Duane Jackson, the Founder of KashFlow, talks to Rachel Bridge at Drax about his life as an entrepreneur
A childhood spent in children’s homes and a conviction for drug smuggling is not the obvious route to becoming a successful entrepreneur. But Duane Jackson managed to overcome huge odds to create a software-as-a-service (SaaS) business which he sold at the age of 35 to private equity-backed software company Iris for a reported £20 million.
Duane and his brother and sister were initially brought up by their mother after their father left home, but when he was nine his mother remarried and he and his sister were put into care. He spent the next six years living in six different children’s homes as well as a brief spell in foster care.
At the age of 16 Duane began work as an IT contractor, but he was lured by the prospect of easy money and was caught drug smuggling. He spent two and a half years in prison, including some time in Ford Open Prison, where he was allowed out for a few hours at a time to see his girlfriend.
By the time he was released in 2002 at the age of 23 his girlfriend was pregnant. It was the prospect of becoming a father that convinced Duane to go straight.
He says: “I remembered seeing other guys in prison with pictures of their kids on the wall and thinking how sad that they were missing their kids growing up. Having my first daughter was a real motivator for keeping me on the right side of the track.”
The Prince’s Trust, the charity which helps disadvantaged young people, had been to Ford Open prison to explain how they could help ex-offenders start businesses. So Duane got in touch and they gave him a £1500 grant and a £2500 loan to become a self-employed web developer. Duane began working for several different clients and soon realised that he needed a simple software programme which would enable him to track the invoices he was creating. He found existing accounting software too confusing so he created one of his own.
He started giving copies of it to friends and gradually realised that he had a potential business on his hands. He says: “It must have taken me a year to realise that instead of selling my time by the hour, I could be selling this as a product.”
Because he was used to building websites, Duane built his accounting programme entirely online, which meant that instead of giving customers a disk which they would upload onto their computer, people could log in to a webpage to access their account in return for a monthly subscription fee. In the process he unwittingly created one of the first Software-as-a-service (SaaS) businesses, long before the term was coined.
He says: “It just made sense at the time to do it like this, because it gave me a regular monthly income and made it more affordable for businesses to use. I didn’t have any great foresight that this was the way that the entire software industry would be going.”
Duane then had a stroke of luck. He met Lord Young, the former DTI minister, through the London Youth Support Trust, a charity that provides subsidised office space. Lord Young agreed to invest around £100,000 in KashFlow in return for a 50% stake, later reduced to 40%.
Duane says: “He confided in me later that actually he thought it was a very big risk and that there was a good chance that he would hand over the money and I would disappear and get some nice new clothes and a new car and never be seen again. But he said he thought it was worth the punt.”
It was. The business grew strongly, appealing particularly to small UK businesses with between one and five employees.
By 2010 Duane felt it would be a good time to find new owners who could grow the business further but when he embarked on the sales process he realised that the business was still very dependent on him personally so it would be hard to extricate himself if it was sold. He didn’t like the idea of staying on to work for a new owner so he spent the next 18 months building a strong management team instead.
By the time software company Iris became interested in buying KashFlow (www.kashflow.com) it was clear it could run perfectly well without him. Duane says: “When Iris looked at all the reporting and planning systems we had in place, they said we don’t need you, you can go. It was a very clean, easy deal.”
He says now: “Any founder of a business should be constantly trying to make themselves redundant. You need to make sure that the business can work without you. I used to judge how well I had built the management team by seeing how long I could go on holiday for and come back to find that the business was still growing. I remember when I could only go away for a week and would be back just in time to sort out the mess. Eventually I got to the point where I was considering going away for six months and leaving the management team to run the business. I am pretty sure they would have done a great job.”
Duane now devotes much of his time helping other young people from disadvantaged backgrounds have the opportunity to build a new life for themselves, as he was able to. He mentors young people through the Prince’s Trust and is also working with the Ministry of Justice on a programme called Code4000 (www.code4000.org) which enables young people in prison take courses on entrepreneurship and computer programming.
He gives this advice to would-be entrepreneurs: “Just do it. Get out there, take the first step and get started. Otherwise before you know it you will be 65 and thinking, what if?”
Drax sector lead: Ruby Sheera
Director, Technology and Tech-enabled business
Tel: 0203 178 3668