The Megabuyte Interview: John Hawkins
Megabuyte, May 2016.
John Hawkins isn’t one to mess about. “I see you have Vislink up on your notebook in capital letters, but that’s not the only thing I’m involved in!” We’ve only just sat down in the Smithfield offices of Hudson Sandler, PR to Vislink, the designer and manufacturer of microwave radio, satellite transmission, wireless camera and marine CCTV systems that’s overseen by Executive Chairman Hawkins. “But frankly, I don’t want to talk about Vislink. We’re in our closed period anyway, so I can’t talk to you about the numbers.”
Allright then, I think as I note down in the margin: “Power move!” I get the distinct feeling this may well be part of the John Hawkins experience, and we’ll get to that later. But for now, what does Hawkins want to talk about? He does indeed have a long and interesting CV, featuring a great many things that have nothing to do with Vislink. To list only a few, Hawkins is also chairman of Isotrak, and was previously chair of MLL Telecom, Wireless Logic, Genus, Atex, and Anite.
When choosing which company to dedicate his time to, Hawkins always starts with the market. “It has to be a very high gross market. The potential for that business has to be high within that sector, because you can have an average management team in a high-growth market and the business will still do well. If you have an excellent management team, but the business isn’t growing, you’re never going to do very well.” Take the Internet of Things: “The market’s growing on average of 25% a year, so you want to get your management to grow 30% a year. 24% would be failure.” He’s referring to Wireless Logic, whose success was also down to international growth, and strength in the management team: “The chemistry between you and the management is important. If you don’t like them, don’t do it.”
I try my luck and ask Hawkins a Vislink question after all: why did he choose to join the company back in 2010? “Well, Vislink I chose because it’s three miles from my house! That seemed a good start!” He laughs – we’re good. “Then there was the fact that the sector prospects looked fine for a business that was heavily loss-making at the time. It made £42m in sales and had lost £8m. I had turned around bigger losses.” In the first year, Hawkins’ team presented a three-year turnaround plan: “Call me stupid, or brave! … Broadly, we said we’d go from an £8m loss to an £8m profit, which we pretty much achieved within three years and 11 months in the market – thinking that we weren’t going to be able to do it.”
Public versus private
Vislink remains a public company, but Hawkins is the first to point out that this approach is in some ways very much aligned to private equity. “In a PE-backed business, without the glare of public markets, you actually have a 100-day plan.” Hawkins won’t say that this is a better way to get things done, though: “The consideration is always the same: grow value for shareholders, and turn that loss to profit.” So the Vislink turnaround wouldn’t have been easier out of the public eye? “Well, it was a public company.” Hawkins shrugs. “You can’t always say, ‘Should it be a public or a private company?’ I’ll give you another example. I was chairman of another quoted company, Genus. … We took it from a £40m market cap to £600m.” Hawkins recounts, always in precise detail, how the company acquired another business and its debt, which was paid off within three years, leaving shareholders with the equity. “That was a PE-type structure applied to a public company that ultimately benefited the shareholders.”
But one structure isn’t better than the other, asserts Hawkins. “They’re different. If this was a PE boardroom table, we’d all be shareholders. We’d all be absolutely aligned and you would have [everyone] around the table. That means you can make decisions for the long term, and you don’t have to necessarily focus on the next six months’ numbers. … In public companies, you also work through fund managers and retail investors, so it’s a much broader church. You’re judged on the next six months. Is it better? It’s different.”
Though sometimes, what’s a good outcome from a business perspective hasn’t gone so well for Hawkins personally – “let’s put it that way”. Hawkins is talking about Anite, which he joined in 1997 as CEO when the company was losing £68m on £168m in revenues. “I joined Anite thinking, ‘Well, it can’t get any worse!’ … It was a collection of businesses with no critical mass in any one sector. To turn it around, we sold, closed and disposed of 90%.” Three small software outfits remained, and a public sector focus was built through acquisitions. Six years on, the company reported a £31m profit.
“At the time, I thought: ‘If I perform [as CEO] and grow the profit on a continuous basis, that will be good enough.’ But upon reflection, having a strong board was really important, and that’s something I didn’t focus on.” Make sure the board is working with you, Hawkins recommends, and also, be clear in your strategy and keep your major shareholders onboard. Hawkins pauses. “At a certain point I thought Anite would have been better off in private hands. I tried to take that business private twice, and in the end I was sacked for it. Though ultimately, that business was broken up and sold. It took them 12 years to do what private equity would have done in two.”
Hawkins keeps coming back to the phrase “shareholder value” – that’s clearly his key priority. Deciding to sell Psion in 2011 was one of those calls: “We were number four in the market; we were never going to get to number one and we were a niche player. The business was never put up for sale, but it was bought by Motorola for a very good premium. That was a good outcome. … At the end of the day, you have to [ask]: ‘Can we genuinely create value for the shareholders? Or are we better off turning that into cash?’”
