Changing the world, through a premium food brand and an AI platform for education
Podcast transcription - 1st august 2018
Peter Cowley: Well, welcome again to another Invested Investor Podcast. Today, I have Priya Lakhani, who I met once before a couple of years ago, but really don't know very well at all. Welcome, Priya.
Priya Lakhani: Thank you.
Peter Cowley: Let's talk a bit about your background, your education, and the start up you did at school.
Priya Lakhani: So, the start up at school was, I learnt from my brother that I could make a bit of money by selling chocolate bars at school. So, I was young, and I would go out with him in his car, and we'd go to the Cash and Carry, we'd buy cases of Chomps and I would sell Chomps for ten pence at school.
Peter Cowley: Chomps being?
Priya Lakhani: Chomp bars are chocolate bars.
Peter Cowley: I'm too old for that.
Priya Lakhani: They're little cheery chocolate bars, actually they were more popular about ten or 20 years ago, than I think they are now. I'd buy those, I'd sell them for ten pence, I'd buy them for seven pence. Then very soon I learned that I could scale to Curly Wurlies because you can make a bigger margin on Curly Wurlies. So, I used to sell those to. I used to mostly eat my profits unfortunately, but I also used to dabble in the stock markets. So, I also used to spend some of my time at home looking at stocks and shares, penny shares, and then I'd get my mom to go to the local Barclays bank and purchases shares for me. I actually made quite a bit of money like that.
Priya Lakhani: Thousands and thousands of pounds I should say, that came in very, very handy when I was at university. So I managed to go on lots of lovely ski trips and I spent it all of course as you do. But yeah I enjoyed a sort of nice early career as an entrepreneur, and also somebody who was dabbling on the stock exchange.
Peter Cowley: Was this from, so that your parents were they entrepreneurial?
Priya Lakhani: Yes, my parents are East African Indian, and as the story goes, there's many of them, that they went to East Africa, they built businesses, my father then came to the UK. He built factories in the UK, also he worked at ICI, and he was involved in creating the one in the back and the IP, and that has his name on it which is great. But very East African entrepreneurial background. So, I was brought up around people who built business. I guess that must have inspired me along the way.
Priya Lakhani: But a lot of this was learned with my brother. So, my brother is four years older than me. He would come up with these schemes and I would basically follow him. So, he was well known in Hale Village in Cheshire as Del Boy and I was named as Rodney. We were quite the tag team. So, I learned a lot from him.
Peter Cowley: Then you moved on to University.
Priya Lakhani: During this young period, a spent a lot of time in East Africa, during some long summers, and long winter holidays. Spent a lot of time amongst children who have nothing, you know. I was really always very taken by the poverty around me. So I decided at a young age that I would change the world. I would be the person who would make sure that ever child have similar opportunities to me because I didn't like the injustice that they face in terms of inequality.
Priya Lakhani: So I decided that I would study something that could potentially help change the world, and I became very interested in law. I specifically wanted to be a barrister rather than a solicitor, and then that's the career that I then pursued. I ended up becoming a libel lawyer for the press. So I focused on libel and libel and privacy. My aim there was to work within the press, and try and make the press more positive, which was potentially a bit naive at the time. But I did realize if you have better lawyers working within press organizations, then investigations are better, because better questions can be asked. Obviously, lawyers are involved in the scrutiny of the press that the public actually see at the end of the day.
Peter Cowley: So you worked for a firm or worked for a media company.
Priya Lakhani: I worked in house. I worked in house at media companies. So, I'm seeing things as they came up, which was fascinating. I worked for newspaper groups, hundreds of newspapers, I worked for ITV, and my take on everything was to make sure that the press was right, that it was reasonable. I really, really enjoyed my job.
Priya Lakhani: I have to say that if I ever retire one day, which I'm not sure is ever a word that an entrepreneur would ever use, I would be a libel lawyer for free, because it was a lot of fun knowing what was about to go into the press that, well now it's the next minute because of digital obviously, but at the time it was what was going to go out the next morning.
Peter Cowley: So how many years were you practicing then for?
Priya Lakhani: Four, and when I was practicing there was one particular news group that I was working for, and I would constantly go, and fix other problems in the news group, that weren't really part of my job description. So, one of the C levels called me into his office. I thought I was in trouble, because I let a story go through that maybe we were going to be sued on, but instead he said, "Have you ever thought about running a newspaper, you know, we never really put anyone through a management program that hasn't been in sales, but we think you would be quite good at it."
Priya Lakhani: That's when I was about 26 years old and I thought, "Well, if you think I can run a newspaper, I'm pretty sure I can run my own company." I didn't want to go on a trading scheme, and I don't really want to work for a large media organization. What I do want to do is actually change the world, is do something very different. I really feel that I should just learn by myself. So, the next day I quit. That's what he really wasn't expecting. That's because I had this idea to start a food company.
Priya Lakhani: I was working late nights obviously as a libel barrister, I was newly married, I've done the Cordon Bleu courses. I'm a good chef, but I have no time to cook. When I went to the supermarkets, I found that there were no fresh sauces in the ethnic food section. So, when you go to the supermarket, even now, you'll find that there's lots of ambient sauces in the ethnic section, that the fresh sauces, and the healthy food is often related to Italian.
Priya Lakhani: So, in 2008 there were no fresh ethnic sauces, there were only fresh pasta sauces. With a recession that was about to hit the country, there are a portion of the population that would have higher disposable income than many others because they would still be in their jobs, and obviously interest rates would decrease. So, I thought why don't we create a premium food brand. So, I created Masala Masala, which was the first fresh ethnic sauce brand in the UK. I was laughed out the door by all suppliers, who said, "Are you having a joke? It's very difficult to get into supermarkets, you're never going to get in, it's impossible. Do you have a sibling who's a buyer?"
