In conversation with Dr Mike Lynch OBE and Martina King, CEO of Featurespace.
With financial crime rising across the globe, Mike sits down with Martina, CEO of the leading provider of AI for fraud detection, to explore how entrepreneurs can commercialise deep tech research and what it takes to build a British multi-billion pound tech company.
Martina King: "A company from Cambridge comes with such a seal of approval largely because people like Mike have led the way. You've helped make Cambridge and companies that come from Cambridge have that real credibility, technology credibility and a business seal of approval."
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Martina King, CEO of Featurespace, a Cambridge based company using AI to detect fraud and financial crime speaks, with Dr. Mike Lynch OBE, Founder of Invoke Capital, on the uniqueness of the Cambridge ecosystem, how to commercialise deep tech research and what it would take to build a British multibillion dollar tech company.
Mike: Well Martina, thank you very much for taking the time to have a chat today. For those who are less familiar with your background, can you just give us a quick whistle-stop tour of your rather amazing life and all the different things you've done?
Martina: I kind of describe it as I've got three careers. I had two careers before I met Mike Lynch and then one after. And the two before, the first one was well commercial really, sales at The Guardian newspaper - 10 years running large sales teams - and then Capital Radio where I was given my first general management role, so I refer to that as my talent management days.
And today I have a different type of talent management, but it's still all about getting people and performance. And then I went to Yahoo and I was the first UK MD for Yahoo, and then ended up running Yahoo across Europe. And it was during those crazy days of the hype, the crash, the head scratching of how on earth are we going to make this thing called the internet make any money, which seems utterly bizarre now doesn't it, but it was true.
Mike: Oh yes, the e-commerce and advertising models were declared dead I recall!
Martina: They certainly were, and it was fun because Jerry Yang kind of said to me: here are the keys to Yahoo in the UK and if I see you on the other side of the crash, great, and if not, it's been good working with you. And that was some of my greatest times there because you have to really think hard and live on your wits and work out how you're going to make a business work and when he came back, he said: Oh, Crikey, this is still a business here in the UK. And then the task was to do the same with the European business as well.
And then that really took me into my second career which was as a non-executive director. So, you know being female and sitting on boards, that was sort of a bit of an advantage at that moment in time, but also having the digital experience was very valuable particularly to more established businesses, some of whom were able to transition and others still found it incredibly difficult to really embrace that digital world.
And then I met you and then I have my full time career again so launching technology companies and trying to do things with them that other people might have found hard to imagine.
Mike: So, at the moment you're CEO of Featurespace. Obviously, I know the story of that rocket ship, but can you first of all explain to people what Featurespace does and how it's changed since you've joined it.
Martina: Well Featurespace, as you described it to me Mike, invented a fundamental technology. And what that technology enables is a use case that we've been able to identify which really separates out good behaviours from bad behaviours so we're able to understand in gigantic real time data sets when a consumer is behaving animalistically. And our use case is anti-fraud and more laterally anti-money laundering. So, is this consumer behaving in a way that you would expect them to? And so therefore can I let this payment goes through or should I stop it because it's likely to be fraud? And obviously that description belies the excellence of the technology working underneath the hood, but the results have spoken for themselves. And a customer told me just last week that we are the de facto market leader and, although the commercials still have a long way to go to be able to declare that, it's good to know that our reputation is there.
Mike: And the company has gone from what sort of size to what size or value since you've been CEO?
Martina: Well, goodness, when I first went in there were 23 people. We took the company back down to about a dozen because it was in that classic situation where there was a belief that if you build it, they will come. And, you know, we really needed to pare everything back to ensure we were conserving cash in order to work out the real problem that we could solve in the world, and then build the company based on understanding what that commercial opportunity was. And so, it's from 12 people, now we will probably be 350 at the beginning of Q1, approaching 50 customers. We have the most recent fundraising where we raised 30 million pounds. We've raised 83 million in total since the company got going, so yeah I think being able to take an idea and then turn it into a really successful technology company with customers all over the world but centred in Cambridge, and with the majority of our workforce still in the UK is a great achievement really. And there's not a day that I go past where I don't really think about Bill Fitzgerald who was one of the cofounders of Featurespace and I often say, Bill if only you could see what we've done you'd be so proud.
Mike: Yes, a leader and also a very academic professor and not somebody who ever think would be thinking about anything commercial and yet has created this business which has gone on to become worth hundreds of millions of pounds, so you know yeah amazing job that he did there. Now, I'm going to be a bit naughty now. It has to be said Martina that you and I both remember the great hits of the 80s, Depeche Mode all of that. We are of a slightly different vintage to the one that you normally associate with AI and machine learning, all these sorts of 22-year-olds turning up with their longboards and that sort of stuff. But to ask a serious question, obviously that image is always been talked about in the entrepreneur world of AI. But what role does experience have - obviously in your situation you've had a long experience that we've talked about and you've brought it to bear with presumably some very bright 23 year olds running around. What is it you can bring to the picture that perhaps for all of the academic brilliance or those younger entrepreneurs can learn from you?
