Interview with Paul Fullagar

Paul Fullager was born in Canterbury in 1950. His parents’ families had been wealthy but lost their fortunes during the 1930s and the Blitz. His mother ran a second-hand clothes shop and his father, who had been in the army during the war, was a gardener. He had one sister

Aged eight, Paul went to Milner Court, the preparatory school of King’s School Canterbury. He couldn’t read until he was nine although he used to fake it by taking books home getting his mother to read out sections which he memorised. “I didn’t enjoy education at all,” he says. “I was heavily dyslexic, although it hadn’t been ‘invented’ then.”

He was also severely bullied. At first he dealt with this by “just hiding away and keeping out of trouble and trying to be invisible,” and towards the end of it, “standing up and hitting back harder.” This got him into trouble because it was always seen as his fault, and because he didn’t know anything else he thought being bullied was normal.

He excelled at one thing — maths. He has a natural affinity for numbers, which he sees in colours and shapes. This was not always a positive experience. Aged 10 he had nightmares counting prime numbers in his head, and would wake in a panic because he’d forgotten the last one he had counted.

Paul passed the 11-plus and the Common Entrance B, in which he became the only person in Britain ever to get 100 per cent. This won him a scholarship to King’s, and during his first term, aged 13, he beat several of the school’s Oxbridge scholars to win the school maths prize.

He recalls the headmaster phoning my father and saying there had been a terrible mistake. “My father enquired as to whether I’d won it fair and square?  ‘Oh, by miles,’ he said.  ‘But he’s only thirteen, he’s not eighteen.’   And my father said, ‘well, if you look at his maths record he would wing it.’” The result was “a bit of a falling out” between Paul and the school, and he stopped attending maths classes.

London School of Economics

Having an August birthday, Paul was barely 18 when he went to the London School of Economics (LSE) to study economics and computing. There he encountered his first computer and learnt to program in Algol using punched cards. He did not find this difficult. “The real issue wasn’t viruses or bugs,” he says. “It was if you dropped the pack of cards you got them out of order. This was a nightmare — you could lose three days’ work just tripping up or spilling the coffee.” The experience taught him always to urge his programmers “number your cards!”

Paul was fascinated by the computer’s arithmetic powers. “To me it was just a series of calculations,” he recalls. “And the first program I wrote I still love to this day.”   The program analysed the performance of the top 50 fund managers, taking into account dividend yield and market growth over 15 years. It then used a random number generator to prove that a random approach would beat the brokers, once all their fees were taken into account. “That truth still holds to this day,” he says

But Paul’s first year at LSE was 1968 — the year of the riots — and it was closed for six and a half weeks. “I was sympathetic to the underlying anti-Vietnam War cause,” he says. “I wasn’t sympathetic to them rioting.”

He was also disappointed by the quality of teaching, particularly a Professor Alan Day who lectured on economics and was in Margaret Thatcher’s think-tank. “He seemed to me to have the dimmest mind I’d ever come across. And on regular occasions in open lectures I would remind him of my opinion. I think LSE was quite glad to see the back of me when, after one year, I decided this wasn’t for me.”

After a summer job on a Kentish farm, Paul decided that he would use his strength in maths by becoming an actuary. “I saw an advert in the paper for Abbey Life, then the new up-and-coming life insurance company run by Mark Weinberg, looking for trainee actuaries.” He applied, was interviewed and immediately got the job.

His office was in number one St Paul’s Churchyard, overlooking the cathedral steps. “I remember it vividly,” he says. “It was a very splendid place to work.” Because I was free to join immediately, and the actuarial department wasn’t quite ready, they asked him to help out the investment director, who was a bit overrun. “So I started helping John Gordon, in the investment department, which consisted of just him and me.  He was a marvellous man, an absolutely brilliant chap and a real mentor.”

Paul never made it to the actuarial department because he ended up effectively being John Gordon’s PA, with an office between him and Mark Weinberg. At the age of nineteen he ran the investments. “I had buying discretion on the stock market of up to £250,000, which would be about £25m nowadays, a ridiculous sum, but I had wonderful fun.”

