my ancestors to keep with tradition.
“The faith for me is about having respect for the religion and it is becoming more important to me as I get older.” She adds: “I’m passionate about kosher products and lucky enough to be in a position where I can help manufacturers of kosher products bring them to a wider audience. Recently we listed an egg-free whitener which I know will be of great use to many Jewish cooks, and our vegetarian selection is vast to help give people choice in foods.”

Asked which retailers she admires she says: “This is a tricky question as I’m a fan of so many shops. I admire Marks and Spencer, not only because I am a regular shopper but I’m also a big fan of the food halls. Whistles is a good example of a brand that has carved itself an identity and whose online offering really reflects their stores. Finally, Hobbs clothing, for their excellent customer service and keeping my wardrobe well stocked. I have also been lucky enough to spend some time with the senior management team at Ann Summers. They are a specialist retailer like us that invests in their staff to help sell their products and keep their customers at the forefront of everything they do.”

How we're banking on start-ups

Candice Krieger — Thu, 10 May 2012 14:38:02 +0100

Israel needs a new way of banking if it is to progress beyond its position as a start-up nation. Such a sentiment is sounded by Michael Freedman, founder and executive director of Asquith Israel Merchant Bank, a new addition to the Israeli banking scene.

Israel is well-known for its innovative start-ups - it has more than any other country outside of the US - but there is a lack of money to help them grow into developed businesses. Asquith, which intends to make its first investment this month, aims to do exactly that. It is promoting itself as the first true merchant bank in Israel, providing capital to revenue-generating small-to-medium sized businesses (SMEs) in order to drive Israel's next phase of growth.

Thirty-two year-old Mr Freedman, who made aliyah in 2009, says the Israel start-up culture "110 per cent" necessitates a different way of investing if it is to enter its next development phase.

"There is a phenomenal venture-capital culture and a phenomenal early-stage business culture but there is very little money in the market that encourages entrepreneurs to grow a business." Unlike VCs, which tend to invest early on, Asquith will invest in companies that are more mature and entering the growth stage.

Mr Freedman wants to address the "short-term mentality" of Israelis, who he says are famously very exit-driven. "It's a chicken-and-egg scenario. Funding tends to favour those seeking a quick exit by those seeking to make a quick buck, furthering the exit-driven atmosphere, and so the cycle goes on."

The bank is returning to the old-fashioned way of merchant banking, modeling itself on famous Jewish predecessors; the Rothschilds. Indeed the bank's location on Rothschild Boulevard in Tel Aviv no coincidence.

The principals behind Asquith are well-known in the Israeli business world. There is Shmuel Ben-Tovim, the former economics minister at the Israeli Embassy in London and a non-executive director at Bezeq, Israel Chemicals and Bank Leumi. And Eial Diskin, a high-tech veteran who heads International Business Development Consultants (IBDC).

In its first round Asquith will invest around $4 million in four selected tech-focused SMEs: IT security firm Gamasec; CartaSense, a sensory technology firm; agricultural company Aqua Era Farms, an operator of recirculation systems that enable production of quality, eco-friendly fish, and medical devices company Vaica Medical.

Aquith is approaching affluent Jews in the UK, US and Canada, or as Mr Freedman puts it: "middle-class investors that are pro Israel and might have a holiday home here but that is the extent of their investment in Israel because there is no other vehicle for them to do so." The minimum investment is $50,000.

Technology has made starting a business easier than ever and the Israeli start-up scene continues to get stronger. Yet Israel struggles to turn its start-ups into big companies - many sell out at an early stage. Its most promising companies are often bought by major firms in the US causing many Israeli entrepreneurs to relocate there.

But British-born Mr Freedman believes his model can stop this "brain drain" in turn breaking some of the shackles of its economic dependence on start-ups and a handful of very large companies.

"Instead of being bought and relocating we are offering entrepreneurs the option to be bought into a local company likes ours, giving them the opportunity to retain all of the jobs and create new ones locally."

Mr Freedman believes this model will improve both the Israeli economy and society. "In Israel there is not this culturally-rich middle class that we are used to seeing in the UK, and that impacts on society as many of that factors that stabilise society come from the top end of the middle-class.

"Our philosophy is to help build that and then Israel will become a better place, culturally rich and vibrant.

"When we looked into how to do this we established that a key driver is having a lot of the workforce in SMEs. The better you build that middle ground of companies, the stronger the middle-class gets and the better that is for society.

"We want to fill the gap by investing in companies that hire for the long-term - and from all sectors including Charedim and Arabs."

Is Asquith not rivalling VCs? "No. They are not good at getting involved in later businesses. The average age of those walking through our doors is mid-30s to 40s. These are people that are on their second or third company and this is the one they want to grow."

Asquith will provide capital alongside advisory services on corporate finance and business development.

Mr Freedman says investors are getting "medium risk for high return compared to relatively low risk and low returns in private equity, and relatively high risk and high returns in VCs." The bank expects to perform as well as, or better than, private equity of venture capital funds.

Mr Freedman studied at Sheffield University. He then set up a corporate finance company before moving to Israel. "The more I understood the Israeli market, the more I realised that the thing to do was create a new model.

"There is no market for being a broker here, and there is very little that happens outside the VC industry. Rather than that being a problem, it showed there was an opportunity to create a new investment product."

JC Business Round-Table

Candice Krieger — Tue, 08 May 2012 16:55:12 +0100

How can we boost British business and entrepreneurship? We asked Sir Martin Sorrell, Lord Fink, Lloyd Dorfman and other experts

Candice Krieger — Tue, 08 May 2012 14:40:32 +0100

The participants:

MS: Sir Martin Sorrell, founder and chief executive of WPP
LF: Lord Fink, chief executive of ISAM fund manager and Conservative Party treasurer
SG: Stephen Grabiner, former head of global media at Apax Partners;
LD: Lloyd Dorfman, founder and chief executive of Travelex
NL: Nick Leslau, chairman of Prestbury Group and director of Max Plc
DS: Daniel Seal, chief executive of UK Israel Business
KM: Karen Mattison, founder of Women like Us and Timewise
SW: Shai Weiss, founding partner of the Virgin Green Fund
BH: Brent Hoberman, co-founder of lastminute.com

Chaired by Alilister Heath,
Editor, City A.M.

AH: The purpose of this forum is to have a broad round-table discussion about some of the big economic issues that concern everyone here. Credit conditions remain an issue and there is a double dip starting to happen in the Eurozone with indicators showing contractions, and that is obviously going to affect people with operations over there.

What is happening to the UK economy?

AH: Sir Martin, what do you think the situation is in the UK at the moment? Do you think growth is starting to return?

MS: We (WPP) had a very good year last year. The company as a whole was up by five or six per cent like-for-like and the UK was up nine per cent. So it was almost like an emerging or, as people would call it, fast-growing market. But I would say it was a bit slower for us at the start of the year here but still relatively okay. But we have got some events coming up; the Olympics and the European Football Championships.

This is not an ad for the Coalition or the Conservative Party or the LibDems but I do think that on balance the government has actually done the right thing, which is to try and address the deficit, which the Americans have not done. The trouble is that it is now blowing back on them. I worry about the government not having a plan.

AH: Not having a growth plan?

MS: Yes. They have done the hard stuff on the costs - they have reduced the rate of increase of cost, certainly in nominal terms, but they haven't really come up with a growth plan. Post-Budget it has been pretty tough for them, either because of their own design or through making mistakes. I think it was a mistake to lower the rate of tax at this particular point in time. And the way they released the Budget - they told everybody else what they were going to say.

AH: They told us everything apart from the things that then blew up in their face.

AH: Nick, what is your take on the current state of the UK economy? Are we coming out of some of the problems or are credit conditions still very bad because of new regulations?

NL: I think that is the issue. The lack of bank debt is starving the economy because it is the oil that keeps the motor running. There is still this lack of ability for SMEs to borrow money to expand their businesses. You can't persuade or force the banks to lend money but what you can do is put the brakes on the regulators a little bit and say: "For goodness sake regulate, that is fine, but don't regulate during the worst time in an economic recovery. Delay it until we are on an upward stretch." So I do think that the lack of bank debt is the issue, and not just in relation to property because property is a function of occupational demand and occupational demand is a function of many things including not even the cost of debts but the availability of debt. Real estate falls into two categories: the prime, which means you don't need bank borrowing to buy it so it is sovereign wealth. It is institutional. It is high net worth and that market is steaming but it is a very narrow-defined market and principally London-based. And then there is the rest for which there is no transparency. There is no transactional evidence and the biggest owner of real estate in the country is the banks.

AH: Do you mean by default?

NL: Exactly. Property is a very loose industry. It isn't really an industry at all because it is just an asset class and it is going to take a very, very long time to recover.

AH: I suppose one of the fundamental questions, which is a bit hidden because no one wants to talk about it, is how massive is the property as controlled by banks implicitly or explicitly and what is the real state therefore of banking balance sheets? What is the genuine state of things market-to-market, rather than everyone pretending that things are better than they are?

NL: The problem with lack of transparency is that there is no market-to-market because you don't know what the market is and no one really wants to try it.

AH: Lord Fink, what is your take on things from a more financial perspective?

LF: I think dealing with the deficit wasn't an option. The scale of the deficit was mind blowing. The government was borrowing £1 in every £4 it was spending so our actual financial situation was worse than Greece's. So if action hadn't been taken, Britain's credit rating would have plummeted. It was only the credibility and the fact that the Coalition or the Tories were ahead in the polls that kept Britain's credit rating where it was. I actually also agree with a lot of the comments that were made by Nick about bank lending being very important, and probably one of the best things one could do is to stop the new onslaught of legislation on banks, because the truth is although they are telling the government that they are lending to SMEs, I think they are doing less than they are saying. Getting credit moving is very important. Credit easing should help but it affects the price of credit more than the availability. I think it is actually the availability of credit that is the issue.

AH: But the new rules are pretty crazy when it comes to things like how much capital you have got to put aside for SME lending. Incidentally it is quite clear that what I think is another recession in the Eurozone has been clearly caused by massive retrenchments of banking balance sheets.

MS: It is the big political issue. The big thing that is going to govern the airwaves is that the Americans haven't pursued an austerity approach - or the Northern European or Western European approach of austerity. The problem is that the Americans will not deal with the problem. They kick the can down the road. They haven't done Simpson-Bowles (deficit reduction commission). The President decommissioned Simpson-Bowles and then ignored it completely and didn't even enter into a dialogue about it. So the issue for the Americans, and what really worries me, is not what we are going through now. It is what happens in 2013 because the Americans will have to deal with their deficit. That is when I think their chickens will come home to roost.

AH: Karen, what is your take on the state of play in the UK more generally?

KM: I can speak as an owner of a small business and we do business-to business recruitment. On a grass roots level we are finding that we are recruiting for small businesses who have, over the past few years, been really nervous about taking on new people but are more recently they are feeling more confident to grow.