All about the challenge
Hawkins hails from what he describes as a working class background, having grown up in a two-bed council house with his two brothers in Reading. “That’s where I started. I didn’t go to university. At 18, I joined a sales organisation called Telephone Rentals, where I had to go around the industrial estates and collect 30 leads a day, off my own back. Then on a Thursday, I had to get eight CEO appointments from those leads – nothing less. And on the first appointment, I had to get them to sign a 14-year contract.” Yes that’s right – fourteen. Hawkins laughs at my reaction: “Sales organisations are just soft now! They have all this Salesforce technology and mining software … and it might take them six months to get a deal!” He tuts. After three months at Telephone Rentals, Hawkins was one of six trainees left out of an initial batch of 300. He went on to become one of the company’s top salesmen.
Hawkins went on to spend 25 years at Philips Electronics, but his lack of university degree meant the company wouldn’t include him in their fast track programme to reach managing director by 30. “So I thought, ‘Okay, fine. I’ll get there the hard way.’ … I was the youngest MD in Philips at 28.” This time was a great grounding in business management, sales, marketing, and international management, he stresses, but in his early 40s, it was time for a change: “I realised that if I didn’t actually physically leave Philips – it was a great company, but I would have been there until I retired.”
A string of management roles followed, in both public and private companies, and Hawkins recounts a number of them, complete with details testifying to the progress over his tenure. Asked about his favourite element, Hawkins says he likes a challenge: “I think it boils down to that. … But whatever you do with a business, ultimately you have to grow it. In the early stages, you might have to cut costs to get to a profit, but the skill is then getting that business to grow. My preference is growth businesses, not turnarounds, because there’s a lot more positive energy going into [the former]. But I can do either.”
The Marmite factor
Back when Hawkins first joined Vislink, it was more a turnaround job than a growth story. “There was a stage of stabilising the patient. [Joining] a business is a bit like looking at it through a child’s eyes. In the first couple of months, you do a lot of listening, as you have fresh eyes. What you have to listen to most are the markets and the customers, and what you have to listen to least is middle management, because they have their own agenda. Where a lot of people fail is that they don’t execute on what they’ve seen in those first 60 days.”
So instead of going to internal meetings when joining Vislink, Hawkins sought out the biggest event where he could meet partners, customers and prospects. After a week on the stand, he came back with the impression of an engaged salesforce and support staff: “But I saw a middle management sitting around drinking coffee and not contributing. So we took all that middle management out of the business in the next 30 days, saving 30% of our costs without touching the sales or product development. Business is simple! You make things, you sell them, finance adds it up.”
Hawkins certainly doesn’t seem to have too much trouble being ruthless if the situation calls for it. “I’m a bit like Marmite,” he laughs. “Management either embraces it, because they can see the drive, the zest, we can put into the business. Others who want to just pootle along – those types of individuals tend to be scared.”
Having said that, Hawkins stresses that goodwill within a business represents 80% of the value in a tech company. “As the buyer of a business, [you have to] be very clear with the management.” That means explaining your vision, and stick to that after you’ve written the cheque: “If you don’t then behave, you’ll lose the hearts and minds of the people. In a software business, that means you’ve had it.” This is why when Vislink acquired software outfit Pebble Beach in 2014, the management created a three-year vision for the founders to clarify the benefits to joining forces. “Now we have a business that’s going to grow organically, because not only have we worked out how we can grow that company, but we’ve also connected it to a much stronger sales channel.”
Growing a reputation
Asked about his own motivations, the first thing Hawkins mentions is his five kids and two grandchildren. “But what I get out of [the work] – I really enjoy the challenge, I enjoy seeing people develop, seeing them get rewards for their efforts. If you talked to the people I’ve worked with, they’ve enjoyed working with me. I’ve been challenging but fair. … All of the businesses I’ve been involved in have grown: they’re either still on the public markets and have done well, or we’ve sold those businesses and they’ve become part of something that’s better and more successful.” Reputation is important to Hawkins: “The reputation of the company comes first. But what you’re selling [personally] is your past performance, your integrity.”
Hawkins (63) is married to Stephanie, and proudly lists where the kids are at: “One’s in China, lecturing English. One’s in the US; it’s her first year on a superyacht so she’s all over the world. I have one daughter in Barbados and one son in Henley, which is close. And then one at Exeter University.” He’s pleased with the fact that his children have gone far and wide: “You have to make sure kids are equipped for life. I don’t want them to be thinking the UK is the only place for them. … They’re all well-travelled, well-rounded individuals. They’re very different, but fiercely independent, all of them.”
Getting a balance in life is important, says Hawkins, a passionate Manchester United season ticket holder. But then again, he was up at 4.40am today and this is already his fifth meeting, after travelling in from his home in Buckinghamshire. It’s about 60 miles west of London, he tells me after I say I’m not that familiar with that part of the UK, gently chiding me: “There is a life outside of London!” This leads to a five minute chat about Southampton, where I went to university and Hawkins had his first sales patch. Then Hawkins tells a hair-raising story from his time at Genus, the animal genetics group: “People used to say, ‘We read in your annual report you have 200 Bachelor of Sciences. That’s pretty good going!” And I’d say, “No, BSC stands for Bull Semen Catcher!” Hawkins laughs, and we’ll stop there. But let’s just say that no one can ever accuse Hawkins of skimping on the details.