Enjoying work

Through John’s mentorship, Paul discovered the importance of hard work, humour and honesty. “I learnt about getting things right and declaring any mistake immediately not covering it up,” he says. “If you’re not making and sharing mistakes other people get nervous, because it happens to everybody. Therefore, if you find somebody who never makes mistakes it means they’re covering them up, and that makes you nervous about where those mistakes might be.”

Paul loves work. It’s partly the intellectual challenge, he says, and the financial rewards. “In the early years, I had an overwhelming desire to succeed and to make money — not for me but to prove the principle that although my mother and father had both lost all their money, I could restore the family fortunes.  It wasn’t about going out and spending it because I often used to work 16 hours a day and 18 months without a day off.”

When he wasn’t busy he debugged the actuarial department’s accounts. These  were written in Fortran, which he taught himself over a weekend. “I could look at sheets of programming and see the mistake,” he says. The programs ran on machines belonging to ITT in the US, which had spare capacity and processing power overnight and were connected by giant land and underwater cables.

It was his mentor who, after four years, persuaded Paul to move on from Abbey Life. “I was addicted to the City and didn’t want to leave but I was actually thrown out by John. He said I was far too bright to be a PA — I must go and become an accountant, or move to the actuarial department, which I’d long since stopped wanting to do.” He walked round to reception at the City of London Polytechnic and asked if they had a place.  They said yes, so he handed in his notice and within two weeks, at 23, was a student again.

The advantage of the sandwich degree Paul had signed up for was that it allowed him to earn money six months of the year. He needed to do this because, having abandoned his first degree, only his fees were paid, not living costs. He kept these to a minimum by sharing three to a room in Earl’s Court.

Internships

Paul’s internships were a mixed bag. His first was working as an accounts clerk for a petrochemical company. “It was incredibly dull and I only just survived because I was largely making tea and coffee,” he says.

Then, as a management consultant for the dairy division of Unigate, he was given the task of persuading the union to change the milk control systems. “They set me up with what in rugby terms is called a ‘hospital pass’, to sort out some paperwork for the London milk division,” he says. Unigate was heavily unionised and the management wanted to change the milk control systems without having to deal with the union. “They put the student intern in there as a sacrifice, thinking it doesn’t matter if we lose him; the union can eat him up and spit him out and we’ll say we tried.”

As it was, Paul won round the union. “I was alert enough to tell the union what I thought the management were doing, and suggested we had a bit of fun and actually agree something.” To the management’s complete amazement, he got the union to accept a new form. “It was exactly the same form but we just turned it round — instead of going top to bottom, we went left to right — and they all agreed that now it was their form and not management’s form.”  It became the basis of the new system.

As an intern, Paul enjoyed the fact that he could take an almost “tongue in cheek” approach. “It didn’t matter if I got fired or anything, it wasn’t the end of the world, students often did not finish their sandwich placement.”

He then worked on harmonising the discount pricing structure of dairy products. Among the pleasures of this job was driving around Britain to different depots taking in the sights, and being given four whole Stilton cheeses for Christmas. “That was just wonderful, because I could give them away as presents and I’d never seen a whole one before. It’s little things you remember, it was just absolute delight.”

His final internship was as an investment analyst at Rowe & Pitman, the stockbroker, where he had “tremendous fun” and won a couple of awards.

On graduating in 1975, Paul decided that he wanted to do something “real” rather than be an investment analyst. So he signed up as a trainee accountant at Overseas Containers (OCL), the company that became P&O Containers. Within a year he was a qualified accountant.

Frequently promoted, by 1982 he was controller of a large division, a job he loved. “Shipping is fantastic,” he says.  “You get to understand the whole world because you’re moving goods from one country to another. Every country you go to, you’re working in it so you understand the nature of the people, the products and what they do. The whole world comes alive and it’s enormously exciting.  And it’s a very valuable thing, the moving of cargo between countries as world trade has done for hundreds of years. It’s a most fascinating area to work in.” He was closely involved in the industry’s containerisation and the closure of docks in London and Liverpool.

OCL used computers for all its accounting, and for its manifests, bills of lading, container control and scheduling. During Paul’s time there it upgraded from IBM to Amdahl—a compatible technology. The process involved using cranes to remove the sides of the building in Aldgate, OCL’s head office on the edge of the City, and sourcing water from a mile away for the cooling system. “I remember the pure logistics. What this machine did is now less than your mobile phone, and it was a whole floor of the building. But at the time it was the second most powerful computer in Britain after British Airways.”

