How do you make that choice? It’s so tempting to stay small.
It is. I guess I’m a bit of an ambitious person and I don’t like to sit still. When you’ve got the choice to say I can take some money, I can dilute my share, but because I thought and still think that this is such a great idea, it has such a great potential, the market size is in the billions. And even now with us being number one in the world, we’re only at 1% of the market. We thought let’s not let this idea go because if we don’t go and get that market share, someone else will. So it was an easy decision.
How do you market?
We have built a sales team in New York and in London who actively call potential clients.
How big is your sales team?
About 10 people between the two different offices. They are full time staff, that take up a lot of money. But they are trained both in sales and in all the intellectual property knowledge that needs to be conveyed to clients. And one of the beauties of our business is that we can see 12 months in advance when someone has to take this foreign patent filing step. So we can get in contact with them by mail or by phone to let them know about our services.
So you can build a pipeline quite a way out?
Yes.
The global downturn has surely put a dampener on all the ideas people in the world want to patent?
Well, in one sense yes. I think the number of patent filings at the US patent office and the WIPO (World Intellectual Property Organisation), have dropped and they’re expecting drops to their revenue. But for a business like ours, which presents an alternative to the traditional way that has some cost savings involved, we’re actually having a good time in the crisis. A lot of doors are opening to us that weren’t opening six or 12 months ago, because people are looking more closely at their IP budgets and saying, well is there another way of doing this.
What has been the most difficult part of leading your company? Restructuring, sacking people, looking at the monthly losses?
All of the above are difficult. You never want to let people go. Fortunately there weren’t too many negative situations and a bit of attrition has happened, so that was good.
It is a little bit nerve racking when you’re taking that aggressive growth strategy. You’re not making money this month, you’re not making money next month, but knowing you’re going over that hill into profitability that was a little bit of a stomach clenching point. To make sure that we got into that profitable position within a short period of time. So that was a little bit nerve wracking, but we’re there now so there are less grey hairs.
More than $10 million sales, so what’s the aim now? Where do you expect to be in a few years time and how are you going to get there?
Over the past 12 months we’ve built our sales team to a very strong platform, we’ve got good leaders in all the parts of the business and we’ve got our strategy right. It’s pretty much a matter of doing more of what we’re doing now. But now that we’ve reached profitability, it’s expanding to get a greater profitability.
As I said, even though we’re doing more of these foreign filings than any law firm in the world, we’re still a small percentage of the market share. So it’s to get to 2% to 3%. We’re kind of taking it a month at a time, but the strategy is to continue doing what we are doing and growing strongly.
What’s the long term plan, how are you going to exit?
I’d say within the next three to five years. Over the past few years we’ve been doubling our revenue. We expect to do that for the next few years, I don’t think doubling will happen every year. That’ll taper of a little bit.
But the staircase continues going up. A staircase graph we call it.
There should be some kind of plateauing, but given that the size of the market there’s plenty of growth to be had. And I guess in a few years time we’ll look at some partnerships with some large players that do other parts of the patent process. And we have had other offers in the past from large intellectual property organisations. So maybe a sale in three to five years time is probably on the cards.
A lot of people think entrepreneurs just take all this money out of the company yet there’s so much sacrifice that goes on. Looking back would you have made more money salary-wise if you had stayed in your profession and ended up as a partner in a major law firm?
I was just thinking about that last week when I was on holidays. As of today I would say yes, that would be true. By moving into this business I salary sacrificed down to a third of my salary so I’ve just got up to the level I was at when I was 28, so that lost revenue in the time is gone. But I know that I’ve built an asset so when a sale happens in a few year’s time, that will be the reward. So I haven’t received the rewards yet.
What are the trends you’re seeing in IP?
I’ve been speaking to a few different Australian patent attorney firms. The ones that have a large Australian client base haven’t seen a lot of drop off in their work. One of them commented to me, the only things people continue to do in recessions is have haircuts and file patents. So that was kind of a confident statement.
But from overseas I guess a lot of work comes from American patent attorney firms, and they are struggling. There are layoffs going on and people filing less cases. From our business, although the number of filings have increased because people are finding our offering more appealing, but our existing clients are choosing less countries to file in. There used to be an average of six about 12 months ago, it is now down to about four.
So they’re saving money that way.
That’s right.
What about the internet; you’re using new technology. How’s the internet changing things?
Well, it’s quite surprising that in the patent attorney industry, people who deal with inventions everyday are not very technically literate or savvy. It’s a very conservative industry and they don’t use the internet much. And we’re one of the few people that are using the internet for our business.
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