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How I Made It: From Luminous Socks to Pioneering Digital Marketing, with Seth Richardson of DC Storm

Introducing the ‘How I made it’ series of interviews for Wired Sussex by Steve Penfold. This series will chart the highs and lows of successful tech startup founders in Brighton and beyond to help inspire others to take the plunge.
DC Storm helps marketers increase sales, deliver higher ROI and target their digital marketing spend better. The intuitive technology platform and first class service provide actionable insight and control across all digital channels; ensuring clients have the competitive edge to succeed online. Seth co-founded DC Storm in Brighton in 2004, designing and coding the early versions of its ground-breaking digital marketing technology platform. In 2006, Seth became CEO and has successfully taken the company onwards, orchestrating a number of key new product launches, and further developing its intuitive technology alongside first class service.
Steve Penfold is a Brighton based, tech entrepreneur turned angel investor and board advisor. He is also a co-organiser of www.opencoffeesussex.com and mentor at www.seedcamp.com. For more on Steve follow him on Twitter (@steve_penfold) or visit www.highgrowthventures.co.uk
INTERVIEW
Present
Steve Penfold (SP) Interviewer
Seth Richardson (SR) Interviewee
SP So this is Steve Penfold here, I'm here with Seth Richardson and we're going to talk about Seth's early days and how he grew DC Storm to the business that it is today.
So do you want to tell me a little bit about the early days and also before you started the business.
SR Yeah sure. I think I've always been slightly entrepreneurial. I think my first entrepreneurial venture was when I was still in primary school and my father and both sets of grandparents actually ran their own businesses. My dad ran a fabric business and built up five shops and I managed to get hold of luminous laces – shoe laces - off my dad in cards and I used to sell them to all the school kids when I was in primary school.
SP They used to be all the rage didn't they?
SR Absolutely, them and the luminous odd socks so the yellow and the pink socks that was my first venture which we did ... me and my brother did really well at until the Headmaster clapped on to it and banned the sale of laces and socks within the school.
SP So that was the end of your first business?
SR That brought that to a conclusion very quickly. But I've always wanted to run my own business. I knew that ever since I can remember really and I didn't know what I wanted to do when I left school. I went to university, I did an environmental engineering degree – just because I was interested in the environment and I have quite an analytical mind but by that stage I hadn't really done any programming. So I did my degree and halfway through the degree I realised I didn't really want to become a environmental engineer, the career path for that wasn't very interesting – I didn't want to go down the quite long and protracted education process of becoming chartered status and there's exam after exam and I'd had enough of it by university, so I was kind of scratching around - wondered what to do and I went and worked for a bicycle manufacturer called Universal Cycles – it's the biggest bicycle manufacturer and distributor in the UK. So they own Muddyfox and they own the universal brand. So I worked with them on a sort of management training programme and one of my tasks there was to review the mail order department to see how I could improve the efficiencies within it and then what quickly came to light was that the mail order database was rubbish. You couldn't store things like email addresses in it, you couldn't do loads of the functionality which you needed to do, there was loads of repeated data entry and all that sort of stuff and so we looked around to try and find a replacement for it and then actually just wrote down the requirements of what we wanted out there and then kind of saw that we could probably write it using Microsoft Access. So my boss said, well can you not do that? Why don't you have a stab at actually writing the access database? So I went off for a weekend - it was a friend's birthday party, we had hired a cottage down in Cornwall and I knew it had to be done for the following week. So we went off to this cottage in Cornwall and a friend of mine was a programmer and so he got me to ... went to the pub with him on Saturday morning 11 o'clock, by the time we left at 11 o'clock in the evening - we were obviously hammered but I understand how the databases worked and had a good understanding on how to structure data models and I immediately got interested in it and I realised it was something I would probably be quite good at - is matching business requirements – understanding what that means in data terms and understanding the systems. So at that point I probably had a look at Job Site or something like that and realised that my management training programme was not going to pay me anything like what I could earn if I turned myself into being a programmer. So I left there and set up a little web dev company with a mate – which was a disaster. We had no business experience. I had some technical skills but probably not enough to get us by and so we folded that within about a couple of months. We built a couple of websites and we folded that and I then got a job at AltaVista as a database engineer – a bit of blagging that I'd done a lot more like proper sequel database development. I was living in Southampton at time and my job was in Maidenhead so I had a two and half hour commute each way – a really bad journey – I had a long commute and I actually did that for ... I was doing the commuting thing for about two months, it gave me five hours a day of like ... full day's work and then five hours a day of just reading and learning – teaching myself how to do the job which I was employed to do.
