Niall Murphy On Raising $60 Million To Give Products A Digital Identity

Niall Murphy is the cofounder and CEO of EVRYTHNG which develops an IoT platform for consumer product brands, articulating data with real-time insights for billions of things. The company has raised $60 million from top tier investors such as Samsung Ventures, Cisco, Atomico, Cisco Investments, Dawn Capital, Sway Ventures, and The Future Fund to name a few.

In this episode you will learn:

• How to handle being years ahead of your time and early to market
• The differences in starting up on different continents
• The real definition of being an entrepreneur

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About Niall Murphy:

Niall Murphy is Founder & CEO of consumer product internet of things platform EVRYTHNG.

A computer scientist by training, Niall Murphy is a technologist, serial-entrepreneur and angel investor. With 25 years of experience in innovation and future thinking, Niall Murphy has built pioneering businesses in internet infrastructure, mobile internet and web services.

Prior to founding EVRYTHNG, Niall co-founded pan European WiFi network The Cloud, acquired by News Corporation’s BSkyB in 2011. In the mid 90s Niall Murphy founded one of the first internet service providers in Africa, later acquired by UUnet.

Niall Murphy also co-founded scenario thinking consultancy The Digital Thinking Network. He has presented around the world, including at TED, was a co-author of the WiFi roaming framework adopted by the IETF, and has co-authored a number of patents. Niall is a member of UK telecoms regulator Ofcom’s advisory board.

Connect with Niall Murphy:

• Linkedin
• Crunchbase
• Twitter

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FULL TRANSCRIPTION OF THE INTERVIEW:

Alejandro: Alrighty. Hello everyone, and welcome to the DealMakers show. Today we have a founder that has been through it so many times that it’s even hard to keep count. I think that we’re going to be really learning a lot. We’re going to be learning a lot about survival, too, in real life, and then also in business. So without further ado, let’s welcome our guest today. Niall Murphy, welcome to the show.

Niall Murphy: Hi, Alejandro. It’s great to be here. Thank you.

Alejandro: Born in Northern Ireland in the ‘60s. How was life growing up there and tell about moving around the world?

Niall Murphy: I’ve had an interesting time as a global citizen. I was born in the late ‘60s in Northern Ireland, which, at that time, was a troubled part of the world. Then in the ‘70s, my parents moved down to South Africa. Obviously, I was a young child at that time, and I ended up having my formative years in school, in university, and so on in South Africa, which, at that time, was also going through a significant transition.

Alejandro: Yeah. You graduated in the ‘90s, and you were involved with all of the new policies that were coming out, and even meeting Nelson Mandela. So, how was that meeting with Nelson Mandela?

Niall Murphy: He’s one of those people that is just a different type of human being. I did some work for him, along with many other people, in supporting formulation of new policies for what would become a democratic government in 1994 in South Africa. I managed to write a speech for him, and so on, which was a great privilege, and sort of awe-inspiring as a human. 

Alejandro: What would you say was your lesson from being exposed to Nelson Mandela and a leader of that caliber?

Niall Murphy: Well, I think it puts any sense of personal adversity that I’ve ever had into context. His ability and his humility and pragmatism, and willingness to talk to anybody on a down-to-earth-basis, given what he had been through, makes anything that I face seem very trivial.

Alejandro: So, you did this for a little bit after graduating, but then you went at it as an entrepreneur and launched your first business. What was the trigger? Did you have anyone in your family that was an entrepreneur, or how did you all of a sudden decide that it was your time to shine as a founder?

Niall Murphy: I was trained as a computer scientist, but my father is an entrepreneur. He’s a publisher. When we moved to South Africa, he started his own publishing business. So I guess I grew up with a bit of that bug. In 1994, the internet was becoming a thing, so I launched one of the first internet service providers in Africa. I did a joint venture with the U.S. Telco Sprint, and we started providing [4:01] and least-line internet access for a whole 68 kilobytes of bandwidth that we thought was a lot of capacity at that time.

Alejandro: Yeah. No kidding. So what ended up happening with the business?

Niall Murphy: It built out reasonably well, both in South Africa and in Zimbabwe. Then that business was acquired by UUnet, a British owner, Edge, now, in ’98. Yeah, I made some money, so a successful outing as the first betting.

Alejandro: What’s the difference, for example, with operating a business, let’s say, in a region that has that uncertainty like maybe the politics are not as stable as in places like Geneva, where you are now? What were some of the added hurdles to the journey?

Niall Murphy: On the one hand, it’s a very green-field environment. You aren’t pushing up against an incumbent. On the other hand, there are very few rules of the road, and so we had to make things up, and we had to identify whole different issues where there were not established policies. For example, I had to negotiate an IP address block for Africa in Washington D.C. and explain that Africa was a larger location than Wisconsin, and we would need a few more IP addresses and things like that. So, basically, just lifted the lid on a lot of uncertainties. But that was great fun.