Priya Lakhani: It's the constant nay sayers, because what I find, actually throughout my life, even when I wanted to be a lawyer, because my head teacher said you're never going to be a barrister, you're brown, you're female, you know, you're an ethnic minority, barristers tend to be white males who goes to Oxbridge, and you're not going to Oxbridge either. There are always nay sayers. This is constant, this is not just when you have a big idea, this is also any small thing anyone wants to do, there'll always be a small potion of the population who'll say you can't.
Priya Lakhani: So, I thought well, I'm going to defy those people and just do it anyway. I think I've been rebellious all my life, and I really enjoyed the challenge, and within six weeks, I had nationwide supermarket deals. They came about not so easily, every time I would send information to Waitrose for example, which was my number one target, they wouldn't receive it, or they would loose my samples and I had to create an entire-
Peter Cowley:Y ou can make the samples at home.
Priya Lakhani: Yeah, I did the health and safety course, and I found a company who would test our samples for bacteria. I had to learn everything, and these are just samples. This is only so we could find out how many carbohydrates, how much protein, and all the things that you put on a label. Then I had to find a manufacturer. So, I had to go out there, and most of them laughing me out the door, and I only wanted to go to a large manufacturer. I reused to go to a small one, because I knew that if I go to a small one supermarkets will say, "How are you producing it, what about, well, no. What about health and safety, is the first concern. I don't think scale at that point was really an issue for me, although, it's a fresh sauce.
Peter Cowley: Might be for them.
Priya Lakhani: But there are lots of small manufacturers that supply, for example farmers markets, but then they sort of scale up to delicatessens. I wanted to go to the sauce manufacturer who produces sauces for Waitrose, and for Tesco, and for Sainsbury's because then that just couldn't be an objection. I don't know where I learned this from, but what I figured out, it's stands try today, is stop trying to break down barriers, circumvent them, just walk around them, because it's too hard to break down barriers. So, I don't let things be issues when they don't need to be issues, because starting a business I'm well aware that I'm going to have problems I won't even know exist until they exist. So, I just thought in order to solve that problem head on, if I go to their manufacturer, when they ask me all those questions I can say, "Well, I'm using your manufacturer. So, what's the problem?" So, I went to the Icelandic manufacturer Bakkavor that produces their sauces.
Peter Cowley: In the UK or in Iceland?
Priya Lakhani: Well, they're here, no they're in the UK. I also only wanted to go to a UK manufacturer, because you know there's all these issues that I had to deal with. Actually won them over, and we worked with them, you know I needed the pots, I needed a sauce, I gave them the recipes, I took my mom with me, she was my creative director. We basically replicated her sauces. They were indeed the best sauces. I mean, later one when we surveyed 11,000 Waitrose and Ocado customers. Everybody, everybody, but one person rated our sauces as excellent or very good.
Priya Lakhani: The one person who rated them as good, in their notes said, "I just prefer your other sauce." They preferred the taste of the other sauce, which is fine. So, it was a very successful process, and somebody said you need a supply chain. That's when I learned the term supply chain. The fact that I didn't even know that was, is, you know. It gives you an idea about how little I knew at the time. I created the supply chain, got the sauces produced.
Priya Lakhani: I actually just drove to Waitrose. I drove to the head office, I sit outside her office, I went into reception. I had my pots of sauce, that now had a really nice label on them. They'd been made up, and I had all the things that Waitrose would need, and I said, "I've got this for the buyer." I knew the buyers name, and they said, "Oh you can leave it in reception." I said, "No, no, no, these are fresh. If I leave them with you, they'll go off. I've also sent these over about five times. Every time I send them to Waitrose, I have to send them in a chilled vehicle, every time I send a chilled vehicle to you, that cost me 60 pounds. It's not like sending something in the post. So, I need her to take these. I will only leave if she takes them face to face."
Priya Lakhani: The reason I did that was not to bully them to give the samples to the buyer, but it was this one lesson that I had learned actually early in life, throughout childhood, is that it's very, very difficult to say no to a human but it's very easy to say no to an email, right? It's very, very simple to say no, but when you're face to face people find it quite difficult.
Peter Cowley: Yes.
Priya Lakhani: At least if they want to say no, they'll hear you out. Then they'll justify their with a because, because only the most assertive people just say no.
Peter Cowley: Right, she can always take it back to her committee, of course.
Priya Lakhani: They do, they can always do that but then you get feedback and obviously the Lean Startup hadn't been written up at this point, but that is agile methodology. It is what is the feedback, what do I need to change, how do I make it suit your needs? Because we know that the number one reason why businesses don't succeed, and they fail is, because they fail to build a product or service that is actually solving a customers needs. It's not something they need or want. So, to entrepreneur back then it was common sense, right. So the ones who succeed, that it was common sense, build something, or create something that people actually need.
Peter Cowley: And they will pay for it, the right amount of money.
Priya Lakhani: Yeah and that's the difference between an MVP and an MSP, right? This is in fees, this is an FMCG. And so created that, took it in, within a few days it they got back, and said we want to launch. They gave me 60 stores, but the day before I actually did launch, they phoned me up, and said we're doing all stores, 220, nationwide deal. Which was an interesting night because I had to get my supply chain to work overnight to produce enough fresh sauce to not let them down.
Peter Cowley: So, how many pots would that have been? 10,000 or what?
Priya Lakhani: I actually can't remember the first run. The funny thing is is that, and every entrepreneur will feel this, you will have this moment, I had it at Century, with my second venture. You don't remember the numbers with the first big Waitrose deal. What I do remember is my first deal, and my first check. You would have had that, right?
Peter Cowley: Yeah I have, yes. Just correlated the check to it, volume.
