The serial tech entrepreneur on his latest venture
Great Britain’s not been that great for Dan Wagner.
It started off well. In 1984, aged 21, he set up MAID, an online market research information service. Just 10 years later, MAID listed on the London Stock Exchange for £120m. A year after that, Wagner was invited to the launch of MSN with Bill Gates, as MAID was the main content provider for the service.
But then, during the dotcom crash of the late nineties, MAID shares plummeted 95%. Wagner’s firm earned the moniker “Dial-A-Dog” in the press.
“The dial-a-dog moniker was very unfair because our share price dropped with everybody else’s,” he says.
“Although [MAID was] listed on the London stock market, nobody really knew what MAID did. If there was an article in the paper saying we were going up, stocks went up. If there was an article saying that Dan’s choice of clothes is bad, stocks went down.
“That’s not how businesses should be run on the stock market.”
After criticism from investors and the media, MAID was sold to Thomson Reuters for $500m in 2000. Wagner left the board in 2001.
In the same year, he launched e-commerce venture Venda, which provided cloud and software as a service (SaaS) platforms to the BBC, Tesco and Jimmy Choo, among others.
But when he invited journalists to talk about the potential of cloud, they thought he was “nuts”.
“Of course now everyone is talking about cloud and Saas, which is a bit irritating because when I tried to say ‘cloud is the future’, I was immediately discounted as wrong.”
But the man’s far from being twice bitten, thrice shy.
In 2001, Wagner launched Powa, another e-commerce business made up of mPowa, a mobile payment provider, Powa, a SaaS platform, and PowaTag, a product that allows shoppers to buy things just by taking a picture of the item on their smartphone.
His definition of e-commerce? “Everything-commerce”.
Come 2013 and Wagner’s business wagon is whooshing ahead. Back in August, Powa scooped up a Series A round of $76m (£49m) from what he says is an “unconfirmed investor, widely reported to be Massachusetts-based fund Wellington Management”.
“With mPowa, people are finally listening to what I have to say,” he says, literally punching the air. Despite being dressed in a slick blue suit, Wagner is like a child with a sugar rush talking about his business – in other words, your typical entrepreneur.
Wagner says the real catalyst for the investment is Powa’s impeding debut on the stock market.
“This capital isn’t to fund us for the next five years but to fund our acceleration for 12-18 months before we raise another round. Powa’s trajectory to the IPO is already set in motion.
“Although it’s a Series A, it’s a pre-IPO round which is a very clear indication of the fact that this is meant to be pre-cursor to an IPO.”
Powa is expected to debut on the stock exchange in 18 months, albeit not in London. Ask Wagner why he won’t list here, and he rants about the UK’s entrepreneurial scene for the next 20 minutes.
Why Wagner is against a London float, but pro US
“There’s only a 10% chance we will float on the London Stock Exchange,” he says, with a faint frown.
“Right now, if I walk into an analyst meeting in the UK, they wouldn’t know what on earth I am talking about. It’s not because they are not intelligent, it’s because there are no vertical companies in tech space listed [in London]today.
“And because we’ve don’t have tech companies listed here, analysts aren’t covering them and there’s poor investor knowledge – classic chicken-and-egg situation.”
Wagner says that after Autonomy, there’s no tech company listed on the main stock exchange that has gravitas on the world stage. He doesn’t consider ASOS a tech company and calls it a retailer.
“I go to Barclays in the UK and there will be only one analyst who covers the internet and all its verticals.
“If I go to Barclays in the US, they would have a 25-man team with a specialist on social media, hardware and every other vertical. So I want to go on the market in the US as the analysts really know the space.
“In the UK, you go to a technology analyst and he goes ‘Cloud? What’s that? What’s a SaaS platform?’ It’s ridiculous!” he says, slapping the desk.
Don’t get him wrong. Wagner loves Britain. He went to stay in Silicon Valley for a year – but said he would’ve “committed suicide” if he permanently settled there.
“I am British and my family’s here so I am not going to move to the US. However, there is a vision and entrepreneurialism in the venture capital market in the US that is unbeatable.
“But what’s so upsetting is that we’re the guys who invented the world wide web. This country has the most amazing vision and creativity is coming out of it. Yet it is not the tech hub of the world. Let’s change it.”
Ask him how, and he’s off, giving us a leaf from his guide to attracting business in the UK.
Chapter one: The “mental” capital gains tax.
“The UK’s capital gains tax is just mental. Why are we taxing people on gains when they risk their capital on taxed incomes? Why should we tax venture capitalists for risking their money on entrepreneurs? It’s just disappointing.”
How about initiatives like Seed Enterprise Investment Scheme (SEIS)?
“Oh! Nobody pays attention to that. People like me are too busy to read those documents, or go to my accountant to get explanations. The process is just too complicated.”
Chapter two: Don’t start up to sell out
Wagner says that UK investors need to be more adventurous with funding business ideas as that’s what will help Britain produce business rock stars.
“Investors have very clear remit to sell-out. The entrepreneur gets money from a venture capital fund and then he has six years before he/she is forced to exit. We don’t have enough investors in the UK who are in for the long-term.”
Chapter three: Failure is a war wound
The other business blocker that gets on Wagner’s nerves is Britain’s attitude towards failure.
“If you start a business and you fail, people should say ‘Well done mate!’. People should be supported for attempting.
“You can succeed only if you fail, and failure shouldn’t be seen as a black mark, it should be seen as a war wound. You’ve had a go, learnt from you mistakes, and now you’re going to try again.”
Becoming a billion-dollar company
Towards the end of the interview, Wagner talks about why he’s not ready to rest untll Powa becomes a multi-billion-dollar company.
“Our investor, rumoured to be Wellington, did not invest in us to be worth a few million. Our valuation as part of this investment is in many hundreds of millions of dollars.
“I love saying all this stuff when I am not a public company. If I was a public company and I said all this stuff, I would’ve been slapped up by the forecasting,” he jokes
No shooting for the stars for Wagner – “aiming directly for the moon” is more his style.
But what can Britain do to keep him here?
“You have a very favourably disposed CEO who wants to be here if the conditions are right. But as much as I want it, I don’t see that happening in London.
“I don’t want to take a chance this time.”