Alejandro: Your next business, after this one, was Digital Thinking Network. Here, one thing that you really, really understood was how to think about the future or think toward the future, and then thinking backward. Can you tell us about this a little bit?

Niall Murphy: Actually, joining in the early ‘90s, when I was involved in some of the political work, we were trying to postulate future scenarios, and we had some involvement from some international consulting organizations on this, and I got interested in future thinking, so I co-founded the Digital Thinking Network with a good friend of mine, Daniel Erasmus. He still runs it out of Amsterdam. What we did was we built future scenarios. What a future scenario does is give you possible, plausible futures, driven apps around a particular space. I found that exercise allowed me to get a pretty firm perspective about what might happen, and if you put yourself in a future state, then you can think backward, as you said, to today. What action should I take today if that’s going to be the potential outcome that we would see in the world? My next major project of business I launched in the UK in 2003, with another business partner, in the mobile internet, a WIFI company called The Cloud. That came out of a scenario project I did in 2001 about the future of the mobile internet and identifying why WIFI technology would play a plan to meet the world. So, we took that bet and invested in that area.

Alejandro: In this case, what was the next move here after Digital Thinking Network?

Niall Murphy: The next move was the foundation of The Cloud. What the Cloud did was to build up WIFI hotspots, so what we take for granted today, having WIFI access in a bar or a restaurant or a hotel, we pioneered that. In fact, back in 2003, we cut a deal to build 3,000 hotspots across the UK, which was globally an unprecedented amount of WIFI coverage and did that with a whole bunch of other groups and spring-boarded the UK into being the #1 player in the world in terms of WIFI access. We worked in partnership with Intel on that initiative. That business then ended up growing into a Pan-European public WIFI operator.

Alejandro: And this was your first real exposure to the venture hypergrowth. You raised money, as well, from people like Excel. How was that first exposure to that hypergrowth VC type of environment?

Niall Murphy: Yes. Excel and 3i were the current leading investors in that business in 2004. It was a whole new experience to learn to work with venture investors and learn quickly the expectation and the accountability that you have toward the structured institutional investors and also the appetite for growth that was expected, and obviously that we had the empowerment to build a drive. A lot of learning in that first instance. I’m always amazed. Like they say, the definition of an entrepreneur is somebody who has no idea what they’re getting into but knows how to get out of it. I think that as we went into that, certainly for me, we went into that experience with the first serious venture player. I certainly had no idea what I was getting into but managed to make a success of it.

Alejandro: Very cool, and here you also saw the full cycle of a hypergrowth company. The company was acquired in a deal that was eight to nine figures, so what did you get from that type of experience, and how did this deal come about?

Niall Murphy: We built the business organically through to 2007. We did a cool deal with Apple when the iPhone was launched, so we pre-provisioned every iPhone 1, 2 to automatically work with our WIFI network across the whole of Europe. Then, obviously, the financial crisis happened in 2008, and we were actually in a reasonable position of strength. At that point, we did a whole bunch of acquisitions. I think, all-in-all, we did about ten acquisitions and were able to leap forward the scale of the business on a Pan-European basis. By the time we got to 2009, 2010, WIFI had become a standard part of the environment. So, at that point, the decision was whether it was going to go up to the next level of scale or whether an exit would happen. As it happened, Skype, [10:24] came along and wanted to acquire the business. So for a variety of reasons, that was the right thing to do for that business at that time so it could play at the next level.

Alejandro: And in your case, you have a secret weapon, and that, Niall, is that you are a mountaineer. You’ve been exposed, not only to life-threatening events in real life, obviously, in business but in real life, I’m sure that you’ve learned a lot as to how to apply them to business, as well. So tell us about one of those events where you thought probably, at that moment, was going to be the end or could be the end.

Niall Murphy: Yeah, I like climbing mountains. The highest I’ve been above the surface of the earth is about 7,000 meters down in the Andes Mountains. I guess I had a formative experience in the Alps almost ten years ago. I fell, and I literally started sliding down ice on the mountain toward a cliff edge, and it went through my head that I was going to go over the edge of that cliff. By some miracle of ice axis and various other bits of luck, I ended up with my feet hanging over the edge of a cliff, but me not going over the edge of it. It puts everything in perspective.

Alejandro: Wow! Absolutely and dealing with that uncertainty, and it’s also like a marathon, getting up to the peak on whatever mountain you’re climbing. How do you think that you’ve been able to apply that to business and to building companies?

