Profile - Eudie Thompson

A successful female IT entrepreneur into her second business

by Nitin Dahad

Eudie Thompson is now into her second human resources asset and recruitment software business after successfully selling her first one in 1996 to GrandMet Trust. She has nurtured and developed Zynap to a stage where she’s approaching venture capitalists to take her company, to the next phase of development. The Chilli talked to her about her experience both with her previous enterprise and the new one, and what she believes are some of the more important aspects of being a successful female technology entrepreneur.

Eudie Thompson

Background
Eudie Thompson studied electronic engineering at Newcastle University and left in 1982 before completing her course. She signed up with Ernst & Young and trained as a chartered accountant, and by 1990 became a partner at accountancy firm Honey Barrett.

Thompson says she’s always been driven by a passion for business, which is what landed her an 18 month secondment alongside the chairman of a roofing contractor company, Chandlers Ford, to turn the company around, raise finance and bring in a new CEO.

With that experience behind her she started her first enterprise, Joblink, in 1994. Joblink was a training organisation built around a number of large contracts with the UK’s Department of Employment. By the time she sold Joblink to GrandMet Trust in 1996, the company had £10m worth of contracts on its books and 145 staff.

Joblink was started with just £1,000 of capital, and it won its first customer just four months later. “I had a husband who was working, so had little or no expenses and didn’t need to draw from the company,” says Thompson. She believes that the reason for the success of her first business was because the timing was right and she was able to see it would be successful early on. “I’d also done my homework, so I understood what the market needed. But I didn’t enter business in a formal way, had no business plan, and didn’t set out precisely where I was going [with the business].”

The first contract, with the department of employment, was won through competitive tender. Asked whether her background was a hindrance, she said, “We won on the basis of price initially, and our ability to deliver.”

From there on, staff numbers shot up rapidly. “We set up a head office with regional managers who then recruited their own people.” Thompson realises in hindsight that what she would have done differently now is to have a flatter management structure rather than the hierarchical one she had created.

Reasons to sell and start afresh – Zynap
Thompson believes that being a strong government sector led business didn’t help with her entrepreneurial motives. “Our staff weren’t used to knocking on doors to get [new] business. I wanted to do more commercial work.” So with this in mind, she made the decision to sell six months prior to the final transaction. “We approached GrandMet Trust, who as a competitor was interested in taking us out.” Joblink was sold for an ‘undisclosed sum’, but it is thought the figure was into several millions.

Asked about how she felt about the sale and her thoughts about the next steps, Thompson was very clear. “I felt a great sense of relief when we sold the business, and was ready to do something else, using the experience gained from Joblink.” She added, “The dot com arena was already overheated, but the recruitment software sector was based on simple workflow – which meant it was difficult to sift through hundreds of CVs very easily. So I started doing some research [into the opportunities].”

Using some of the money raised from the sale of the previous business, plus friends and family, a total of £1.5m of initial capital was put into starting up Zynap. “It was a very soft funding, nice and easy,” says Thompson. The business also had a proper business plan and exit strategy, unlike her first venture.

She then set out to research the recruitment software market, and establish a management team. A couple of people came over from Joblink on the sales and admin side, and the CTO was recruited via the internet. A team was in place by February 2001.

“We started working with Autonomy’s pattern matching engine and became an OEM partner for them. We developed a method for matching complex job descriptions to CVs. The idea was to move away from simple keyword matching. We succeeded in matching complex CVs, and then built the recruitment software.”

Thompson recognised that the market was flooded with IT companies and was trying to sell Zynap’s product for two years before realising that maybe large companies needed something else. “So we changed to providing ‘talent management software’, which enables companies to manage their vast array of employee skills and resource.”

The very first customer for Zynap was Reed Elsevier, who bought a perpetual licence for the CV-matching engine used on Reed’s ‘totaljobs.com’ portal. UBS AG was also signed up as a customer – and the global resourcing managing director Chris Macklin was so impressed with the product that he recently joined Zynap as chief operating officer.

Vision, financing, VCs and the exit
Business motivation has always been in Thompson’s blood. “That’s why I became a partner early on at the accountancy firm. My vision has always been to achieve optimisation of the workforce. And to make money through empowering people to be better at their jobs.”

But in the process, the journey has become one of constant fund-raising. At the time of writing, Zynap had raised a total of £3.5m capital through 60 angels – with the only non-individual shareholder being Autonomy. “The number of angels is high. But everyone had been hurt [through the downturn], so investors took the view that they liked this opportunity but didn’t want to miss out.”

Thompson says that Zynap is expected to breakeven and become cash-flow positive in 2005. The next step for the company is to entertain VC funding, followed by a listing or sale.

Asked about the current funding climate, Thompson says it is getting better but still cautious. “I get the impression that, unlike in the last four years, VCs are funding again. But investors are still risk averse – for people starting from scratch, I believe there is still difficulty in getting funded. However, the UK government’s EIS scheme is good – we’ve benefited in that our angels have taken up the offer. I believe we received a higher level of investment because of EIS.” She added that the R & D tax credit benefit from the Inland Revenue was also useful.

Lessons to others – attitude, and what to avoid
Asked about what the government could do to help, Thompson demonstrates true entrepreneurial spirit. She comments, “I believe it [the government] could help with easing up some of the legislation. But I don’t look at the government being totally responsible for my financial success.”

Thompson’s advice to others in their early stages of business development is:
- stick at it and be realistic with your prospects
- stand back every now and then and make sure that you know what you are doing
- believe in yourself.

About investors and shareholders, she firmly believes in the ‘partnership’ approach. “When you bring investors into your company, you have to recognise that it is a partnership until the exit. So you must check that their philosophy is in line with yours – do your homework about them too. You need to check out your investors just as much as they are checking you.”

She adds, “Maintain a good relationship with your shareholders since they are with you because they’ve put their money in. Don’t tell them things are better than they actually are – understand the value of your investor. Make sure you iron out all the issues – such as monthly burn rates – so that they know what they’re getting into. Just be honest.”

You can’t do it alone
One of the most important lessons Thompson offers to other entrepreneurs is ‘to make sure all the people around you support you’. That means everyone from family and close friends, to shareholders and staff. “You can’t do it alone,” she says.

Despite this, Thompson adds being in business represents the ultimate loneliness, especially as a founder and/or chief executive. “The reality is that the buck stops with you – and this extends outside of business life too.”

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© Chilli Publishing Ltd 2004

13OCT2004