Christian Nellemann, CEO and founder of XLN Business Services

Megabuyte, October 2015.

Screen Shot 2015-10-02 at 11.08.50The Megabuyte Interview: Christian Nellemann

The Millbank Tower may be a grandiose building in black and red marble, but the London headquarters of XLN Business Services are all about small businesses. I’m reading about the 125,000 hairdressers and plumbers serviced by XLN as I wait for Christian Nellemann – the CEO is talking to someone outside, sitting on the front stairs, in an attempt to get some air on this very muggy summer day. Nellemann has a soft spot for entrepreneurs, he’ll tell me later in his no-nonsense manner, having been one himself even before going into the confectionery business at 13:

“I’d managed to blag my way into getting a wholesale account with Rowntree’s. My classmates, instead of having to go all the way the petrol station to buy sweets, bought from me at the same price.” The venture got shut down when the headmaster’s wife caught wind of it – she was a dentist. “But that’s been me since I was six years old: selling and trading and trying to make money.”

In that spirit, Nellemann founded what was then XLN Telecom in 2002, and most recently led the tertiary buyout in October 2014. XLN currently provides phone and broadband, card processing, gas and electricity to SME customers – Nellemann mentions insurance at one point, so maybe that’s next. We’re sitting in the CEO’s office, which is full of retro pop art and mid-century modern design. Nellemann is relaxed in jeans and open collar, straightforward and open as he talks in a Scandinavian accent. Asked about this year’s plans, he takes it back to 2008, when the current strategy was born:

“We devised a strategy around creating a multi-services company where you have a business that’s entirely focused on the micro SME market.” That’s all your High Street hairdressers, accountants, bakeries, law firms, and so on. “[We wanted to create a business] that really cared about them, really understood them, and could supply them with some of the services they’d only been able to buy from, essentially, monopolies.” Everyone still gets brand-name services on separate bills, explains Nellemann; the attraction lies in how XLN tailors products to fit the unique needs of SMEs. The prices are good because of the volume, and the service is top-notch: everything is handled in-house at XLN. “90% of all our phone calls answered within 10 seconds. 87% of the problems are solved in that one phone call.” This is vital for an owner-operated business, where there’s no time to spend two hours on the phone troubleshooting a card machine error.

As XLN has branched out from its telecoms beginnings, focus has been on building an organisation that can provide economies of scale as more products are added. “We’ve spent four years building a leadership team, expanding the second level of management, upgrading all our processes, building the systems.” This new office in Pimlico, as well as the one in Sheffield, is part of this expansion, which has taken the company to 400 people. “This is the platform from which we can now grow into the business we want to be.”

The entrepreneurial spirit
One of the things Nellemann wants his business to be, is a champion for small businesses. “I’ve never worked for anybody else, I’ve always run small businesses. This one happened to morph into a big business. But my family has always been entrepreneurs. I have a very full understanding of the challenges of starting and running your own business: the priorities, the time pressures, the sacrifices.” He’s on a roll now, citing reports showing small businesses often get the short end of the stick when it comes to pricing and customer service: “But we want to give small businesses the best prices and best service! We want to champion them, because I genuinely believe small businesses are the lifeblood in the UK.”

Nellemann grew up in Denmark, before going to boarding school – he’s quick to add he asked his parents to go, as sending your kids away to school is very unusual in Scandinavia. While at university, he came across a company called Scentura Creations, and ended up spending most of his final year in San Francisco, doing field sales. The commission-only set-up sounds like something Alan Sugar would orchestrate to see if you’ll break: “Yes, it was tough. But it taught me a lot about sales, about work habits, discipline and focus. I built that into 30 sales offices in the UK, and seven other countries in Europe.”

After the perfume business came the office products: OfficePoint and OfficeStar, before Euroffice in 1999, an online business. It started in what Nellemann calls “a traditional fashion” – by the founders putting in their own money. Plans to raise £5m in PE funds were topped by the dot-com crash. “We had no money and we were running dry. Eventually we got to the point where we had to sit down and say, ‘We are insolvent and we have to close the doors.’ That was on a Monday.” Nellemann asked to have until Wednesday, then the weekend, and then a few more days, until he had an idea: invoice discounting. “That got us the liquidity to continue. Venture capital came in a number of months later with a £1m investment, and another £1m later. So we carried on. Whenever you build a business, it’s touch and go for a long period. The smallest things can close the doors.”

XLN was born three years later, when Nellemann found a telecoms partner and built a salesforce based on the idea that small companies needed an alternative to the then-monopoly that was BT. But the start was more modest: “I created some leaflets and a contract that looked like I was a salesman for a telecoms company. But there was no company. I visited some of the small businesses in the Portuguese quarter of Vauxhall, and signed up four customers that afternoon. That was my proof of concept: I can supply it, and people will buy it.” He tells the story so matter-of-factly. But, I press, that was a pretty bold move! He shrugs: “Well, I’ve done it all my life, so …”

Does that means he enjoy these dramatic early days of a business? He thinks for a moment. “I wouldn’t say [Euroffice’s illiquidity] was a particularly pleasant experience. It’s more fun to look back at. But the key is that I genuinely believe just about anything is possible.” Having a positive attitude, as opposed to a defeatist outlook, is also vital if you’re trying to raise money. “I’ve done this many times now: raised funds, overcome people problems, process problems … I’m not so frightened when we have big issues, because I know it will be okay. It always turns out okay. I try and enjoy the process, as opposed to flip out.” His grandmother used to remind him, he says, how the chessboard of life has just as many dark spots as light spots, but you get through them: “It gives you faith – ‘I just have to hang on in there.’ That’s my philosophy.”

New business frontiers
XLN is no longer a startup, but the present day experience is nevertheless new for Nellemann: “I’ve never built a business bigger than this. I’m right at the edge of my experience and right at the edge of, potentially, my capabilities! I’m learning, I’m doing the right things and also making mistakes, and the business is moving forward. That’s a huge personal challenge and a massive adventure. I genuinely know this can become a £500m business on its own, and with acquisitions, it can probably be a £1 billion business.”

XLN will probably be floated at some point, says Nellemann, to ensure it has a life beyond him. “Will I go and start another business after that? Who knows? It depends on how old I am and so on. But chances are, I won’t be able to sit still at home.” Home for Nellemann (48) is in Sunningdale in Berkshire, where he lives with his wife Naima – she used to be an R&B singer with the Honeyz. Nellemann had their family house built in Queen Anne style, after decided a sleek Scandi design would look all wrong: “Who am I to come and put a modern, egotistical building that everybody has to look at forevermore, facing one of the most famous golf courses in the world?”

The couple’s two sons are still young, but as a third generation entrepreneur, Nellemann wants to make sure they learn the value of money: “You’re not going to be a happy person unless you work.” You have to find something you like doing, he adds, and you have to get up in the morning: “I’ve been out of bed at 5:30 since I finished university. Those are the work habits from my early life that stick with me, and that’s partly why I’m successful.”

Nellemann goes back to Denmark on occasion, maybe once or twice a year. “Denmark, Norway and Sweden are the most amazing places. But I can’t stand the Jantelov,” he says, shaking his head at the term all Scandinavians know: the idea that individual success is a threat to the collective and should be scorned. Britain’s is better at letting people be successful, says Nellemann: “I want to promote entrepreneurism – that you can start on your own and be successful. But people who are successful, and have the trappings of success – the cars and the toys – they’ve paid such a price that frankly, most people wouldn’t be willing to pay that. So don’t envy them! We should rejoice in people’s successes. That’s what we do here.”

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