Martina: I think I probably put it all under one heading which is a shortcut. Another heading might be language. So, trying to bridge the gap between technology and academia and the boardroom I think is really important. A lot of people who are technologists don't have the confidence or the language to be able to conduct themselves at that senior level, and to instil confidence that if the organisation with whom you're trying to partner selects you, that they can trust you and that you will do the right thing with their money and the data in our case that they put into our hands. So, I think that bridge between academia and the senior commercial world I think is something that was helpful.
And I also think the boardroom experience is something that is very valuable to. And maybe a lot of entrepreneurs undervalue the importance of the boardroom to their organisations. You know, having the same terms for your investors, making sure that everyone's aligned around the company's goals, trying to ensure that everyone is focusing on the company and the company's success rather than their own individual objectives as individual investors or board directors is essential. And I found that my experience, sitting around boardroom tables has given me a level of confidence that has enabled me to manage that quite effectively and young entrepreneurs I don't think always think about that.
Mike: So, one of the things I think you've done brilliantly in life is one of your little secrets so I'm hoping that you'll share it with us is. Obviously, when you have people who've just graduated from some great university in machine learning or AI or something and they're often quite idealistic and they're often in a hurry to change the world. And then you have to come along and put it in the reality of making your business some of those very exciting things like budgets and things like that. How do you do that without undermining that raw enthusiasm that that age group often has and is so important?
Martina: Yeah, it's a good question. I think instilling right from the very beginning that there's only one voice in the company that really matters and that's the customer's voice. And if the customer really believes in what we're doing, they will pay us, and I've been very transparent right at the beginning about the finances of the company, how much money we have in the bank, what our targets are. We update the company twice a month on all of the finances of the business. I've always really believed that if you're going to hire the best possible people then you give them all the information, they're always in charge of their own careers, they can always go and get another job somewhere else but you want them to feel totally connected to the mission and the success of the business and you want to share that back with them. So that transparency of progress I think is absolutely essential.
So, focus on the customer and then transparency with the numbers to ensure people feel the ownership and success of the business, because every single person contributes towards it.
Mike: And obviously you've done this business in Cambridge in the UK. What are the advantages of doing it in the UK? You could have up stakes and gone to California – why doing it here?
Martina: Well there were a number of reasons. I think first of all is the Cambridge reason. A company from Cambridge, as you know Mike, comes with such a seal of approval largely because people like you have, you know, led the way. You've helped make Cambridge and companies that come from Cambridge have that real credibility, technology credibility and a business seal of approval. So, I think that that really helps and when people from around the world meet us, they said, “oh you're from Cambridge goodness” and that that kind of intellectual capital as a halo effect. And that really does rub off on Featurespace for sure.
I think the Cambridge ecosystem actually is incredibly supportive. I find people really encouraging and they celebrate your success. So, you know that it's not dog-eat-dog and really competitive, I found it to be really encouraging and even down to, you know, friends like Tony Quested, the local newspaper, really supporting and getting your stories out there have been invaluable.
More broadly in the UK, I actually think the tax rate tax regimes are incredibly attractive in the UK for all companies. And so the entrepreneurial relief that comes, the investor schemes so angel investors - companies like Featurespace wouldn't exist if it hadn't been for those EIS schemes and the angels – they're not called angels for nothing - for people like you and for Robert Samson early days backing Featurespace, so that makes the UK I think very attractive.
And then is the ability for us to sell well, you know, to market ourselves well from the UK is a great hub and a great place for us to be able to partner, particularly with the US. And that's not always easy for companies to make their way in the US, but our partnerships have really taken us there, so I think that halo effect of Cambridge and the respect that exists between Cambridge and the UK and doing business internationally has really helped us. I think the final thing for the UK is our rule of law. And I think people really do trust that when they contract with companies in the UK, that we will do what we say we do.
Mike: Now, you're at a very interesting time with Featurespace in that you've gone from start-up to hundreds of millions of pounds in value. One of the issues we've had in the UK is that we produce these amazing companies with amazing technology and then, like DeepMind or Magic Pony, they end up being acquired off and then all the money seems to be made elsewhere and you end up with 10s of billions of dollars of value and sadly I sometimes feel that the centre of gravity then moves out of the UK. So, the next thing lots of people saying we need to do in the UK is make companies like yours become $10 billion companies in the UK. See, your works never done Martina! So, the question for you is, if you were in government now and you wanted to really grow the UK and use up this incredible science base to create, not just great start-ups, not just great scale ups like you, but great world class companies in the UK. Can you think of anything you could come up with ideas that would make it possible for companies like you to more easily become multibillion dollar businesses - you know, in the UK we have very few tech multibillion dollar businesses listed on the London market. But scientists and entrepreneurs are responsible for vast amounts of that value. So, any thoughts on that?