AH: Are most of the operations UK-centric rather than global?

KM: Yes. We are completely UK-centric.

AH: Do you feel there is some growth now in London?

KM: Our particular area is part-time recruitment and we are finding that more and more businesses are turning to part-time because they are understanding that they can get the skills and experience they need to grow the business but not necessarily on a full-time basis.

AH: So that is almost saying that actually things aren't that great out there and they have got to be more careful and they can't hire people full-time?

KM: No. What they are saying is they would rather get part-time senior people and people with experience to help them grow than make more cautious decisions and keep junior people.

Is now a good time to be an entrepreneur?

AH: Brent, from an entrepreneurial perspective, how are business conditions in the UK at the moment?

BH: Well, when you talk about entrepreneurs it is such a micro-world, particularly in the digital space, so I am not sure how reflective it is of the whole economy, but obviously it is a very buoyant time for entrepreneurs. Valuations are very hot. We are getting back to the point where taxi drivers are talking to you about business ideas, which is very 2000. Because of the unpopularity of banking and finance, more and more people are looking at entrepreneurship as a career choice.

AH: I suppose the taxi drivers aren't talking about property any more. That is probably quite a good thing.

Why is there no uk facebook?

AH: What do people in the room think is the real state of play when it comes to entrepreneurial Britain and Tech City? Daniel, why aren't there any UK Facebooks? There is clearly a lot going on in parts of London in the new areas but there seems to be some problem when it comes to growing businesses to a major global size.

DS: I think entreprenurial Britain has to evolve. If you look at Silicon Valley or Israel, the tech landscape has evolved over time. You can't think: "Okay, we are going to create digital roundabouts" and expect everything to happen immediately. Certainly I see that people among my generation don't see banking and management consulting as a way forward. I think the government needs to to encourage entrepreneurship and not just say: "We are going to create a digital Britain" but provide the right frameworks, such as going back to the education system and teaching coding in schools. It is also access to capital. You do need quite a bit of capital to start a business now.

AH: But clearly there is a lot of business creation in the UK but only seven per cent or so of these become gazelles and then how many becomes genuine major global brands?

BH: Scale is obviously a big issue.

AH:: In the sense that the UK market is too small?

BH: One obvious point is a single pan-European digital market, which is something that the EU are trying to work on. It should be very easy to create pan-European digital success stories but I don't think there is the conviction among the UK government to do it. There are some EU conferences on this but it is just talking at the moment. One example is MoneySupermarket. Why is it not pan-European? It is a great British success story but it is not a pan-European one. It should be.

AH: But why does it need to be pan-European rather than global?

BH: It is still early for Brazil and India. You want to win in Brazil in the internet in five years time. Today it is still not big enough. It is the same with India. It is exciting and buzzy but there are only a few billion-dollar companies in the internet space in those markets.

AH: What about the UK?

BH: I think it is a bigger issue than the government wants to accept. Does it matter that every company I can think of that is doing well in the internet is becoming American? Yes it does.

I would like to see the government help UK success stories become pan-European very quickly, before they are copied.

SM: But what is it about America that does it? What is it that we need to do? We have got Silicon Fen around Cambridge University but what else is it that we have to do?

BH: The businesses that are getting huge valuations are platform businesses and the platform businesses start where there is scale. The other point is that the skills we have got here are packaging skills: creativity and user interface, and user interface in the web business is now the new gold dust so why is it that we are not able to leverage those user-interface skills into more global businesses? I think there are barriers.

AH: But what strikes me as quite interesting about all of this is that you have got existing companies that seem to have become very good technology companies, but the difficulty is creating new ones.

BH: We have some. Betfair, which succeeded because of regulatory arbitrage. A big point is that people sell out too early. SecondMarket lets you create a private market for shares so it stops you having to go public to de-risk things, and I don't why Barry Silbert, who runs SecondMarket, hasn't come over here. VCs are also changing their attitude. In America the venture capitalists are happier for the entrepreneurs to take money off the table as they scale.

AH: What about VCs in the UK?

BH: There is a more relaxed attitude - that the entrepreneur will still remain motivated even if he has taken 10 per cent of his stake off the table. From the entrepreneur's point of view that is pretty essential because if you put your whole life in one basket you need to hedge your risks.

What should government be doing?

AH: Lord Fink, what do you think is the solution in terms of policy changes?

LF: I don't think there is a single silver bullet. There are certain things that government can do well. First of all, focusing on education. It is important that we turn out kids from primary school who are literate and numerate. Then we have got to get the kids used to technology in school - and technology used smartly. Also improving digital broadband speeds throughout Britain. Government has announced major investment in improving broadband speeds, which will mean that most people do have access to better broadband which gets them used to the power of the internet. But then there is the question of whether to encourage companies to grow without trying to pick winners, which is a mistake made by the previous governments. Do you actually just try and reduce some of the barriers to businesses expanding? This is something I think you should do selectively. I think we need to help companies to move from Britain to Europe.

AH: But why is Europe the answer in this instance?

LF: I think if you are having to travel and move people physically, Europe is just much closer geographically so people can get on a plane, go to Europe and back in the same day. Now with the demise of Concord, if you are going to the States, it does involve a two or three day trip for a face-to-face meeting. And face-to-face meetings are still required. Video conferencing has replaced a lot of meetings but if you are meeting a stranger for the first time it is normal to have a physical meeting.

MS: And hasn't the UK become rather imbalanced? The economy is heavily dependent on financial services. I am not saying it is a bad thing. I am not saying it should be discouraged. It should be stimulated if anything. But it is imbalanced geographically. We are sitting here in the middle of London but go a few miles outside of London and it is a totally different picture. You mentioned education. It is about technology and infrastructure. It is about broadband. It is not just the hardware. It is not just about airports and runways. It is about immigration policy. It is about taxation policy. I find the argument about whether it should be 50 or 45 per cent of complete irrelevance. If you want to stimulate the entrepreneurial industry you are not going to do it by income tax. You do it by Capital Gains Tax.

AH: But why can't there be a really radical change?

MS: You are in the newspaper industry. If you have got a legacy newspaper business and you are trying to compete with new young internet companies which are judged on totally different criteria, it is very difficult - you have these structures. Mario Monti tries to introduce reform of the labour laws in Italy and gets blocked. In Spain it is a struggle to do what they are doing. In Holland they try and make some changes and get turfed out. So it is very difficult to change these structures. It is the same thing for companies and it is the same thing for countries.

SG: In terms of entrepreneurship there might be something happening. If you talk to the young people, particularly the well-educated ones, you begin to get a sense that they are going to take things into their own hands, and actually they are looking around saying: "What you guys benefited from over the past 10 years is not going to happen any more. We recognise that. We recognise that there aren't necessarily jobs for life. Actually we don't even particularly want to be lawyers because in 10 years time we will work out that it is no fun being a lawyer." There are the beginnings of the re-engineering of an entrepreneurial culture. Young people are beginning to say: "I want to go and do this myself because that is the only option I have".

NL: But you need a framework for that to happen and I think whether it is the TMT sector (telecommunications, media and technology) or any other sector, as a country we are very very short-termist. Whether it is VC, equity or institutional equity, it is unbelievably short-term and we do nothing politically to encourage long-term investment. The politicians can't do very much but they can change the framework. I wish George Osborne had stayed in bed on Budget day because he has done so much damage to the Conservative Party that he should have done nothing. But "rich" is now a horrendously sinister word. There is "uber-rich" and "rich" and it is all about "rich" and how much money people have got and "aren't they morally repugnant?" The fact is, rich should be celebrated. Wealth creation should be celebrated and we are in a society now where it is the opposite.

MS: I don't think that is entirely fair. The criticism is heavily on payment for failure, which I think we would all be sympathetic with. In terms of criticism of payment for success, I would agree with you. I am not going to apologise that WPP had a record year last year and neither should I. The issue was the bad bankers and the banker-bashing and that has since migrated. The real problem lies with this movement towards capping absolute levels.

NL: It was the Labour government that introduced taper relief. It actually was one of the clever things they did. If you invest for 10 years you pay 10 per cent tax and actually, we need far more of that. We need far more encouragement. Instead the vernacular surrounding the rich and wealth creation has made it something that is not good to aspire to, whereas we should be investing in employment, trade and TMT.

MS: But you have got to have some sympathy with that argument. The tax payer bails out the banks and becomes the owners and we are pumping more money in and profits are being inflated and any mug can do it. They are not doing the SME investments that we want them to do. They are not providing the liquid engineering for internet companies or SMEs. I have some sympathy with the argument.

NL: What is the argument?

MS: The argument is that you have to do something about rewards and returns for failure.

NL: I am talking about wealth creation outside of the public arena, outside of the state-owned banks. All of us around this table who have some money to invest, we either want to invest it or give it away. Certainly giving away is now being challenged. So we want to invest, so encourage us to invest.

MS: But I am talking about your thinking that rich is bad. There is a variation of that argument. In terms of the argument that we got ourselves into the problem with the banks, something should be done about that. Payment for failure is wrong. I am talking about the payment for success where I agree with you.

SG: Nick, it is really interesting because you set out a set of really Jewish values. You set out values that say the market is okay but actually you want to encourage it to work and this is the best way to generate wealth creation. But actually the State and the people around the table have a responsibility to ensure that some of that success goes back in to support other people in doing it and it requires us not to be continually looking over our shoulder saying: "This is what happened with Lehman." It actually requires us to demand some sort of sensible long-term planning. I am sure the success that is coming from WPP now come out of things that you (WPP) were doing four and five years ago and our government doesn't seem to be able to take that in.

AH: Lloyd, what is your take on entrepreneurial Britain?

LD: I think Stephen is right. I think this climate is actually conducive to entrepreneurial desire and growth because the safe options are no longer there. I don't think there are comfortable jobs any more. I think young people have a problem: whether they go to university or don't go to university, how are they going to earn a living? You get a sense that young people think about these things more and more. People have been saying that Europe is important. I have to tell you, I found Europe really difficult to build businesses in. It was easier to build business in the US, Australia and the Middle East than it was in Europe. I don't know if anybody has ever employed people in Europe. You have got to put your bullet-proof underwear on and just hope and pray that you get through it. It really is tough. Philosophically I think we lean more to the United States. Wasn't it a Brit who invented the world wide web? What happened to that? Wasn't it a Brit who designed the iPod? What happened to that? We have been a seafaring trading nation. We have always punched above our weight. We have built enormous global businesses in the past. Why are we sitting here like little worried Englanders. To Nick's point, I think he is absolutely right. Would any half-talented, reasonably clever person want to take on a job heading up a bank today? What would you want that for? We need to stimulate entrepreneurship, celebrate success and encourage people to invest. Austerity in the short-term is important but like any business you can only go so far cutting costs. At some point you have to grow the top line and as a country we have got to find a way to do that. The banks have made a complete mess of the situation. And now they are so busy shrinking their balance sheets and screwing their remaining solvent customers to get themselves out of it that we are not seeing the SME lending that we need to achieve for growth.