Priya Lakhani: I didn't remember that, like remember like first check, and what I will I tell you there is Harvey Nichols. It was 108 pounds, it was check it wasn't a transfer or anything, and I got it in the pay. So, it was the best 108 pounds I've ever, ever seen, in my life. It was for, just a handful of cases, but the really, really funny thing about that, was that big manufacturer don't make a handful of cases. So, they made a palette, right.
Peter Cowley: Garage somewhere.
Priya Lakhani:No because it's fresh, but a palette is 80 cases and Harvey Nichols were only buying six cases. So, I had a lot of cases to get rid of. 74 cases in the back of the van. So, I'd literally gone within weeks from wearing a three piece suit as a barrister, to wearing a hoodie and jogging bottoms driving a van. I went to Victoria Street Station, I was parked on the double red route, I know this is public, but hopefully there is some sort of statute of limitation on that, as I admit that. But I parked on the double red route, I was lifting these 74 cases out of the back of my van, outside the front of Victoria Station during rush hour.
Priya Lakhani: I was shouting, "Available in Waitrose in six weeks." So, I thought it would be a good marketing effort. Actually I do know that people wrote to me and said, "You said it's available in Waitrose. It's not." Then I have to remind them it was in a few weeks time.
Peter Cowley: Did you give them away?
Priya Lakhani: I was giving them away for free. Saying, "Go and taste at home." You know, feedback on Facebook, and using the social media that was available, and was popular at the time, and tell your friends about it. So, I was using it as a marketing tactic to launch in Waitrose, because people really like free stuff. Particularly stuff that they can take home, that's tangible. What was really interesting was that I was being yelled at because I couldn't open the boxes-
Peter Cowley: Fast enough, yes.
Priya Lakhani: So, people were getting their keys out, and they were keying the boxes and taking them out, saying, "Give me more, and I want that one." Then this homeless guy took complete pity on me, and started helping me, and I offered him the pots of sauce at the end of it. A couple of pots, but he said, "I've not got a kitchen." So I went, and bought him a sandwich from Pret a Manger and gave it to him. Then some parking attendants came up, and they said, "You're parked in the red route." So I ran to them, I said, "Please don't give me a ticket." Look, I'm in trouble right? People are yelling at me, they're keying the boxes. A homeless persons taking pity on me, and so I said, "Look, why don't you take a case of it home." Because these guys they were African, and I said, "They're ethnic, it's the first ever ethnic fresh sauce."
Priya Lakhani: He said okay. So, they took a case each, and they took them home they didn't give me a ticket. The next thing I know is four other parking attendants, right, because they've got to tell their friends. So I took four cases away, and I gave them, and they didn't give me a ticket. But you know it was really interesting how my first check was actually so much more memorable, because I went home, and I was exhausted that day, and I had cuts all over my hands. It was my first experience, it's very relevant to think to all business, not just FMCG but also in software. But it is blood sweat, and tears, literally, running your business. It has it's peaks, but it also definitely has it's very difficult times, and while that was a really, there was a rush in there, and I can talk about it anecdotally, and it's really good fun talking about it.
Priya Lakhani: But it was really exhausting, and actually quite scary proposition, when you've got 74 cases you're lifting sort of tier by tier at the time, by myself, people yelling at you, parking attendants, you know, it's a great story, and you know I don't regret it, and I would do it again.
Peter Cowley: How did the business scale, then?
Priya Lakhani: Yeah, so actually, we ended up in 3,000 stores in the UK. We ended up exporting it to the Middle East through a distributor. I had my first child while running the business, and I ran it pretty much by myself with a couple interns. This was my first sort of dabbling into business, if you like. When I started the business, I realized at that point that this is my chance to actually change the world, and give back to that six year old who was playing football in the streets in Nairobi with some kids, where I looked at them and thought. I want to change things.
Priya Lakhani: So Masala Masala was very different, with every pot of sauce that I sold, I would feed a homeless person a hot meal in India. I would provide vaccines in Africa, the pentavalent vaccine, the five in one, which saved you from five of the biggest killers in terms of diseases. I would fund schools in the slums. So, I was building schools. We were profit making from year one and I would take all the profits, I'd plough some of it into marketing to make the business scale but I would actually plough a lot of it back into these charitable causes and I was enjoying doing that.
Priya Lakhani: I was in my late twenties, I was suddenly being put on Vince Cable's advisory board at BIS I was walking into number ten I was having a grand time and it was a great business. I never sort of talked about the revenues actually, I don't think I ever have done. But we did about ten million hot meals. You could start to now think, if I'm selling a pot of sauce. And ou margins were very, healthy, which is I think our suppliers realized at some point that I was making a 56% net margin.
Peter Cowley: Right, through the retail channel, as well.
Priya Lakhani: Through the channels, yep. So we were selling it at 2.99 a pot and then because it's a very very low cost business in terms of, I ran a supply chain. So, that's all I had and the couple of salaries, so basically Masala, Masala was a brand and it was a supply chain. It was a logistics operation but it was in chilled logistics and chilled logistics is very difficult. The first few cases that we sent to the Middle East would explode on the plan because their pots of sauce with the pressure would explode and there'd be sauce everywhere. They'd get very cross with me and say we have to meddle with the recipe to make it work.
Priya Lakhani: That was a really, a very, very steep learning curve and a very quick one. One our suppliers, really the recession hit, they were knocked in terms of the cost of garlic, ginger, spices. I remember the cost of spices rocketed a few years in. They were put under enormous pressure by supermarkets to reduce the own label pricing of own label products. So, they come up to me, and within about a two week period, in 2012, prices were increased by about 100%, and our distributor which I found-
Peter Cowley: These are raw material prices?
Priya Lakhani: Raw material, no my price.
Peter Cowley: Your price.
