Reason Digital

My interview with social entrepreneur Ed Cox on his journey to co-founding Reason Digital, a leading social enterprise and digital agency in Manchester.

Summary below or jump straight to the interview

We discuss what led Ed to leave a high salaried job in the midst of a global recession and at the height of austerity when the coalition Government of the United Kingdom came to power to co-launch Reason Digital.

Recent government estimates suggest there are 70,000 social enterprises in the UK, employing around a million people. The sector’s contribution to the economy has been valued at over £24 billion
(State of Social Enterprise Survey, 2013)

Ed explains how alongside his co-founder Matt Haworth they found a niche market to serve, that of the charity sector which according to the UK Government has over 165,000 registered charities in the UK totalling a combined annual income of over £64 billion (UK Government Statistics, September 2014)

I go onto explore why Ed believes Manchester is on the cusp of a social enterprise revolution building on the city’s already illustrious history. And what may be required for it to follow in the footsteps of recent successful developments in the tech and digital start up ecosystems.

Ed shares with us the challenges and fears he faced personally and professionally in the early days ensuring survival of his enterprise; to the present ones in running and growing a successful digital business with over 35 employees.

Finally, and perhaps most importantly, through pursuing his dream to venture Ed now likes getting out of the bed in the mornings.

On to the interview – 10 min read – transcribed from our audio podcast

How did you get started with Reason Digital Ed?

I was working at the University of Manchester about 8 or 9 years ago and the opportunity came up to take a voluntary severance as part of restructuring.

I didn’t get it but I left anyway and I started Reason Digital with nothing, rather than with a voluntary severance cheque, which was my intended option.

That was a big decision

Yeah, it kind of was. It had taken me a year to get a no and I’d already kind of made my mind up by then that whatever was going to happen I was going to leave, so it would have been nicer to leave with a cheque to start something.

So you already had an idea in mind that you wanted to do something else

Yeah, I wanted to kind of do what I was doing everyday, but doing it for myself. So when I left the University, I decided to start of on my own or in partnership with Matt Haworth, who also worked at the University at the time.

And when we started in the really early days, you take on any job that you can to pay the bills, so back at the start we did things like kitchen websites and double glazing sites, but it just wasn’t fulfilling.

We decided early on that we would focus on a niche, and that niche was charities, and what we were going to get good at was not things like how do you do ecommerce, how do you convert people into customers, how do you get people to buy the maximum amount possible.

We were going to focus on things like how do you convince somebody to become a volunteer, or to make an online donation or to otherwise get engaged with a charitable cause.

And also, I guess one of the other aims was to give charities a leg up because businesses have got the money to invest in the Internet, but back when we started, the Internet was seen as a bit of a luxury for charities and they weren’t really that into it.

But I think one of the main reasons for doing it was that, if the Internet was going to be the new high street, which it kind of has become by now, then having loads of shops is fine, but where are the virtual versions of the hospitals, the charities and the support groups?

So the Internet was becoming a very commercial place but not a very good place for you to be human, if you see what I mean.

I do, and I love your analogy of questioning where are the hospitals, charities and support groups in the virtual high street. In that sense did you think charities were being left behind?

Yes, even to this day. In February this year there was research done by Lloyds, I think it was, that says over 55% of charities say they still say they have low IT skills. The Internet is not a new thing its been around for a while, but back when we started, like I say the Internet was seen as seen as a luxury, so charities didn’t really invest in it that much.

Then coalition came and austerity kicked in, a lot of grants came to an end and a lot of projects came to an end. Suddenly charities didn’t have the money that they relied on before so I think they had to turn to the Internet at that point to make things more efficient because they still had to deliver more services.

Austerity has just complicated a lot of peoples lives, so there’s more homelessness, there’s more depression, there’s more illness if anything than there was before … but charities have got less money, more demand, so the Internet was a way to try and help reach people at scale or to make efficiencies or to deliver services to people.

So what were the trigger points whilst you were still at the University which made you feel there’s something more I want to do, I don’t feel fulfilled, there’s more that I can offer. Did you go through that process; was it something that happened suddenly or over a period of time?

