Eight years ago, Colm Lyon quit a 'cosy' job in banking and entered the risky world of internet sales. Things are even cosier today. IAN CAMPBELLreports
REALEX PAYMENTS will branch out from its business-to-business services next year and launch a PayPal-style online payment service for consumers in 27 countries. In an ambitious three-year plan, the Irish company will also embark on the acquisition trail to expand its geographical footprint and cement its reputation as an international player in payment processing.
Offices in London and Paris are spearheading its growth – about 30 per cent of its business now comes from outside of Ireland – though the company’s Dublin headquarters in Monkstown is still the development and administrative hub where most of its 60 staff are employed.
Seemingly immune to the effects of recession, the firm announced revenue growth of 12 per cent in its financial year to the end of April 2009 and a turnover of €6.5 million, up from €5.7 million in 2008.
But bucking economic trends has been part of the Realex culture since company founder Colm Lyon left a “nice, cosy job” in Ulster Bank. It was in March 2001, a month before the Nasdaq crashed and dot-com turned to dot-bomb.
The would-be entrepreneur had fallen too far under the spell of the internet to be put off by a collapsing market. He was convinced that online shopping was the future and had spotted an opportunity. “Businesses were going to sell online but banks weren’t necessarily going to sell them the transaction technology to do it. A market for payment gateways emerged,” he explained.
The venture capital community was closed for business at that time but he set about launching his company anyway. He bought a server on 18 months’ credit, negotiated free software and hosting, and acquired a firewall on an evaluation licence. He even persuaded leading law firm Arthur Cox Solicitors to represent him. “I wanted to make sure Realex was connected to tier-one names,” he said.
Did he win them over with a convincing business plan? “No, I showed them a nice presentation. But I didn’t talk too much about the products. I talked about the problems we were solving. I do that now because I know I should, but back then it was purely instinctive.”
Spend some time in his company and you begin to understand how he managed to persuade so many people to come on board so quickly. He’s funny and personable, but most of all he is passionate about business. In contrast to some of his multinational peers who carefully recite messages from their corporate websites, Lyon is refreshingly enthusiastic and candid.
“The motivation was to always leave my job and start my own business,” he said. “What I actually did was secondary to wanting to do it, though I soon became infatuated with this particular business.”
Having teamed up with a software developer, they secured AIB as a bank that was prepared to use a start-up solution and then turned their focus to finding a first customer. “Every time I got rejected I went back and made two more appointments in the diary so I always felt that I was taking it forward,” he recalled.
Directski, the winter holiday company, was first to say yes. By the end of 2001, Realex had 19 customers and was generating IR£5,000 a month in revenue. A proper office was opened and recruitment began. A business expansion scheme provided the only outside funds the company used, although Lyon plans to talk to potential investors for the next phase of development.
Today Realex has more than 3,500 clients, a mixture of small firms and about 200 corporate clients including Vodafone Ireland, Aer Lingus and Quinn Insurance. According to Lyon, the company wins blue-chip business because of its customer service and commitment to understanding their needs. To date, he claimed, the company has not lost a single corporate customer.
“We differentiate through our expertise around fraud and security,” he said, acknowledging that basic online payment software has been commoditised. “There’s a saying that technology will make today’s innovation tomorrow’s commodity. It’s hard to have product differentiation – you might think you have it but you are probably fooling yourself.”
The landmark win outside of Ireland was Virgin Atlantic Airlines. With boyish enthusiasm, the 46-year-old chief executive relishes the significance of the deal.
“It’s incredible to think that ticket transactions are taking place around the world that are processed on Realex servers in Dublin that have nothing to do with the Irish economy. It takes a long time to win, but that’s the type of business we want.”
A regular speaker on the conference circuit, his main message to internet start-ups is to look outside Ireland. “You can’t build a business in a country that’s the size of greater Manchester, but you don’t have to go to Silicon Valley to be a successful internet company. You can fly across the water to a UK online market that’s worth £60 billion.”
He also started the Internet Growth Acceleration Programme having persuaded Enterprise Ireland to contribute funds to successful applicants and help them scale their businesses. Lyon believes more money should be made available to internet start-ups and a better support infrastructure, headed up by an internet business expert.
Would he like to take up the role? “Yes I would if I wasn’t doing this,” he said. One has a sneaking suspicion that he is more than capable of doing both jobs if someone asks.
Colm Lyon will be speaking at UCD Business School’s Beyond Borders – Going International with your Business conference next Thursday, November 12th, in O’Reilly Hall, Belfield, UCD, Dublin.
http://www.ucd.ie/growingireland