Priya Lakhani: The my price, so raw material prices, but this nobody trying to pull the wool over anyone's eyes. It was global news that raw material prices were increasing at the time. I had a back-up manufacturer, so that would have been fine, I could have gone there. I accepted the price increases initially because Masala Masala would still be okay, we wouldn't be able to have as much of an impact worldwide in sort of our charitable efforts. I accepted those, in the meantime I was looking at a back-up manufacturer.
Priya Lakhani: Because I was then pregnant with my second child, I decided that we really want this business to scale, and it's not going to scale with just me running it the way that I am. I will get a great distributor to take on the product. So, we worked with three distributors, we picked one that's still operating I think, that they had worked with some other big brands, like pasta sauce brands. They didn't have much experience in chilled, and not many do because most distributors work without moving product. They were willing to take it on and we worked with them.
Priya Lakhani: Then within literally a few weeks of agreeing a deal with them, and having a contract with them, they sent us an email saying, "We need help with marketing cost." They were asking for a quarter million pounds. So, something was going very, very wrong that, and what I learned was one of their largest brands left them for another distributor, because they failed to get insurance on their warehouse. Now insurance on a warehouse doesn't affect me very much because I'm shifting product every day. My product goes off in nine days. So, if there's a fire or flood in a warehouse, you're not going to lose so much stock that it's going to break Masala, Masala, but you will break other business that are storing ambient stock there.
Priya Lakhani: So, that was an issue. So, manufacturing prices up, distributor not working, I need to find another one, and at the time, again it was literally within that couple of week period, while being heavily pregnant, I found out that my father was very unwell, with his second cancer. It was the sort of prognosis that you wouldn't wish on anybody, even your worst enemy, and I decided at that point that I would press pause.
Priya Lakhani: So, I called all the buyers that I knew, and fortunately because I tend to get on very, very well with anybody that I do business with, they're all friends of mine. So, I become very good friends with them, and I call them and said, "Look, I can solve all these problems for you, but I need to get home." They would agree, so we literally pressed pause. I was not fined by anybody, supermarket standard terms, and conditions are that you have to supply them for a certain period of time, you have to give them notice, because they're potentially letting down their customers. I said I'll be back in about six to eight months, once I figure out what's going on and also I need to have this child.
Priya Lakhani: Then it was a very tumultuous time for family. So, we pressed pause but I still retained my position on the advisory board and government. I also managed to go to the Mayo Clinic with my father's scans and find that is not really much to do with entrepreneurship but it is to do with, you know, never really settle if you're not quite sure. So we got second opinions, and touch wood, six years later he's alive. There were about two surgeons in the world that could save him. We found one.
Priya Lakhani: I'm very glad that I went home but during that period I was sitting on the advisory board at BIS, and Vince Cable was very interested in skills because that was part of his remit with Matthew Hancock, who is the bridge minister between Department for Education and Department for Business. I learned the fact that 1.8 million children were underperforming in UK schools. I did say to them, "I've been building schools in India and in Africa, why can't we get education right here? So, I decided to dig a little bit deeper.
Priya Lakhani: So, I took my two year old, at the time, and I was either heavily pregnant or some, or you know after I gave birth, I was kind of buggy, and I was pretending at schools to be a parent interested in the school for my child. But actually what I was doing was asking a lot of questions, and finding out what was going on it schools. I found that there were two big pain points on the front line in school with teachers.
Priya Lakhani: That was that the one size fits all delivery of education is inadequate, we know it doesn't work. We know that students are left behind, they're left unchallenged, and we know that teachers feel very disheartened by this. They have no other way of delivering education, because they've got a class size, at that time the average was 27 kids per class, and they have a national curriculum to get through in a certain period of time. They're regulated by Ofsted. They've all these challenges. The second pain point that actually was spoken about more was the data entry, and data management is a huge issue. So, teachers spend 60%, six zero percent time on admin rather than on teaching. No teacher I've ever met signed up for that, right.
Peter Cowley: That's including mark I suspect.
Priya Lakhani: Marking, micro assessing, admin, data management, producing all the working at grades to put in the management information system so that Ofsted can see that, that you're tracking the progress, and achievement of every child, you know, every time an intervention is necessary, dealing with parents gathering all that data for end of term, planning your lessons. All of these things which struck me you know some of which could be automated. So, I looked at it, and thought, "Well we've been using technology at every other part of the world, and transforming every sector in the world, what are you using?"
Priya Lakhani: All I was seeing in every school was that the blackboard was now a white board. That was it. I thought, "Well, you know, this is extraordinary. So, why don't we look at solving this problem?" So, I went back to BIS and I spoke to a member, a special advisor to Secretary of State and said, "I'd like to look into this." I must say that every time anyone on the board would do that, they would welcome you to work on specific projects, which was actually a great testament to how they ran that advisory board, because you don't want to be on an advisory where it's just lip service, and you're there for optics.
Priya Lakhani: So, I looked into it. I did the Stanford University artificial intelligence course, over this period I spoke to founders of tech companies. I was learning what was going on in the world, I accompanied a mayor to, one of the, the mayor at the time to the US to go, and have a look at what was going on with technology. I came up with this idea round the last quarter of 2012 to build a platform, a technology platform that would learn how every brain learned. If we could learn how we learn, then we can personalize education for every student using similar technology to all of those recommendation engines that we now see in shopping, for marketing, for search.
Priya Lakhani: We could then take all the data while a student was learning, and just provide it on intuitive real time dashboards for teachers. There's your admin, there's your marking, it's auto marked. As technology progresses the more natural language processing we can use would be helpful in terms of long-form answers, but initially that's not actually even using machine learning. That's just using advance data science, and if you put a layer of machine learning on top of that, the machine would learn how every individual learns, you know the algorithms would be smarter and smarter as they move long. The data would obviously feed into that and the point is, is that you would end up with a completely personalize platform that learns the pace of learning, focus levels, memory function, knowledge, skill set of every child in real time. Then provide every student with the content they need to learn so that it could plug their gaps in knowledge and skills.
