Ben Way on incubation, acceleration and the value of failure

Source: Exec Digital UK

Date :10/04/2008 14:58:13

Still only 28, Ben Way has already passed the true test of the entrepreneur – he’s built a fortune, lost it, and rebuilt it again. He speaks to Exec about his latest ventures

By James Hurley

When he began his first business back in 1995, Ben Way became the UK’s youngest company director at the credulity stretching age of 15. One of the first dotcom millionaires, he developed Waysearch, a search technology - later business-to-business product Pulsar - and was reportedly worth £18.3 million in the 2001 Sunday Times Rich List.

However, not long after the list was published, he had a dispute with his investors and lost the lot. I’d heard that he couldn’t afford to buy a tube ticket on the same day as he appeared beneath Robbie Williams in the list - if you think that sounds a touch apocryphal, Way doesn’t mind confirming that it is.“The reality is that I tried to buy a tube ticket with my credit card and it was rejected.” Fortunately, he had enough cash to complete his journey.

Incubation & acceleration

This particular story began when some very wealthy Jersey based entrepreneurs approached Way following a Channel 4 documentary that profiled his precocious gift for business and technology. “They wanted to hear my ideas,” he says. “Fortunately, ideas are one thing I’ve never had trouble with.”

The one they picked up on was Waysearch, effectively the first comparison shopping engine in the UK. “We were well ahead of the curve and it was a solid idea,” he says. “We tried to launch it in the UK, but had a few technology problems.

By the time we’d launched it was almost the dotcom crash. When it happened the investors got cold feet and pulled the plug. I ended up losing everything at 19. It was quite an experience.” Unsurprisingly, it has influenced Way’s approach to his current ventures – through his corporate venturing company, The Rainmakers, he helps incubate and support small technology enterprises.

“We get a lot of secondary or tertiary shareholdings through the rainmakers where we help innovators and acquire shareholdings – we’ve got a number of interesting stake-holdings in a number of different companies,” he explains.

The Rainmakers has approximately 3,500 sq ft in Covent Garden, with ten companies currently operating out of its offices. “We offer the cheapest rent available – it’s about half the cost of any other innovation company in this area. We don’t see our value coming from profits derived from our innovation community – we see it coming from incubating our companies, accelerating them and then selling on our shares at a later date.”

A new kind of VC

Rainmakers doesn’t invest capital in the businesses it supports, only intellectual property. However, Way is directly involved with technology venture capital though Brightstation Ventures, a $100 million investment fund he was invited to become a director of last year. “Brightstation is very much about investing hard cash into new ventures. It’s synergetic; projects have come to the Rainmakers that Brightstation has invested in,” he says.

The fund aims to be ‘a new kind of VC company’. Founder Dan Wagner says they’re akin to “business angels with deep pockets” and for his part, Way is keen to see a more collaborative approach adopted by the wider VC community.

“With a lot of the deals that we do, I say ‘let’s not get anything down on paper but let’s see what happens in three months’ and if they haven’t had any added value by then they can walk away,” he says.

“People are the most important part of the business and if I’m not working well with the people I’ve gone into business with then there’s no point. The big problem VCs have is that when they fall out with people, it creates so much tension and inefficiency within the organisations that they’re funding.” He would also like to see more investment on a cashflow rather than lump sum basis.

“Companies get a huge influx of money - £2 or £3 million, for example - when they’ve been used to working with cashflow of around £5,000 a month and they think ‘wow, we’ve got all this money, let’s spend it’. I would like to see the investment community committing to a certain level of cashflow each month, perhaps increasing over time. I think that would make for a more efficient investment.”

Encouragingly, he does think that the UK is showing more enthusiasm for entrepreneurism, even if the networks that are being established need to be consolidated.

“I started in business 14 or 15 years ago and it was completely different. I can’t imagine what I would have been able to achieve with the tools that are available now. I ran a business for five years without any external help or advice. Now it’s so different – there are so many advisors, networks and avenues available for help.”

The Brightstation funded Smarta – a website that aims to help entrepreneurs create and grow their businesses – is one example Way is directly involved in. His latest bright idea, Viapost, is a disruptive piece of technology that aims to revolutionise the business postal market by offering the ability to send a letter from desktop to delivery at a keystroke.

With the contacts and experience he’s already established at the ripe old age of 27, the success of this next venture might just mark his graduation from ‘one to watch’ to a permanent fixture on the rich lists.