Niall Murphy: There’s a fantastic expression in Swahili that says [12:07], which means one foot at a time. If you climb Kilimanjaro, the guides will tell you that. I think that patience, and if you keep putting one foot in front of the other, you will get to the top. I think that patience is a really important philosophy. Also, secondly, when you’re in a storm or in a crisis situation, it doesn’t help to panic. It’s important to remain calm and look at tools that you have at your disposal, be pragmatic. I always like to say the only way forward is upward.

Alejandro: Absolutely, and those panic situations are always on the menu if you’re building a startup, so that’s good stuff. Thank you for that, Niall. In your case, after the acquisition of The Cloud, you started doing some angel investing before you went at it again with your most recent company. I want to ask you here when you were doing some angel investing and seeing other founders and learning from their own journeys, what were some of the things that you were able to recognize? Maybe there was some pattern recognition there that you developed on being able to differentiate what makes great execution and what makes execution that is destined for failure?

Niall Murphy: This is, obviously, a much-said thing, but it’s all about the people. If you have an ability to create a great team, that is the biggest precursor to success. I’ve seen people with great products that just couldn’t put a great team together to exploit that product capability or people that have got a great team and then went hunting around for a product. The latter is much more likely to be successful in my experience. I found that I wasn’t a great angel investor. I found it very difficult to be involved in a number of different projects and not be the person that was in control or driving the initiative myself. So, after doing that for a little bit, I decided to focus on one key idea that I wanted to develop myself.

Alejandro: Let’s talk about that. How did you come across the idea of EVRYTHNG, and what was that process of bringing it to life like?

Niall Murphy: It was another scenario project, which is looking at the Internet of Things, but how connectivity was coming to everyday objects. The thought experiment that I did is if you follow the trajectory of Silicon Technologies and Century Technologies, we would get to a world where every physical thing made would be connected to the internet in one form or another. If that was the case, then what would that mean? What kind of information environment would that create? I got fascinated with the idea that just like we thought social networks of human beings like Facebook or LinkedIn, where would be the graph of physical things? Why can’t you Google a pair of shoes, literally, a pair of shoes on a shelf in a store? If everything did get connected to the internet, that would become possible. That sort of future world fascinated me, and then I got focused on how physical things would be digitally identified on the web, and that’s what led to the foundation of EVRYTHNG. The reason the business is called EVRYTHNG is that we felt that everything would be connected. I hunted around the world. I found two Swiss computer scientist who, at the time, were at the AlterID Lab at MIT and had developed something called the Web of Things. This was back in 2011. A long story short, I dealt with them to bring them on board, and the work that they’ve done with the Web of Things and that led to the formation of EVRYTHNG. We had a point of view about technology and the digital identity on the web of physical things as being the basis of our intellectual property. The problem we went about solving was how we would help the companies that make and sell things, the consumer brands of the world predominantly, know where all this stuff was at any point in time.

Alejandro: So how did you go about building the team?

Niall Murphy: In this project, we were able to bootstrap with venture capital investment from the get-go. Atomico was one of the first investors in the company, and with my partner, Dom Guinard, who is now my co-founder and CTO, and a couple of other partners, Andy [16:52], that’s what formed the initial team. We were able to recruit some great engineers in Switzerland and Eastern Europe and then went looking for a pioneer customer and found one in the form of Diageo, the drinks manufacturer. We did an initial project in 2012 that proved the value of the technology that we were building and did a couple of other projects. But that led us to a place where we could do a Series A investment round in 2014.

Alejandro: For the people that are listening to really get it, what ended up being the business model of EVRYTHNG. How do you guys make money?

Niall Murphy: EVRYTHNG makes money by providing digital identity for products. We manage the digital identity of each individual product that a manufacturer makes. For example, we track every Moët & Chandon champagne bottle around the world. We track every Ralph Lauren Polo shirt around the world, and we earn revenue for managing the digital identity of each one of those items. It’s a Platform as a Service business. You could think of it as a business model very similar to Salesforce.com as in those manufacturers are describing to the EVRYTHNG product cloud platform, but instead of managing CRM records like a Salesforce business does, we manage the digital identity of individual products.

Alejandro: Going back to the actual fundraising, obviously, this was not your first time going at it and raising money from outside capital; what were you look at some of those investors that you really wanted to be involved with on something like this?

Niall Murphy: Aside from capital, we also wanted reach, relationship-reach. In founding EVRYTHNG as a European entrepreneur – I guess I’d call myself a European entrepreneur now. One of the things we recognized is that our target customers, the global consumer product brands, about 60% of those companies are headquartered in North America. What we needed to do if we were going to be successful was to have some foundational investors in North America out of the gate. What we would not be able to do would be to successfully build this business in Europe, and then some years later get into the American market; we would probably lose the window. So we found some super angel investors in North America who were both able to bring capital and great network access. Later on, we added a Silicon Valley-based venture fund, Sway Ventures, as a key investor in the business, and some other corporate investors, Cisco, for example, became a strategic investor in the company. All of that is about how to build the right network of relationship reach and ecosystem insight as well as getting capital.

