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( Entrepreneurial Marketing ID: 50V101228000228753 Entrepreneurial flair when combined with effective marketing skill is a rare and powerful combination in business . Developing products that customers want, and being bold with marketing investment, are vital factors in achieving long-term success. )

( Entrepreneurial Marketing ) ( Page 1 )

( SOURCE )

2004-2010, 50 Lessons Ltd.

( CATEGORY )

Business and Economics

( SUB-CATEGORY )

Entrepreneurship and Small Business

( SPEAKER )

Michael Jackson

( SPEAKER TITLE )

Chairman

( ORGANIZATION )

PartyGaming

( TAGS )

Consumer Products, Financial, Technology

This lesson is about how Sage started, and how this particular case combined someone who had great marketing skills but also was a great entrepreneur: a very rare occurrence, particularly in the technology sector, and something which turned out to be a massive success story.

The Sage story - which has been told before but I think is worth telling again - is about David Goldman, a guy who had a printing works in Newcastle and who took on a visiting professor under a DTI scheme to do some technology work for him.

In this particular case it was to do a costing and estimating package for the print industry, based on software. As anyone in the printing industry will realize, it’s quite a complex process to cost and estimate a printing job, which could have various different colors and different lengths etc.

They produced this product and started to sell it, and then subsequently produced an accounting product, which was OK. I raised venture capital for them, as is my style: I invested my fee back into the company and became involved.

In this particular case, Amstrad launched the PCW, which was the first low-cost PC in the UK, at £500: within six weeks, David Goldman had produced a £99 accounts package to go onto the Amstrad. It was the beginning of low-cost software in the UK market, and the business just took off.

But where David was outstanding was that he understood marketing. He wasn’t hung up about the product per se. So for example, when people phoned up and said: “How do we buy invoices to work with your accounting product?”, instead of shrugging his shoulders, he said: “We’ll produce them!”, because he was a printer of course.

So he produced invoices and payslips, and when people said: “Well, how do we make this thing work?” not just: “How do we turn the computer on?” but: “How do we do the

month-end routines? How do we do some of the accounting functions that go with the software package?”, we started to advise them - and, significantly, to charge them for it.

In those days back in the early 1980s, it was unusual for software companies to charge for their telephone support. We did. And, of course, it’s become a massively important part of the Sage business, and a massively important reason why people bought, and still continue to buy, the product.

Then sales started to take off; so the bold decision to go with this product at that particular time was just transformational in terms of the business. The sales had been less than

£30,000 or £40,000 a month, until one day when I remember going up there. I always used to catch the red-eye, which got me in at 7.30 in the morning. Of course, the boys didn’t get there until 8.30 being good software people, so I was there, waiting outside the office; but I couldn’t get in because there were masses of mailbags containing £99 checks for this accounting product. It was an extraordinary story.

The sales took off, but again Goldman - and this is where his entrepreneurial flair and his marketing skills came in - realized and was prepared to invest 50 per cent of the sales revenue back into marketing. In those days, that was something which people just didn’t do.

So he did some innovative things - charging for support, investing 50 per cent of the sales revenue of the business back into marketing – almost from day one, realizing that we had an opportunity: realizing that if we could establish ourselves as the number one low-cost accounting software vendor in the market, that would be a massively powerful place to be.

He did that, and those were the entrepreneurial skills that he possessed. I think it was that combination of marketing and entrepreneurialism that was unquestionably the reason for Sage’s success.