What Chris Gorman did next
Is Chris Gorman mellowing? Once the irrepressible optimist with the Midas touch who defined the essence of an emerging generation of Scottish entrepreneurs in the brash Noughties, Chris is definitely more considered and measured. Thankfully, some things haven’t changed; the loquacious networker is still evident; the self-deprecating Teesside humour and matey banter; the generosity of spirit and candidness.
And there is still the party-loving animal; although he readily admits it takes longer to recover from the excesses of dusk-till-dawn sessions. But there’s a sense that Chris’s mellowing is due to the valued enjoyment of precious leisure time spent with his wife Mary and their family. Sitting in the office of his expansive Bridge of Weir home, he recounts a family excursion to an upmarket Scottish holiday park where the whole family gathered for an old-fashioned few days of Scottish fun and games – this was just a few weeks ago, so the family are firmly connected with terra firma.
Chris Gorman OBE might be a more measured person, but what he did next in business is interesting for the seasoned entrepreneur watcher because it shows that you can never write off someone who made their wealth in their thirties just because they are a decadeand- a-half older and wiser. Chris Gorman is working as hard as ever.
One of his business interests is the music PR agency Lucid. A major player in that space, the company reflects the meaning of its name; shining, transparent, easily understood, intellectually bright and not confused, sane. Gorman spends most of his working week in London. The Met Bar in Park Lane’s Metropolitan Hotel is where the moversend up after a hard day at the recording studio.
The Met Bar, open until 3am with its resident DJs and mixologists, has played a significant part in his evolution. Over the last 16 years, Gorman has clocked up more than 1,700 nights at the hotel, famed for its contemporary urban sophistication. He is the most stayed guest at the uber-chic establishment – no mean feat.
“I love the hotel, but it’s not a cheap one,” he says. It’s here that he was introduced to a twenty-something music impresario called Charlie Lycett, the founder of Lucid. Lycett’s fiancée Nikki managed PR for Met Bar and over the years the pair became friends with Gorman. A fortuitous dinner was arranged at Cipriani (now C London) and there the two men hatched an ambitious business plan.
“We harnessed the power of social networks to identify upcoming bands as it is very difficult to get into the Top 100 of anything,” Gorman recalls. “Unless a band or a record is promoted smartly, these charts remain pretty static. Viral marketing is powerful but there is a fine art to making it work.
“It’s a substantial challenge to break through. We took what we knew, developed and shaped it into what we wanted to be and patented it.” Gorman connected with Joanna Shields and Michael Birch (of Bebo at the time) and did a deal with them to integrate their ideas into the music philosophy of the social network and were rewarded with half-a-per-cent equity in exchange for the patent.” When Bebo was bought by AOL for $850m in 2008 their half-a-per-cent translated into $1.5m.
This amazing reward hit the bank account on the day that Charlie Lycett and Nikki got married; quite a “dowry” for the newlyweds – and for Chris Gorman! In July 2010, Sony Music approached Gorman and Lycett, wanting to buy into Lucid.
Lycett became managing director of the famous RCA record label in the UK, and Gorman became commercial consultant to the Sony Music Group and both continued to drive the Lucid business to ever-greater heights.
Separately, he developed a long-standing idea he had which combined his communications and music expertise – ChartsNow was born and the development began of this full-on mobile music app which would give listeners Top 40 charts downloaded daily to their mobile. But, more of this in a moment. Looking back to December 2005, Chris Gorman endured the famous court case involving the feuding business leaders at the Gadget Shop being dragged through the High Court in London. Gorman and fellow entrepreneur and close friend Sir Tom Hunter ended up in the witness box.
“The dispute caused me a lot of distress on a personal level,” he says. “We were growing the Gadget Shop in a big way; it was a great business and was tracking to be a great investment.” The Gadget Shop was in dire straits when Gorman bought it in 2002.
“The idea was to spend three months in the business and sort the finances out,” he says. “Within that time we were running at between 10-15% positive like-for-likes and we’d cleared a lot of the old stock. We were bringing cash back into the business, so I decided to stay involved in it and drive it. That was great until we had the fall-out.