Paul developed gaming skills from an early age, learning to play cards and “tote rigging” horse and dog racing — a legal activity which warped the odds by sending out teams to place bets on totes at meetings while others put much bigger sums on favourites in betting shops. While a student he had teams of people helping him with this.

As a junior accounts trainee at OCL, Paul had to deal with the Merseyside dockers, sometimes sent out to do jobs the others wouldn’t do. On one occasion he found the dockers playing three-card brag rather than unload a ship.

“’Oh crikey,’” I said, “‘that looks jolly complicated’.  ‘Oh, it is’, they said.  Then one of them had the bright idea, ‘Would you like to play?’  And I said, ‘Well, I don’t think I know how but it looks quite fun.’” After beating them hollow he offered them their money back if they could unload the ship by dusk that night. They readily agreed, especially when he threatened otherwise to return to play cards the following evening.

In 1982, Paul was headhunted to be group chief accountant at Ellerman Lines, which he says was suffering “gross incompetence” of management. “They were ‘old school’ boys, you know — lovely, large lunches, cigars all round.  No idea what they were doing.” They were living thirty years behind the times and totally unprepared for containerisation. “The most important thing they had on their minds,” says Paul, “was whether to sack the director’s boardroom dining room chef and get a better one, while Rome burnt, as it were.”

Paul was recruited alongside a new finance director, but within nine months, then 32, he had taken on the group FD’s role himself. This included being responsible for IT. He stayed five years and turned the company around — being group FD puts you in a very good position to do this, he says.

Two years into his sojourn at Ellerman, David and Frederick Barclay, now Sir David and Sir Frederick, bought the group including its breweries and shipping division. The Barclay brothers even moved their head office into the top floor of Ellerman’s building in Camomile Street.

Unlike many people, Paul got on with David and Frederick “like a house on fire”.  He says: “I probably got on better with them than anybody I’ve ever worked with.  They’re an absolute delight, but in a way you had to be someone like me to get on with them, because a lot of people couldn’t.”

One thing they didn’t like, says Paul, “is people who toadied, and of course because they were quite domineering, people toadied up to them.”  They often seconded him away from the shipping company to look at other projects, including the feasibility of whether they should buy Sealink.

“Their style would be to call me up to their office one morning and say, ‘we’re thinking of buying Sealink, here’s the file. They’ve got nine places that we want you to go to, we need a report by the end of the week.  If you look outside the window you’ll see our Roller ready to take you to the helipad, we’ll see you on Friday.’  And that’s what you’d get, that’s the briefing, go sort!  Which I loved, it was tremendous fun.”

At the time Paul was prop forward for club rugby. On one occasion, after a tough weekend game where he’d had the whole scrum on him, he had plasters on his eye and face and his arm in a sling. Arriving at the last minute for Ellerman’s Christmas lunch on the Monday, David asked him where he had been. “There was a silence in the room,” says Paul, “and I looked straight at his eyes and I said, ‘David, there’s no bad debts in our company’.”

Management buyout

In 1985, the brothers wanted to sell Ellerman because shipping was not consistent with their other acquisition plans. Within a matter of weeks, Paul organised a management buy-out. “That’s when I really did start using computing,” he says.

First he changed the accounts system because he wanted everything automated. He decreed that all the company’s software applications — container control, accounts, sales ledger ordering, manifest, bills of lading and so on — had to run under the same operating system. This meant that they could all be linked and data would only have to be entered once.

That delivered huge advantages in terms of speed, accuracy and reduced manpower. Meanwhile, he had one of the early PCs with Finar, a spreadsheet designed for financial modelling. He put all the buyout modelling on this system to show VC analysts and answer all their “what if?” questions, for example, what would happen if the dollar moved in a certain direction?

The VC analysts were wowed, never having seen such a system.  The buy-out went ahead with the management team putting in modest amounts, in the region of £25,000 each. “Enough that you wouldn’t want to lose it.” Then, in 1987, Trafalgar House, with which Ellerman had joint ventures, bought the business for “a considerable amount of money”.