Peter Cowley: You won't know, but I was chair of a private school in Cambridge for five years. The big issue there is you can't be agile, you got these long cycles don't you? It takes you, there's only a six for me, it would still take two years to find out whether you picked the right student on their way out. There's plenty of data out there, it was actually the time scales involved were long.
Priya Lakhani: The time scales are long but they would do that using a lot of summative assessment. So schools put off, and look at a student's key stage two grade, and then obviously as we've developed in terms of policy, we now have progress eight metrics. We'd calculate, "Well, this student at key stage two is likely to get X grade at key stage four." Then you have to, has the school had progress, if a machine itself could make targeted interventions by learning how you learn, and knowing what you need to know, we're then giving a teacher the right intuitive data, actionable insights, not just death by data. But this is what you need to look at, and allow them to make those interventions. You make them a lot faster, and you can improve outcomes.
Priya Lakhani: So, the premise was that, rather than waiting two weeks for those students to do the homework, and give it back, and you've got to mark it. Then you got to have the time to make the intervention. In all that time, if a student spends ten minutes on a piece of terminology, it can do that automatically. So, why can't we build this?
Priya Lakhani: So it was two pager that I produced. Two page piece of paper, and I put at the top, "There is no technology that does this, because I've been out there." The first option was always to find the technology for the UK, present it to DFE and to BIS, because BIS, BEIS as it is now, is still very interested in skills, it has to be because their remit is the economy. So, they're very, very focused on education, it's not just the Department of Education, and find it and give it to them, because it didn't exist, I thought let's build it.
Peter Cowley: I remember years ago meeting somebody from Silicon Valley that Sherry Coutu brought over. It was building something like this in a technology company in Silicon Valley.
Priya Lakhani: I go every year to keep abreast of what's going on. There are lots of companies who say that they use artificial intelligence, and they don't. Century was not using machine learning for two years, but it was out there, because we were gathering data. We were looking at the national people database. It's about mining the right databases, but it's about collecting a lot of data. There was one company in the USA that was using it.
Priya Lakhani: What the technology would have to have in order for it to work, and this is really what would take a year to build is A) the right data model, which tech entrepreneur will appreciate is, it's not a small piece of work, right. It's not a small piece of thought that goes into that, and you have to be agile in terms of your model to make sure it works, but you need a content agnostic content management system. You wouldn't be able to rely on somebody else's content management system. It would have to be a system that could suck in any content, work with any content, work with any curriculum, any course, any author to work with, you know any course out there and so there is a company out there.
Priya Lakhani: They've pivoted three times now, and they're now focused on higher education. They spent something like 160 million dollars in terms of the money that they've raised. They were possibly too earlier. Their chief exec has left last year. So, he's left and he's doing other things, and they were potentially too early for their time.
Peter Cowley: Yeah, okay.
Priya Lakhani: This is something, again the entrepreneurs have to understand, is sometimes it's not that the idea is not fantastic. It's not that it's amazing, you will meet so many entrepreneur out there who will say, "That was my idea, I even started building it. I couldn't get funding or I couldn't get traction." It's often because it was too early.
Peter Cowley: Myspace and Facebook for example.
Priya Lakhani: Yeah exactly.
Peter Cowley: So, all the search engines before Google.
Priya Lakhani: Exactly. So, if you're too early before your time, it's bad luck. You've produced something really innovative and it shouldn't distract people from innovative, innovation's about survival, it's crucial, but unfortunately sometimes timing is not right.
Peter Cowley: So you went to her for funding then?
Priya Lakhani: First there was a discussion of, hang on I've got a company, it's profit making, it's done really well. It's a small business.
Peter Cowley: Masala, Masala?
Priya Lakhani: Masala, Masala, yeah. I was scaling it, I had a distributor. All I need to do was find another distributor, potentially going to another manufacturer.
Peter Cowley: You need to replenish, you need to rebuild that stock on the shelves as well, didn't you?
Priya Lakhani: Well no, it was because it was fresh. It came of the shelves within ten days after I paused. We had over 15,000 complaints from customers saying, "Where is it?" I'd given them a date that I was coming back which, I didn't realize wouldn't come true. I know I had all the buyers ready to take it on again. Once you're in the supermarket, if you're strategically in terms of your marketing, see even if I was B2B, I was working with supermarkets all my marketing was B2C. So, I'm really far more experienced in B2C marketing than I am B2B.
Peter Cowley: Need to get your shelf space back, though don't you?
Priya Lakhani: They would give it back, you know because I know them. I still know them today. There are plenty of business that come to me for help with food, and I always see that. They know that I'm pretty friendly with these people. So, no, the space would be there, I could go back, because this was a successful sauce for them, right. If it is a successful sauce for them, and a successful brand, they know that it's going to work. If your rate of sale is high, they're going to take it on again.
Priya Lakhani: I have no problem with that, but at the end of the day, what it came down to was this one dinner where I went to an Italian restaurant near my parents house with my husband, and I said, "I think I'm going to go back to work, you know, my fathers okay, I've now got this, you know, new baby, but I'm getting itchy feet." During this period, I had also annoyed my family a little bit because I'm supposed to be relaxing. I had decided that I would write a book, just because I been told that I'd never be able to write a book by one of my teachers, because I wasn't bright enough. So I decided I'm going to write one anyway. So in this period I actually wrote a book as well.
Peter Cowley: Which you published.