BH: There are actually quite a lot of things the government are doing, which smart people who follow this stuff don't know about. What puzzles me is that for a country that is skilled at packaging stuff, why is the government lacking a coherent narrative?

AH: Also, I would say the austerity narrative is actually harder than people understand because the government is constantly saying they are paying down the debt and they are not paying down the debt. Theirs is increasing at a very fast rate. They are only slightly reducing the deficit and the massive cuts aren't that massive, meaning that we might still be in another fiscal crisis one or two years down the line.

MS: Nominal spending has increased.

AH: And if growth doesn't materialise in two or three more quarters then all of the deficit numbers would be up again and the whole thing will have to change again. So I think that is much more precarious than people realise, but this growth narrative is a major problem.

LF: I want to talk about the argument that is used about communicating the narrative. To be honest I expected a slump in the government's poll rating to happen a year ago but actually at that point Cameron and the cabinet were playing a pretty good game and didn't make many mistakes and Labour were scoring a few own goals. So the slump in my view was always going to come at the end of the honeymoon period. The honeymoon lasted a bit longer than I expected. One of the reasons we have for not getting our policy across is that traditionally, the government was one of the biggest advertisers in the UK and one of the biggest areas of cuts that has been made is advertising.

MS: But is was their own choice.

LF: It was but it was a large sum of money. It was an easy save.

MS: But it is not a communications point. It is a planning point, a strategy.

LF: Spending money on communications and advertising is one way you can guarantee to get your message across but this budget was cut. We also face a press that is being hit by a Leveson Inquiry and will be pretty grumpy for the next year or so because the inquiry is going to drag on. So I think that whatever the message is, it is actually quite difficult to get it across unless you pay for it. So I do think the government has a general communications issue because it can't pay for it. It isn't paying for the advertising and it can't rely on the goodwill of the press in the short-term while the press is reeling from Leveson.

MS: So it is all the media's fault...

LF: I didn't say that.

MS: You sound like one of our clients when they get into trouble: "It is all the media's fault."

LF: I didn't say it was the media's fault. I was just trying to explain the practicalities of life. I don't think the press and media barons are enjoying being hauled in front of the courts. That is not a nice experience for them. I am being pragmatic.

SW: I have been in the UK for over 15 years and I find it odd that the discussion on growth is really being pushed back to the government. In the US, Facebook doesn't sit around discussing government policy. I am very cynical about government policy to really move the growth narrative. People are changing their outlook on failure, willing to take on risks and bear the consequences. There are some very good UK businesses which the UK can do more of. The signals are clear but it is not the government that is really going to make it happen. It is the people who are going to make it happen.

MS: But didn't people criticise Obama? Less so as we get towards the election but didn't they criticise Obama very heavily in the first two or three years for his lack of policy? Having been pro-Obama broadly, even the East-Coast Jewish democrats who voted for him changed their mind.

With all due respect Stanley, I don't think you can blame Leveson. I mean, it may not help but the fundamental thing is a strategic issue. When you speak to the Chancellor for example, he says events have prevented them from dealing with the basic strategic issues, one of which you highlighted which is education. And it is infrastructure and it is technology and it is apple pie and motherhood.

NL: Going back to my point about short-termism, we treat a trader who makes £100 million on a trade the same way as we treat an investor who invests for 10 years, creating jobs and wealth, and to me there is something inherently wrong with that.

Making that sort of wealth is not a crime but you should pay 80 per cent tax on a short-term trade and pay no tax on a 10-year wealth employment-creating investment. So I don't think governments can change markets but they can change frameworks within which markets can become more productive. I think our emphasis is wrong. I am a Conservative but I do think there is a kind of blind spot about things like that.

LF: The problem is that we live in a global market so if you applied 80 per cent to short-term trade profit globally, then it may or may not have the desired effect but if we apply it unilaterally in Britain, as we have tried to apply other rules, it simply means that our hedge-fund community will disappear to Geneva. I do think that the 45 per cent help sets a tone about going below the 50 per cent barrier that does appeal to people. I know people who have divorced wives and if they get away with paying the wife 40 per cent they feel they have done okay but if they have to pay 50 per cent they feel they have been screwed. It is just a psychological thing.

Where are the growth markets?

AH: Martin, as someone who is making worldwide asset allocation decisions, where are you putting your resources?

MS: WPP's asset allocation is in new markets - the BRICs (Brazil, Russia, India and China) and the Next 11 (Bangladesh, Egypt, Indonesia, Iran, Mexico, Nigeria, Pakistan, Philippines, Turkey, South Korea and Vietnam). It is new media and digital. I was in Russia over the weekend and despite all the corruption issues, I am very bullish about Russia. I was in Brazil and Argentina a few weeks ago. It is very strong. Argentina is going to run into trouble but it is still very strong. So all those markets, that is where we are investing. That is where we are growing. America is in the twilight zone a bit because we have to wait and see what happens next year. American numbers have been better in the past few months. People running international companies have to take a more longer-term view than politicians.

SG: Lloyd, do you have the same view?

LD: I endorse what Martin is saying. I think the UK has been a little bit harder this year than it was last year. The US has been good for us so we are seeing growth there. We made a poor acquisition in Brazil. We are investing in China. We are looking at India. The Middle East, actually for all the unsettled things there, has been good for us. We watch the euro with great interest. I suppose you have got to be careful what you wish for but there will be lots more currencies again.

AH: You may well see at least one or two over the next couple of years.

LD: You may see one or two. I think we have got to understand that there is a problem with the "one size fits all" notion of the euro.

AH: Are you exposed to the Eurozone yourself?

LD: We have got important businesses in Europe. Continental Europe is not as big a part of our business as the UK is. But for us we are investing further afield. Asia, Brazil, the Middle East are important territories for us.

MS: I can't think of a chief executive that we deal with who is bullish and wants to invest in capacity in Western Europe. It is simply the reverse. I can't think of a chief executive who hasn't said what Lloyd just said and isn't willing to put money into the BRICs, Next 11 and the new G8, or however you describe it.

LD: Why would you?

NL: Absolutely, and I can't think of a private equity limited partner or a fund of private equity that isn't saying: "We are not interested in Europe any more. We don't want to put money in Europe. We want to put it elsewhere."

MS: But there is a contrary view which is that Western Europe is big - you have got five economies which are $2 or £3 trillion dollars each. Add them all up. When I was in Brazil I met with Jorge Lemann (co-founder of 3G Capital) and he always takes a contrary view. He bought Brahma in Brazil when Brazil was in the pits and when Brahma was in the pits. He bought Burger King, again, contrarian, and they are involved in the financing of Coty for Avon, again, a company that is out of favour. So he always goes on contrarian views, so there is something there.

AH: But the other contrarian view of course is that there may be some problems with China, for example a re-credit bubble or re mis-allocation of resources. You don't agree?

MS: Soft landing.

AH: I am just saying that is a contrarian view which is linked in a way, being the pole opposite of the Eurozone discussion. Shai, what is your take on all of this? Obviously you are in a growth area?

SW: Yes. We are in a growth area - in renewable energy and resource efficiency. I must say that in Western Europe and the US, it is receding dramatically and the capital doesn't want to go there any more. There is a sense that in a recessionary environment or just difficulties, governments will change their opinion, even retrospectively, which they have done and this causes alarm for investors who want stable frameworks. In terms of the emerging markets, you cannot stop finding money for emerging markets. We have just found a big pool of capital in Russia. Russia wants to change its economy. It is the worst economy in terms of efficiency of energy and resources. They will put a lot of money into this area because they have it and they want Western expertise. For us that is kind of the conundrum - Western-focused teams that need to migrate very quickly East, the broader East being the BRICs and the Next 11 and so forth, so it is a very interesting period which is not easy for our type of business.

What do you want for growth?

Brent Hoberman: The EU helping businesses to expand.

Nick Leslau: A major government initiative supporting long-term investment for job creation.

Stephen Grabiner: A venture fund that gives young people very small amounts of money to go out and try and fail if they needed to.

Karen Mattison: Sponsorship, rather than mentoring, from the kind of people around this table, to help create a sense entrepreneurship

Shai Weiss: A tax regime that benefits long-term investments.

Lord Dorfman: SME lending.

Sir Martin Sorrell: A plan.

Lord Fink: SME lending.

Daniel Seal: Getting government initiatives actually to people, and not just as tokens

Bringing happiness through a mobile

Candice Krieger — Wed, 04 Apr 2012 18:31:39 +0100

Oded ran left his role as head of consumer marketing for Windows Phone UK at Microsoft to join start-up Touchnote because, he says: "I thought: 'Why didn't I think of that?'"

Touchnote, founded in 2008 by Raam Thakrar and Paul Burdin, enables users to create and send printed personalised postcards across the world via their mobile phone, tablet or computer. The application was initially developed for the web following a dinner conversation between the founders who couldn't understand why it wasn't easier to send picture cards from mobile phones. Users simply download the app, select an image from their photo library or camera roll, enter some text, the recipient's address and the virtual card will be delivered as a printed one. There is also the option to doodle on pictures or add a small Google map to show the sender's location.

"I thought it was such a clever idea," says Mr Ran, who joined the Touchnote team in 2011. He had spent the previous four years at Microsoft where he was responsible for launching Microsoft's Windows Phone 7 to UK consumers. "Everyone loves receiving a picture card. It's a business that puts a smile on everyone's face.

"A lot of people don't have time to go out and buy a card. This way you can do all your holiday cards while sitting on the tube."

Mr Oded's role when he joined was to help grow Touchnote into a global player. More than two million of the apps have been downloaded on mobile phones, over 750,000 of them on Androids, making it the number one Android postcard app at the time of writing.

The company has printing stations in London, New York and northern Germany and sends postcards to more than 200 countries for $1.49 in the US, €1.49 in Europe and £1.49 in the UK (first class Royal Mail). Sixty per cent of customers are from the US. The UK is the second largest market with around 20 per cent.

Mr Oded, 33, identifies the greeting card industry as worth $5 billion in the US alone. Unsurprising then that Touchote team have recently launched a second product, Hugmail.

Aimed at the older generation, Hugmail uses larger font sizes and enables users to set reminders, such as "send grandma a postcard every two weeks."

Mr Ran says: "We are launching Hugmail as a separate brand to connect the digital generation with those who haven't grown up with the internet. A lot of older people end up missing out on news from family because they don't spend as much time online and aren't using smartphones. That's where Hugmail comes in."

Now based in London, Jerusalemite Mr Oded has ten years experience launching web and mobile products in the UK, US and Israel. Before Microsoft, where he was also head of mobile services UK, he was in charge of product management at Retailx, a global leader in retail software. He has degrees from the Hebrew University and Harvard Business School and was a team leader in the Israeli Defense Forces.

