Con Conlon had a dozen calls to make, and the technology entrepreneur made them in rapid succession. Sitting in his home in Chennai, a waterfront city on India’s Bay of Bengal, he called a succession of shareholders at his data intelligence company.
Most were located more than 8,000 kilometres and five times zones away. Some were in Leitrim and Cavan; others Monaghan and Meath. Some were based in England. For all, however, the news was good.
Each had put an average of €50,000 in Conlon’s business. Now, the Merit Group was being sold, and Conlon was explaining to each that the average return was a whopping €1 million.
“It was a fifteen to twenty times return for investors,” Conlon says. “They were absolutely delighted.”
Merit was being bought by Dods Group, an AIM-listed business intelligence firm founded in 1832. The deal had to be notified to the stock exchange, but Conlon wanted to brief his backers.
The chairman of Dods, Dr David Hammond, who has served on several listed companies in London and New York, announced the deal to the markets on July 18, boldly stating: “The acquisition of Merit is the first step on our journey to becoming a significant augmented intelligence business where the combination of machine learning, artificial intelligence and human application meet to inform actionable business outcomes.”
Up until then, few in Ireland had heard of Merit. Yet, it had quietly become one of the biggest Irish-owned firms in India with 900 employees in Chennai and another 140 people in Mumbai.
Conlon had created this business by raising just €900,000 from a group of 16 investors in Ireland and England.
“Was it hard to sell? Absolutely. I am 48 so young enough to give it another five or ten years.”
In the early years, it looked like the money would be lost – for its first five years Merit made losses year after year, before it gradually turned a corner, becoming profitable from 2010.
However, once that corner was turned, the suitors started to emerge.
“We were not actively selling,” Conlon says. “I would get the occasional call from private equity people in London looking to invest or buy out shareholders, but it was never the right fit.”
Dods, however, was different. It was a blue-chip firm with niche brands targeting politicians and policymakers with titles like Civil Service World, Public Technology and the Parliament magazine. Its offer to Merit was up-front but with the proviso that Conlon had to keep any talks secret. “We didn’t shop the business around as we felt that would have been unfair. They would have walked away if we had,” Conlon says.
“Was it hard to sell? Absolutely. I am 48 so young enough to give it another five or ten years. Merit is profitable and it was paying dividends, so we were under no pressure. I am comfortable financially now so didn’t need to. This could be a €100 million business. We had to think long and hard about it.” Conlon said.
He said the deal, however, made strategic sense to both businesses as their respective skills complemented each other.
Tom Lyons (TL): How will teaming up with Dods Group change Merit?
Con Conlon (CC): I think Dods will change us in terms of opening doors to much bigger clients. They have about 1,500 customers and clients like Boeing, Airbus, Shell and Huawei. I think they will elevate us and help us to play at a bigger level. They have a sales team of 30 people, which is a huge advantage.
TL: How will Merit change Dods?
CC: We will definitely help them with their digital magazines, events and websites. We can allow them craft more sophisticated offerings by combining our data with their insights into places like Westminster. They have journalists in the parliament who have great insights into policy and we will add data. I think we will definitely bring Dods firmly into the 21st century in terms of making them a much more technology-credible business.
“I got diluted down in early rounds quite a lot. Being diluted is the price you pay for failure. I was still the single biggest shareholder when we sold. We have all done well.”
TL: What will the business look like together financially?
CC: It is a big acquisition for them. Their turnover is €23 million. Our turnover is nine heading for €10 million. I think they felt they needed to make a leap into a much more digital and data-driven business in order to sustain their brand. Dods is 180 years old, but to sustain it they needed a big data tech move.
TL: How much did you and your investors make from the deal?
CC: Collectively outside of the board of directors – investors had 45 per cent of the company. I got diluted down in early rounds quite a lot. Being diluted is the price you pay for failure. I was still the single biggest shareholder when we sold. We have all done well is all I can say.
