Interview with Richard Little

Richard Little was born in Ealing in March 1955. He is one of five siblings. His mother was a secretary at Ealing film studios and his father was a civil engineer who started his own business and became the inspiration for Richard to follow suit. Richard’s father’s family came from Ireland and he says that makes him ‘three-quarters Irish, Ealing; London Catholic’.

Describing his father’s business Richard says: “My father worked like a demon and set up his own practice. It had his name on the heading; Kenchington, Little and Partners. It was the first in the world, a company that had started as a partnership, as a professional practice and had gone all the way to being public.” The company became Associated British Consultants when it turned public and is now of WSP engineering practice from America. Richard adds: “My father was a non-executive when it went in its flotation and he went on to become an expert witness in court cases and then the Chief Engineer for the Channel Tunnel. He was in the five-man arbitration panel that had all the authority between the different contractors and designers on each side.  He was definitely the role model that I had to match.” His father also led the campaign for professional codes of practice in civil engineering.

Richard, along with his brothers, went to St Benedict’s School in 1960, a monastery day school in Ealing run by monks from Downside. He was awarded a free place via the Ealing Council scheme after being encouraged to repeat his final year at primary school. An experience that set him apart from his natural peers, he explains: “It was quite traumatic because all of my friends were now in the school above me … I got pretty profoundly de-socialised at the age of 11.  I moved from the B stream to the A stream and I stayed in the A stream and I became the difficult character I’ve always been at that point.  My friends would disown me in the playground because they were in the year above and it mattered what year you were in at that age in those times. I became very disobedient.  I was in a lot of disciplinary trouble all the way through school.”

Despite behaving badly, Richard worked incredibly hard on his studies. He adds: “I would work ridiculous hours. I was determined to excel without being seen to try; that was a characteristic of mine.  I grafted and I got excellent A levels, best you could get.” His passion was learning languages including Russian at school.

Having achieved his A levels, Richard went on to Cambridge University to study Arabic and Persian. He says: “I ended up going up to Cambridge, because I swotted a lot at school.  I didn’t do that after I left, I swanned around at university, got a gentleman’s degree, and then went out to the Middle East. My degree was in Arabic, which was a mistake.  I liked doing languages, I’d done Russian at school, I enjoyed the struggle really of learning a language and thought Arabic would be a test, and it was a test, a considerable test.”

His ‘swanning around’ included discovering rowing, acting, and girls. He says: “I made friends which I hadn’t done at school.  I made very close friends in different disciplines including mathematicians and doctors, that was a good thing about the college system at Cambridge.”

Richard spent his summer holidays and time after graduation in Arabia where he taught English and worked on building sites. It was at the end of this period that he decided that languages were not his future and the computer industry caught his attention.

In 1979, upon returning to the UK from Arabia, Richard applied for four jobs, two of which were with computer companies; IBM and Burroughs. He elected to join Burroughs as it was ‘a shorter commute’. He says: “I started as a salesman which was not a very a very high status role, but I loved it, I loved sales. They trained me as a salesman. I went on sales training and COBOL courses. I actually remembered and digested the principles of selling but I never learnt to code in COBOL effectively, nor any language since.”

 Richard continues: “I was in the general accounts force selling business machines. The great thing that I got from Burroughs wasn’t learning COBOL, but I learnt accounts payable, accounts receivable, because they used the American terminology and we had to translate it into debtors and creditors, but I learnt from a very competent training organisation. I learnt how small companies account for themselves and I drove around the trading estates around Heathrow Airport selling to entrepreneurs in all sorts of lines of business. I couldn’t have had a better business training than that. I loved the accounting, I loved these little companies I was selling to. … I watched the company I was selling to and saw how they kept their eye on the numbers.  I’d talk to the business owners about their worries about whether their staff were ripping them off, and these basics of business that I suppose you learn at business school, I learnt them first-hand. It was a really good training to become an entrepreneur and it’s been pretty good for me as an investor since.”

In 1982, Richard co-founded Braid Systems Ltd. He says: “I started my own company as a typical entrepreneur, I wasn’t very employable.  I’d worked in a salesroom, I’d not had much respect for my employers and I felt I could do better.  I was an arrogant little so-and-so, I suppose.”

