It’s not about having gleaming offices in London, New York or Silicon Valley. It’s not about hiring tons of new staff, splashing cash and shouting about how successful you are. These can be the trappings of ego-trippers. Effective entrepreneurship is more often about coming up with an idea, proving the concept as cheaply as possible, and scaling it as quickly as possible.
James Macfarlane, the 30-year-old CEO of PM Connect, would agree with this statement. One of the most impressive young entrepreneurs we’ve met, James has never wanted a fancy London HQ with hundreds of employees working beneath him. He’s never been interested in splurging money on a high-octane ‘entrepreneurial’ lifestyle. All he’s ever wanted is to overcome self-imposed hurdles, the height of which he’s raised again and again as he’s matured. James has achieved every goal he’s set himself so far with a laser focus more often seen in Olympic athletes. The result? A £20m-turnover business headquartered in Longbridge, Birmingham. His next target? To build a £100m-turnover business. He’s raised the height of the hurdle yet again. His latest – and biggest – challenge is now live.
Aged 16, James imported iPod covers from China and made a cool profit by selling them on eBay. Later, while studying at the University of Leicester (he got a 1st in Business Economics),he launched a phone-comparison website for fellow students. “I used to hand out flyers on campus,” he recalls. Setting personal entrepreneurial challenges has always felt natural to him.
Not long after university, James met serial entrepreneur Scott Smith, his future business partner. Scott saw something special in the then 22-year-old and, in 2010, and offered to invest £1m in a digital business that James would launch and develop. The proposed business did not exist at that point. There wasn’t even a plan on the table. It sounds like a crazy punt, but Scott clearly knew what he was doing.
“Back then I was prominent in various online techy communities,” explains James. “I was passionate about business – particularly online business – and so I posted in these forums. I gave advice such as how to improve search-engine rankings, that kind of thing. I didn’t do it to make money. I did it because I loved the subject. I’ve since learned that Scott spotted me and saw I was knowledgeable about building and monetising websites on a small scale. He wanted to invest in my knowledge to see if I could increase the scale.”
There is more to Scott’s decision, however. Scott also saw a kindred entrepreneurial spirit in James. He believed his protégé was motivated for the right reasons and would therefore treat his investment with care and respect.
“A lot of entrepreneurs love to take big risks, but Scott and I are quite risk averse,” says James. “What we do is invest the smallest amount of money possible to prove that a concept works. As soon as we prove that concept, we scale it up as fast as possible. That’s how we gelled. It wasn’t like, ‘I’ve got a million quid, let’s hire 20 staff, build this big new website and hope it makes money.’ It was more, ‘OK, let’s pick a few ideas, develop them to the best of our ability for a small outlay – and see which works’.”
Working from home (not a fancy office), James set out on his entrepreneurial journey. The broad aim had been defined: build an online business capable of global impact. Experimentations began. Ideas were tested. The first success came when James created one of the UK’s largest online mothering networks, comprising babynames.co.uk, babies.co.uk, pregnancy.co.uk and mum.com. Reaching an online audience of nearly one million mums every month, he sold advertising to the likes of Johnson & Johnson, Pampers and Toys R Us. He even sealed a book deal with Penguin, which resulted in Britain’s best-selling baby-names book. But it wasn’t enough. The business was too small for their ambition.
“It was a lifestyle business,” says James. “We scaled it up and achieved a turnover of several hundred-thousand pounds, but we couldn’t grow it any further.” They built other successful websites too, including gold.co.uk and mobileinsurance.co.uk, but a business model that could bring huge international success remained elusive.
Then, in 2013, James noticed an interesting trend. “Web traffic on our mothering sites was going up, but our ad revenue was going down,” he says. “Normally, more traffic means more revenue, so we took a closer look. What we saw is that our mobile web traffic had shot up from 20% to 60% in 12 months. Mums were using their phones much more to browse the internet. Also, we noted that the most effective mobile advertising was incredibly annoying, resulting in more users clicking away from the page.”
Armed with these facts, James went back into planning mode. “We tried to find a solution to increase mobile ad revenue. But we concluded there simply wasn’t one. The bottom line was that no one had monetised mobile content properly.”
A dead end, then? Time to give up on mobile? Nope, not one bit. For James, this was an opportunity – a huge one. He returned to the drawing board – one of his favourite pieces of equipment – to work out how to monetise mobile.