Con Conlon is meeting me to tell his story after walking a short distance from his new office with Dods on the 11th floor of the Shard in London to the Ned, a five-star luxury hotel at 27, Poultry. His brother Tommy, a sports journalist with The Sunday Independent, had put me in contact with him after I mentioned the sale on the Last Word with Matt Cooper’s radio programme. (My interview with Cooper was before all journalists from The Currency were banned from Today FM by Denis O’Brien’s Communicorp radio station group). It is 11am when I meet Conlon in London but he hasn’t had time yet for breakfast, so he orders a sandwich in the cavernous ground floor of the Ned. The Ned was originally designed in the 1920s by Edwin ‘Ned’ Lutyens, who is best known for his buildings in New Delhi as well as work on Lambay Island off the coast of North county Dublin. It is a fitting location to hear a story of Ireland and of India.
Two friends in Ballinamore
Con Conlon grew up in Ballinamore, a small town in Leitrim that sits on the Yellow River. It has a population of 2,000 people. His father Tommy was a building contractor who did everything from building house extensions to schools while his mother, Kathleen, ran the day-to-day side of the business.
“The economy was a bit of a basket case back then so they had a tough time like anyone who was in business,” Conlon tells me.
“I know my mum hated the idea of me going into business as it was so unreliable and tough. But business was always a background noise growing up.”
Con Conlon developed an interest in computers by getting to know his neighbour Hugh Reynolds. “He had a very early-stage computer, a Commodore 64. I went over to his house and we started playing a lot of games and then writing them.”
The two were avid readers of computer magazines; at that time, the magazines contained long lines of code that could be typed up and turned into games. The magazines taught the two boys the rudiments of coding and this skill allowed them to enter the 1987 Young Scientist Exhibition, then sponsored by Aer Lingus. The teenagers’ ambitious project created a way for the visually impaired to use a computer by adapting a joystick and creating a way to give a computer instructions using voice.
“It was only a secondary school project but it got us much more intimate with computers and how they worked,” Conlon said. Their entry only came fourth, while the winners from Wexford developed a project on fibre optic cables.
“We take for granted things like broadband today, but they were playing with fibre optics back in the 1980s. They were worthy winners,” Conlon marvels. “Still, we were the first ever kids from Ballinamore to even enter – and we did win our category.”
Hugh Reynolds went on to be one of Ireland’s most successful technology entrepreneurs, co-founding games engine Havok, which was sold to Intel for $110 million in 2007. He then set up games personalisation platform Swrve before joining Uber where he is leading its self-driving car team. “Hugh was a big influence on me on getting into computing,” Conlon said. “We met up only a few months ago. It is great to see him doing so well. He is working on the cutting edge of technology.”
Building and selling his first business
Just after he turned 17, Con Conlon moved to Dublin. He studied computer programming in the College of Commerce in Rathmines for two years, an intense period with 40 hours of lectures and 20 hours more for projects.
“We were doing COBAL, Basic, IBM RPG, assembler language which was really tricky, and C itself. Oh, and a bit of Fortran,” Conlon recalls.
Conlon lived on Windsor Road in Rathmines near the home of former Taoiseach Garret Fitzgerald. “I lived in a classic bedsit – damp, grotty and owned by a copper – but it had its own craic.”
Conlon was the youngest of seven children, two girls and five boys. “My brothers were in Dublin so they were around. You were chucked in at the deep end but Rathmines from 1988 to 1990 was fun.” Conlon’s older brother Tommy would, he recalls, sneak him into Bad Bobs, a late bar, in Temple Bar.
“Rathmines was hard work but it meant I knew my way around a computer both theoretically and practically,” Conlon says. “It was a mix of the high-brow and the practical. Of the 65 of us that started the course, just 25 got to the end of it.”
After finishing in Rathmines at 19, Conlon got a job working on accounting software with a small company called Software Support Systems in Dundrum.
“It was slap dash enough but this meant I learned a lot,” Conlon said. “You did everything from setting up twenty PCs on a network to coding up a software patch.”
Yet he was not ready to settle into computing.
Instead, Conlon decided to go to UCD to study politics and economics where he found himself with just 11 hours of lectures a week. “It was the reverse of what I was used to. So I had the time to be a jobbing programmer on the side.”
“This was pre-web so it might be exporting a database from one format to another or linking up an accounting system to a stock system.”
To keep up, Conlon bought a mobile phone, making him perhaps the first student in UCD to own one.