SP Useful to have those extra five hours then?
SR It was. So yeah, AltaVista was actually the springboard for me for really knuckling down and getting immersed in technology and realising actually my talent was understanding business and understanding how to match that with technology. I was very good at taking requirements and being able to turn that into a product. So I worked at AltaVista with Pete who was one of my CTOs – he and I built the first reporting platform at AltaVista for reporting across all of AltaVista properties – that was a scary project. Day 1 we switched it on and it had to process over a hundred million records a day from day 1. So that was a big learning curve for I think everyone involved in the project of how to deal with volume of data and actually trying to make sense of it and then present it back to the business for them to make some decisions on ... I'm not sure that anybody really made any decent decisions but ...
SP At least they had the data.
SR They had the data. So I worked at AltaVista and then when the team got disbanded back to the US and sooner or later I was going to be made redundant and I wanted to buy a house or a flat before I left or didn't have full time employment because I knew my next move was I wanted to set my own business up again. I felt I'd learned enough now - that I've got confidence that I can set a business up and be successful. So I bought down in Brighton – for no other reason than I liked the town and I had a couple of friends here. When I moved here those friends moved to Spain within three weeks but it was a great move. Brighton's a creative community close to London and a nice place to live. So I set up down here and set up - again it's a kind of web dev agency building business applications – mostly building business applications for clients and while we were doing that I was always on the look out for developing something of my own. Although I enjoyed coding and enjoyed the challenge of building applications for other people, I wanted to build up my own IP and I saw the success and you're going to get a good return in the long term, if you can build up some IP which you can then later leverage. So I was always on the look out for that and I bumped into someone I used to work at AltaVista with, Reggie, who was running a digital marketing agency and he asked me to build a digital marketing platform. So I did that and then realised there was a bit of an opportunity there that we could actually do some of the optimisation, the APIs were starting to be released and that's when we decided together that we should start a business around the product.
SP Oh okay. So it was the two of you that started together was it?
SR Yeah it was me and Reggie and Pete and another guy called Jonathan. So yeah.
SP And that's how it started?
SR That's how it started.
SP Brilliant and how was it in the early days of the business – what was it like getting your first clients to get to use this product?
SR Well we were in quite a nice position because we had clients right from the start so it wasn't about building an application and then trying to find clients for it. It was like we'll build the application based around the client's needs and so we were working with All Response Media as one of the clients plus also all Reggie's clients within his agency were adopting the technology. So we had a ready made client base which we could talk to, get feedback – all the way along the line and I think that's one of the big ... we've done that all the way from the start. We've never just gone off and developed something thinking that we're smarter than the market. We listen to the market. We always talk to our customers. We often run ideas passed customers before we start developing them and I think that way we end up developing a product which is fit for purpose and fit for market. But yeah in the early days it was all about ... I didn't think about sales at all, I was developing the platform myself – Pete was lending a hand and then it was like, you know what? There's actually a real business here let's try and grow it and start selling it and that's when I started to get involved a little bit with the sales. So I remember going to DGM. So DGM was one of the first clients which we tried to sell a platform [to]. They were ideal for us because they'd developed their own PPC optimisation platform and they hadn't done if very well and they were spending loads of money on it and they, like lots of other agencies, were trying to dabble with developing their own technology but they don't really have the [skill] to do it. So we were talking to them about taking that off them – we'll build the platform, you can use us and you can white label it or whatever and so Reggie and I went to New York to a Research and Strategy show because we know that some of our clients were going to be there and we knew they were going to be sniffing around the competition out there and we were pretty nervous at the time because we were very small – there was just two or three of us – well me and Pete full time that was it.