I think I was kind of pushed into that process because Matt is 12 years younger than me and he’s more ambitious. I’m not the kind of person who makes big decisions very easily, I’ve been in the same relationship for 16 years. I’ve lived in the same flat for 15 years. I don’t make big decisions lightly.

So I was content to carry on doing what I was doing. I was paid well enough, I wasn’t really happy doing it, but it was paying the bills.

You were in the comfort zone

Yeah probably, but Matt was more kind of, you know we can do this for ourselves. I think he was seeing that consultants were being employed by the University and getting paid a lot more money basically to tell them the sort of things we were already telling them.

It just felt like if you were an employee, nobody listened to you, but if you were a consultant, everyone listened to you.

It seemed ridiculous, so we just thought lets do this for ourselves, let’s control the projects that we work on, let’s control the people that we work for, so that we’ve got more choice. So it was probably that, and Matt was kind of the kick in the arse to do that.

And when we started I got paid a lot less than I was at the University, in fact if anything I am still being paid less than I was at the University, but I like getting out of bed in the morning now.

Sounds like you have a much deeper sense of satisfaction now

Yeah, I think it helps me shape my own ethics and my own sense of being if you see what I mean, because I can choose who I work with and who I don’t work with. Whether it’s an employee, whether its a customer or a partner on a project, and that’s quite liberating I think to be able to have that level of choice and to be able to say to somebody, no I don’t want to work with you because I don’t really agree with what you do.

How have you found it working in the charity and social enterprise space? Did you face any obstacles?

When we first started it was really tricky, there wasn’t a lot of money and a lot of people didn’t think that the Internet was of any real value.

So was it more of an education process?

Yeah, I think it was when we started. It was about teaching people about the value of the Internet. Whereas I think these days its more about educating the funders about the value of websites because charities know that you need a website and you need digital services but nobody funds websites because I think a lot of funders still see websites in the same way they see leaflets or a pencil with a logo on it.

They don’t see it as a method of delivering services at scale or making back office efficiencies and so they don’t pay for it in the same way. I think there is still an element of education in there, but not so much for the charities, more for the funders.

With social enterprises however, I think there’s more [understanding] because they’re more kind of enterprising and commercially astute. They know about the value of money and that things need paying for and to make money you’ve got to invest money.

Profit is not seen as ‘bad’ in a social enterprise, it’s just the way that its ethically re-invested back into the company to create more impact in a self sustaining way

Yeah, that’s right. I agree with what Richard Branson says in that business can be a force for good, but in order to be able to do social good you have to have the money to be able to pay for it, and the more money you have, the more social good you have if that’s the way you choose to spend your money.

Manchester has a proud history of championing social causes and movements; have you found it to be true with social enterprises?

Yeah, I think it always has, from the Rochdale pioneers, through to the co-operative movement and the co-op being based here, and I think Manchester always has had that kind of entrepreneurial feel but with a social element to it as well. So I think Manchester is a great place to be a social enterprise and to practice social enterprise.

But the infrastructure I feel isn’t quite there to support it properly yet. The tech sector is there. Its getting a lot of money and a lot of publicity and it has buildings and it has infrastructure, but I don’t think social enterprises is quite there yet.

There is a lot going on at the grass roots, but it’s not joined up yet in the way that it could be. I think that things are changing; more organisations that support social enterprises are coming into the city, like clearlySo, dotForge, dotforge Imapct.

So accelerators are starting to come in and funds are starting to come in. I think we’ll see a bit of organisation over the next few years and a stronger sector as a result of it.

How about when you founded Reason Digital Ed, what challenges did you face, how did you get your first customers?

I think the biggest challenge when you’re starting out is getting people to know about you. And the way that we did that was through word of mouth, so we did it through people that we’d worked with before.

So you used your personal networks

Yeah, we used our personal networks to start with, and then once we had a small portfolio it was a little bit easier and that’s one of the things in the charity sector is that people move around a lot, fund raising managers might only stay somewhere for a year or two then move on.