Alejandro: How much money have you guys raised to date?

Niall Murphy: In total, we’ve raised about 60 million dollars to date.

Alejandro: Understood, and just so that we get an idea on how big everything is today, is there anything you can share in terms of the number of employees or anything else?

Niall Murphy: Yeah. We’re about 70 people. We’re working with a number of the major Fortune 500 brand owners. I mentioned some names already, but folks like Unilever, Ralph Lauren, Lululemon, PUMA, these kinds of companies. Growth has been good, and I expect our monthly recurring revenue to grow north of 50% in 2020. It’s progressing positively, notwithstanding the fee of the challenges of COVID.

Alejandro: Absolutely, and as we’re looking into the future, there’s one question that I wanted to ask you here. Imagine that you go to sleep tonight, and you wake up in a world five years later – it’s a tremendous snooze. You’ve been able to catch up for all those sleepless nights. Basically, you wake up in a world where the vision of EVRYTHNG is fully realized. What does that world look like?

Niall Murphy: It’s a world where every physical object around you is an interface, actually. So by pointing your phone, or whatever it is we call a phone five years from now, at anything, you can access information about what it is, but where it came from, and you can access services and so on that might be associated with it. I guess my hypothesis is that the possession of physical goods will gradually become replaced with physical goods being a service, just like automobile ownership is being replaced with the Uberization of cars these days. So we’ll see a lot more rental of all sorts of physical types of things, and if you’re running out of something, you can just ask it to reorder itself – that kind of an experience. And every physical object being digitally engageable like that is probably the type of world that we’ll see. 

Alejandro: That’s pretty cool. I mean, definitely, a lot going on in the space that you’re in. One of the things that I wanted to ask you here, the journey with EVRYTHNG has been remarkable. One of the things that is true here is that timing is everything, and I’m sure that a lot of people that are listening right now are probably wondering about product/market fit and being at the right time in history and all of that stuff. In your case, when you guys got started, it was a little bit early.

Niall Murphy: Yes. I think that we launched the company probably four years early. Relative to what we now know about the market timing. The big challenge for a business like EVRYTHNG is that we’re providing a specific part, which is the Cloud, data intelligence, and data management capability. But for us to succeed, we needed the cost of digital sensors or digital tags on everyday items to be low enough. We needed smartphones to automatically scan and interact with products on a ubiquitous basis. Apple and Google didn’t upgrade the mobile operating systems so that your camera could automatically scan QR codes. They didn’t do that until 2018. So a bunch of the ecosystem elements were just not sure enough during the first few years of our business. So, obviously, you make a bet on timing when you start a company, but you’ve really got to be quite careful about tracking what those trigger points are and make sure that you can survive to the point that they actually mature. I think we were lucky. We were good at raising capital. We were able to build intellectual property value, and so on during that early time and able to find good pioneer customers. I always say that if you don’t survive, then you’re not present to play the game when the market accelerates. I think that’s a very important phase. The early-stage where you’ve got to survive, and you’ve got to get to the starting point, so to speak, and then, of course, the whole thing shifts, and it becomes a race to keep up with the acceleration of the opportunity. That’s certainly the nature of the environment we’re in now.

Alejandro: Pretty cool. As we’re talking here about lessons and things that you learn along the way, there’s one question that I really enjoy asking the guests that come on the show, and that is if you had the opportunity, Niall, of going back in time, and maybe we go back to the ‘90s, where you started getting involved with launching companies. If you had the opportunity to have a chat with your younger self, with that younger Niall before launching that first business, what would be that one piece of business advice that you would give to your younger self and why given what you know now.

Niall Murphy: That’s a good question. I think I would tell myself to stop believing my own bull **** and look carefully at the people that I’m putting around me because building a great team is what’s going to make me successful. It took me too long to realize that. So, that’s the advice I’d give myself.

Alejandro: That’s fantastic. Well, Niall, for the people that are listening, what is the best way for them to reach out and say hi?

Niall Murphy: I’m on Twitter @nialltweet. I’m on email at ni***@EV******.com, or you can easily get ahold of me on LinkedIn.

Alejandro: Amazing. Well, Niall, thank you so much for being on the DealMakers show today.

Niall Murphy: Alejandro, thank you. It’s awesome you’re doing this, so a pleasure.

 

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If you like the show, make sure that you hit that subscribe button. If you can leave a review as well, that would be fantastic. And if you got any value either from this episode or from the show itself, share it with a friend. Perhaps they will also appreciate it. Also, remember, if you need any help, whether it is with your fundraising efforts or with selling your business, you can reach me at al*******@pa**************.com.

 

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