“We built some products specifically for mobile,” he says. “These are known as HTML5 apps – or ‘smart’ websites – not the traditional apps you download from Google Play or the App Store. Next, we put these products behind a paywall. We didn’t want to rely on ad revenue because we thought advertising would ruin the user experience.”
So far, so good. But there’s more, and this is where the genius comes in. They decided to allow people to pay for their products on mobile phones, not credit cards.
Hold it right there. This is the key. By ensuring users could pay for mobile content via phone rather than credit card, James had found what he’d been looking for. This was the multimillion-pound idea that could have a global impact.
Why? Because humans are lazy. Being able to pay via your phone indulges our desire for instant, trouble-free gratification. It also means you don’t need a bank account. James explains: “Using your credit card to make online purchases is arduous – you have to fill in all that billing information. If you’re paying between £1 and £3 for a mobile app, you just won’t bother – it’s not important enough. But if you can just click once and get billed on your mobile bill, that’s a different story.”
In 2015, James and his team approached the UK’s largest mobile network. “We presented our mobile content – gaming, fitness, food and mothering apps – and told them our plan for mobile billing,” says James. “We hit them at the perfect time. Luck is crucial in any business and our story is no different. They were actively looking for ways to increase their revenue through sales of mobile content, so they pricked up their ears.”
PM Connect launched with them in 2016. Then, their business exploded. “We went from turning over a few £100,000 to several million very fast,” says James. “We were acquiring customers incredibly quickly and I was suddenly getting my first taste of what a multimillion-pound scalable business would look like.”
Other UK mobile networks were also keen to harness the extra revenue, so they too signed on the dotted line. “We grew very quickly on those other networks,” says James. “There wasn’t much content available to customers paying by phone, so we were the UK’s first movers.”
PM Connect’s global play came next, launching in the UAE. And today James’s company has deals in place with several mobile carriers across Europe, the Middle East, and North and South Africa. Crucially, James’s company also works with huge global brands such as WWE (World Wrestling Entertainment), Opta and the NBA, repackaging their content into a profitable mobile format. “We’re able to monetise fans who’ve never been monetised by these brands before,” says James.
Today PM Connect, which is privately owned and – amazingly for a tech company – completely debt-free thanks to James and Scott’s intelligent, frugal approach, turns over £20m a year. Expect that figure to grow substantially. “The mobile-payments industry is worth roughly £14bn this year,” says James. “By 2022 it’s predicted to be worth around £38bn. We’re a relatively small player in a relatively niche market but we’re poised to become a global player in something that’s growing massively fast. We’ve finally found something scalable and we’ve learned quickly. We started out as a UK mobile-content company. We’re maturing into a global mobile-payments company. I know we can soon become a £100m-turnover business that’s worth half a billion.”
So how did James – just 30 years old – get himself and his company into such a strong position? Talent aside, we’d argue that he’s got here thanks to his attitude. How many 22-year-olds, after being handed £1m to launch their own business, would continue to work from home, spending the “smallest amount of money possible to prove their concept”? How many young entrepreneurs would see the hugely popular network of mothering websites they’ve built from scratch as not good enough – a mere “lifestyle business” – and return to the drawing board to launch something bigger and better? How many excitable twentysomethings would choose the relatively unsexy Longbridge as their home ahead of the trendy West End? James’s lack of ego has allowed him to build his business in the purest, most effective way possible, using his laser focus and self-discipline to make one exceptional decision after another.
“I’ve always seen it like this: it’s a challenge,” he says. “Getting to your first £100-turnover business allows you to learn something. You say, ‘OK, this is what I need to do to make £100’. Getting to your first £10k – that’s another learning curve. The same for £100k, and so on. That’s what gets me out of bed every morning: the challenge to overcome and to learn.”
As an entrepreneur, your ego can get in the way. This story is an object lesson in why effective entrepreneurship is not about pride or self-image. It’s about complete focus, sheer determination, hard graft and solid business nous.
The same is true for investors. They too can be attracted to the ‘shiny stuff’ and won over by alluring ‘too good to be true’ figures. But Scott Smith seemed to know exactly what he was doing when he invested in James Macfarlane. It’s probably the best £1m he’ll ever spend…