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Martyn Dawes
Founder of Coffee Nation
Being around Martyn Dawes when he is getting enthusiastic about something can be a rather alarming experience.
He says: ‘I have a habit of making a very strange noise when I get very excited. It sounds a bit like the noise Al Pacino makes in the film Scent of a Woman. It invariably makes people jump, particularly if they are on the phone.’
Dawes has much to be excited about right now. He recently sold his business Coffee Nation, which was selling more than 750,000 cups of coffee a month from its self-service machines, for £23 million.
Born in Coventry, Dawes was adopted at six weeks old by a couple who were unable to have children of their own. He says: ‘I was their whole focus and a lot of love and encouragement came my way.’
But Dawes was always restless, caused partly, he now thinks, by uncertainty over his origins. ‘I wanted to get out there and show what I could do. I had a need to prove myself. I think it was a way of compensating for not knowing where I came from.’
He was so keen to get started that he dropped out of college halfway through his A levels at the age of 17 to work for a local foundry where his father worked. In his spare time he took flying lessons and dreamed of becoming a pilot. But his dream was shattered when he discovered he was colour blind. So at the age of 21 he got a job with Massey Ferguson, the tractor maker.
He did well but after a year he met his future wife, Trudi, and decided to move to London to be with her. He set up on his own as a self-employed management consultant for engineering companies and soon discovered he had a knack for it.
He says: ‘When you are 23 you have a wonderful sort of arrogance and inbuilt self-confidence because you haven’t had the experience that says you could get your fingers burned.’
Within six months he had started up his own consultancy, and soon his wife, who worked in human resources, joined him.
The consultancy did well, but by the time Dawes was 28 he was getting restless. He says: ‘I have got a very low boredom threshold and I realised that consulting was not really what I loved doing. I could see that businesses interested me more than consulting did.’
So he took £50,000 out of the consultancy business and started looking around for inspiration to start up a business of his own. It was, however, harder than he thought. He says: ‘It is very hard to find something when you don’t know what you are looking for. I would get knots in my stomach because I was so scared.’
He briefly considered buying a clothing company that had gone bust, and also looked into the idea of opening a chain of workplace children’s nurseries. He says: ‘I looked at everything. I literally had a blank sheet of paper in front of me.’
One day he read an article in a newspaper about a company which was doing well by putting photocopiers into newsagents and corner shops. It got him thinking.
He says: ‘I liked the idea of a business model in which you could generate a little bit of revenue from lots of different places. That way you would not be reliant on any one of them too much and would never be really exposed to one customer. And you would be using the foot traffic of people already going into those stores.’
Fact file
Date of birth: 14 January 1968
Marital status: divorced with one child
Qualifications: BA (Hons) business studies degree from South Bank Polytechnic
Interests: socialising, sports cars, taking flying trapeze lessons
Personal philosophy: ‘Never ever give up.’
He decided to visit the United States in search of inspiration, starting in New York and then heading for Minneapolis, which at the time had the biggest shopping mall in the world. While he was there Dawes initially toyed with the idea of becoming the UK franchisee for a frozen yoghurt business. But at the last minute he realised that it might not be such a good idea because the sun does not shine much in England. He was also entranced by a restaurant called The Screening Room which contained several tiny cinemas for groups of friends to watch films together. But he quickly realised that to open something similar in the UK would involve a huge investment of capital.
His big idea eventually came to him when he was standing in a local New York convenience store. He noticed that large numbers of people were coming in simply to buy a cup of coffee to take away and realised that there might be a similar demand for takeaway coffee in the UK too. Following the photocopier business model he had read about, he would install instant coffee machines in corner shops and give a percentage of the money earned from the machine to the shop owner.
Back home in the UK, Dawes got to work. He persuaded four independent corner shops to take his machines, which he filled with instant coffee powder and powdered milk. But he quickly discovered that not many people actually wanted to buy instant coffee from a machine in a grubby little shop.
He says: ‘I remember walking through Peckham thinking what the hell am I doing? It was the wrong product in the wrong shops in the wrong location.’
So he started putting his instant coffee machines into larger convenience stores such as Spar and Alldays. But by 1997 he realised that the product and the location were still wrong. He says: ‘I was selling 50–60 cups a week but that was never going to spin the wheel.’
His personal life also took a nosedive. He and his wife separated and Dawes found himself sleeping on friends’ floors.
Then one day he was standing near one of his machines talking to customers when one of them said something that hit a nerve. Dawes says: ‘The man said to me, “Why would I spend 59p on a cup of coffee when I can go back to the office and put the kettle on? If you want to sell me something in a store like this it has got to really excite me.”’
Dawes suddenly realised the answer to his business problems was to provide machines that made real coffee with fresh milk. So he persuaded a couple of manufacturers to lend him a few genuine espresso machines to try out, and quickly saw sales improve. ‘It was a eureka moment. I felt fantastic.’
Unfortunately, his euphoria did not last long. By this time he had come to the end of his £50,000 and had no money left.
He went to see an insolvency practitioner at his accountant’s firm for advice on winding up the company. But while he was there he happened to bump into an adviser who thought he might be able to find investors for Dawes’ business.
So Dawes quickly wrote a business plan and was given the chance to pitch at a forum for investors. By the end of the day he had secured investment of £100,000 in return for 20 per cent of the company’s equity. That unlocked the door to a £90,000 bank loan – and Dawes was back in business. He began to find better sites for his machines and two years later managed to raise £4 million from venture capitalists to invest in growing the company, leaving him with a 25 per cent stake.
His Coffee Nation gourmet coffee stations are now in over 400 outlets including Tesco stores and Welcome Break motorway services, where they serve real espresso coffee made with fresh milk and fresh coffee beans. Dawes has also installed his machines in Odeon Cinemas and W H Smith outlets in airports and stations, and has expanded throughout mainland Europe. In 2008 Dawes sold the business to private equity firm Milestone Capital for £23 million.
Now 42, Dawes is immensely proud of what he has achieved. He says: ‘I was tempted to give up many times. But if you do and somebody else makes it with your idea, you have got the rest of your life to kick yourself and think of what might have been.’
He credits his ex-wife Trudi with much of his success and giving him the drive to succeed, saying: ‘She was and continues to be an enormous source of inspiration to me. When I first became self-employed at the age of 23 she could see in me what I couldn’t see in myself. I would not be where I am today, and I wouldn’t have the confidence or the self-belief without her.’ They are set to re-marry.
Dawes has also succeeded in resolving much of his restless search for his true identity. Eight years ago he finally met his birth mother for the first time. To his surprise he discovered she is something of an entrepreneur herself and runs her own corporate gift business.
He says: ‘When I met her I could see exactly the same traits in her as in me, and it has enabled me to relax a bit with myself. I had always thought, why am I like this, why do I always want more? And now I know.’