BUSINESS LIFE ENTREPRENEURSHIP: Technology that put a shine on a growing business – Article by Marcus Gibson, Financial Times
Publication Date: Mar 16, 2005
In 2002 a young entrepreneur in Leeds risked everything he had – and he did not have much – to make his business a success.
Three years on, Andrew Ainge’s print technology company, MetalFX, has generated business around the world, and expects annual revenues in excess of £10m ($19.1m) by 2007. His route to success took him as far afield as China and led him to adopt an innovative technology licensing model that minimises the operation’s overheads while maximising its profits.
The technology in question is a new method of printing metallic colours. Since it was launched, the system has changed the industry’s approach to the use of metallic inks and the visual results – on brochures, packaging, annual reports and so on – have been stunning.
Printers use the CMYK system (combinations of cyan, magenta, yellow and black ink) to create coloured images and text. To print metallic colours, a fifth ink is required, which typically needs changing every time a new metallic shade is used. In 2001, however, Mr Ainge developed a new kind of ink that enabled the printing of 104m metallic colours in the same run on a five-colour press. Allied with technical changes to the presses and software for guiding the equipment, the system allowed thousands of metallic colours to be created at once.
Once the process was tested and proven, Mr Ainge’s first challenge was to convince a global audi ence of both printers and designers of its benefits. The second was how to maximise revenues from the opportunity. His answer was a strategy that combined innovative marketing of the technology with exploitation of the intellectual property behind the idea.
Mr Ainge already ran a design and pre-press agency, so it would have been easy for him to buy a printing press and offer the technique locally. He foresaw, however, that a much more lucrative strategy would be to license the technology to other printers on a global scale. By late 2002 the product was ready but there was a pressing problem: Mr Ainge’s financial resources were exhausted. Worse, the company was unable to source any of the UK government’s grants for research and development, such as those for feasibility and for development.
“By the time our grant application had been reviewed, we had already passed the feasibility and then the development milestones, rendering us ineligible,” explains Mr Ainge, who owns a majority of shares in the company.
By this stage, he had not only built up considerable debts and mortgaged his house, he had even cashed in his pension. On two occasions the landlord of the business premises served a bankruptcy petition on him to wind up his business.
He decided to stake everything on a forthcoming print industry exhibition in Shanghai, China. Borrowing £5,500 from a close friend, he bought tickets for himself and his technology manager.
“Then the frenzy started,” he recalls. “Many local printers were coming to the stand with cash in their hands.” In only three days, Mr Ainge had collected more than £250,000 in orders for licences. Mr Ainge made access to his technology a carefully controlled process. First, he licensed the rights to manufacture the ink to several of the industry’s biggest participants, including Wolstenholme International, a UK printing ink company.
Andrew Rink, managing director of Wolstenholme, says: “MetalFX has revitalised interest in the metallics market. All companies involved, though competitors, are eager to work together to launch the technology on to the world market.” Then, in April 2004, Mr Ainge secured a deal with Eckart, a German ink manufacturer, which dedicated part of its stand at Drupa, a big trade fair for printers in Dusseldorf, to the technique.
Next, he made sure that designers and printers also gained
access to the technology through a software licence that allows them
to specify exactly which MetalFX colour they want.
Finally, MetalFX put together a sophisticated website, enabling printers around the world to go online and buy a licence. Designers, too, could search the global directory of MetalFX printers to find one closest to them.
“Because the search engine lists all suppliers worldwide, it has created a unique print sector alliance,” Mr Ainge says, enthusing about his new-born empire. “A MetalFX printer can find a MetalFX designer in their area or a brand owner can source suppliers to create and print some packaging.”
Mr Ainge says that, though the company employs only nine staff at its Leeds offices, the site gives it an army of 20,000 people around the world who promote MetalFX through their use of the technology.
Pricing was another issue. Instead of using different prices for different regions or countries, MetalFX now licenses its technology for the same price – £1,750 – around the world. The single global price simplifies the licensing process, particularly for a company that sells online and has thousands of distributors and brand owners.
Printers who want to buy a licence also have to pass a quality control test. “If a printer doesn’t reach a certain standard they are refused,” says Mr Ainge. “We fail on average about two per month but they get an opportunity to re-take the test.” The marketing strategy has paid dividends and Mr Ainge claims that the business now enjoys a 92 per cent profit margin, as well as a worldwide export facility in a market for metallic print worth £100m.
He is also branching out in an unexpected direction. Once the technology began to be used to create eye-catching and colourful brochures, posters, packaging and publications, it caught the attention of another group – artists, who were attracted by the possibilities of metallic printing for their creative work.
In response, Mr Ainge set up an art gallery in Ilkley, West Yorkshire, and allowed artists using MetalFX inks to show their work for free. A network of similar galleries showing MetalFX work is now envisaged.
Much of the company’s success is down to its efficiency in reaching overseas buyers. At Yorkshire Forward, the regional development agency, Adam Pritchard, head of investment, is well aware of the vital importance of export activity in boosting the economy. “International trade, or rather exporting, accounts for around 20 per cent of all business activity in the Yorkshire and Humberside region - worth some £9.1bn,” he says.
Between 9,000 to 10,000 companies are active exporters in the region. Yorkshire Forward and UK Trade Investment, the UK’s international trade promotion agency, have two programmes designed to help them build overseas sales. The first, Targeted Export Support scheme, or TES, helps existing exporters, while Passport to Export assists those who have never exported before.
“There are literally thousands of small businesses in all sectors across the region that have products that would sell extremely well abroad,” says Mr Pritchard. “If a business as small as MetalFX can sell to more than 120 countries – using innovative ideas, key trade shows and the power of the internet – then, frankly, anything is possible.”
Andrew Ainge, founder of MetalFX, a company that licenses technology to print metallic colours for brochures, reports and other publications, had his big break after travelling to a trade exhibition in China.
Borrowing money from a friend to attend the event with the company’s technology manager, he found a ready demand among Chinese printers, raising £250,000 ($478,000) in orders for licences in three days. The company has few staff and minimises overheads by virtue of a business model that relies on arms-length exploitation of its intellectual property. Mr Ainge licenses production of his metallic ink to Wolstenholme International, a UK printing ink company. Printers around the world then buy licences to use the ink in the printing process, as well as for software that controls the graphic design process. For simplicity’s sake, Mr Ainge charges a single price of £1,750 for licences, wherever the purchaser’s market. Licences are typically purchased through the company website.
|© 2008 Marcus Gibson|