Priya Lakhani: Which I published. Well, I published it because I took it, I took the scripts into Waterstone's near me and the Waterstone's management said, "This is really good you should get this published." So, I found an artist in Seattle. I really liked her drawings and I said, "Would you paint this for me?" She said okay, and she said, "What are you going to do with it and how much you going to pay for it." I said, "No any money we make we're going to give to Great Ormond Street Hospital." And she said "Okay, I don't know who they are, but it sounds great." I said, "Go on their website."
Priya Lakhani: I've always had a big soft spot for that hospital. I said, "Why don't we just do something where it's again charitable." The thing that you'll really realize about me is, I won't get out of bed in the morning to so something that's not going to try, and change the world. So, I wrote the book on space, because I really love astrophysics. I'm a bit of a geek at heart, but to write the book I thought, "Well, I don't know how to write a book." My english literature teacher told me that I wasn't very bright at school. So I need to learn how children read.
Priya Lakhani: So, I read about 60 neuroscience journals on how children learn. So, this was part and parcel of the thesis of what would then form Century. I was fascinated by the plasticity of the brain, by all the anatomy of the brain. Looking at the amygdala, the hippocampus, and how they work together, and oh my goodness, you know it was just so fascinating. I wrote the book, it was published it was translated to other languages. It's called Zarin's Perfect World. It's a little preschoolers book, it was written for my children.
Peter Cowley: Yeah.
Priya Lakhani: It's about this wizard called Zarin, The USP of this book, because everything has to have a USP, is that every book that my children were reading, they were really creative, which is brilliant, which is what you want, But when they would ask questions about dinosaurs or space, I would either take them to a reference book, and they would switch off or I would try, and explain it, which is fine if you're a parent who has time, which I did at the time, or I take them to a museum, because I'm one of those nutty people that would just turn up to a museum in an hour's notice, but taking to account that I live in London, so it's possible for me to do that. I thought, "Well, how do parents do this?"
Priya Lakhani: So I decided to create a preschooler book that was a blend of science and story. So it's based on the facts of the solar system. So, he tries to find a hospitable planet. He goes all the way from Neptune to Mercury. It's in verse because children love verse, I learnt that. He learns why they're inhospitable. Then he ends up at Earth obviously which is perfect. It's got this sort of rhyme in it, which they like to, you know, children like to shout out at me in the street in Hampstead, because they know that I wrote the book, but I wrote that.
Priya Lakhani: It's based on facts but it's about this wizard who goes off in space. It's got a bit of creativity in there. So, I did that went for dinner with my husband and said, "I'm going to go back to work, and so I better revive Masala Masala" That is honestly what I said. I'm never going to tell you, you know, a lie. I did say that, because obviously I wasn't bold enough to think what I should have been thinking. He said to me, "I can't understand why you're going to do that, all you've been talking about for the last few months is education." And he said, "Look," at this point, so he was on the board of NetJets, but then he was running a tech VC. And he said, "Technology is really how you want to transform the world. Why don't you look into that?"
Priya Lakhani: So, typical entrepreneur style, I'm sure you've heard this before, Peter, we got a napkin out, drew a line down the middle put Masala Masala on one column, and the top next column was headed Company X. He scrubbed out Masala Masala, he said "No, don't do that because it's your baby, and you're too emotional when you talk about it, put Company Y," So we had a reverse column, we had Company Y and Company X, and we leastly did the financials of each. So, with Company Y, I knew them. So, I'd also created a food service product with that. I did a deal with Three Double Six Three. So, that company was always going to scale because food service is really how you make a lot of money.
Priya Lakhani: It was an ambient sauce which, frankly, I wouldn't eat myself, and that's why I really didn't want to put it on the market, but I created it, and I'd done the deal. So, that was Masala Masala, and that was going to grow in a certain way. I'd had an offer to purchase Masala Masala two years in, so I knew generally, even in my late twenties, what this might be worth. So, I had all that down. On the other column I had this tech company which obviously cost a lot more money to build, was far more risky. Turn over the napkin same columns, so Company Y, it said, "Sell curry sauces, feed the homeless." And company X it said, "Education."
Peter Cowley: Yes.
Priya Lakhani: When we wrote it down, and I looked to see I had goose bumps, and I thought I can't not, because it's a bigger deal. I don't really trust anyone else to do it properly. So, I did that, and then I went out to raise money. So as you can imagine I had lots of nay sayers, "How are you going to build a tech company? You're not a former Google engineer, again, you know, do you have a sibling who's a Google engineer?" As you've met me in some angel investing forums, I've been yelled at, I've shouted at, I've been told I'm not good enough. I've been told quit, and go home and stop wasting everyone's time. That was somebody, I'll never forget the person who said that, and I cannot wait until I write my book and to say, "Well, I didn't quit, I didn't go home."
Priya Lakhani: Already today four years on I have a company with thousands and thousands of children on it who thank us every day. Specific children with autism, special needs, children with a pupil premium background who are not give the best start in life, who are out performing other children on our technology.
Peter Cowley: We're talking about where you got to, but I just want to find out about funding. So, did you find Richard Little, or did he find you?
Priya Lakhani: Yeah, then when I went out to get funding, I didn't know what to do, because I never had to raise money before. I started Masala Masala with 25,000 pounds of my own money, and it was turning a profit. So, with this I went to a couple of friends of mine, founders. I called them up, and I said, "What do I do and where do I go?" I called Julie Meyer because she was also on Vince Cables' advisory board. I knew that Julie did events, and you know, knew a lot of people.
Priya Lakhani: Julie just wrote back, I actually sent her an email. Then Julia emailed me back and said straightaway, "I've got an event tomorrow at the Four Seasons, in Hampshire, called Entrepreneur Country, come along." So it's six o'clock in the morning the next day, I got up and said "I'm going to go to fund raise." My husband thought I was nuts. He said, "Why are you going to Hampshire." I said, "Well, I'm going to go and start fundraising." I didn't know how to do it but I'll try.