SP Oh right okay.
SR And Reggie was running his agency so ... maybe Doug was onboard then as well – maybe Doug was there. And so we went to the US just to make sure our clients weren't being poached including DGM and that's when we met the Chairman of DGM who subsequently wanted to put some money into Storm.
SP Really, wow.
SR To shore us up basically because they'd seen the potential but they didn't feel comfortable that we were such a small company and that they're going to just basically shelve their project – their PPC optimisation tool. So they put some money in and that's when we started to accelerate and grow – we started to employ.
SP So they took some equity and effectively that was your first Angel investment
SR That was the first one yeah.
SP Oh great and that's helped to accelerate the growth.
SR Yeah. So that was the first round of investment and it wasn't, to be honest, it was - for the ambitions of the company - it wasn't enough money for that stage. It's very costly developing this kind of technology which we're developing ... different entrepreneurs have got different approaches and some ... like if you've read 37signals?
SP Yeah I have, they like to keep everything simple from a development perspective
SR Yeah by simplifying everything – only developing the minimal features. What we're trying to do is develop is much more complicated ... we're not in that kind of space. Our clients and agencies they want something to go and sell to their clients, and unless it's market leading or cutting edge then they'll go with the competition.
SP It's about the volume of data, the accuracy and the minutia of the detail.
SR Absolutely and you can't get round some of it. I mean you can't set this up. I mean our infrastructure costs now today are almost what they were three years ago – they're almost exactly the same and that's just because you need to get the core infrastructure in place and once that's there then you can start leveraging over the years and you start making better margins but in the early days when you haven't got the customers you still need the infrastructure, you still need two data centres, you need to [develop] redundancy across your database servers and you need all of that complicated expensive stuff and unless you've got some money to throw at it it's [impossible].
SP Right okay. And then after you had that investment it obviously allowed you to grow the business a little bit. What was your strategy after that point ... did you want to kind of make this an international business, or did you want to grow it in Brighton and sell it. What were your aspirations after that point?
SR Well by partnering with DGM they had a large presence in Australia, so from the first day we started working with them we knew that the tool had to work multi-territory/multi-currency, so we always built it so that even if we weren't doing it today that it would have the foundation that would make that possible. So I've always thought of Storm as an international company. I thought the tool set would be as appropriate here as it would be over there and however the tool itself is an advanced tool. It's definitely for advanced marketers and arguably the UK is generating some of the most advanced digital marketing technology available. So we are at the cutting edge of that industry.
SP So now you've got an office in Germany.
SR Yeah.
SP So how did that come around?
SR So that was fortuitous actually as you have to take your luck in business – definitely and when we started to actually look at other ways we could leverage the IP within Storm and we've got a lot of knowledge, so one of the things we looked at, dabbled at, at that stage was running training course – just generic training courses obviously in SCO for agencies and for people wanting to run their own campaigns and so ...
SP Okay so that was like a marketing kind of exercise really was it?
SR Yeah to try and get people in the door and then they'll be doing the training ... we won't make masses of money out of the training but we'll also try ... we're also going to sell them Storm.
SP And how did that work as a strategy?
SR It was expensive. We didn't have the budget to be honest to continue the marketing because it kind of broke even but it was quite a lot of work and it was a bit of a distraction from what we're really good at. So what did happen was that a guy from Trifles which is a German Yellow Pages business came over and did training with us and they're part of a ... they're a family business – a wealthy family and they are diversifying away from Yellow Pages into all sorts of different digital business and so they became interested in investing as well and they ended up taking a stake into DC Storm and also doing a joint venture with us to set up DC Storm Germany and so that was a really good deal for us it gave us partners in another territory and enabled us to really ... they helped us with the recruitment and they're a trusted partner on the ground, it enabled us really to get a team up and running over there relatively cheaply and to start penetrating what is a massive market.
SP And so in terms of going international and the successes it's brought is it something you'd consider doing again? Is it something you'd recommend to other businesses in Brighton?