After that Paul needed to move into a new sector. Shipping offered limited opportunities, he says. “It’s a very volatile industry and it’s big money so you only get the occasional window.”  Software appealed to him because, like books and music, it offered the potential for multiple sales. It was like a new sort “Wild West” he says. “I thought it would be fascinating to get involved in software where you can write it once and sell it a million times.”

He was familiar with the FCMC company because it owned Finar, the spreadsheet he’d used at Ellerman. FCMC also had a package on Finar called Fin Group, which was the only product in the world that made it possible to consolidate 500 companies on one PC.

In 1988, FCMC was based in Marylebone, London, where it had just a dozen people and needed direction. Paul invested and quickly became chairman, taking on an increasingly executive role and splitting the management of the company with its founder, John O’Connell, also an accountant.

Having joint executive chairmen is not usually recommended, but Paul says it worked because he was more City-based, and eventually organised the flotation, while John was more inward focused. “It didn’t necessarily conform to what people think is the right way to do things now, but it wasn’t all power in one person, so that extent it did comply.”

The power of Workflow

When Paul first arrived, FCMC was developing a generic mortgage system that could be used to automate any mortgage application. It became apparent that, in addition to mortgages, this product could be applied to loans and other business processes — ‘workflow’ as the concept was then known. “Workflow is wonderful stuff, because of course this is core enterprise software, you don’t put it in and out of a company every day,” says Paul.

Moreover, he realised the FCMC software could enable generic products much as had achieved at Ellerman, where data need only be entered once. “And I wanted generic products, rather than fixed products because, that we could write once and sell a million times, which doesn’t work with bespoke.”

The FCMC software ran on Unix and Linux so worked on most platforms including the IBM AS/400. FCMC sold it for £20,000 to £400,000, depending on numbers of users. But the real value was in the maintenance agreements, which included free upgrades.

The aim was to pay the bills out sales, says Paul. “But the value of the company was never in the product sale, because – as they say in football – you’re only as good as your next match.  Having sold it and done, if you don’t get any more customers the business is bust. It was the annual maintenance annuity stream that I was always after.  And we did that reasonably successfully.”

Expansion Overseas

Paul particularly enjoyed building FCMC’s business in other countries. “It was tremendous fun,” he says. Because the product was so generic it could work almost anywhere. Initially the company used resellers. But eventually Paul decided the company needed to own its resellers. He told John: “Two things are happening: one is we’re giving away half our margin; but secondly we’re disintermediated from our customers, whereas we really need to be next to our customers and own them.  Moreover, resellers don’t necessarily share our objectives and have common goals with us.”

So, the management team began using the company’s shares to buy resellers, spurred on by the desire to float the business on London’s Alternative Investment Market (AIM). Owning shares meant the resellers felt part of the family so it helped enable smooth integration. Meanwhile, they carried on almost as they were, says Paul.  “And as they were in different countries they didn’t need to be integrated, and they were already using all our paper and logo.”

FCMC’s AIM flotation happened in 1996 and achieved a market capitalisation of £26m to fund growth and pay off debt. Then four years later Paul moved the company to a full listing on the London Stock Exchange in 2000, just before the dotcom crash. Later that year, having been chairman for 12 years, he stepped down to become non-executive deputy chairman and spend more time with his first wife who was very ill.

By the time he left, in 2003, FCMC had offices in 16 countries, more than 350 staff and a market lead in business process automation software.

When Paul ceased being non-executive deputy chairman at FCMC in 2000, he became a senior non-executive director of Marlborough Stirling, which supplied insurance, banking and mortgage software. It had 1,600 staff and his appointment was at request of 3i, the company’s venture backer, to prepare for a flotation.

UBS, Marlborough Stirling’s banker, wanted someone on the board with knowledge of software and technology as well as experience of flotation. The public offering went ahead but board level disagreement led to Paul’s eventual departure. “We parted company with the executive chairman and there were various regulatory stock exchange announcements which described what went on,” he says. “But I was jolly cross with UBS for not having done its due diligence properly on individuals.” In May 2005, Marlborough Stirling was sold to Liverpool-based United Utilities.