High hopes for Beatty director

Candice Krieger — Thu, 29 Mar 2012 15:56:25 +0100

Balfour Beatty's Peter Zinkin is not a fan of the word "construction" - at least not when referring to the company he has worked in for more than three decades.

The planning and development director prefers to use the term "global infrastructure business." He explains: "We are not just a construction company. We are so much broader than that."

Founded in 1909 Balfour Beatty's services extend to engineering, consulting, managing and investment-services. In fact, whether a school, airport, road or railway, the company has probably been involved in its making.

Well-known UK projects include Heathrow's Terminal 5, the Channel Tunnel, Docklands Light Railway, Kielder dam in Northumberland and the Birmingham Super Tunnel. Its order book for 2011 was £15.2 billion.

But Britain's infrastructure industry has taken a big hit of late and projects have grind to a halt amid the crisis. According to the Construction Products Association (CPA), Britain's construction industry is unlikely to grow until 2014, marking the worst decline in 30 years. The CPA said more than £32 billion of construction activity had been lost since 2007 and predicted a fall in construction output of 3.6 per this year and zero growth in 2013.

So, what does Mr Zinkin, who has been instrumental in many of the company's contracts over the past 30 years, have to say about the beleaguered industry? "Maybe the past few years have not been as hard for us as they have been for many. Much of what we do is around managing construction projects rather than actually laying bricks. We have the people who win the contracts and then manage the supply chain necessary to build the project.

"We are much broader than we used to be so although the construction market hasn't been the easiest market, the business has survived the period."

Besides, "construction is not going to disappear. The economy can't grow without investment in infrastructure."

Balfour Beatty generates £10 billion of revenue across 80 countries. It has fared relatively well in the difficult conditions and earlier this month reported pre-tax profits of £246 million for 2011, up from £201 million in 2010. Group revenues rose by three per cent to £9.49 billion. Profits were up by nine per cent to £334 million.

Since joining the firm Mr Zinkin has spent much of his time building businesses in the US, the company's biggest market behind the UK. It accounts for nearly half the Group's turnover. Balfour Beatty is the third biggest general builder in America, with 10,000 staff - one fifth of company's total.

"I spent much of the 1980s growing the business across the US but the global industry had a really rough time so I had to dismantle them, and in the late 1990s, sold a lot of the businesses. We were left in 2000 as primarily a UK construction company but we had been able to pay off all our borrowings and sold some remaining businesses. This gave us quite a lot of money which we have been able to reinvest, turning ourselves back into being a global company."

Over the past decade the group has spent more than $10 billion buying businesses in America but Mr Zinkin is now turning his attention to emerging markets: Brazil, India, and the major resource economies, Australia and Canada.

Recent international projects include a desalination project in Victoria, Australia, the West Island Metro Line in Hong Kong and the Institute of Technical Education in Hong Kong.

Today more than half of the company's value comes from overseas and Balfour Beatty estimates 10-12 per cent-a-year growth expected in emerging markets such as India, Brazil and Indonesia over the next ten years.

Mr Zinkin is one of five executive directors at Balfour Beatty. A Cambridge graduate with an MBA from the London Business School, he joined the firm in 1981.

Mr Zinkin held several senior positions in the finance departments before becoming the Group's director of planning and development in 1991.

Pressed for his views on Mayor Boris Johnson's cross-rail development levy, taxing new developments to fund the cross-rail project, he says: "Infrastructure is what the group is about so broadly we are very supportive of all major projects because that's our life-blood. Clearly it's nice when these projects have broad support and I think that we are very conscious of the fact the for the younger people in the organisation and many of our customers, sustainability is a key issue."

So, what are the biggest challenges facing the industry? "Broadly, with most of the markets we are in, money has to be spent on them. GDP growth simply doesn't happen without expenditure on infrastructure.

"We strongly believe that economic growth and infrastructure are tied together. The government is cutting its spending on many areas and we have had to adjust our businesses in those areas. On the other hand, more money is going to be spent on power stations and off-shore wind so we are doing work in those sorts of areas to compensate. Our biggest challenge, because we are so broad, is making sure that we focus on work on the areas that are growing and not declining."

He would "absolutely" encourage a career in the sector. "Working for a global organisation is very interesting. "Construction has been quite traditional but it is changing. It is a good career for people interested in travel - you get broad experience across a range of disciplines in different countries."

Outside of work, the father-of-two is actively involved in the community. He is the former vice-president of the United Synagogue and was one of presidential candidates last year.

He is a long-standing member of Golders Green Synagogue where he was former chairman - his wife Jacqui is vice chair. He is a governor at the University of North London and Birkbeck College.

Boycott, what boycott? UK-Israel trade booming

Candice Krieger — Thu, 15 Mar 2012 15:30:40 +0000

Britain's ambassador to Israel, Matthew Gould, was in buoyant mood this week as bilateral UK-Israel trade figures reached £3.75 billion, up 34 per cent in a year, putting firmly in its place the campaign for a boycott of Israeli goods.

Mr Gould said: "There is a lot of noise around boycotts but these figures show that it is just noise, and the trade relationship speaks for itself."

Israel is now the UK's largest individual partner in the Near East and North Africa, and its 29th largest export market world-wide. There were £1.57 billion worth of UK exports and £2.18 billion of Israeli exports in 2011, primarily in pharmaceuticals, machinery, diamonds and technology.

Daniel Seal, chief executive of UK Israel Business, said: "There is a massive amount being done that isn't documented, whether it's Israelis on the board of UK companies or British ownership of Israeli start-ups."

Mr Seal believes that the recent offshore Tamar and Leviathan Israel gas finds could become a "game-changer", enabling Israel to become a major exporter, which could "double trade between the two countries."

On Wednesday, in London, the UK-Israel Tech Council held its first meeting, jointly chaired by David Willetts, Minister for Universities and Science, and Avi Hasson, Israel's chief scientist.

Striving to rediscover hunger will make successful start-ups

Candice Krieger — Thu, 15 Mar 2012 11:55:30 +0000

Think Jews in business and names such as Sir John Ritblat (British Land), Lord Kalms (Dixons) and Lord Sugar (Amstrad) might well spring to mind. Go back a bit further and there was Tesco's Sir Jack Cohen (1930s), Michael Marks, co-founder of Marks & Spencer (late 1880s), and Nathan Rothschild (N M Rothschild and Sons) in the early 1800s. Anglo-Jewry has a history of producing some of the best of global industry and creating some of the world's most iconic business empires, be it in banking, property or retail.

Fast forward to modern times and Jewish businessmen remain some of the most accomplished in their fields: Nick Leslau (Prestbury), Michael Sherwood (Goldman Sachs) and David Reiss (Reiss), but perhaps not to the same level or quantity as their predecessors.

How so? Not because they are not capable, but because the business landscape has changed. "A generation ago it was very fashionable for Jews not to become entrepreneurs but to become professionals," says Alex Brummer, city editor of the Daily Mail.

There is no shortage of leading Jewish professionals: Jeremy Newman (former CEO of BDO), Jonathan Morris (partner at BLP) and Neville Kahn (global leader of Deloitte's reorganisation services).

The concern today is that there is a lost generation of entrepreneurs. While there are some exciting 40-somethings who have made the big-time: Errol Damelin (Wonga), Brent Hoberman (lastminute.com and mydeco.com) and Tim Steiner (Ocado), the UK - Jewish or not - is no Silicon Valley.

Multimillionaire internet entrepreneur Marc Worth, 50, is the chief executive of Stylus Media Group and chairman of UK Israel Business. He is the co-founder of Worth Global Style Network (WGSN), the online fashion information service, which he sold to Emap for £142 million.

He says: "Back in my day, going to university was an option, not an imperative. It was certainly not frowned upon if you went into business rather than continuing education. I think the world is a very different place today."

Robert Ohrenstein, KPMG partner and head of private equity transaction services for KPMG Europe, agrees. "Something has changed. I don't know if it's because our grandparents' generation came to the UK - or were already here - in a pretty destitute state, and were forced to make a go of things. They had a hunger for success. As a result they were vastly better off than their parents but now, we are not in that situation.

"Today it is more about the pressure of living up to parental expectations; getting a degree, training, and a good job, combined with a much tougher economy."

Over the past couple of decades the trend has been for someone to spend the first ten or so years following a career and learning from a larger institution with a view to venturing out on their own. Yet in reality, people become good at making money and get too comfortable.

"They don't want to break out," says Alex Brummer. "That tendency to edge towards a profession has muted a lot of the ingenuity. I think we have lost a lot of the post-war generation of people who had a lot of 'go out and get it.' We have been too prosperous for too long. I fear that Anglo-Jewry has become very conventional and establishment-orientated."

Mr Ohrenstein points out "real succession issues" among the major successful Jewish businesses. "The founders' children are either not interested in taking over, or, for governance reasons, the reins can't just be handed over."

What's more, several family-run firms have been swallowed up by multi-national corporations and it has become harder to start again.

"Long gone are the days where you could sell aerials from your car boot," says Daniel Seal, chief executive of UK Israel Business. "Setting up a business now needs significant financial backing, and there is a huge risk associated with it."

Former journalist-cum-businesswoman Lisa Berwin comes from a rare long line of entrepreneurs. Her great-great-grandfather set up suit company Berwin & Berwin, now run by her grandfather, father and sister, and her late great-uncle, Stanley, founded leading law firm, S J Berwin.

Lisa, 30, recently launched her own PR firm but believes "setting up a business today is a scarier prospect than it used to be. I don't know many people my age who have launched their own business."

Many Jewish success stories have come from the US (Mark Zuckerberg's Facebook and Reid Hoffman's LinkedIn) or Israel. The UK's entrepreneurship has been hindered by the global crisis, and smaller businesses have struggled to make the transition to larger ones. That said, there are some exciting entrepreneurs who have been successful; and attempts are now being made by a new breed of digital entrepreneurs.

Jonathan Stankler, KPMG partner and head of technology for KPMG corporate finance, says his firm takes start-ups "extremely seriously. Of all the sectors, a small start-up technology company could be the next Google."

Technology has without doubt changed the business landscape. All companies must embrace it to survive. Mr Stankler says: "Unless you have an app and can embrace technological change, you will fall behind. Perhaps this is where businesses with an older mindset have struggled."

One success story is Leeds-based Xtras Accessories. The family-run firm, which sells hair extensions, discounted beauty products and fragrances across the UK, was set up by husband-and-wife Sandra and Andy White, in 1984. Daughter Leah and son-in-law Steven Berke have since joined, and last year launched an e-commerce division.

Mr Berke, 28, says: "Developing the digital side of our company is vitally important to us, and it's currently the entire focus of my role. While many high-street retailers have struggled in recent years, e-commerce has enjoyed, year on year, double-digit growth, and with the rise of mobile and tablet devices, this trend will only continue."