“Two inherited shareholders took umbrage to another business deal that we did and decided to sue. Even although I knew my integrity and business ethos were as solid as ever, the court case knocked me to a degree I never expected. I was involved with the minutia of the business because I was the CEO and when it came to court I was involved in every single point tabled by the the lawyers. The business went into forced administration and I was devastated to lose the brand and lose a tremendously valuable, successful and driven workforce.
I lost so much more than money on this; truly devastating.” From the long list of success, there has been other “failures”. Reality Studios, a recording facility in Johnstone set up by Chris and Mary Gorman never took off financially but it helped him break into the music industry and ultimately made money when Mary transformed the site into real estate. “I don’t have a problem with failure,” he says. “I’ve been involved with smaller things that haven’t worked and I very quickly get to the point where I say, ‘This isn’t working’. I don’t have an ego that says everything has to work, and failure teaches valuable lessons on how to do things better next time around. “The life of an entrepreneur involves risk and you have to be a strong and passionate enough to put everything on the line. You’ve got to give it everything you can. It’s when you don’t recognise that it isn’t working – for whatever reason – that you might be in trouble. One of the things I’ve learned along the way is that success or failure always revolves around people.” When an entrepreneur spreads their interests across a multitude of things it is important to know they have good people that can be trusted to deliver.
“It becomes more important in terms of having the right team of people around you,” says Gorman. “Can they deliver in the way the capabilities, the connections, the networks? Do they have the ability to keep on moving and changing? Are they the best in their field?” He says that when people start businesses they often have a rosy picture of what they want to get out of it, yet business life is seldom as simple.
So is the “mellowing” Chris Gorman more cautious and contrite? Absolutely not. “My fundamental views on business haven’t changed,” he says. “My glass is still half-full, never half-empty. I still have the belief that I will find a way through a situation. I believe that where there’s a will there’s a way – sometimes it’s very hard – but I think an entrepreneur must have the tenacity to keep trying.” Like many others, he admits he lost a lot of money in the recent credit crunch – but smiles and says: “I lost my money – not anybody else’s.
It was a tough time. I was fortunate in that I didn’t have any leverage. I didn’t borrow from the banks. And if I wanted to continue living my lifestyle – which is not cheap – then I had to make more money.” What has defined Gorman’s success has been his partnership with others, starting with Richard Emanuel and John Whyte who set up DX Communications back in 1993.
His latest business thrust is the combination of his interest in mobile phones – which brought those first millions with DX – and music, which has been one of his enduring passions. And here Charlie Lycett rejoins the story. Lycett set up Lucid in 2003 with Mick Garbutt, who began his career in a Virgin Records shop.
A specialist music PR and plugging agency promoting the UK’s most successful labels and artist including Kylie, NDubz, George Michael, Shakira, JLS, Jamie Cullum, and many others, Lucid dominates the industry.
“Charlie is one of the youngest CEOs of a record label ever,” says Chris Gorman. “His father was head of Radio One for a very long time so he has grown up surrounded by icons of the music industry. Charlie has an amazing pedigree within the industry and we connected so well that he asked me to come and join Lucid. At the time, it had three people and was turning over £30,000 a month.
Charlie said to me, “If you can make a fortune over one idea over dinner, come and see what you can do with Lucid.” Lucid was a successful lifestyle business making money by getting artists on radio playlists, but Gorman has helped move it to a new level, buying out Mick Garbutt’s stake in 2008. He brought to the party an understanding of how to make the business work more effectively. He set out a strategy for Lucid, increasing its involvement in the industry from purely radio into television and online.
Within 18 months, Lucid had grown to 30 people with a turnover of nearly £200,000 a month. Building on their world-class credentials, Charlie Lycett was approached to become managing director of RCA in the UK, a record label steeped in the history of popular and classical music. Sony invested in Lucid and Chris Gorman became an integral part of the development team. For many years RCA was the home of Elvis Presley before eventually being bought by Sony Records in 2008. While Charlie Lycett works on running the label, Chris Gorman works on looking after new acts and developing the business into new areas. He says: “Charlie and I work well together because I don’t interfere in the music. I love music but I don’t profess to have anything like the expertise that he and his team have.