He got involved in student politics with his friend Damian McDonald, today director general of the Irish Farmers Association. “We backed three winning candidates for president of the student union in a row,” Conlon says.
“We became good at getting out the vote in the agriculture block and the engineering block, which could swing things.”
“I was sharing a house with four other guys in Roebuck Castle near UCD. It was quite a chaotic place to write code with all sorts of random people walking in and out. I just sat in the living room churning out code. It was really tough but we got the product out the door.”
In 1994, Conlon helped Aisling Ni Bhriain get elected as president and as a reward she appointed him head of communications at the students’ union.
Conlon found himself in charge of The University Observer, a college newspaper which had just been founded by Pat Leahy, today political editor of The Irish Times, and Dara O Briain, now a famous comedian. He remembers them both fondly, for being fun but also for getting good stories.
“I was doing the boring stuff – the money,” Conlon recalled. “There was a couple of grown-ups administering the funds for things so it was always a bit of a job to get the cash out of them for the newspaper.”
In his final year at UCD Conlon began to write a payroll system for Microsoft’s Windows operating system with a friend named Leo Moore that became his first business. “We decided to set up a company called Dyna Software. This was maybe 1993,” Conlon said.
“I was sharing a house with four other guys in Roebuck Castle near UCD. It was quite a chaotic place to write code with all sorts of random people walking in and out. I just sat in the living room churning out code. It was really tough but we got the product out the door.”
Conlon and Moore got a modest office on Carysfort Avenue in Blackrock, Co Dublin, and they soon had 15 people working for them. Conlon was 22 and dealing with all aspects of business from sales and marketing to customer support; from accounts to product upgrades.
“It was a good education,” Conlon said. “I learned a lot from working out how to handle an employee out the door to dealing with a customer who has gone ballistic.”
Dyna Software’s revenue gradually moved upwards to €300,000 a year. “I have never been to business school but that period taught me a lot about the subtleties and grey areas in business.” After five years, Conlon and Moore sold their company to TAS, a British accounting software firm.
At 27, Conlon had made a small amount of money. He was now the chief technology officer with TAS in Dublin, helping them localise their software for Ireland. It was an undemanding position compared to what he had been used to. It was time for a new challenge.
Listing on AIM and moving to India
Con Conlon met Frank Beechinor in the late 1990s. Beechinor came from Cork and was the chief executive and co-founder of OneClickHR which had various human resources technology solutions under the Vizual and HR.net brands.
“Frank had developed a cracking HR product aimed at small and medium sized enterprises,” Conlon says.
Pete Sedman, the company’s chief technology officer, was also impressive. “Pete was a tech genius. Frank asked me to join the company and I went in as head of product delivery.”
This required moving to Weston-super-Mare, a seaside town south of Bristol, England. Conlon found the town like a run-down version of Blackpool with little remarkable other than the fact it was represented by Jeffrey Archer, the colourful novelist, in the House of Lords. “It had a faded Victorian grandeur but it was a struggling town that was no longer prosperous,” Conlon recalled.
After a year he moved into a flat in Bath and commuted down daily. It was now 1999 and at 29, Conlon was at the start of the tech-bubble which would see dotcom companies float at huge valuations before often later collapsing.
“Frank decided to float the company. Yahoo and Netscape had just floated. We raised £10 million on AIM,” Conlon recalled. It was now May 2000 and Conlon was in theory well-off from his shares but by no means rich.
“I had a lot of paper money but I was locked in and couldn’t sell,” he says.
Preparing to float the business had been a great experience. “I had a ringside seat. I was helping to put together a prospectus, working with the lawyers and the chief financial officer, as well as meeting with potential investors.”
OneClickHR floated at 40 pence a share. Its value then doubled to 80 pence, before beginning a long descent. Ultimately the business turned out well being bought, after Conlon had left, by New York Stock Exchange-listed ADP for $25 million.
“A big lesson I learned is if you are going to float a company your sales engine needs to be 100 per cent. A lot of other dotcoms didn’t have that right,” Conlon said. “Frank was a very good sales guy but we probably overstretched by aiming our products at both large and micro businesses.”