Mr Berke believes that being a family-run organisation is beneficial to business. "It helps us retain a close relationship with our staff - a majority of them have been working for us for many years. In our niche market, we can operate in a more flexible manner which allows us to react more quickly to ever-changing and unpredictable trends. We regard this as key to our success."

The business environment appears gradually to be changing back in favour of entrepreneurism, and many argue that the start-up culture is now more fruitful than ever.

Zac Gazit, head of UJIA's business division, says: "There was a gap, but we are now seeing a new trend in UK Jews launching start-ups. There had been a delay compared to other countries, partly due to the financial situation and lack of government commitment, but society's view towards entrepreneurship has changed."

According to a report last year from the Department for Business Innovation and Skills, there are 4.5 million small businesses operating across the UK, with SMEs accounting for 99 per cent of all enterprises in the UK.

Now an increasing number of 30-to-40-yearolds are having a crack at their own businesses. Dan Reinhold, senior business development manager for KPMG in London says: "People think that if they are going to strike out on their own they should do it by 40."

Shraga Zaltzman, managing director of Jewish business-assistance organisation, TrainE-TraidE, says: "We are receiving more than eight inquiries a week from new businesses".

The UK now has its own entrepreneurial hub in London's East End. Home to around 5,000 technology-focused companies - and growing - the area has been dubbed Silicon Roundabout, perhaps Europe's biggest challenge to California's Silicon Valley.

The UK government has also been playing its part with David Cameron's declared intention to boost London's role as a world-class "Tech City." It has pledged £400 million to London's tech economy and set out major policy changes encouraging entrepreneurship.

Daniel Saunders, chief of staff, for trade and economic affairs at London's Israel Embassy, says: "Britain has recognised the need to grow the start-up culture in the UK and has looked to Israel for inspiration and collaboration."

The growth of social networking is also having an effect. Several sites and LinkedIn and Facebook groups have popped up to encourage businesss, such as Our Entrepreneurship, Start-up Specialists and UJIA Ignite.

And several first-generation digital entrepreneurs are now actively mentoring the new generation through projects such as Seedcamp, established by father and son Robin and Saul Klein in 2007.

Thirty-year-old lawyer Gemma Posner, founder of popular Facebook group, Our Entrepreneurship, says: "I was always hearing about small businesses being set up, particularly baking ones, so I thought setting up the group would be a good way of supporting each other in the community. I would prefer to spend my money with someone in the community whom I might know, rather than someone I don't know.

"Setting up a business can be expensive, especially advertising, so it is a way of helping people get exposure."

According to Ivor Tucker, chief executive of Entrepreneurs World, "the critical issue is for aspiring entrepreneurs is to know that they don't have to do it all alone - there is an enormous amount of goodwill from within the community to help other entrepreneurs succeed. Unlike the corporate world, entrepreneurs are very willing to share knowledge, experience and connections."

UK Israel Business recently launched its Working Lunch Club to help SMEs explore new business opportunities.

Young Jews are setting up businesses in the technology, media and telecommunications sectors. Exciting entrepreneurs and start-ups include Bradley Starr, founder of Bizantra, a company supplying software products to SMEs. His previous start-up, Miller Star, was sold to a major US advertising agency, now part of McCann Erickson.

There is Shai Weiss, founding partner of Sir Richard Branson's Virgin Green Fund, which invests in renewable technologies; Andrew Showman, founder of CurrentBody.com, the UK's leading online supplier of electrical health, fitness and beauty products; Bernard Howard, who sold his niche recruitment sites TotallyLegal.com and TotallyFinancial.com plus the Australian versions to Trinity Mirror in 2007; and Rob Keve, whose customer-feedback software provider, Fizzback, was sold to Israeli technology provider NICE Systems for $80 million.

Bradley Starr says: "It's a tough environment but there are opportunities for original thinkers. A big positive today is that it has never been cheaper to start a business due to the low cost of technology and the ability to network."

And while the landscape is changing and Anglo Jewry's start-up boom continues, there is still a long way to go. A greater hunger is needed, combined with a media and government shift towards a greater celebration of entrepreneurship, to ensurethat the next generation of talent will opt, not to join Goldman Sachs or BLP, but to establish their own business - and it might just be the next Facebook or LinkedIn.

'Barclays could be replaced by Facebook'

Candice Krieger — Thu, 15 Mar 2012 11:55:24 +0000

The City as we know it is changing. As financial institutions struggle, technology, media and telecommunications companies (TMTs) are experiencing exponential growth rates. And it is the latter that are now propping up London's commercial property sector.

According to award-winning agency DeVono, which acts exclusively on behalf of tenants not landlords, TMTs are now the most active occupiers in London. They accounted for 24 per cent of take-ups in 2011 compared to 12 per cent the year before, greater than the banking, finance, oil and gas sectors.

What's more, these TMTs which include Google, Facebook and Microsoft, are looking beyond their traditional home in London's West End to more affordable parts of the capital such as Farringdon and Spitalfields, and in many cases replacing financial firms. Groupon recently took over 40,000 sq feet worth of Bank of America Merrill Lynch's offices in Swan Lane, EC4. This trend could, believe DeVono co-directors Robert Leigh and Adam Landau, pave the way for a transformation in the dynamics of the City.

Property consultant Mr Landau, 33, says: "It's not happening instantly but the City is absolutely changing. It could take decades. You have to remember that some of these industries are archaic; banking, accountancy, law and insurance, and it could take years to change. But change is happening around us and we are spotting it.

"Before the recession hit, financial institutions and hedge funds formed one of the most active and growing sectors in London's world-renowned commercial property sector. These industries are in decline leaving room for a new breed of occupiers, TMTs.

"Not only are these industries occupying top-quality grade-A office space but they are seeking to change the layout and space requirements of London's offices to suit their requirements." Important factors include large floor plates, open plan, raised floors and a high-level of power supply.

Although Mr Leigh, 32, acknowledges that rents in prime Central London locations such as Mayfair and St James have come down in the recession, he says they are still significantly higher than the perimeters. "Landlords have realised that the economy isn't as stable as it was so they are being sensible about letting their space, not holding out for the highest rate. Some parts of the West End are achieving close to £100 per sq ft - Mayfair is achieving £102 per sq ft compared about £240 per sq ft in 2007, but the City borders are much cheaper; locations in Spitalfields, Farringdon, London Bridge and Clerkenwell could be as low as £25 per sq ft or in the £60s at the top end in Holborn."

TMTs are seeking these secondary City-fringe locations.

Mr Leigh says: "Everyone has gravitated towards the Old Street/Silicon Roundabout vicinity because it is the cheapest location in Central London's zone one by far. Traditionally it was a second choice of location, now it's where businesses want to be.

"These areas are fast becoming the centre of the technology hub in the UK - and Europe," adds Mr Landau. There are hundreds of technology firms situated near the Silicon Roundabout compared to 15 in 2007 and according to Savills, London's TMT workforce is expected to grow by 40,000 to top 300,000 by 2016, resulting in the need for a further four million sq ft.

"Where banks are firing, TMTs are hiring." The duo believe that in time the capital will no longer be known for finance but for its TMTs. "I think there's a strong possibility this will happen," says Mr Landau. "Look at the Canary Wharf skyline and you see Citibank, Barclays and Credit Suisse. There is a strong possibility that soon we will we see Microsoft, Apple and Facebook.

"Although London is the number two hub in the world for banking and finance I think we will see shrinkage in this country with growth in Asia. You only have to look at the 10,000 people supposedly being let go at the banks at the moment. 10,000 sq ft is a lot of office space and can be taken up by someone new."

"All the data centres available at Canary Wharf make it a very serious consideration for TMTs," adds Mr Leigh.

DeVono was set up by Mr Leigh in 2003 to work exclusively on behalf of tenants seeking to rent office space in London. Last year the company moved 97 businesses - believed to be the largest number ever by a commercial property agency in a year. Clients include E.On, 118 188, Manchester United, Topps Tiles and Toshiba.

A former JFS pupil, Mr Leigh raised £40,000 through the government-backed Small Firms Loan Guarantee Scheme, to invest in DeVono, together with £20,000 of his own money.

Mr Landau, a former consumer-software distributor, joined in 2004. The company, based on the Haymarket, has since placed close to 500 tenants and hopes to achieve more than 100 this year - 20 per cent up on last year. They remain one of the only commercial agencies companies to act only for tenants. It now also represents retailers and has expanded its services to include a dedicated purchasing, project management and consultancy team.

What will happen to City-fringe rents as demand for these sites increase? "In the next five-to-10 years, those rents will increase to similar levels of other prime London locations and then a new area will pop up, maybe Whitechapel or Kings Cross." As for other trends he says: "I think we will see a massive increase in oil and gas businesses coming to London. They like to be listed on the Stock Exchange but with so many restrictions now for financial businesses, they might decide to open offices elsewhere outside of London."

There is help at hand for online shoppers

Candice Krieger — Thu, 08 Mar 2012 11:36:25 +0000

Talk about handy. Techno buff Robin Landy has created a real-time internet tool that automatically finds the lowest prices, without using a price comparison website.

Called InvisibleHand, the free download informs you when and where there are lower prices available on the product or service you are searching for. So, while you are sizing up an item, InvisibleHand is monitoring other stores and sites for better deals, subtly alerting you on your toolbar if and where it is available at a lower price.

It covers hundreds of major retailers and brands including John Lewis, British Airways, Amazon and Boots.

Launched in August 2009 the start-up has received more than 2.6 million downloads, finding £105 million worth of savings for UK users and for US users, over $500 million. Its average saving in the UK on products is £6.64 and in the US, $10.94.

The tool is available for all major web browsers including Microsoft Internet Explorer, Google Chrome, which has recommended the service, and Mozilla Firefox, which lists it as one of the greatest Firefox add-ons of all time.

A former information architect Mr Landy, 32, came up with the idea while he was working at digital agency Forward Internet Group. "I was shopping for an iPod online but found it difficult and frustrating to find the best deal on the specific one I wanted. When you get an email, it comes directly to you -- you don't have to search for it. It should be the same with retail. The best price should come to you.

"Users shouldn't have to change their shopping habits or the sites they want to shop on."

He pitched the idea to the Group's founder who agreed to finance it. It has since been making the headlines, featured on BBC programme Click and in The New York Times, USA Today and the Guardian, among other publications.

Initially aimed at DVDs, books and games, the business has expanded to travel and car rentals with a daily deals service on the agenda. What about clothes? "This is our weak spot and something we are addressing."

He says: "When you are booking a trip you shouldn't have to open 25 different tabs and do multiple searches. We are cutting out the legwork."

