Scottish entrepreneur David Sibbald is hoping that his current business, Sumerian Networks, will be hugely successful, because that way there will be more money to give away. The approach is typical of the man who is arguably the most thoughtful of Scotland’s current crop of entrepreneurs.
After quietly building Sumerian from scratch and clarifying its offering, Sibbald has now pushed the button on a programme intended to bring rapid growth for the Glasgow-based business.
It is early days for establishing the full potential of Sumerian, but it is being closely watched, given Sibbald’s previous achievement in building Atlantech, a designer of software for managing internet traffic over telecoms networks, before selling it to Cisco Systems for £115 million in 2000.
Sibbald is only now ready to talk about Sumerian because it is only now that he believes his new “baby” is ready to be launched on the world. As he puts it: “Ideas are cheap. It’s really about if you can deliver something.”
That said, Sibbald says setting up a business has been that much easier second time around. He says that he was able to avoid some of the mistakes and pitfalls he experienced when he set up Atlantech.
Despite that, Sibbald had to deal with the same issues facing any early-stage business. “Have you got the right business model? Can you get the right people? Can you convince a customer to take a risk with an unproven concept?”
With the early work done, Sumerian is ready to step up a gear. “We’ve been moving from the start-up phase to something like stability and we are now entering the growth phase,” says Sibbald.
To lead the next stage, putting corporate systems in place for rapid growth, Sibbald has recently hired Joan Seaward. She was formerly chief financial officer with Orbital Software the highly-rated though ultimately unsuccessful knowledge management company.
She joins another ex-key player from the Orbital stable, Calum Smeaton who Sibbald describes as “a very good marketeer and very good at the technology”.
Sibbald set up Sumerian with a hand-picked team who have mainly worked together at Atlantech and at Cisco Systems. “We’ve chosen people we’ve worked with for the last 10 years,” Sibbald says. “We have people who know each other inside out and upside down. Everyone knows their colleagues’ strengths and weaknesses.”
Sibbald says that the timing in bringing people on board is one of the crucial judgement calls in a start-up business. “You have to bring people in at the right time. Too early and people get bored and in the way. Too late and there is too much catching up for people to do,” he says. The business has 16 employees and will grow from there.
Sibbald is confident that all the work done in the first couple of years has laid the foundations for a long-term sustainable business. There is no venture capital involvement in the business – the £1m seed capital was invested by Sibbald and co-founder Martin Velasco, the Geneva-based Spanish entrepreneur who was also a non-executive director of Atlantech. Velasco used to run McKinsey’s global telecoms business.
Sibbald says he expects Sumerian’s turnover to be about £1.5m this year and that the company is already in profit. Its customers will be very large users of IT with very large data flows.
Sumerian uses its software to build up a detailed picture of the way that data flows within an organisation and based on this makes suggestions for achieving economies. It looks at whether companies have the right systems in place, how they can add new systems and whether and how these will improve a company’s productivity and cost base.
Sibbald says he expects his main customers will be banks and other financial services companies. He refuses to discuss customers, but it is known that Sumerian has been doing some work with Big Four accountant KPMG.
Customers will include those who are wanting to markedly cut their IT spend or add on new systems and want to achieve it in the most efficient manner and “without causing the house of cards to fall down”, as Sibbald puts it.
“A lot of companies come to us and say ‘if we wanted to take 10% or 20% out of our network spend, how would we go about doing that?’
“People want to spend less money, but they want to do it in a way that doesn’t hamper the way they operate and that doesn’t affect the service to customers.
“There is a trade-off between economies, risk and the quality of service,” he says.
A second major for organisations coming to Sumerian, Sibbald says, is that the company can offer solutions on introducing new technologies to integrate in a trouble-free way with existing systems. “If someone wants to introduce total wireless capability, they might ask us to come up with the best way of doing it.”
Sibbald believes that there is a rich market for these services among major companies with heavy IT spend. “Everybody knows how much they are spending, the problem is that they don’t know what they’re spending it on.”
He says the information Sumerian supplies will allow clients to negotiate deals with companies such as mobile phone providers and ISPs that could benefit them greatly. The business model works on the basis of Sumerian agreeing a year’s contract with clients. The contract is intensive at the beginning as Sumerian gets to grips with the business, applies the software model to the company’s data flow and begins monitoring.
Sibbald says that Sumerian has already established a track record with its early customers. “They’ve all reduced their annual spend on IT in less than six months.”
Our interview takes place in Sumerian’s modest offices in Blythswood Square where the walls give eloquent testimony to Sibbald’s other main interest: the charitable foundation he set up which funds education for children in the developing world. The striking photos of children in Kenya and Afghanistan that are smattered around the office are a constant reminder to Sibbald of why he is building the business.
“There was 97% female illiteracy in Afghanistan under the Taliban,” says Sibbald, explaining why the Kate MacAskill Foundation (named after his wife’s grandmother) is working on a joint venture project in Kabul with UNICEF providing education for girls. “It’s separate from my business,” he explains, “but is a huge part of my life.”
Sibbald is one of a number of the major Scottish entrepreneurs, including Tom Hunter, who is not planning to leave his millions to his children. “I think there is nothing worse than second-generation wealth,” he explains.”
“It’s all going to be given away. It’s all got to go before I go.”