Richard learned from his father who had also established his own business. He adds: “I have observed a strong correlation between being an entrepreneur, or trying to be an entrepreneur, wanting to be an entrepreneur and having a parental example that’s pretty similar.  So I definitely was following in my father’s footsteps not to become a professional civil engineer, indeed, he counselled me against joining the professions.  He said they acted in restraint of trade and that I’d have more fun doing trade.”

Richard invited Geoff Chapman whom he’d met at Cambridge university to work with him for a 40% share in the business. Geoff had studied maths under Stephen Hawking and went on to start a PhD in Hawking’s group doing black hole theory. Richard says: “Geoff was still doing PhD when I left and started my own company, Braid Systems Ltd, and I persuaded him to give up a year before getting his PhD and to come down and work for Logica. Nine months later I persuaded him to leave Logica and start the business with me because I knew I wanted to develop code, I couldn’t do it myself, I knew he could do it in his sleep.”

Braid Systems was started with a small customer base that Richard had built up via his previous employer and a small loans grant from the Government. He says: “I had some business to get started with, I had the promise of a 50 grand investment from my father-in-law with which I was able to hire three people to come and work for me, including Geoff Chapman, my friend from Cambridge who became my partner.”

Unfortunately, his father-in-law died suddenly before he could make the investment but Richard was contacted by his father-in-law’s banker who suggested a £75,000 loan under the Government’s small firms loan guarantee scheme.  Richard adds: “I ended up borrowing 250 grand as the scheme grew over the years and I paid it all back in full, which apparently most companies didn’t end up doing.”

The company’s first concept was to build a terminal emulator for the CO3 terminal on ICL. Richard says: “ICL had mainframes with terminals that cost more than PCs, so we decided to build a terminal emulator.  That was my first business lesson, because so too did 250 people working for ICL, so we produced a product that was undifferentiated from six other products launched at the same time and we ditched it.  We just realised we’d made a mistake.  We then chose telex as an equally expensive dedicated device that we could replace with software. Telex wasn’t confined to a market like the ICL mainframe market, telex was a global market, and we thought they’re as good as anyone else, but no one’s going to have an inside track on telex.  So we chose telex having failed with our first idea.”

Richard says that learning these lessons very early on was part of the route to his success, he explains: “My route to success was having got everything wrong first time. My philosophy became to get it right second time, not to even worry about getting it right first time.  We launched Braid with the wrong product but we got it right when we discovered what was wrong with it. This has become almost the background to agile programming; you iterate.  Nowadays, it’s become much more systematised, but in those days it seemed like I was inventing this.  Don’t over-research things, get out, do it, get it wrong, correct it.”

After the initial success with the telex concept, Richard says: “We struggled later because telex died out, fax was really difficult to do on a computer. By the time we got to the finish was we weren’t just doing telex, we were doing all sorts of structured messaging between different applications, and these Americans came along and called it messaging middleware. Nonsense words, but it was words that meant venture capital poured into this business.”

Braid in London employed one hundred people, including Peter, one of Richard’s brothers, who was sales director.  Richard says: “He and I are so similar in our outlook and style that actually we didn’t get on terribly well together in a room. Our differences irritated us, nobody else noticed them as differences, they just saw us getting irritated with each other. So I left him in charge of the company and with the terminology changes of the time we were both able to save face.  He took over my role as managing director of Braid, I went over to the States, to set up Braid Inc and called myself chief executive.”

His brother ran the engineering capability and the main sales office while Richard set up the US office, he adds: “  I started the set-up in the States, found someone to run the US office, went out to Asia, set up in Asia, went back to the States in time to sell the company. Basically Peter ran it from then on with my interference. I was expanding the business overseas.”

This was the start of Richard’s love of start-ups, he realised that he was very good at creating businesses and getting them going. He says: “I like the start-up stage and I’ve stayed like that since.”