InvisibleHand takes a commission on any sale made on its suggested retailer or service. Although Mr Landy is reluctant to disclose financials he says the company is aiming to achieve "tens of millions of downloads" this year and will shortly be launching complementary iPhone and iPad apps. "We have been going for around two years and are heading in the right direction. The vision is to cover absolutely anything so whenever anyone shops for something online, we will be there to give users the best prices."

Mr Landy, who lives in north London and has a masters in human-computer interaction from University College London, acknowledges setting up the company has been challenging.

"There is a lot that goes along with start-ups such as building and managing a team and financials. But it has also been really fun and rewarding knowing that you are making a difference to the way people use the internet."

Mr 'French Connection' means business

Candice Krieger — Thu, 01 Mar 2012 11:53:59 +0000

Stephen Marks last appeared in the JC in 1961. He was a schoolboy tennis champion who could barely afford to join his local tennis club.

Fast forward 51 years and the former junior Wimbledon player has become one of the world's most successful - and wealthy - fashion bosses. He still holds a keen interest in tennis, owning an academy fostering stars of the future, but it is his French Connection retail brand that Mr Marks is best known for.

The fashion label has more than 300 shops worldwide. It has become synonymous with its simple and controversial "fcuk" advertising campaign, which launched in 1992 and helped establish the brand as an international phenomenon (more of that later).

Indeed his public company has become one of the world's most well-known retail brands but Mr Marks, by his own admission, likes to keep himself private. His closest friend in retail was the late Joseph Ettedgui of Joseph. "Other than that I have no friends in retail," says Mr Marks, sitting at French Connection's head offices in Camden, north London. "I'm a hermit. I hope that we have an individual feel about what we are doing. We are not looking to follow anybody else."

So, what is there to know about "Mr French Connection?" It turns out, quite a lot.

His ex-partner is French fashion designer Nicole Farhi - they have a daughter and two grandchildren. He loves tennis, is a member of the All England Club, co-financed Lock Stock and Two Smoking Barrels, holds a Nevada gaming license and is an avid Arsenal fan.

But first up: the day job. Mr Marks, 65, set up what became French Connection in 1972. He was a promising tennis player, winning a plate at Junior Wimbledon, but the game was still amateur and he was keen to make a living. He started out in retail in the 1960s working as a salesman for clothing brand Andre Peters. He joined Louis Feraud to launch a Miss Feraud label. When the collection succeeded he was asked to become a director.

"I asked if that meant more money," recalls Mr Marks. "They said: 'No but you can call yourself a director. I replied: 'You can call me a tea boy for all I care. I've been working my butt off and I think that as things are going so well I deserve some more money." So with £25,000; half from a friend and half from the bank, he decided to set up shop on his own.

"Forty years ago, if you went into a department store there would be a coat department, a blouse department and a blazer department with different buyers for all those departments. Nothing was coordinated. However in France there were names that did coordinated ranges - I suppose that was when I thought that we should change things."

He opened his first shop in Walton Street, London in 1972. It sold furniture and clothes. French Connection started trading in the late 1970s.

Today there are 350 shops and business, he says, is growing rapidly. It now caters for men and women and has a strong cosmetics range. In April it will launch a premium home range including furnishings and ceramics.

But the business has had a mixed time amid the tough climate. It reported pre-tax profits of £700,000 for the first six months of 2011 and revenues rose seven per cent to £102.8 million but the company has since announced disappointing Christmas results and financials for last year are likely to be lower than previously thought. Profits for the year to the end of January 2012 are expected to come in at £4.7million.

French Connection really hit the big time in the late-1990s when its famous "fcuk" campaign was launched.

"I was looking to take French Connection and put it in the front of people's heads," recalls Mr Marks. "I was driving along and saw a bra advert up in Battersea Power Station with Eva Herzigova on it. I nearly crashed my car. I thought: 'Wow, that's amazing.'" He got in touch with the advertising man responsible, Trevor Beattie.

French Connection used to send faxes back and forth between its London and Hong Kong offices using abbreviations, "FCHK" and "FCUK."

"There was no thought of it being rude," says Mr Marks. But Mr Beattie picked up on it and came up with the slogan. "We had been doing it for 20 years and it had never crossed our minds. I thought it was bloody marvelous. We didn't even have an advertising budget at that time but within four weeks we had the posters up and the rest is history. 'Fcuk' was a phenomenon." The campaign angered some and ran into counterfeiting problems but it helped transform the business. "Sales rocketed. Everybody became aware of it and everybody wanted it."

But times since have been challenging. In 2010 Mr Marks was forced to sell the loss-making clothing brand Nicole Farhi, which he launched with his ex. He admits it wasn't easy. "I'm not an accountant. I am emotional and passionate about what I do so of course it was difficult but as a public company we have to do the right thing.

"French Connection has traded quite well the whole way through but we had other issues where we had things that weren't making money. I always feel that if something isn't working, it's up to us to sort it out and make it work. If you have three of four things that aren't working, it's very hard to keep everything else going. It's a bit like spinning plates. You have to make sure they all stay up."

Perhaps if "spinning plates" had not gone so well, Mr Marks may have been destined for the film world. He is close friends with producer Matthew Vaughn, who spent six weeks in Mr Marks's house while working on cult-film Lock Stock and Two Smoking Barrels, directed by Guy Ritchie. Mr Marks was also involved in Snatch, Layer Cake and Kickass. "Creating a clothes collection and creating a movie are very similar. You need to have a good eye and be a good sounding board."

He has not lost his passion for tennis either, helping to establish academies in the UK and Israel. He counts Israeli tennis player Eyal Ryan among his closest friends.

Mr Marks is refreshingly candid when talking about the industry he has worked in for close to five decades. "When I first got into retail there used to be a store at Marble Arch called C&A Modes which undercut everybody's prices and give all the other retailers a major headache. They are no longer there but there is one called Primark which seems to be doing the same thing, obviously much better."

And then there is the internet. "It has changed the whole industry. Anybody that ignores e-commerce does so at their peril. I feel like a dinosaur. Everybody looking at computer screens is not my idea of the fashion business."

Has he been surprised by some of the victims of the high-street? "No. Does anybody miss the names that disappear? There are new people coming and new things happening all the time and it's up to us to keep abreast of it."

He adds: "I still feel that this is one of the most difficult businesses to succeed in. You have to constantly change things. The consumer wants to see something new in the shop each week." And Mr Marks is certainly committed to the cause. He edits all the collections and used to spend seven months a year traveling for work.

As for the future he intends to keep growing the business - there are new products and effective ad campaigns - spend time with his family, improve his golf and produce some tennis and golf champions, "and hopefully there will be some more movies." Mr Marks himself would make an interesting subject.

The man helping to make metal sexy again

Candice Krieger — Thu, 23 Feb 2012 11:59:18 +0000

Not many businessmen can claim to have attended a conference with Margaret Thatcher and spoken alongside US Republican Condoleezza Rice and Lord Stern, the influential climate-change expert. Metal expert Robert Voss can.

Mr Voss is the founder and managing director of metal traders, Voss International. And as president of Eurometrec, the European metal trade and recycling federation representing 10,000 companies throughout the EU - he is the only person to have held the position twice - the amiable chief is regarded as a leading authority on metal.

So what does he have to say about the surging industry - one of the few that has thrived since the downturn - that he has worked in for nearly four decades?

First up: the dwindling number of Jews in it. "Pre-1936 the centre of the metal industry was in Germany and London and the business, particularly in Germany, was predominantly Jewish and remained so for about 20 years. This has changed dramatically," says Mr Voss, a suave 59-year old. "The growth of multi-national corporations and internalisation has meant that small family-run Jewish businesses have been swallowed up. Even when I started there were a significant number of Jewish companies but this has dramatically reduced."

That said he acknowledges that a rising number of Jews are expressing an interest in the sector as a career - "metal has become sexy again." The industry has dominated the headlines of late due to the boom in - and theft of - recycled scrap metal, rising prices, and demand for gold.

What makes it a safe haven in downturns? The sustained growth of emerging economies. He explains: "Metal is used in construction, power, telecommunications and automotive, and as long as the emerging economies continue to grow they are going to need these. This is combined with the fact that Asia, in particular China, doesn't have a huge wealth of intrinsic metals under the ground. It has to buy them.

"The demand for metals will remain high because the need is there." Gold is not only used for jewellery but also for electronics, and platinum is used in catalytic converters.

"People are looking at metal-free technology but so far, with the possible exception of optical fibres, noone has really come up with a suitable alternative whether it's to steel for building or to copper and aluminium for power generation and the transport of water, gas and oil. Cars are still made of steel and aluminium and the lead battery hasn't changed in 60 years. Therefore the future growth of metals, closely aligned to the development of emerging economies, is there for everyone to see."

Unsurprising then that his company, with a turnover of £50 million and operational in over 65 countries - it recently set up a subsidiary business in Kazakhstan - has been unaffected by the recession. "We've seen continued growth because there are always new markets. Vietnam wasn't a market five years ago. Now it is. Thirty years ago hardly anyone traded with China. Now look at the size of the market."

Mr Voss started his eponymous company in 1987. He is third generation in the metal business. His late-father had worked in partnership with Sir Sigmund Sternberg. "My father had died long before I graduated. I went to see 'Siggy' Sternberg after I decided that I wanted to go into advertising but he said go into the metal business so I followed his advice." A good call. He completed stints at Brookside Metal as a graduate trainee and Metramet, where he was a director, before setting up on his own. "I didn't want to look back at 60 and say: 'If only I had done that'."

Aged 28 he was elected to the council of the British Secondary Metals Association becoming their youngest ever president at 31.

Passionate about the industry Mr Voss is keen to encourage young traders into the business and believes Jews are well-suited to it. "The metal industry is known as 'the pendulum of the economy' - we swing and others follow. It reacts quickly to all world events.

"A bright young person with a quick and active mind will always get on in this business but often it is difficult to 'learn' to be a trader. I believe a trader has it in his blood and that is why I think it is so suitable to many young Jewish people."

Pressed on where to invest, he says: "Long-term, copper, aluminium and steel all have a strong future because the emerging economies will keep emerging, demand is there and supply is limited."

Surely it can't be all rosy? There must be challenges? "The internet. It hasn't helped people like us because today, everybody knows everything. When I started you could trade on people's ignorance. Now there is no ignorance. Anyone in the world can now have a live stream onto the London Metal Exchange."

And then there is the growing epidemic of scrap-metal theft. He says: "The one problem with increasing world prices of metals is the rise in theft of scrap metal. The industry as a whole is working hard with governments and police to stop the theft and make the sale of stolen material more difficult as well as urging them to increase the sentences handed down to thieves and I am pleased to say that governments are taking these matters seriously. The UK Government is reviewing the legislation governing the trading of scrap metal which is somewhat overdue. The main victim of metal theft is the metal industry itself."

Based in Hertfordshire, Mr Voss has travelled to over 70 countries for work including Africa, Pakistan and "Dubai in the 1970s when it was still a small fishing village."