Martina: Well, yes, and I think I'd start with during my time at Yahoo what I learned is that if there's one thing the US do really well is commercialise their technology and coming into Featurespace that was really one of my ambitions. How can we take that world-beating technology, but make it equally world-beating when it comes to its commercial success?
And I think that one of the things that Bill additionally gave us in his legacy was permission to be commercially successful because that's what he said to me. He said look Martina, I'm not going to be able to stay the long term with the company, can you make Featurespace as commercially successful as I've been academically. And I think that's a great rallying call for technologists - we have permission to be making the best technology in the world, but also permission to be as commercially ambitious and successful as we can possibly be. And it's only by putting those two things together that companies genuinely are world class.
Mike: So, do you think there's still a little bit of that two cultures idea England, that you're either a pure scientist or you're an applied engineer and never the twain shall meet?
Martina: Well, again, it's something that we really tried to – you know, a lot of the people in Featurespace really want to be great business people too. And the other thing I've learned from working with some of the brightest minds in the world is that everybody wants a nicer front door to walk through. Something that shows, you know, that there's a reward for the effort that we put in that's slightly beyond the higher purpose, and there's something for ourselves, too. And those two things those personal motivators and the higher purpose motivator come together with commercial success, so I think you've been able to harness those two objectives. And I'm still very much on that mission, so you know lots of people would say, it can be very hard for you to be successful in the US, you know there are so many companies that have tried and spent huge amounts of money and mostly, they're not gone very much further than the middle of the Atlantic. Where we are now is over half our revenue comes from our customers in the US.
Mike: But your one of your founders had to actually move there didn't he?
Martina: That's right. Yes, Dave Excel he's is living in Atlanta. But again, I think that comes back to our go to market strategy, the real deep understanding that we had and the partnership that we had with the customers in particular in the payment industry in the early days, and then the support that we've been able to garner for our company from those large corporates that we've partnered with because we build them, you know, I've heard you talk about Arm and what they do and their technology sitting in every mobile device and I think that's a very good way to be able to get British technology into the hands of everybody. So, we've partnered with really big American companies to build our technology and so that we're protecting payments across the world, but the wing which we do that is through the partnerships with the payment industries, particularly in the US.
Mike: So, you've got great customers, you're growing at a phenomenal rate and you've just raised good lump of money, what are you going do with that? What's the next exciting phase?
Martina: Well, do you know what, one of the things at Featurespace, you'll remember this Mike, is: how do you create demand? You know, when a young company where it feels like you're trying to shove boulders on Everest, you know, it's just so hard to get people to ring you up and say: please can I have one of those things that you make?
Mike: The key thing is you can often see that the world is going to need this and it's going to buy it. But, is it going to be tomorrow or is it going to be five years' time?
Martina: And they might not know they want it, but then all of a sudden, you're able to show them that their world can be massively improved as a result of partnering with your technologies.
And then you have other people come along and say: Oh, I like their messaging, we'll tell the world that's what we do too. And so therefore you're then in a competitive situation where you know you've built the best technology, but you've got somebody else who's using the same words. So how do you still have the authenticity and how do you get to stand out when other people have nicked a lot of your marketing IP?
Mike: Well, the only thing I would say is I always remember whenever that used to happen to me, I always used to think that imitation is the sincerest form of flattery.
The other thing I always used to love is when, when, you know, you'll be in some sort of competitive procurement and you'll have massive companies who spend all their time criticising you and you'd realise, well they're really scared!
Martina: Can I ask you a question? You have portfolio companies at Invoke and, if not all, certainly the majority of them run by women. That's a pretty unusual situation.
Mike: Well, it's actually not in any way intentional. It's the natural outcome of just being gender blind in that, you know, I see no the reason why half of tech businesses shouldn't be run by women I'm not a great believer in any sort of analysis that says, you know, men and women have different qualities and therefore the female quality set is better suited to AI. I just want the very best people and half of them at least are female, so it naturally comes out in the wash. And I guess you could argue that if there is any bias in tech still leftover then that means that there's some really good people more easily available because they haven't been snapped up by somebody who's not that bright, because you know in some way they're biased against women. So no, I'm completely on the basis of merit and nothing else. You know, the other thing I would say about the various leaders I have who happen to be female is they're all different. They all have different skill sets. So, it's much more about making sure that you're using all of the brain power that's available out there.
Martina: It's like one of my favourite quotes recently I was watching a documentary on Motown and its success and the character of Berry Gordy, who said there was only one colour they ever saw at Motown. And that was the colour of green.
Mike: Well, I think, on that note, which will leave it there. Thanks very much.
Martina: Thanks Mike, great to see you.