Braid ran for 17 years and was sold for 250 million. Richard says: “We ended up selling the company to one of those messaging middleware players. We became the financial division for a company that was doing financial middleware in the healthcare industry. We did have a glorious exit, but it was more by luck than judgement and it was other people’s business genius that saw the much wider application and managed to attract capital into what was otherwise a sleepy backwater.  We were tail-end Charlies, dominating the tail-end of a dying industry and that’s a good way to make a living but it’s not a great way to make a fortune.”

Speaking about the term angel investor, Richard says: “I don’t really know its official history.  It was certainly a term of art I would not have willingly adopted when I started doing it. At the end of the last century an angel investor brought to mind the picture of a retired dentist putting ten grand into his daughter-in-law’s florist shop, it was a hobby, if anything. It must have been roundabout the turn of the century that the business expansion scheme turned into the EIS scheme and with a lot of tax breaks and support generally from government, it’s become a thing now, but it certainly wasn’t when I started it.  I regarded myself as a poacher turned gamekeeper, an entrepreneur turned investor.”

After selling Braid, Richard focused on his interest in the start up process. He looked for companies that ‘looked like Braid’ and set out to advise them on how to get going. He explains: “I was the first to find companies that looked a lot like Braid; British tech that tried to get themselves established in New York and around the world. I went along to people who looked a bit like I thought I must have looked ten years earlier.  These were entrepreneurs who’d got customers, who’d got a business, usually in banking or in comms, and I would introduce myself to them.  I’d research them a little, I went to trade shows, I found little companies, I introduced myself to the boss and if we got on, I’d say to him, you ought to be lining yourself up for venture capital, you ought to have a board of directors, you ought to have minuted board meetings, you ought to have options schemes.  All the things I’d done that very often they hadn’t done for different reasons.”

In the first ten years as an angel investor Richard says he saw himself as a coach and mentor to chief executive officers. He explains: “My spiel was ‘I think I can improve your capital outcome by at least 10%, so I’ll buy 10% of your company and I’ll give it you back for whatever I paid any time in the first four years if you come to doubt that I’m going to add 10% of the value’. Nobody ever walked away.”

He adds: “I was going to start-ups who’d got one to five million in revenues and I used to talk about getting them from five to 50. In a way that’s still my sweet spot. At that stage it’s less than 100 staff, your first customers are very important but they will also lead you astray. You’ve got to keep control of your destiny through that stage when lots of people have the whip hand over you.”

Richard says that his input is more hands-on than the strict definition of angel investment. He explains: “Like an angel I would only take ordinary shares, and like an angel I would never attempt to coerce.  If I couldn’t persuade or influence, it’s over.  No fancy shareholders agreements for me.  I always have the attitude ‘it’s your company, it’s your decision, but that seems a very brave choice to me’.  I was in a position of influence, not a position of authority and that’s what I’ve learnt and got good at. … I’m not a venture capitalist.  I’m definitely more of the operator side rather than the investor side, and I tend therefore to find common cause with management, helping them very often. Handling the VC is as important as handling your early customers.”

Richard says the optimum number of boards he works with at any one time is five. He is currently Chairman of three and involved with two others. A typical first investment is about one hundred thousand pounds. He adds: “I like companies that learn how to manage their cash, that grow while learning and don’t just leap into maturity, because I think they can develop a culture that’s going to have better decision-making capacity, which is a key test for a company to me.”

 Richard’s main interest lies in technology start-tups and includes projects around cloud, artificial intelligence and machine learning.  Richard says: “I reckon I have lived through four generation changes of technology; the PC on to the local area network, on to client server and now on to Cloud.  Each of them has given an occasion for a generation change to take place in application software.  So it tends to be there’s an opportunity for challengers to come along when there is this change of platform and that’s when innovation is at its maximum and that’s where I like to invest. I got very excited about cloud. Braid rode the journey from the PC into the LAN.  Dovetail rode LAN into client server and my current generation of companies are all about cloud native, so Thought Machine, Form3, Century. Transversal came in at LAN and went out at the very beginning; an intermediate step.”