Normally you put a product on a shelf and people buy it, but in a talent-based industry like pop music, the ‘product’ is human and is a totally subjective entity. We deal with sometimes volatile creatives who have strong opinions and ideas. You make people celebrities, but then you’ve got to micromanage their expectations.” Gorman’s latest venture – a progressive mobile music application called ChartsNow, a standalone business – is perhaps the last big opportunity for the record companies and recording artistes to get a new stream of revenue.
“No one has really harnessed the ability to make music work commercially on mobile,” he says. “There’s been lot of pseudo deals with networks but the take-up of music on mobile is still very limited, apart from the ecosystems of iTunes and iPhone. “All the research that we did showed that the 13 to 24-year-old market was still untapped. But this wasn’t just about young people. Our research showed that one of the things the over 55s would like on their phone is music, but they didn’t have a clue how to do it.
“Even when you look at youth, the amount of time spent downloading a track is phenomenal. If you want to have music on your phone the download process is still very clunky.” At peak times in London it takes an average of eight minutes to download a four-minute song. In this vicious circle, the mobile companies weren’t getting the revenue, so they were putting this development at the tail-end of their service.
“The phone networks are facing ever increasing demand for data down their lines and there are physical laws of nature saying that you can’t put any more down the pipe,” says Gorman.
“Until we get 4G this won’t improve so if you want to keep current and up-to-date with your music, it’s not easy.” So what was the Gorman solution? A little touch of genius – similar to the electricity companies using night-time tariffs to pump water to the hydro-electric stations – when a music fan goes to bed, new charts are pre-loaded overnight onto their phone.
Each morning the charts are updated, so that the music fan – jazz, rock, rap, classical – can listen to their Top 40 tracks. “When you’re on the Tube, you don’t have to download it from a cloud or some other remote system,” he says. “You’ve got nothing to wait for and it changes automatically every day with new songs coming through. You don’t have to think about it, it’s all done for you.” It sounds so obvious, but getting around the music industry and securing agreements has been back breaking. For Gorman and Lycett, it has taken two years of background work to get the idea and the prototype off the ground; putting in £1m of their own money.
They raised an extra £750,000 seed funding from friends wanting a slice of the action, and are about to embark on a fund-raising round for at least a further £5m. “Because we are in the industry, it is a lot easier to go and talk to people,” he says. “We know a lot of people at senior level in the industry and have engendered trust over many years of delivering results. “It’s an idea that everyone I see gets excited about.
They all see the opportunity, then pause and say, ‘well that’s going to be difficult to get the economics to work, to get the technology to work’.” But Chris Gorman is tenacious and found a team to make it work. He has been working with Mark Lewis and Chris Carlson on the technical end of the project and a team of around 12 senior music figures. In early June, the Beta development was launched on Android and Blackberry.
“We’ve got the economics working and the technology, but it has been a long two years to get this far,” he says. “We’ve had to deal with music publishers, the labels, artistes, the legals, and so on.” The deal is simple: for around £1 a week a listener will have unlimited access to Top 40 charts on their mobile. “The music industry has been in decline,” says Gorman. “The major companies who spend huge amounts on major artists and marketing need to feel certain about revenue streams.
While they embrace new opportunities they want to manage it very closely. With this business all the labels have a stake in its success and we work together to drive it.” The software also builds up a picture of what the music fan is listening to.
ChartsNow is not limited to the UK; with global aspirations the company has done deals in Australia, New Zealand and South Africa. “We see ourselves as being the music and content enabler behind a mobile network or an online retailer.
It’s simple and easy to download applications for your mobile phone and we have harnessed an easy and direct route to consumers.” At the time of interview, Chris Gorman was in talks with some major players in the industry which would catapult his ideas into the music stratosphere. For those who admire the spirit of enterprise, what he does next is always interesting.
Published: 01 July 2011