And they’ll take that relationship with them

Yeah, so we get a lot of repeat business from the same people as they moved onto different organisations. That’s how we grew to start with, through word of mouth and networks.

But having said that a lot of what we do now is through word of mouth because we’ve never advertised, we’ve never taken out an ad anywhere.

They say that’s some of the best form of marketing

Yeah I guess, it’s certainly a lot cheaper

Are the projects you work on mainly based in Manchester?

They’re mainly not based in Manchester, weirdly. We’ve got a lot of clients in London so I’m really happy to be able to take money out of London and into Manchester, so that’s good.

A lot of how we sell ourselves actually is on this whole thing of we’re not a London agency so we don’t charge London prices, so people get more value for money because we’re not having to pay London rents and pay our staff London wages.

There might have to come a point where we have a satellite office down there though, for some people, they wont leave London for whatever reason, getting them to get on a train to come to Manchester can be quite tricky.

What’s the size of Reason Digital now, you started with two founders

I think we’re about 37 people now, so it’s constantly growing and every-time I get a new employee, I’ve literally never run a business this big so there are always new challenges.

You’ve successfully moved on from the early days of survival to that of a growth phase and I imagine that is bringing a whole new set of challenges for you?

Yeah, one of the challenges has been the issue of culture. When you’re 3 or 4 people, there’s a certain culture and people will go out of their way to help each other because there are so few of you, you need to have such a wide range of skills.

Now there are more than 30 of us, people who have very specific skills that do very specific jobs. I’ve not designed a website for years, that’s not what I do now. My job now is running a business.

They say to recruit people who are cleverer than you so that’s what I try to do. But the bigger the organisation the more diverse the workforce and then you find that groups emerge, circle of friends develop and teams might have their own culture that is separate to the culture of the business itself.

So the culture is the biggest thing that were working on at the moment particularly in this industry which is very male dominated and it is often difficult to fill the roles with women when you don’t have a lot of women applying for those roles.

So what we’re trying to do is develop talent as well, so we’ve got some staff who’ll go and do projects with women who code and girl geeks.

Its more about marketing the fact that we have vacancies in particular places if you want to increase the diversity of people who apply for work.

I’m conscious that it shouldn’t be a male dominated workplace.

Increasing that diversity can help to bring different view points into the company and that can also impact and influence the culture as well

Yeah, yeah, absolutely.

Have you had any help along the way? Did you find it easy to ask for help?

It took us ages to ask for help. Early on you try and do everything yourself so we did all the HMRC stuff, all the tax, all the VAT, all that sort of thing ourselves and try to manage our own money.

I guess if I did it all again, one of the pieces of advice I’d give myself is pay somebody who knows what they’re doing.

I’d just not be keen at all to pay for an accountant or a bookkeeper early on because you want to try and spend whatever money you have wisely but spending money on an accountant is wisely spent and I just wish I would have known that sooner.

As we got more established and as we grew our networks we found that there was a lot of support out there, places like the Business Growth Hub, Access to Finance who want to help and can help. It took me years to figure this out.

So yeah, probably that’s the biggest thing is that asking for help earlier on and knowing that your money is better spent getting somebody who knows what they’re doing …

I don’t want to plumb my own toilet so why would I do my own taxes

What are your future plans? Are you looking at new markets, industries?

Whatever we go on to do still has to have that social impact. At the moment it’s growing through getting more of the same. So we’re working with 2 or 3 housing associations, it needs to be a lot more than that, we’re working with one or two Credit Unions, it needs to be more than that.

It’s about being smart about how we bring in money in the future.

Are you finding it a more crowded and competitive landscape servicing charities as one of the early pioneers in this sector?

We’ve always competed against agencies who saw working with charities as a chance to do pro-bona work or CSR (Corporate Social Responsibility) opportunities so that kind of competition has always been there.