Peter Cowley: You had a pitch deck?
Priya Lakhani: I didn't know anything. I didn't have anything. I had a piece of paper. So, I went in there, and I met a bunch of people. Actually there was a man I met there who I approached who spoke on stage. I was so impressed with his speech, it was through him that I met another person, and then another person. Three of those people actually that I met through him invested, including him himself. He invested and then I met a group of other people, it was from that first introduction, I've met every single angel investor, everybody. So actually, had I not gone to that event, I have no idea whether Century would be funded.
Peter Cowley: I'm sure you would have.
Priya Lakhani: Well, the really arrogant, suppose, you know, comment that I made was somebody said, "So, fund raisings really hot." I said, "Is it? I just turned up to one event." I wanted to raise a 115,000 pounds because that was the magic SCIS number, but I raised 540 within a few weeks.
Peter Cowley: And you were single founder?
Priya Lakhani: Single founder, no tech experience.
Peter Cowley: No team.
Priya Lakhani: No team, nothing. Piece of paper, I said, "I'm going to change education with this platform," and it was an idea. I built a deck in that time, I built an animation video that said what Century would do. It's pretty similar now to what it does do, but I showed that to people as a vision, got people to invest and I got Telefónica's Wayra to invest, Gary Stewart still says, "This is the only company I've invested in that's a piece of paper and a founder of a tech company that doesn't build tech." He said, "You better do good." And I said, "I'll do good." but I think it's because of track records.
Priya Lakhani: So Masala Masala was you know, it definitely served its purpose in terms of its charitable outcomes, and obviously it did very, very well as a business. As the sole founder I couldn't have asked for more from that business, but it obviously set me up in good stand for Century. That matters. you know, I think people underestimate how much that matters. Prior experience can matter, it doesn't matter for everybody. You got lots of founders who are successful and it's their first venture, and they've built, you know, Airbnb or Facebook which is great, but actually you know people underestimate-
Peter Cowley:You will have learnt a lot from that, yeah.
Priya Lakhani: Yeah and it's all transferable, you know. All the things come up in the same way, and so that's actually how I met Richard Little. So, I met Richard Little about ten investor meetings later.
Peter Cowley: So not in the first round?
Priya Lakhani: No, I met him in the first round. So, I took on quite a few angels in my first round. I met 15 angels and of the 15, 9 invested. I said no to two of them because, it's something that I learned from Masala Masala. I'm still learning now. I don't think I'll ever stop learning there, but every single day that I've run a business, I have always learned that one of the mistakes I constantly make is when we believe in something believe in it with real conviction.
Priya Lakhani: We've all got our gut instincts. Whenever I don't do that, I find I make a mistake. I've done that in terms of hiring previously, where I've just thought black on white, I said, "Oh it looks really good." Somebody else has said, "Priya, you've got to hire this person." My guy instinct is just said no and a lot of that is to do with the culture. With angel investing it's the same. So, just as much as investors pick opportunities. You are an opportunity as an entrepreneur. If you've got something they're willing to invest in you've got an opportunity. No one want to put their money in a bank at .75 to one percent or something.
Peter Cowley: Some do, well they want to take zero risk.
Priya Lakhani: Well, some do, but not that doesn't appeal to most angel investors, but you've got an opportunity, but also pick the angels that match your profile. You've got to pick a diverse set of angels but at that time, I remember it being strong enough to say, "I don't want these couple of angels."
Peter Cowley: It's probably chemistry.
Priya Lakhani: Yeah, I mean in tech also, you know, one of them is very much unfortunately the story that has broken in the media over the last year, which is not behaving well with females. I'm a female founder, and that has come up time and time again at Century. It's come up more in Century than I ever imagined, and certainly more than in my FMCG-
Peter Cowley: With investors or with others?
Priya Lakhani: Both.
Peter Cowley: Okay.
Priya Lakhani: I've had founders, investors behave incredibly, not my investors, I have to say I've managed to pick quite well. But yes with the investors, I've had six meetings with one investor, we've gone into due dil, and in the last meeting we've had those problems.
Peter Cowley: Oh you've had those problems.
Priya Lakhani: They've had those problems, yeah. So, I've walked away. You know what I find is that it's important to say these things, because people think it doesn't actually exist, it's never going to happen to me, it happens to everybody else. Actually it does. So, I've been quite careful, but with our initial round we got a great group of investors, and I'm very. very fortunate because all of our investors have been fantastic investors.
Priya Lakhani: They've either said, "No, I want to watch this quietly." A few have done that, but many investors have been very, very involved. They are the best advisory board that anyone could ask for.
Peter Cowley: So, three of you are on the board is it?
Priya Lakhani: Yes.
Peter Cowley: So, Richard, you and the CFO.
Priya Lakhani: Richard, me and my CFO who's also my husband.
Peter Cowley: Yes.
Priya Lakhani: So Rahul's been on the board since day one. He's a very experienced executive.
Peter Cowley: But as you expressed earlier, he's not a co-founder. He had another role at the time.
Priya Lakhani: Yeah, he didn't found Century. I founded Century but interestingly things have moved on now, because it has turned out, as we expected in order, we've worked very hard for an opportunity well worth pursuing.
Peter Cowley: Yes.
Priya Lakhani: It's really doing some very, very good in the world. We've got data that we just released yesterday that shows we can actually prove outcomes improved as a result of the technology. So, in January he's actually started working here full time which is really interesting.
Peter Cowley: You've had another funding rounds have you or?
Priya Lakhani: We've had three funding rounds to date. We got one open right now.
Peter Cowley: Right.