Highlights include being stuck in Karachi airport, getting arrested in East Germany and losing his passport in Zaire. All of which he intends to one day chronicle in a book, perhaps alongside his meal at Number 10 with Margaret Thatcher. But first there is business to do and although "the idea of playing more golf (he plays off 16) is tempting" Mr Voss is as enthusiastic as ever. In April he will be sharing a stage with former-US President George W Bush in front of 3,000 people at a conference in Las Vegas. Another one for the book perhaps.

The Israeli-made camera making our roads safer

Candice Krieger — Thu, 16 Feb 2012 11:57:22 +0000

Many of the world's most serious traffic-law violations are difficult to enforce says computer expert Yaniv Alon. And so the 36 year-old, who specialises in algorithms, has established a company devoted to doing so.

RoadMetric has developed a video-enforcement system for recording violations from tailgating to illegal passing, drifting inbetween lanes and not yielding right-of-way to pedestrians and other vehicles.

Mr Yaniv says: "Our goal is to make the roads safer. When it comes to traffic-law enforcement there hasn't been much innovation over the past 20 years. We want to improve this."

The Israeli start-up installs discreet cameras in traffic-police vehicles. They can not be seen from outside.

The camera's video technology spot and record a variety of offences that Mr Yaniv says are traditionally complicated and expensive to detect. "There are many violations that the police can't enforce because they don't have the tools to do so. Speeding and going over red lights are easy to detect without investing too much money but other serious violations are not.

"Our system provides clear video evidence which may come in useful if a case goes to court."

Mr Yaniv, who used to work for vehicle-safety technology company Mobileye, believes the system will be beneficial to local authorities and governments as a more effective and profitable way of enforcing traffic laws. According to sources typical enforcement systems catch an average of one violation per hour. RoadMetric's system claims to catch between eight and 25.

With a masters in computer sciences from the Hebrew University, Mr Alon is an expert in computer vision.

He has been working on the RoadMetric system since 2007. Around $500,000 has been invested - comprising his savings and salary as a computer consultant. He also secured a start-up grant from the Israeli government.

The system is now ready for sale and Mr Yaniv has been in touch with the Israeli government about its implementation. He also hopes to raise $500,000 to expand internationally.

The automated traffic-law-enforcement-systems industry is valued at around $800 million. Mr Alon identifies Britain as a huge potential market. "The UK government has invested a lot of effort in traffic-safety technology and they have succeeded in reducing the fatality rate by close to 50 per cent over the past ten years. To further improve traffic safety new technology is needed."

According to recent reports traffic accidents in the US and Europe are the leading cause of death for those aged between three and 25.

"Effective and up-to-date enforcement is key to reducing dangerous driving behaviours, preventing accidents and saving lives," says Mr Alon.

We want to be as big as Apple, says Wonga chief

Candice Krieger — Thu, 09 Feb 2012 11:33:52 +0000

'We want to be world class," says Errol Damelin, talking about his high-profile start-up, Wonga. "And I don't mean bigger than Barclays. I mean like Facebook, Amazon and Apple."

Fantasy? Well, the smart-talking South African entrepreneur is certainly making a strong case. His company looks set to transform personal finance as it makes the process of borrowing money completely automated.

Wonga is the online, short-term money-lender backed by some of the world's top venture capitalists. Launched in 2007, the multi-million pound start-up is Europe's fastest-growing company. Its £73 million 2010 revenues were up 300 per cent on the year before. Profit in 2010 was £14 million. Last year, it won the Sunday Times TechTrack100.

"I sensed it would be this big," says 42-year-old Damelin, who founded Wonga with fellow entrepreneur, Jonty Hurwitz.

"We didn't want to solve a small problem but something that was a very real issue for people. In my opinion that's the only way to do it, says Mr Damelin."

Wonga provides small cash advances to hundreds of thousands of UK consumers. It uses sophisticated risk and decision-making technology leading to computerised lending decisions, transferring cash to approved applicants within 15 minutes.

Customers can first determine the exact size and length of the loan required, using two sliders on the Wonga home page - up to £400 on a first loan and £1,000 for returning customers. They can see the loan period in days - the maximum is a month - calculating the cost in pounds and pence as the slider moves along. The site also shows the headline-grabbing annual percentage rate (APR) of 4,214 per cent. A £200 loan for 14 days would cost £33.88. Miss the repayment and Wonga charges a £20 penalty and adds just under one per cent interest a day on to your account for a maximum of 60 days. The average first-time loan is £160 and the average length is 16/17 days.

Wonga, which has issued more than three million loans - mainly to males aged between 22 and 40 - has brought a disruptive technology to the Facebook generation. "It is about breaking the mould," says Mr Damelin, an experienced entrepreneur. "It is about disrupting the status quo, enabling people to manage their cash flow without the need for long-term credit-card dependency or large overdraft fees.

"We are competing with banks and institutions that are hundreds of years old, massively powerful and commercially successful." And he is certainly relishing the challenge. "Facebook has the same problem. It competes with Google. Amazon has to compete with Walmart and Apple has to compete with Microsoft and IBM."

A former investment banker, Mr Damelin has spearheaded two previous successful start-ups; one steel, one software, but Wonga is by far his most ambitious. He has secured £93 million worth of investment from leading VCs including Greylock, Accel and the Wellcome Trust. There are plans to expand overseas this year.

So far so good, then, for Errol Damelin, who has been named Entrepreneur of the Year at the UK's Growing Business Awards, the Guardian's Entrepreneur of the Year, Founder of the Year at the TechCrunch Europas, Ernst & Young Entrepreneur of the Year for London and Digital Entrepreneur of the Year. Some might disagree.

Wonga has come under fire from commentators who deem it to be exploiting the poor and, more recently, students. It has been labelled a "loan shark." Is Mr Damelin bothered? Not really. "It's thoughtless," he counters. "We knew it would be controversial because people have preconceived notions. Everyone at Wonga believes in the ethics of the business and we are totally comfortable with it."

But is it not fuelling debt? "A vast majority of people don't take on more debt because they are sold it. I don't believe someone takes on a mortgage because they are sold one. They do so because they want a house. It's the same with Wonga. They have a cash-flow challenge and need a solution. We are not asking them to take credit they don't need." He continues: "You don't generally get sold things on the internet. You have to go and search for something. It's not the same as someone coming to your door and selling you something that you may or may not need."

In fact, Mr Damelin believes his company is performing a valuable social function. "Credit in consumer society is absolutely critical. Without it, you have no social mobility. Not having credit will increase the gap between the rich and the poor. Wealthy people will stay wealthy and be able to buy things ahead of the curve. The opportunities that arise from having cash are massive: buying a home, a car, going to university and having better work options.

"I would argue that there isn't enough social mobility in the UK. And it isn't just about credit. It's about being able to consume and invest. If people are consuming or investing wisely and using credit in an educated way to do so then I have no problem with that.

"Not having credit will have serious social knock-on consequences. What we need to do is build safe, transparent tools, not take credit away."

The company prides itself on "responsible lending." It has a strict selection process declining two thirds of applications. Customers must have a full debit card, mobile phone, steady income and reasonably good credit rating.

Mr Damelin grew up in South Africa where he studied at the University of Cape Town. He holds a masters degree from Boston University's School of Management. He moved to Israel and in 1995 became an early-stage corporate-finance banker at leading investment banking boutique YLR Investment Management, now part of the IDB group, the largest holding company in Israel.

Three years later, he was part of the founding team at steel-production firm Barzelan where he spent two years. He moved to the UK in 1999 and founded software company Supply Chain Connect Ltd the following year. It became a global leader servicing over 250 blue-chip customers and was bought by ChemConnect in 2005. It was during his time there that he says he got a sense of how powerful internet technology could be.

Now based in London, Mr Damelin says Britain has a lot to learn from other nations, particularly Israel, when it comes to entrepreneurship.

"The UK is lagging behind in terms of start-ups per capita. It isn't because there aren't good people here, problems worth solving, or a lack of capital; it's because entrepreneurship and breaking the mould isn't celebrated like it is in other places. The media and government could do so much more to create an environment where people view being an entrepreneur as a viable and attractive alternative to a regular employed job. The gap between the UK and other countries gets bigger and bigger.

"London should be one of the entrepreneurial hubs of the world."

Wonga has offices in five countries and employs close to 250 people; around 60 are based in the London office near Regent's Park.

"Being an entrepreneur is about the process of taking an idea and making it real. Walking into the office every day is a reflection of reality. It's one of the most satisfying things." As is hearing the company's catchy advertising jingle. "It's totally weird but brilliant."

Wonga has led an aggressive advertising campaign despite, says Mr Damelin, "not allocating huge budgets to it." This has helped the company become a household name. It sponsors Championship football club Blackpool and Scottish team Hearts in addition to ESPN's coverage of the FA Cup.

"Sponsorships are generally a long-term proposition and we are building a long-term business, not one of those businesses that get flipped to anybody."No plans to sell, then? No. "We are building something very special."

Not content with chasing profits, Errol Damelin recently completed the Antarctic Ice Marathon raising over $70,000 for the charity, Water.

Solving the crisis - it's child's play

Candice Krieger — Thu, 02 Feb 2012 11:59:23 +0000

Who would have thought it? Lego could be the key to improving global economies.

According to Israeli entrepreneur Amir Asor, the popular children's building brick is integral to training the next generation of engineers, who will in turn play an increasingly important role in solving some of the world's financial difficulties. So convinced is Mr Asor that he has set up a business based on it.

His rapidly growing company, Young Engineers, has developed a programme which uses Lego and robotics to teach children aged four to 12 the intricacies of engineering.

And Mr Asor is not alone in seeing its potential. The 26 year-old was recently named Entrepreneur of the Year by The Prince of Wales's Youth Business International, supported by Barclays Capital. And he has secured around NIS 250,000 (£42,500) in funding from investment vehicle Keren Shemesh.

Mr Asor says: "I believe that the right use of Lego could certainly advance and foster the next generation of engineers.

"The world is advancing in a digital way and engineering is the cornerstone of the digital world. There is no doubt that engineers are vital to our world's development."

He continues: "Engineering is key to answering the current problems we are experiencing in the business world. The right use of technology could increase GDP, decrease dependency on imports and increase exports. This would strengthen a nation's exchange rate, increase sales and decrease unemployment."

How does the Young Engineers programme work? Instructors demonstrate a scientific principle using an interactive Lego model. The child replicates by building their own model enabling them to understand the concept both in theory and practice.

The models are built step by step and at the child's own pace with more complex add-ons available to those who finish quickly. Models include vehicles, cranes, robots, amusement-park rides and conveyor belts.