The way we’ve combated that in the past is to say that volunteering is all well and good but a website isn’t a finished thing, you still need support on it 6, 12, 18 months later, but if the agencies have done their bit for charity then you don’t benefit from that quite as much and similarly volunteers who work directly for your agency might loose interest and move on and then they’ve lost all the passwords to everything and they can’t update their website. Sometimes it pays to have an agency who’s job it is to look after your things

Rather than a one night stand its more of a committed relationship

Yeah, yeah, yeah absolutely.

I think more people are coming into this space. When we started it didn’t make any sense to start a business in 2008 during the financial crisis, it was madness to do that.

And then to focus on the charity sector when austerity was kicking in and there was no money around, there didn’t seem to be the opportunity but we seem to be doing it, creating jobs and hopefully having some social impact at the same time.

It’s a big enough market, there are enough problems in the world for everyone to work on.

Did you give yourself any deadlines or timelines when you first started, to say if we don’t achieve certain goals in 6 months or a year then…

No, I can’t say we did any organised planning when we started out. No real business plan, no dates. Taking on our first employee was basically who could argue the case the loudest because I was always dead against it, but Matt was saying that we’ll never grow if we don’t take a risk.

How has the relationship between yourself and Matt been through this amazing journey together?

The relationship between Matt and I kind of works because we are very different personalities. Like I say, I’m fixed and very set in my ways. I don’t make big decisions. I’m the, can we afford to do this? Whereas Matt is the, can we afford not to do this?

At some point you’ve got to reach a consensus, so one of us has to convince the other that they’re right and that’s how we made a lot of decisions to start with. If I was dead against something it would be his job to convince me that he was right or the other way around.

Partly, I think we’ve only grown the way that we have is because Matt is so confident that it’s the right thing to do and that we can’t take on more work unless we’ve got more people. But I’ve always been oooh how much is that going to cost?

Matt’s the one with the whacky ideas and I’m the one who reigns him in and most times we meet in the middle

How have you dealt with setbacks or failures? There must have been times when things have not gone to plan. How have you overcome that?

There’s been times, like with any business, where you lie in bed at night and the memory of something comes to you and it just makes you cringe so much that you can’t sleep for the rest of the night thinking, oh my God how did we ever let that happen?

I think its a case of businesses are very organic things so with the failures you kind of forget them and move on to something else and that’s the kind of thing that dictates the direction of the business over time.

Like with life, I suppose that any decision you make shapes the kind of person that you are, and you could of been a very different person now if you’d taken a different path. You make dozens of decisions every day that could take you one way or another.

Its about being pragmatic and instead of saying I wish we could have done this or that, I wish we could have done this differently. It’s a case of, these are the things we did and this where it has got us.

So asking, how can we learn from it and how can we move forward?

Yeah, every failure is a learning experience so I think you should learn. You’ve got the capacity to learn more from failure than you have from success, because with failure you know that you’re never going to do that again.

With success, sometimes its difficult to know how you’ve succeeded but with failure you usually know how / why you’ve failed.

People say don’t do anything you’ll regret but I tend to think of don’t regret anything you do. Do it, learn from it, and either don’t do it again or do it better next time.

We could have been a very different business but we go where the opportunities are. Sometimes we make the opportunities sometimes they come to us.

I really like that sentiment of how sometimes you make your opportunities or sometimes they come to you. I think that happens for a lot of people but what is it that stops some from taking advantage…

I think it’s fear of failure, it’s a very crippling thing. That you could go .. hmm we could do this but its not my area of expertise, I might fail so therefore lets not do it.

There was an opportunity a few years ago that came up but we didn’t have the staff to do that particular kind of job but we said we can do it and then we went and hired somebody to do it after we’d secured the money.

So that was an opportunity but then it was an opportunity to grow the business because it was in an area that we’d never done before.

So I guess it’s about finding those things and having the confidence to say, well, I can do this and even if I can’t do it, I can find somebody who does and that mental change and change in attitude I think has helped.

The talented team at Reason Digital created a wonderful video illustrating the story of Ed’s and Matt’s journey setting up Reason Digital, which I was really humbled to find out was inspired in parts by this interview.

Thanks for sharing your Dream 2 Venture Ed.

You can find Ed on Twitter @EdCox and at Reason Digital

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