In 2002, again at 3i’s request, Paul joined the board of Helsinki-based Teamware, which supplied business software to Nokia.  “I just liked Finland, I still do,” he says. “And I found it quite refreshing to go somewhere different. Except in January when it’s dark all day. Then the board would use me as an excuse to pile over to the UK for meetings and get away from the SAD syndrome.”

In 2004, he became a non-executive director at Financial Objects, which supplied object-oriented software to the secondary banking market. At that time, tier two and tier three banking was a relatively small and fragmented market going through a lot of transition in software development.  It was a “fickle” market to be in, Paul recalls.

Although the company had good software it was struggling to keep up. One problem was that it was not working its existing user base by selling upgrades. Another was ensuring new sales provided a proper annuity stream. Once again, the answer was maintenance fees, says Paul. “In negotiations always commute the sale price for a better maintenance price,” he advises.

Another strategy was complete chargeable upgrades that could be implemented one module at a time to keep up the revenue stream. There was also a focus on improving service and driving foreign sales, particularly Sweden. The strategy was “to milk the existing customer base, which was very good quality, and give them a much better service.”

In July 2007, Paul he was headhunted to become non-executive chairman at Brady, a commodity trading software company, which had a market capitalisation of about £5m and had “run into the ground”, as Paul puts it. “They wanted some help to try and turn the business round. And I was fascinated by commodity trading anyway, I suppose it comes from the shipping days.  It’s similar to shipping, in that it is about moving commodities all round the world and international trade.”

By September, Paul had recruited a new chief executive while he continued working with the founder Robert Brady, who he describes as “not a businessman but delightful and incredibly bright.” Robert was the youngest ever Fellow at Trinity College, Cambridge and his hobby is quantum physics.

Paul stayed at Brady until June 2016, by which time he had increased the market capitalisation by an order of magnitude to £60m through a combination of acquisitions and organic growth. Brady bought software trading products, originally in metal, then in Sweden in gas and electricity. In the US it bought companies that were trading in recycling — the only time Paul has ever been involved in buying a company in the US that was a great success.

Paul says he has very strong management theories. “I believe in responsibility structures not authority structures,” he says. “I believe in flat management. I believe in respect and that everybody matters.  Everybody’s equally important, they just have different roles to play.”

His favourite example is receptionists being even more important than executive chairmen, because they answer the phone and greet visitors. “If they hash it up they could destroy your business,” he says. “Whereas actually, by the time it gets to the executive chairman, most of the stuff’s been done and his ability to destroy the business is somewhat marginal compared to the receptionist.”

Paul feels he is popular, noting that people want to work for him again. But he is not afraid to give them the sack where necessary. “I make a hard decision and enact it with great compassion,” he says. He also sees himself as a good salesman.

During his second year at City of London Polytechnic, aged 23, Paul was social secretary of the student union — the largest in London — which was Marxist. While there, in addition to playing in rock bands and running discotheques, he also took over the Ents system and managed to attract bands such as Black Sabbath, Free and Marmalade. On one occasion he built sound and light systems to create a disco for 500.

He worked out a way to guarantee huge attendance to such events by laying on free buses during the day for students to attend Marxist protests and deliver them back to the student union at 7pm on Friday night, whereupon they would pile into the disco. The drinks they then bought funded the buses.

He was frequently reprimanded by the vice-chancellor for supporting Marxists when he wasn’t one himself. “He couldn’t understand if I wasn’t a Marxist why did I have to do all this for them?  And I kept pointing out, it’s freedom of speech and if they want to protest they’re allowed to.”

Paul was dyslexic at school and a late reader. But at 21, he suddenly developed an astounding memory. He now reads and writes prolifically, and has a voracious appetite for theatre, literature and film, and composing comedy sketches — an activity which takes him far beyond the world of financial software.

His subject is often challenging authority, especially stupid rules. Recently he wrote a comedy sketch about the absurdity of the government banning people burning green logs. “No one burns green logs because they don’t burn, and how are you going to police it,” he says.

It was when floating Marlborough Stirling that Paul made one of his biggest mistakes, he says. Coming is as non-executive director he should have leaned much more heavily on UBS to do its due diligence, he believes. “I did actually ask them the questions but I didn’t follow up to make sure they’d given the answers, and that was sloppy.” Had they done the research it would have revealed a lot more information that might have changed things, Paul feels.