“We were pushing for revenue growth and profit but we didn’t have maturity as a company to keep that sales engine going. That stayed with me,” Conlon said.
“I had to ring Natasha and tell her there has been a bit of a change of plan by about 5000 miles. But she was great about it. She said ‘Ok. Let’s give it a whirl.’
OneClickHR did however have a real business unlike some of its dot-com peers.
It wanted to use the money it raised to expand into France, Germany and Sweden but it couldn’t find enough programmers locally to allow it do so. “The only way to find the engineers we needed was to set up in India,” Conlon said. “So, we started to look at going into India about six months before floatation.”
A reconnaissance trip to India was completed and the company selected India’s sixth biggest city Chennai in the south as a suitable base. The plan was that Sedman would lead the business in India but for personal reasons he was unable to do so at the last minute. “Frank called me on the Tuesday and said: ‘Pete can’t go. Will you go?’”
By the following Saturday Conlon was on an airplane on his first trip to India. He was by this time engaged to his American wife Natasha. They had met on a train to Galway by chance when she was studying law in Dublin and the plan was to live together in Bath. “I had to ring Natasha and tell her there has been a bit of a change of plan by about 5,000 miles,” Conlon laughed. “But she was great about it. She said ‘Ok. Let’s give it a whirl.’”
A steep learning curve
Touching down in Chennai was a shock to the system for the Ballinamore man. “I was gobsmacked. The moment you walked outside the airport it was just chaos. There was literally thousands of people selling things and milling around.”
“The honking, the noise, and the smells,” Conlon says. “I hadn’t had any time to prepare. Nowadays you would do a cultural assimilation course beforehand, but we just didn’t have time. I didn’t give it any prep. I remember driving from the airport to the hotel and thinking I need to forget everything I know.
“I need to forget everything about business, everything about interacting with people. This was brand new. There was no point trying to implement in India what worked back home. I had to be open to anything.”
“There was a lot of exaggeration as people are so desperate for work. There is no support systems out there. If you don’t work, you don’t eat.”
Conlon arrived at his office to discover it was an empty shell. The skills he learned from his father stood to him as he hired plumbers and carpenters and installed air conditioning and phones in order to get up and running. Logistically it was tough as India had currency controls making getting money into the country arduous.
“There is a lot of bureaucracy. The learning curve in India was extremely steep.
“The important thing was keeping my equanimity and sense of humour. I got sick a lot. I can eat street food today but not back then. I lost a lot of weight.”
Soon it was time to begin hiring. OneClickHr needed to find 40 engineers in ten weeks. “We put a recruitment ad in the paper and we got 800 applicants by that Saturday. There was a lot of exaggeration as people are so desperate for work. There is no support systems out there. If you don’t work, you don’t eat.”
Conlon set up coding tests to sift out the best candidates and was impressed by the talent available, but back home not all was well.
“Post the floatation there was some trouble on the sales front,” Conlon said. “We had made all these sales commitments without the teams in place to deliver them. The share price tanked,” Conlon recalled. He then fell out with Beechinor over strategy.
“I had slogged my arse off in India setting this thing up, getting the company out of a right pickle. I sledged very hard setting up the right operating systems. I felt I deserved better.”
“I spoke to the chairman about my concerns which I probably shouldn’t have in retrospect,” Conlon said. “But I really felt the sales side of the business was faltering – and it was. This led to a rift between myself and Frank.”
After 18 months Conlon moved back to England to rejoin OneClickHR in a new role having established its Indian operation. “I was isolated out in India, on my own. I felt I was right to raise my concerns… But my position was untenable when I came back.”
On his second day back in England the finance director of OneClickHR told him he was out of a job. “I had slogged my arse off in India setting this thing up, getting the company out of a right pickle. I sledged very hard setting up the right operating systems. I felt I deserved better,” Conlon said.
“I was sore at the time but I understand Frank had his own troubles too to be fair.” Conlon decided to dust himself off and make a future in India.
Hanging by a thread
Con Conlon had learned a lot during his 18 months stint in India. “I knew where it worked and where it didn’t. There were amazingly talented people. I felt I could bring that expertise to SMEs in Europe who couldn’t set up in India themselves.”