Priya Lakhani: So we opened our funding round this year last week. Just before the end of the tax year, which is just a little tip to entrepreneurs when doing Angel rounds, is that if you can open your round before the end of the tax year-
Peter Cowley: It needs to be a month or so, doesn't it because people need a little bit of time to think.
Priya Lakhani: You need to open, and you need to have time to think, because we really opened it for current Angels. We've only taken follow on investment. We gave them about a week's notice. It's because they asked us to. They said we're going to invest next this year. So can you open a bit earlier, and it's no problem whatsoever to do that.
Peter Cowley: Have you just got angels or is there any funds in the-
Priya Lakhani: We've got angels and family offices, and Wayra. So no traditional institutional money.
Peter Cowley: Yes.
Priya Lakhani: Which we will be looking for this year.
Peter Cowley: How much have you raised, so far?
Priya Lakhani: So far, we've raised approximately 4.2 million pounds.
Peter Cowley: Excellent okay.
Priya Lakhani: We'll be raising a lot more this year. So, I will be looking at doing a series A.
Peter Cowley: Probably a VC almost certainly.
Priya Lakhani: We've had lots of interest for VCs. We've also had lots of interest from family offices.
Peter Cowley: Right.
Priya Lakhani: So, we are currently building our plan for taking external funding, so they can be part of the investor family, which is a great family at Century. All our investors are wonderful, and so once we've produced that deck, and we figured out what the price is, then we'll know who to go to. But I'm not there yet today, in about a months time you know I think we'll have more of a view of how that's going to go.
Peter Cowley: So, Priya, what sort of tips have you got for entrepreneurs?
Priya Lakhani: I think for new entrepreneurs, specifically, just be open to the fact that you don't know, what you don't know, because every time I meet entrepreneur, and they are you know, they're in a real panic, because the business is going in a different direction, or they've been face with problems that they didn't foresee. I always say, "But you knew that was going to happen, right?" And it can't be said and emphasized enough that that will happen.
Priya Lakhani: The other tip I say to entrepreneurs, which is just the honest truth, is that you will experience two feelings while being an entrepreneur. You fluctuate between euphoria and terror at any given moment. Hopefully you'll have far more experiences of euphoria, but you will have moments of terror. This is because this is your baby, you know. You'll have built this from the ground up, you have a team. I've got 40 people that I'm responsible for at Century. I've got lots more users and customers, and when things go wrong you take them personally, and you know I'm also responsible for my investors, and I take that incredibly seriously. I won't take a penny of anyone unless I really, really felt that I could succeed. You go through all sort of emotions because you've done that because of the life that you're living.
Priya Lakhani: So, for entrepreneurs that think, "Well I don't want to work for somebody else." There's a difference between being unemployable because you have a real entrepreneurial mindset, which is great, and a real difference between just not wanting to work hard enough elsewhere, because this is a lot harder. But I would say is that it's far more rewarding. So if you can do it, then absolutely gather the momentum on whatever idea you have. Go and seek feedback from other people, you will be working in an agile way. That's the way that everybody works, you know. Business that don't operate in that way fail.
Priya Lakhani: Take on advice, ignore the naysayers, you're going to get so many of them, and it can be really, really disheartening but just ignore them. You've got a gut instinct. Take on their advice and just, you know is there anything useful in this advice that I can take on to make my product better, or my offering better, or to make my deck better, or whatever it is that they're telling you, but then continue ahead. Just remember that you're going to go down a really adventurous path. It's going to be tumultuous, it's going to be rocky.
Priya Lakhani: But if you can take on that type of pressure, and if you can enjoy it, and the end game is basically a dream of yours. It's something that actually you know gives you goosebumps, you can't live without. Then you're on the right path. If that doesn't feel comfortable to you, then you're better off maybe finding an entrepreneurial company you can work within, you know, where you're not the founder. I think that's the best advice that I can give, because the entrepreneurs that I see being really successful, we all get off on the same things. If that's right way of putting it.
Priya Lakhani: You know we're kind of adrenaline junkies, and we do it every day because it's within our role. It doesn't really feel like a job, because we love what we do. We have purpose in what we're doing. For those that actually struggle, you know, they may have got in to things for the wrong reason, or not really seeing reality. Then you know but by all means, you know, I don't want to say that there are entrepreneurs out there that don't continue with their particular ventures for only those reasons. There are one that unfortunately as I said are too early. You know there is such a thing as luck. I think you can make your luck-
Peter Cowley: Statistically over half the companies will fail.
Priya Lakhani: Yeah absolutely, so over 60% in their first year, but give it a go if you think you're ready for it, because our country is a great country. You know Britain's great, you are incredibly innovative. British people are very polite. If you asked them a question, and ask for advice most of them will give it to you, whereas you know you can go to other places, and people aren't that forthcoming. So we're very, very polite, we don't say no, and you can abuse that, and exploit it because they want to help. So, I think you know, there are lots of tools at your fingertips that are available online, there's just a plethora of resources out there, and give it a shot or don't. That's the best advice that I can give but don't live your life with any regrets.
Peter Cowley:Excellent Priya. Well t here's so much more we can talk about. We didn't talk about the product itself.
Priya Lakhani: No.
Peter Cowley: We have something in the show notes about it.
Priya Lakhani: That's fine. There's stuff online about that.
Peter Cowley:Yes exactly. No it's listening to your voice, and your passion and your experience that's what everyone wants to do. Thank you much, Priya.
Priya Lakhani: Thank you.
Peter Cowley: Thanks for listening to another Invested Investor podcast. You can subscribe to all future podcast via our website, investedinvestor.com or via a number of online podcast platforms, and be sure to follow us on Twitter, Linkedin and Facebook to get the most up to date, interesting and insightful content.