He adds: “I’m not an engineer, I don’t get involved, I observe these things happening. Other engineers make it happen and then I just try to find lucrative areas where better, cheaper, faster is going to make a difference and then it’s all down to the people.  The opportunities are myriad and there’s no set shape of these things, but there is a set pattern for the companies, they need to have the right culture in their management team and I think that being there ideally spotting it and finding it and not touching it, or helping if it’s going a bit wrong.”

Richard is involved with Century-Tech, a start-up focusing on tech in education. This is Richard’ first foray outside of fintech which he says has been an education in itself. He explains: “It’s a shocking marketplace. Banks, financial institutions, insurance companies all understand tech, they willingly accept technical risk, they will buy a better product, they have budgets. Schools aren’t like that, they don’t respect technology, they begrudge it. So it’s tough and it’s been a very long path, it’s taken twice as long and twice as much capital as I expected. … It’s nothing to do with our product or our peers.”

 The private school sector has accepted and adopted technology better than state schools and CENTURY-Tech are now working to help state schools see the benefit.  Richard adds: “The shame is that it’s another generation of kids that won’t get the benefit of it. Only teachers can teach but they just need to use technology to teach.  The kids love technology.  … We have to get teachers to adopt this.”

 The Covid-19 pandemic saw a dramatic change in the way children were educated through lockdowns around the world, with a shift to home-schooling. Richard says: “We thought Covid could kill us, but in fact we’ve now had two years of 100% revenue growth; two years where we’ve more than doubled our school usage.” This  success means that Century can now move ‘to its full story without venture capital’.

Of his proudest achievements, Richard says: “I reckon there are more than a dozen entrepreneurs like I was in the last century who I’ve materially helped in their first enterprises; it’s those companies I’m very proud of.  At least as proud of the one I started myself.  I’m pleased that I feel I’ve pretty successfully had an after-career.  When I sold Braid in 1999 I’d made an awful lot of money and I didn’t dream of retiring, but I did worry that I’d never do anything as good again. I do feel that I’ve made the transition from a start-up entrepreneur through to an angel investor and I’ve been just as successful financially.

“There’s no doubt I love the culture that is thriving over the last 25 years that is fuelled by angel investment. It’s a really good thing that’s happening socially and allowing entrepreneurship, encouraging innovation, which big companies stand on.”

For anyone looking to enter tech as a career, Richard suggests considering and comparing the options of joining a small business versus a larger business. He says: “I think that what I got from my father was the confidence to set up my own business, and if you don’t get that from your father then go and find someone who did and go help him, because  everybody learns in small companies. The same lessons are available to everyone, and the same environment and the same security.  There’s far greater security from someone who has resilience, self-confidence and a wide range of skills that you’ll get in a small company, rather than the promise of going to work for a brand name somewhere. That’s why I think I was very lucky; it came naturally to me and I never really considered the alternatives other than to get involved in early start-ups.  I don’t mean it can’t be done in other ways, but the lessons I’ve learnt and that I would pass on are all contrasting to the large company experience.  We help large companies, we end up being part of them. If I’d started my career at IBM I might still have been there and my brother retired from IBM having gone the same path I did. I think that there’s room for both, but I’m definitely on the side of the small.”

Looking to the future and its potential impact on society, Richard believes that it’s all happening too fast; he explains: “We’ve got a problem with IT; it’s been over-successful.” He points to the rapid growth of young IT companies that have become giants, particularly in the US, of whom he says: “Young, ill-formed company cultures have grown into giants over in the States and they are going to eat us unless government cuts them down to size.” He adds: “That is what Extinction Rebellion is about in one dimension and that’s what the civil servants in Europe are trying to focus attention on. Would that they had the power and the smarts to do it.”

 He adds: “I think there are limits to what I want tech to do, as there are limits to what I want my business to do to my life.  At the end of the day I think business is there to support life, it’s not there to replace life, and I think tech is there to support life. That’s a family life, that’s a social life, that’s a community life, that’s a species life, and other people just chase their own self-interest and push way beyond the reasonable agenda, so I’m more afeared in the long term of tech over-reaching itself than of it having to do much more than it’s doing.”

Interviewed by Tom Abram

Transcribed by Susan Nicholls

Abstracted by Lynda Feeley