SR It think if you've got a ... depends what your ambitions are but if you've got ambitions and you believe that your product is a product which is going to go international, the sooner you can do it the better. Just because even if it's not massively profitable there are so many different systems you need to put within the business and you don't want to be building a business which is really isolated which will only work in one territory and which you then have to change everything to then make it international. Including like training processes, marketing material and then the actual platform – making sure that works and there's different laws. I mean just with our platform, there's different laws in German on data privacy so you have think about that when building the technology.
SP So you thought about that in advanced then?
SR We thought about that really early on and all the processing we put in place and the internal communications had to work international and we had to [make sure] all the stuff we were doing here was in line with ... I wouldn't say we got it bang on but we're certainly working hard at it and I think we'll be able to replicate it.
SP Great. So in terms of your growth - you're 25 staff now, what would you say are the main factors that contributed to that growth – anything that's happened along the way, luck or any particular strategies that you decided on early on that really paid off? What things would you do again say if you were starting DC Storm from scratch?
SR Well our business ... because our product is quite an advanced product our main route to market has been via agencies and that's a double edged sword really. I mean you don't get as good margins but you get the market penetration and that's proved to be a really good move. Focusing and working really hard with agencies to get the product out there and using the agencies to sell our technology. So making sure our agencies are well informed and they're well supported and they like working with us - that was absolutely key.
SP A good move.
SR Absolutely key. We know that now the business is evolving a bit we do more business direct with clients but even then we're very often working with the agencies and we've got a good relationship with the agencies. We're not here to erode any agency/client relationships. We've got experience of working with agencies and understand what value they bring to the mix. Plus also we know what the value of having a direct relationship with the client brings to the overall deal as well.
SP Great and was there anything you can think of where you overcame some of those growing pains by making good decisions?
SR Yeah I think one of the things which was holding us back for a long time was training because again, the product is quite complex and the market we live and play in is a complicated arena. So we were good at running training courses and businesses liked our style of delivering training courses but it was massively inefficient. It meant that you would end up having a trainer who would then be training between 2 to 7 or 8 people and it would take them all day and if you just do it all in one block that training, at the very best people will remember what you've told them in the morning and by the afternoon they'll remember absolutely nothing. So we decided that it would be good to be able to video a lot of the training [courses] and also put together an accreditation programme so that businesses felt there was value in the training they were doing - that the person who is signing off the purchase of the training knows they're going to get some value out of it because there's going to be a rubber stamp to say that person is now accredited. So we've developed Storm Professional which is all online. We've videoed all of the courses – there's some core modules and then there's some specialist modules. It took over a year to put the whole thing together and there's still quite a lot of work now – every quarter everything gets refreshed but we've had massive take up on it. We've now got 130 odd people signed up to the training. Every new client who comes onboard buys the training courses.
SP So its an additional revenue stream for you on top of the product is it?
SR It is but it's not massive it's a small annual fee per user. When we deliberately priced it as well ... we could give it away for free but if you give something away for free we find that businesses just don't value it. So we decided that we should charge something for it so that people do accept there's a value to it and also it does help us with the cost of maintaining the courses a bit. So it's not a big revenue stream for us at all but we hope it's kind of like breaking even kind of thing in the cost of maintaining it.
SP It must help with your retention figures for the product, so when people feel that they understand the product better they get more out of it and therefore they renew at the end of each year.
SR Exactly, there's that and also there's the other added benefit that the people who have actually taken the course and have passed exams, they really value it because it's not an ease thing to do. We've pitched it so that it's difficult but not too difficult - so you can retake the exam - it's a hundred per cent pass mark on all of the exams, so you have to pass it, right? So you're not just going to luck out of it. You have know what you're talking about and you have to understand it to pass it but that then has the effect that anybody who's done it they value it and they're valued within the organisation and if they do leave the organisation they very, very often introduce us to where they're going. So they become our Trojan horses.
SP Right yeah because they look at the qualifications they've got and they think how can this be valuable somewhere else and actually actively look out for someone who uses DC Storm.
SR Absolutely. They probably use DC Storm and people put it on their CVs now, so I've seen that on people's CVs – they're Storm Professional qualified and that's very ...
SP You know you've made it when you see that don't you!