The programme is currently only operational in Israel where it is being used in more than 100 schools and education centres but Mr Asor is planning an ambitious international roll-out. The UK, Europe, Africa and Latin America are on the agenda with plans already underway in the US. He is in advanced discussions with Israel's Education Ministry about formally incorporating the programme into the national curriculum.

His concept should too appeal to the UK government as sources show that there is a significant lack of skilled craftsmen/crafts jobs in Britain despite one million 16-to-24 year-olds being out of work.

According to reports, many manual-trade firms are being forced to recruit foreign workers because the British education system is not equipping teenagers with the necessary basic skills.

Mr Asor says: "There is a shortage of skilled crafts people in the job market. In the UK for instance, many come from abroad to work in this area resulting in an unhealthy imbalance in the sector. Schools should celebrate jobs that require professional practical skills and not just academia.

"They should focus on techniques that combine practical skills, artistic thinking and academia. Our programme prepares children in the best possible way to join the world of work."

He adds: "One of the reasons I started the business was to equip children with the learning tools most relevant to Israel's economy - technology."

But what was once an innovative idea to promote science to children and make lessons more accessible has developed into a solid business.

Launched in 2008 the programme grew 1,100 per cent in its maiden year. It has continued to grow at an average rate of 400 per cent a year - 2,500 students are now enrolled compared to 100 in the first year.

Revenues for 2011 were around NIS 2 million (around £340,000) and are expected to reach close to NIS 8 (£1.3 million) this year. "The potential is huge," says Mr Asor. "It is a big market which will only grow. There is no doubt that out of the 2,500 children enrolled in the Young Engineers programme, many will become engineers, particularly in the robotics and machine sectors.

"I was surprised that nobody had set something like this up before."

Mr Asor was inspired to establish the company based on his own educational experience. The youngest of five children he struggled at school and was diagnosed with learning difficulties. Determined to overcome them he attended extra classes and earned a scholarship to study at Israel's Open University. He completed an economics and computer science degree.

While studying, Mr Asor volunteered for a project which supports students in need of extra educational and emotional help. He recalls: "I started to research and develop an idea that grew into the Young Engineers programme. I was thinking about what would make lessons more interesting for children and began developing instruction manuals.

"Overcoming my learning difficulties motivated me to build a fun learning experience that promoted self-thinking."

His plan now is to translate the programme into foreign languages and export it. "The English and Spanish versions are ready. In five years we aim to hold Young Engineer courses in between 6,400 and 8,000 centers around the world.

"The franchising model is a perfect fit. We have a proven product that answers a global educational need. I believe it can earn maximum revenue with minimum risk."

Parents pay the host school, which in turn pays a fee to Young Engineers; the programme is offered free to some organisations such as schools for the blind. Young Engineers employs 18 full-time instructors. New staff chaperone a senior instructor for two weeks before they start teaching.

"We believe the programme is imperative for developing thinking among children and helping to develop a country's resources in order to maintain its financial feasibility."

The Facebook backer's $350m start-up fund

Candice Krieger — Thu, 26 Jan 2012 11:37:33 +0000

It is every venture capitalist's dream: invest in a young company and watch it grow on an unprecedented scale in a short space of time. And that is exactly what leading VC firm Greylock has managed to do - again and again.

It counts US-based Facebook, LinkedIn and Groupon among its successful investments. But it is not all about those coming out of America - certainly not as far as Greylock partner Moshe Mor is concerned.

The 50 year-old Israeli joined Greylock, headquartered in Silicon Valley, in 2000. Today he heads Greylock Israel - a fund focusing on local investment opportunities plus those in Europe, particularly the UK.

Since its launch in 2006 the Greylock Israel fund has raised more than $350 million for investment in start-ups - up to 30 per cent are expected to be UK-based.

What does he look for? "It's interesting. For us, when it comes to technology-heavy start ups, Israel is the place for opportunities. The technology-oriented companies here are some of the best in the world. On the other hand, in the UK there are some very interesting consumer-oriented start-ups, which isn't surprising given the size of the UK market. It is large enough to support companies in their early days before going global and there are some opportunities there that you don't find in Israel."

That said, he acknowledges that there are technology companies in Britain worth investing in.

Greylock's UK investments include internet money lender Wonga, online marketplace notonthehighstreet.com and Just Eat, the market leader in online ordering of takeaway food.

At the time of writing the fund has supported six UK companies and 20 in Israel but "it is not like comparing apples to apples" says Mr Mor. "In Israel we usually invest very early. It could be a check for $100,000 or $1 million - not necessarily large amounts. Whereas in the UK we usually invest in more advanced companies where the size of the cheques are much larger."

Perhaps though not as large as the one written in 2006 for a stake in Mark Zuckerberg's Facebook. Mr Mor was very much involved in the decision process to back the social networking sensation. He recalls: "When we invested Facebook was valued at $500 million. It was a very tough decision - a high valuation for a young company which didn't have revenues yet." Meritech Capital Partners also participated in the financing round along with existing investors Peter Thiel and Accel Partners.

Mr Mor admits he didn't think it would become as big a phenomenon as it has. "I wish I could say I did but I didn't. No one could imagine it would become that big and that valuable.

"We were lucky." Quite. Today Facebook is valued at around $50 billion.

Prior to Greylock Mr Mor, who holds an economics degree from Tel Aviv University and an MBA from Harvard Business School where he was a Baker Scholar, spent eight years at software provider SPL WorldGroup. He had previously held management positions at software companies in diverse stages. He also served six years in the Israeli Army as a captain in the military intelligence branch.

Greylock receives approaches from up to 100 companies a month. Only about one fifth are taken further.

"We definitely say 'no' more than 'yes'. You have to. It doesn't mean you always get it right. It is not about what you don't invest in but what you do. We invest in six or seven in a year." Greylock does not invest in life sciences.

What does he consider the hot areas at the moment? "The mobile phone area is mushrooming. It's a big growth driver in the market and a very exciting area."

Lev Leviev loses out

Candice Krieger — Thu, 26 Jan 2012 11:37:33 +0000

Not such a good week for Lev Leviev. The billionaire lost his place as Israel's top diamond exporter. Number one spot, published by Diamond Supervisor Shmuel Mordechai, went to Leo Schachter. His company exported $403m worth in 2011.

Jay-Z invests in Israeli technology

Candice Krieger — Thu, 26 Jan 2012 11:37:33 +0000

It may seem like an unlikely pairing but US hip-hop star Jay-Z is the new face of Israel/US start-up Duracell Powermat. Jay-Z, whose wife Beyoncé this month gave birth to their first child, will serve as the new spokesman for the company and as an investor. Israel's Powermat, known for its wireless technology, teamed up with Procter & Gamble's battery giant Duracell last year to advance and globalise wireless charging stations. The partnership became operational this year.

The icon follows other major names who have invested in Israeli technology - actor Leonardo DiCaprio recently backed phone app Mobli. Jay-Z said: "I'm partnering with Duracell Powermat because they're providing the solutions for the future." Maybe he can rap about it in his next song.

Who's boss at Leumi?

Candice Krieger — Thu, 26 Jan 2012 11:37:33 +0000

The race to succeed Galia Maor as CEO of Bank Leumi took off this month. It seems there are three more candidates in addtition to frontrunners, deputy CEO Rakefet Russak-Aminach and Roni Hizkiyahu, former Supervisor of Banks.

Texting - it can better business

Candice Krieger — Thu, 19 Jan 2012 11:39:32 +0000

In 2004 entrepreneur Rob Keve had a pivotal moment. The former venture capitalist realised there were changes afoot for customer service and came up with a concept to enable businesses to receive consumer feedback in real-time. And so, with £5 million of investment, his start-up Fizzback was born.

Last year it was sold to Israeli technology provider NICE Systems for $80 million in cash in what was believed to be the biggest UK technology deal of 2011.

UK-based Fizzback enables consumers to provide feedback at the point of experience, such as in store or on the train. Chief executive Mr Keve, 40, says: "As an investor it occurred to me that there was a gap in the market for businesses to better understand and manage their customers. Brands were increasingly trying to compete on better service and customer satisfaction and there was very little for them to use to personally understand the mood of their customer base."

How does Fizzback work? The client's customers are sent a text message asking them to rate their experience. Their response is analysed instantaneously and directed to the appropriate department for action. The service has a 30 to 40 per cent response rate, significantly higher than industry norms at under 10 per cent. The company is generating around one million responses, aka "Fizzbacks", a week.

"When we started we really needed some innovative clients to be early adopters and demonstrate the value," he explains. "We managed to attract some great case studies - National Express, Butlins and Phones 4U - and leveraged on this to reach a wider market."

Today clients are mainly Fortune and FTSE 100 companies. They include Tesco, Virgin Media and BT. Across all clients Fizzback reports a 23 per cent increase in their customer satisfaction.

Mr Keve, who had previously run technology VC fund 3K Digital, says he always believed Fizzback would be well-received. "We felt very strongly that every business should be listening to all their customers all of the time. Once the first few adopted there didn't seem to be any reason why others wouldn't."

Besides, the benefits are clear. "The return for business is customer retention. Companies have the opportunity to identify customers who would have defected and maintain them. Even though these are relatively small numbers - under two per cent - to some, this is worth £30 or £40 million a year." What's more, in 12 months there is an improvement in customer satisfaction of between 20 and 30 per cent. "Many businesses equate a seven per cent gain in satisfaction with a one per cent gain in revenue. So, a 28 per cent increase in customer satisfaction is a four per cent gain in revenues."

Not surprising then that NICE, which provides business solutions to over 250,000 organisations, saw the potential.

Mr Keve says he was not planning to sell when the offer came up. "Our plan was to fundraise in the US to enable expansion across North America. We had six different term sheets of sizeable amounts and this led to a large amount of corporate interest from a few different parties. We concluded that NICE, both strategically and culturally, was going to be the best for us long-term."

Some critics say they sold too soon. "The question of when is the right time to sell is not a formula or something you can work on scientifically. You need to be driven by what's happening in the marketplace and our market place was starting to consolidate. Our customers were starting to look for global solution providers and we asked ourselves what the best way of getting there was. We chose to best position ourselves for the future."

Mr Keve, who holds two degrees from Bristol University and an MBA from Kellogg Business School in the US, hopes the acquisition will set a precedent for future UK technology deals. "The UK punches below its weight. We have most of the ingredients we need here: great entrepreneurs, talent, highly-skilled migrants, capital and a pretty helpful tax regime. What we need is critical mass and I think we are starting to get to that point in London where there is enough of an eco-system to really get working, but it's still a long way off of somewhere like Silicon Valley."

He adds: "Technology is an exponential market and we are only just starting to move up the curve. The amount of opportunity, whether we are in a recession or not, is enormous. Now is the time to be doing a technology start-up –- the capital is still there. It can be done and people are hungry to do deals. Tech is the future."

As for the future of Fizzback, the plan is to expand into other sectors and markets and penetrate those where NICE has a strong presence, particularly North America.