But although he says he has made loads of mistakes, and hopes he has learned from them, he doesn’t think about them. “They’re kind of deleted from the memory bank so I can pretend they never happened,” he says. “It’s like the ‘childbirth syndrome’ for women where the process of childbirth is very painful and disagreeable but their brain cuts it out very quickly.” He admits to being a little too trusting, although he prefers it that way.

He does agree with industry luminaries such as Sir Tim Berners-Lee, that the internet is creating a digital dystopia. In the case of social media, for example, people don’t understand that it is all public, he says. “There is no private social media of any kind, it’s all in the public domain…And despite the Data Protection Act, companies like Google still collect all our data without our permission. It’s extraordinary.” That’s why he doesn’t have Facebook or Instagram accounts.

Most acquisitions fail because there is no real synergy, says Paul. This means you are just buying turnover, and if you are taking away the ownership from the people who used to own it and giving them a lot of money they get bored and leave. “Then the people who created the wealth, knew how to run it, have gone and you end up with what?” Just buying software companies because they are in the same business as you doesn’t create value unless you can use it yourself and sell it to your customers, Paul says.

A particular “minefield” for acquisitions by UK companies is the US, says Paul. When considering a US acquisition he starts with the principle of “no” — the opposite of his usual approach in life.

Paul believes that many big public sector technology projects, like the NHS patient records, fail because the professionals doing the procurement lack the appropriate skills. In the case of the NHS, he gets very cross when they are maligned, “because I know from my personal experience that they’ve been fantastic, and even people on the administrative side care about clinical care. However, it doesn’t make them competent to choose systems and processes, they really don’t understand.”

But they rely on large consultancy firms, which, in Paul’s view, also lack understanding. He recalls putting forward a paper to the NHS from Staffware, which suggested the answer to their problems at the time was workflow processes. It was a simple idea — that there would be a “suitcase” of data for each patient, which could be moved wherever needed.

The workflow system would be based on multiple interlinked servers and could be upgraded gradually and expanded when necessary. It would provide constant revalidation and audit trails and was available in the 1990s. But the consultancies wouldn’t recommend Staffware, he says, because they wanted the fee income from writing the software themselves.

Another area where consultants were largely self-serving in Paul’s view was Y2K, which he describes as a “complete farce”. While it is easy to be wise with hindsight, he says, “I couldn’t really see that it was going to be a major problem.  And it wasn’t a problem at all.”

Paul sees the UK software industry as good health with a large number of new ventures. “I think that’s very important,” he says. “Innovation comes in small start-ups.” The problem, he says, is the skills shortage. “This probably worries me most, because I’m still involved in a handful of private software companies and their greatest challenge at the moment is getting the labour they need.”

The skills shortage forces many software companies to look overseas, he says, as happened with Financial Objects when it acquired a Bangalore software division for its programming. ”But even that’s now become quite expensive compared to what it used to be.” Although Eastern Europe is a good source of skilled staff there’s a nervousness about going to Russia at the moment, Paul says, “depending on the nature of your software.”

It is typical of the IT industry that it keeps repackaging things which are not new, says Paul. He cites cloud computing with applications such as Dropbox. “This is only another version of what we’ve been doing for the past 20 years with email,” he says.

The same is true of AI, he argues, which is just a natural extension of workflow. It is only originating thought in the sense of saying “if it is green go that way, if it is blue go the other way,” which is the same thing. “AI is nothing new.”

But what is interesting is the processing power behind AI, “particularly quantum computing, when they start to really get that working, and they’re nearly there.” He admits he doesn’t know how quickly this will happen because he is not an engineer in the field. But he believes it the processing power behind the processes that will make the big difference with AI.

If he had a million pounds to make a commercial investment Paul would probably put the money into virtual reality and quantum computing. Both have far to go, he says.

The theme that illuminates his approach to IT, he says, is software seen through the eyes of the user, and what it can do to make the user’s life better. “It was never software that I sold, it was solutions that I sold, and it’s about the customer, seeing through the customer’s eyes.” So IT should be a service, rather than dominate the user.

Interviewed By: Richard Sharpe on the 26th February 2020 in London

Transcribed By: Susan Nicholls

Abstracted By: Jane Bird