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Julie Deane became an entrepreneur out of necessity. In 2008 she wanted to make enough money to send her daughter to a private school to get her away from a group of classroom bullies.
In five years Ms Deane turned £600 of savings into The Cambridge Satchel Company, an upmarket bag-maker valued at £40m. She talks about her experience in the new series of Start-Up Stories, the FT’s entrepreneurship podcast.
Ms Deane had no background in fashion or design — she previously worked as an accountant and as the development officer for Gonville and Caius, the Cambridge university college where she had studied natural sciences as an undergraduate.
“I was born to sort things out when they go a bit pear-shaped,” she says. “And things did go a bit pear-shaped when my daughter was having a bit of a tough time at school.”
The idea of making high-quality school bags was taken from a list of 10 business plans, based on problems Ms Deane had long wanted to fix in order to make her own life easier — in this case the fact that her children’s flimsily-made school satchels frequently broke.
She had picked bags in preference to her other nine ideas based on a scientific analysis of which business scheme had the most potential in terms of market size and possible margins.
“I am blessed with the kind of personality that gets irritated at things easily,” says Ms Deane. “There will always be something that you can look at and say ‘this can be done better’.”
This series of Start-Up Stories features the outsiders, such as Ms Deane, who disrupt industries by looking at problems differently.
Another episode focuses on iZettle, the low-cost card reader technology co-founded in Sweden in 2010 by Jacob de Geer to help his (now ex) wife, who imported sunglasses, take payments at the stall she ran at trade shows.
“She came home and she was absolutely frustrated, and it wasn’t because of me that time,” he says. “Half of all the people who came to her booth wanted her products and she couldn’t accept credit cards and they didn’t have cash.”
Mr de Geer notes that his success is based on the realisation that the ability to take payments easily is the core of any new business. “This came from that epiphany that there is a massive segment completely underserved from financial services.”
The Stockholm-based company thrived, and iZettle has just been bought by PayPal for $2.2bn. The acquisition, in mid-May, came just before iZettle was due to float in the largest initial public offering to date by a European financial technology company.
Before he launched iZettle, Mr de Geer had tried to build other companies in digital marketing and film streaming. The difference with iZettle was that Mr de Geer had no experience of the industry he was entering — and he did not repeat the mistakes that those in the banking sector had previously made.
“Ignorance is sometimes bliss,” he says. “If I knew back then what I know today there would not be a chance in hell that I would pursue this opportunity, because it’s been a rollercoaster ride both mentally and physically.”
There is some evidence that founders can fail by overthinking their ideas. Researchers at the University of Edinburgh Business School surveyed 1,000 would-be entrepreneurs in the US and found that writing a plan before setting up a business is a bad idea.
Francis Greene, chair in entrepreneurship and co-author of the report, notes that: “It is much better to wait, not to devote too much time to writing the plan, and, crucially, to synchronise the plan with other key start-up activities.” The key to succeeding in business, according to this study, is “being flexible and responsive to opportunities”.
Ms Deane at Cambridge Satchel pulled back from outsourcing production because of her concerns about quality and control. “I never imagined I would have to start a factory having no manufacturing knowledge and a backlog of 16,000 bags, but it has worked out,” she says.
Doing it herself became an advantage, giving the company more control over production and enabling it to market its goods as “made in the UK”.
The Cambridge Satchel Company is now a luxury brand, backed in 2014 with $21m from Index Ventures
. Ms Deane says she does not regret taking venture capital investment, but she is critical about how she handled the relationship in the past. “I didn’t choose the wrong investor, but I didn’t manage the investment well,” she says, noting that sales were flat for several years after taking the money from Index before they picked up again. “I should have had a bit more confidence [in myself].”
Listen to the new series of Start-Up Stories and previous episodes at ft.com/startupstories, Acast and other podcast apps
Outsider advantage
Being an outsider may mean that you are the only one capable of disrupting a sector, according to John Mullins, associate professor of management practice in marketing and entrepreneurship at London Business School. “Established companies are rarely willing and able to disrupt themselves,” Prof Mullins says. “Witness Kodak, which was first in the digital photography game, but lost.”
The argument against this is that “complementary assets”, such as access to distribution channels, often trump innovation, according to Nelson Phillips, a professor of innovation and strategy at Imperial College Business School.
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