“It is not easy to set up there. Yes, the food and the dress is different in India… But they think different and how they are motivated and communicate is different.”
India had a hierarchical society, which could lead to an aversion to people admitting to mistakes. He said that culture was changing but it was something he had to be conscious of early on.
When he began to set up Merit in 2003, he also realised he needed someone in England selling what his business had to offer. He had worked with a sales executive called Ray O’Neill initially with TAS back in Dublin and then in OneClickHR. Conlon knew that he needed someone like O’Neill on the ground in England while he was in India.
“Ray was superb and he was available,” Conlon said.
“We needed funding to get clients and credibility. But it was quite a difficult market as the dotcom bust had happened, so everybody was risk averse.”
Initially, Merit provided business process outsourcing solutions to companies in Britain with clients including Emap, a business-to-business publisher, private healthcare group HCA International and newspaper publisher Trinity Mirror.
To win these type of clients however required investment. Conlon spent nine months working on fundraising. “We needed funding to get clients and credibility,” Conlon said.
“But it was quite a difficult market as the dotcom bust had happened so everybody was risk averse.
“The pitch was we know India and can set up facilities to deliver all sorts of work from the subcontinent. We were prepared to do everything from back office data entry stuff to outsourcing to a little bit of call centre stuff,” Conlon said.
“We felt we could get recurring revenue with good margins from customers by doing things like handling the processing of mortgage application forms.” Salaries were low back then – about €300 a month was what Merit paid its Indian workers. “The economics allowed us pay good wages locally but still do so at a big discount to cost in London.”
“I said to all the investors it was extremely risky but in the end there were 16 people prepared to take a punt.”
Smaller institutions simply didn’t want to invest in anything that had to do with technology so Conlon took another route.
He took out the British Venture Capital Association’s contacts directory and started to cold email high net worth angels. He also worked his own personal networks in Ireland.
Conlon knew John D’Arcy who worked with the Bewley’s Group who also came from Ballinamore. D’Arcy was a chartered accountant who had worked with the Kerry Group and the Quinn Group. He introduced Conlon to some of his contacts who were in property and business in Cavan, Leitrim and Monaghan.
“One chap was a solicitor in Cavan – I don’t think I can publish his name – but a very, very, nice man. He brought in some other people who were fairly well off. There was one in Monaghan and one in Meath.”
Conlon was looking for between €50,000 and €75,000 per investor in return for a stake in Merit. “I said to all the investors it was extremely risky but in the end there were 16 people prepared to take a punt.”
During the first few years, Merit missed every target it set, but his investors remained committed.
“They were very positive. I never tried to gloss things over with fancy words or blame the economy or blame others. I would say we are losing money and we had a shit year. This went on for four or five years. We were very good at stretching out the money.”
“Our investors could have been tearing strips off me but they were always extremely positive.”
When he was back in Europe, Conlon would meet his Irish investors in the Kilmore Hotel in Cavan and his English backers in London.
“There were two occasions when we ran out of cash. There was a couple of months in a row I didn’t get paid. It was stressful.”
He found dealing with Irish and English investors was culturally different. “The English shareholder would say ‘This is clearly very challenging and do you have a strategy to emerge from this?’ while the Irish guys would say ‘This is a fucking disaster.’ Language can be very different!”
From 2004 until 2009, Conlon paid himself between €24,000 and €30,000 a year. “Remember it was India, so my cost of living was a lot lower too,” he says. A low salary was one way he kept cash burn down.
“There were two occasions when we ran out of cash,” Conlon recalled. “There was a couple of months in a row I didn’t get paid. It was stressful.”
The business, he recalled, was saved one time by Conde Naste, the publisher of Vogue.
“They had 50,000 coupons they needed entered into a database. It was crappy, very low-end work, but it was worth £25,000 to us. When we did that deal it was worth so much to us. It gave us four months of positive run-rate. The shareholders gave us another £100,000 and we hit break even six months later. Sometimes things hang on a thread in business.”
