Back in the game

THE FRIDAY INTERVIEW: John Nagle, head of Zapa TechnologiesBY HIS own admission, Cork-born entrepreneur John Nagle is not a "techie person", but he does have a keen eye for a business opportunity, which has served him well over more than two decades in the electronic payments industry.

Nagle was a founder in 1989 of Alphyra, an Irish e-payments company that still provides the kit for many of the electronic retail transactions and mobile top-ups that take place in the State.

A spectacular fall-out with Alphyra’s private equity backer Balderton Capital, and that group’s lead partner Barry Maloney, led to Nagle being given the elbow in March 2008 as chief executive of the then newly formed Payzone (Alphyra merged with UK ATM operator Cardpoint in December 2007).

But, in true entrepreneurial fashion, Nagle has picked himself up, dusted himself off and started all over again with a company called Zapa Technology.

It’s not a million miles away from what Payzone does but, if Nagle’s hunch proves correct, this company will move electronic transactions to a higher level with the aid of so-called next-generation technology.

Using what’s known as near field communications (NFC) – an updated version of Bluetooth, if you like – Nagle has come up with an electronic tag that will have a multitude of functions. “NFC is tap-and-go technology and it’s going to be used for collecting loyalty points, receiving discount vouchers, holding your gym membership, making micro payments, and access devices for work, right along to probably eventually turning on your car, to be honest with you. All through your mobile phone.”

Depending on your point of view, this could be the greatest thing since sliced bread, or yet another Big Brother-type tool to allow companies and public bodies to collate and store your personal information.

Nagle has no doubts, having spent more than a year trying to piece together the jigsaw. “The only thing you really carry with you all the time is your phone – it’s like a third limb. What we are trying to prove is that the consumer is willing to embrace the technology, and will pay for that technology. That they will pay a fee not to have to forage through their wallet to try and find their cards.”

Zapa sees itself as the honest broker, the party that will bring together retailers, banks, payments companies and consumers. It is already up and running, recently agreeing a deal with coffee chain Insomnia that allows customers to collect loyalty points by swiping their tags at electronic readers beside tills.

About 17,000 people are already using the service, and Nagle has a handful of other Irish retailers ready to roll in the coming months. For now, it’s a basic application of the NFC technology, until the mobile phone makers integrate the software into handsets – at which point it can become truly interactive.

“From mid-2010 onwards, the mobile phone industry has committed to developing NFC as a standard on all new production phones,” he explains. “The first out of the blocks will be Nokia. In order to prep the market and prep the consumer, we’re deploying contactless readers in various shops to accept [the tags] and to leapfrog the development of the phones, and we’ve developed a tag that mimics NFC.”

Ireland is very much a dress rehearsal for Zapa, but Nagle sees its ultimate stage as being Europe and beyond. “Ideally, we’d like to execute it in Ireland and then take it to other countries. I’m not building Zapa to be Zapa Ireland Limited, I’m building it to play a role in NFC across the world.”

He has just agreed a deal with Mastercard to launch city centre gift cards in Dublin and the Belgian city Antwerp before Christmas. Consumers will be able to redeem the cards in a variety of city centre shops. He’s also working with large local towns in Ireland on developing a loyalty card that would incentivise consumers to shop locally and use facilities such as swimming pools and libraries.

Tuam in Galway is likely to lead the charge before Christmas with a community-based loyalty card. “They need to give a compelling reason why the consumer should stay in Tuam on a Saturday morning, instead of driving into Galway city.”

It’s 19 months since Nagle was sacked by Payzone after a messy three-month legal wrangle that ended up in the High Court and also involved finance director John Williamson.

Nagle is a big man, brimming with drive and self-belief. He doesn’t bruise easily, but he readily admits he was shaken by the whole affair, which was played out in public. “It was an extremely difficult time,” he says, almost in a whisper. “I started Alphyra when I was 25 years of age.

“They never told us why they sacked us and, to this day, I don’t know why I’m sacked. You don’t treat people like that.”

Maloney and Balderton (formerly Benchmark Capital) had backed Nagle’s management buyout of stock market-listed Alphyra in 2003. Nagle says relations between himself and Maloney were “excellent”, but began to sour around 2006.

“There was a need for new capital a few years into the extension of the business. The view was that we should float it and, during the float, we got offers for the business, and our interests started to diverge really.

“We never could agree on who to sell it to and for how much. We ended up doing a transaction with Cardpoint that I’m sure Barry [Maloney] regrets as much as I do.”

At its height a few years ago, Nagle says Alphyra was “worth somewhere between €400 million and €600 million, net of debt”. Today, Payzone has a market value of just €6.5 million. “It’s a very significant destruction of value.”

Alphyra’s reverse takeover of Cardpoint brought matters to a head and, just four weeks after the deal was concluded, Nagle was unceremoniously sacked.

“I don’t have a halo on my head. The Cardpoint acquisition might not have been the best one, but I would argue to this day that I would have been the best person to get us out of that, which is what I tried to do.”

Nagle remains Payzone’s second-biggest shareholder but he claims not to care about Payzone now, in spite of millions being wiped off the paper value of his stake. “I’ve no interest in the business,” he says matter of factly. “It’s been a tough two years, but eventually it’s not the thing you’re thinking of when you wake up. You move on,” he says, somewhat wearily.

And so we do, this time to how the Government might tackle the recession.

“It drives me mad that the only thing that they talk about is wind [energy],” he says, with a strong hint of frustration in his voice. “There are other things out there other than wind. It’s ridiculous. I’m just sick of it. There’s loads of guys out there with ideas.”

Nagle says the Government needs to “show leadership in a more aggressive way”. “They should execute a very aggressive cost-reduction of public services,” he adds.

Nagle also wants a get-tough policy with the banks. He is sceptical that they will begin lending again in spite of the billions received in taxpayers’ money.

“I don’t think the banks are going to wake up on a Monday morning and support Irish business,” he argues. “The Government needs to take a firm hand with the banks.”

The Government also needs to “re-engineer their spending towards people who are creating jobs”. He cites the city of Antwerp, which has offered Zapa free office accommodation and “four free people” for the next year to help establish the business there for the gift card initiative.

With the right support, Nagle believes Ireland could become a hub for “contactless” payments. “There’s a huge opportunity here for Ireland to lead the way and be an NFC capital. I’m one of those budding entrepreneurs who is grabbing the opportunity and trying to do it.”

Zapa is a long-term play, but Nagle believes he is ahead of the posse. “We’ve some very interesting projects that are likely to catapult us into an environment that has significant cash in it at the moment. If we get any momentum at all, it’ll be terribly exciting. I truly believe we can lead this industry.

“I’ve met all my competitors in Europe. There’s a lot of talk going on, but we’re executing on a lot of stuff and I think the next six months are critical to us, being able to execute, deploy and go live, and demonstrate that we can actually build a business internationally.

“I know it sounds a bit bizarre, but there’s nobody doing what we’re doing. We’re talking to guys in Australia about taking a franchise. We’re talking to guys in Los Angeles; I was talking to a guy in Buenos Aires last night. There’s a lot going on.”

ON THE RECORD

Name:John Nagle

Position:Founder and chief executive Zapa Technology

Lives:Killiney, Dublin

Family:Married with three children

Hobbies:Golf and fishing

Something you might expect:"I'm a straight-talking guy. What you see is what you get."

Something that might surprise:"My first job was as a time-and-motion manager in the Lois jeans factory in Cork."