SR Yeah that's really satisfying and it's something which I'm passionate about as well, the whole education side of things - really passionate about. It's what I was talking to you earlier about the fact we've built an intern scheme here, we've gone round to all the universities. We go and talk at the universities to explain to them what the digital marketing world is all about to try and help graduates find jobs and the way the economy is and the amount of graduates which are out of work at the moment it's a complete opportunity for small businesses to grab eager talent and to train them up yourselves and you build really strong teams that way and you're giving something back as well.
SP Yeah sure. So what's it like to work at DC Storm compared to say another digital business and if there's anyone out there looking for a job who's a top graduate and interested in the business, why would it be better to work at DC Storm than anywhere else would you say?
SR I think our offices now do reflect the kind of business that we are looking to work in.
SP Yeah you've got a great view as well.
SR We've got a fantastic view. What we've tried to do here is create some relaxed areas and certainly some space so that everyone can get a bit of quiet time if they want to. Plus obviously there's the decked area out here where people can come and relax at lunch time and take a break. I think what I'm trying to do with the company is create a business where come 5.30 people aren't looking at their watches and that people will work late because they want to work late and there's a job to do and that they're passionate about delivering value for our clients. I think that's the sort of thing that I'm trying to instill and I do instill on everyone within the business, is if we are delivering value for our clients then everyone's life is going to be a lot happier. Clients will be happier. The shareholders will be happier because we're going to have better client retention and it's makes us a much nicer climate to work in.
SP No it sounds great and you know you've been in business for a number of years now is there anything that you've learnt along the way that you live by or run your business by?
SR I think I would have probably taken on a non-exec director earlier to help me with the strategy and help mentor me. Fortunately, my Chairman, joined the company when DGM did which was in the fairly early days and he really started taking an active role about a year after joining and he's helped me develop massively as a mentor – getting my head around financial planning ... all the numbers ...
SP Is he from DGM the Chairman – the original investor?
SR No, he was appointed by DGM. He actually works for the BBC. David McNally he's been absolutely instrumental to my personal develop and that in turn has benefited the business.
SP Fantastic. So that's something you'd do again if you were to start a business?
SR If you can get your hands on a mentor as a young entrepreneur – I don't care how much you think you know things, if you've got somebody whose been round the block a bit and whose done it – whose been in start-ups and who understands the pressures that start-ups are on and the different phases that they go through – it's absolutely invaluable.
SP One think I say is to try and find someone that's done it before because I find there are lots of business advisors around who have been business advisors for a long time – in fact career advisors who are very good at what they do but there's no replacement really for someone whose done it before and who can talk about their war stories and apply their experiences to another growing business.
SR Absolutely and also been in businesses which have been in trouble and helped them either get out of it or certainly at least experienced businesses which have been struggling because if you know what the signs are then you know how to avoid them.
SP Very true. Excellent. Is there any other bits of advice that you kind of want to give out to the people who are looking to grow their business?
SR I think looking at the funding and matching your ambitions with your funds available. Doing that early on is really important and if you haven't got the funds available then you have to redress what your ambitions are – or go and find more funds and I think that's probably ... I've suffered through that. I've certainly been over ambitious without the funds available and it comes and bites you at some point.
SP So watching your cash flow – keeping a close eye on cash flow and not extending the business?
SR Yeah, not extending too much. And just making sure your ambitions are in line with your abilities and the funds available because you might have some fantastic ideas but if you can't get someone to put their hands in their packet to fund it then you might as well concentrate on the stuff which is going to make you some money.
SP Okay that's great – that's been very, very helpful. I mean it's a great story DC Storm. A great story for growth, you know you're someone who started a business early on and always knew they were going to be an entrepreneur and started the business small and they've now grown to 25 staff ... you've taken on angel investment. You're growing the business sustainably and now working internationally as well and there's certainly growth for the future. So a very successful business - fantastic and well done.
SR Thank you very much.
SP Cheers.
SR Cheers.
END.

About the author

Phil Jones

Hi, I'm the Managing Director of Wired Sussex, overseeing our strategy as an organisation and work to promote our membership and its needs to local, national and international stakeholders, including government.

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