From epiphany to liftoff

22 Aug, 2012

Sleep is important to Tom Dudderidge. Not his, but yours. The bedside alarm clock his company will market to UK consumers this year monitors its owner's sleep patterns, allowing them to be woken after they emerge from deep slumber.

It is one of a series of gadgets made by Gear4, the company Mr Dudderidge founded in 2004 with £23,000 scraped together from his savings or borrowed from his father. Since then, he has exploited a wave of demand for Apple's "ecosystem", the family of iPod or iPad-enabled devices and add-ons ranging from simple plastic cases and headphones to sophisticated docking systems that has sprung up around Steve Jobs's brainchild. The applications market is just the latest iteration of a continuously developing sector.

"They used to describe it as a cottage industry – now it's an industry," says Mr Dudderidge, speaking in Home House, a private club on London's Portman Square.

Riding on the coat-tails of Apple's explosive growth has put this business, based in High Wycombe just outside London, on a trajectory more commonly associated with Silicon Valley companies. Funded by bank debt, it is now turning over £30m a year – up from about £25m in 2010 – and sells its products in 64 countries, employing 92 staff.

In an open-necked white shirt, the 35-year-old chief executive describes a moment of entrepreneur epiphany while sitting on a flight home from South America in 2003. On disembarking, he promptly rang his boss to say he was leaving, then gave himself six months to come up with five ideas, from which he would choose the best.

"I'd dabbled with starting a business but ... I'd always found it easy over a couple of nights in the pub to figure out all the reasons why I shouldn't do the idea," he says.

Then Mr Dudderidge came across his first iPod, recognised it would dramatically change its industry – and realised that he also had his idea for a business.

He bought his first Apple accessories off the shelf from an Asian manufacturer and adopted a rudimentary finance strategy. "We bought inventory, sold it, collected the cash. Bought twice as much, sold it, collected the cash. We didn't really know what bank debt meant."

Gear4 today designs virtually all its products, which are constantly updated, manages 20 suppliers in China and has a team of 18 based in the country to monitor operations. Now it is embarking on a new phase of the business by moving beyond its Apple-based roots into smartphones, tablets and smart television.

Growth has been fast, but with bumps along the way. The first came in October 2005 when Apple sent him a 26-page fax explaining that its trademark ownership of "pod" meant his company, then called Podgear, would have to change its name. "They were very nice about it," Mr Dudderidge says, adding that Podgear was given four months to rebrand. "But we were just coming into our busiest trading period, we were already under-resourced and working 18-hour days, and this was something that if not handled properly could have killed our business," he says.

Four of the nine employees concentrated on the Christmas rush while Mr Dudderidge took himself off with the rest to come up with a new name, design the logo and packaging, halt Podgear launches and figure out every facet of the new brand. "None of us had ever done any of this before. We gave ourselves four weeks to come up with a name, then eight weeks to do everything else."

Mr Dudderidge sees recruitment as a crucial part of his job. But, having left school at 16, he says he is happy to look beyond the CV when hiring. "There is something to be said for [raw] talent ... knowing what you're doing is sometimes a massive constraint."

He owns 74 per cent of the company, with a family trust holding 25 per cent and another executive the final 1 per cent. While fresh investment in the realm of "tens of millions of pounds" would help, he is wary of private equity – at least in Britain. "The attitude in the US is: 'try it, here's some money, let's see if it works'. In the UK, it's 'here's some money, don't use it whatever you do, don't lose it, don't take a risk whatever you do. And if it doesn't go according to plan, we'll take over'."

Another period of angst came in 2007. A push to expand Gear4's European retail operations was foundering, with sparse working capital tied up in underperforming activities. His wife was seriously ill after the birth of their fourth child. Then, just when the business needed flexibility from the bank, the credit crisis struck. He was forced to apply the brakes, restructure the European operation and lay off 18 staff. "We had to lean on our partners, we had to turn our inventory and our customer debts into cash, and do it all very quickly."

Mr Dudderidge is a believer in the power of company culture, but Gear4 owes more to California than Buckinghamshire. Gear4 shares its building with his father's company, Focusrite, which makes recording equipment. Staff at the two companies mingle over breakfast and lunch, provided free in the café.

The two companies have just finished their annual Chillstock gathering, a one-day music festival they lay on for 400 employees, friends and family in the grounds of Mr Dudderidge's parents' house. Of 10 bands that played, four were formed by employees. "We think of our company as a big family, particularly when you hire a lot of young people as we do."

Another phrase he uses to describe Gear4 is "global SME", an emerging breed of company that can operate everywhere without needing to build a physical operation in each territory.

The price, however, is an intense travel schedule that might take him overseas, east to China or west to California, every other week. "The rules – and there are rules – are that I'm allowed to leave on Sunday night, but not until the night flight, and I have to be home on a Friday evening."

Instead of a summer holiday, Mr Dudderidge is taking Fridays off in August as the company prepares to spread beyond Apple with the launch of its first docking station for Android devices. "There's a lot going on just now," he smiles.

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