Moving into profit
In 2010 Merit reached break-even. It convinced its clients to move their contracts from low-end data entry to creating smart databases. “Web 2.0 was taking off. Banking was going online. Government data was going online. We got very good at gathering and collecting data.” A client in the fashion industry asked it to track pricing trends globally across retailers like Debenhams and Marks & Spencer. “We were able to tell fashion buyers at what price points their competitors were operating,” Conlon said.
“We built robots to scrape data every day from 40 big retailers websites.” Merit could tell when new products were introduced; how quickly they sold out; and if they were being discounted. “If you are a fashion buyer this is really great data,” he said. “Spending your dollars becomes a lot more scientific than just going to the catwalks and trying to guess what will sell.”
Merit, he said, can drill into the data to determine, say, what colour dress is doing best and in what size.
“We built the robots to do this ourselves and after that it was about applying them to different industries,” he said. “We do it now for oil and gas. We track prices and volumes across Europe.” For the construction sector it tracks every planning permission in Britain. “The data my robots can tell say a company like Kingspan that there is an 18-storey commercial building being built in Edgware (North London) and this is the materials being used.”
“People’s perceptions of India and Africa can be very out of date. The urban India of today has WeWork-style offices. Our warehouses are a little bit unusual and funky as that’s what you need to attract staff.”
Merit has also undertaken bespoke projects for private equity firms. “For example a firm is buying a hardware chain. We scraped the websites of every hardware store in England so we could tell them where their prices were competitive and where they weren’t. This allowed the private equity firm know how much wriggle room it had to increase prices.”
Merit he said initially collected data, but now its focus is on using it. “Making data insightful is the challenge. We can pull data from say 400 retailers but how do we make it digestible? Data transformation is tricky. We use machine learning, artificial intelligence and human beings to get insights.”
Answering hard questions with data
Merit today employs 900 people in Chennai and 140 in Mumbai. Dods, meanwhile, has 250 people primarily based in the UK. Conlon has become chief technology officer with Dods following the sale. He is working with Dods to help it find new acquisition targets as well as continuing to lead the business in India. His son Lorcan and daughter Clodagh have grown up in India. “We are committed to India for at least three to six years. We don’t have any expat friends, they are all Indian friends and colleagues that we are quite close to.”
“People’s perceptions of India and Africa can be very out of date. The urban India of today has WeWork style offices. Our warehouses are a little bit unusual and funky as that’s what you need to attract staff. India has skyscrapers and office blocks cheek by jowl with a man with a bullock and cart living in a tin hunt. There is a dichotomy that still amazes me, even though I am there a long time. There are some things you don’t get use to. The energy of people striving for better is quite extraordinary. My commute is never the same. You would be going along a main road and there would be dozens of little allyways…tiny houses with mothers getting their children ready for school, The kids are spick and span coming out of a one room house with no running water. India has that energy…
“It is a difficult place to operate in, in terms of selling stuff. It is extremely price sensitive and extremely high volume at the bottom of the pyramid. You can be very wealthy if you can sell something in that space while keeping a margin.
“At the very top there are probably 50 million people who by global standards are very wealthy. They buy Prada and drive a Mercedes. There is another market there potentially for Irish businesses.”
For Conlon the challenge is to stay ahead of technological advances. “Data collection is now the easy bit. It is all about transforming that data into insights.
“We know how many residential houses will be built in the UK next year. In the shipping world we know how many large vessels are on the water at any one time, we know how many are sitting in Singapore at the moment,” Conlon said.
“The data is always getting better. Business needs to stay ahead of it.”
“We know any large vessel where it has been and where it is going, probably even what it is carrying. We can tell you pretty much anything about fashion online…
“We collect public sector tenders for a company in Glasgow so we can tell you that the department of defence in Pakistan has a tender out for 500 military trucks because we are collecting data on that sort of stuff. We can tell you all of the technical characteristics of any automobile being sold in the UK at the moment because we track that data for an automobile company.”
“We are looking at satellite imagery. It is becoming much more accessible to small business now. You can pay X grand a month and get X number of satellite images in a month. That can help the military tracking troop movements but it can also do stuff like monitor how full are the car parks at shopping centres at the weekends.”
“There is a lot of exciting things out there. The data is always getting better. Business needs to stay ahead of it.”