Driving a greener future with Radius

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Audio Transcript

Tim Smallbone

Hello and welcome to Inflexion Point, the podcast that explores those crucial moments in a company's journey that change the trajectory of success. Through conversations with business founders and entrepreneurs, we'll explore what those moments look like and how to recognise and harness them. And in this episode, we'll speak to Bill Holmes, the founder and executive chairman of Radius, a provider of mobility, connectivity and technology services, that was founded in a little office above a hairdresser in Crewe and today has revenues of over 4 billion pounds.

Bill Holmes

Light bulb moment, maybe there were a few, but pretty much anything we've got that's good has taken us a lot of time.

David Whileman

It's all about kind of catering for the next generation and making sure that Radius is as relevant to them as the people that have been there many years.

Tim Smallbone

I'm Tim Smallbone, and in my 20 years as a partner at Inflexion, I have been lucky enough to witness a huge number of inflection points that are part of every success story. From humble beginnings, Bill started out for petrol stations group Esso before founding the fuel cards company UK Fuels in 1990. Since then, the business has grown rapidly through a combination of organic growth and acquisitions to offer a full range of fleet, mobility and connectivity solutions. Today, Radius employs almost 3,000 people in 53 offices across 18 countries. Inflexion made a minority investment into the business in 2017 through its Partnership Capital Fund. And I'm pleased that the head of our Partnership Capital Fund, David Whileman, is also with us today. Welcome to you both and thanks for joining us. Bill, it'd be great if you could just tell me what mobility and connectivity solutions mean. What does the business do?

Bill Holmes

For our first 25 years, we've been selling fuel cards, mainly diesel, to a wide range of trucking and van fleet customers. But since then, we've now widened our offering to our customers to include telematics, vehicle tracking and dash cams for the vehicles, and fleet insurance for our customers. We lease and rent the vehicles themselves. We've got quite a large telecoms business now, so we provide mobile phones, connectivity, VoIP and other associated services. And now more recently, we've got an EV and energy business that we see very much as the sort of future as we try and help our customers through the energy transition over the years ahead.

Tim Smallbone

So the customers are other businesses. This is a business-to-business solution.

Bill Holmes

All business-to-business. Where we're strongest is small businesses. So, a classic customer for us would have five or six vehicles. But I mean, we do have enterprise customers. So, we've got people with fleets of 1000 vehicles or more. But where we're strong is really, I'd say, the small end of small to medium.

Tim Smallbone

Yeah. And Dave, welcome. What did Inflexion see in the business? Why did we invest?

David Whileman

Like any investor, you do a bit of customer referencing. And one of the things that came out really strongly is the strength of the brand, because the average customer bill would be someone maybe with five to 10 vans, be the entrepreneur, maybe a florist. They haven't got the time to spend too much time shopping around for all those services that Bill talked about. And what was really clear is they trusted the Radius brand. And there was an opportunity to sell even more products to them. So, as Bill described, it started as a journey of just fuel cards, but now Radius could supply virtually all of their essential services, including insurance.

Tim Smallbone

So it started off with fuel cards; it's now like a one-stop solution for these customers, for all these services.

Bill Holmes

We don't have all of our solutions in every country, but UK, which is our biggest market, we have all six of our divisions live, and we do see ourselves as a one-stop shop and we really want customers that have got multiple products with us. We find they're much more sticky; it's much better for the business and I think for the customer as well.

Tim Smallbone

I'd love to hear the story. You really started it above a hairdresser. You really were a travelling salesman.

Bill Holmes

I'm not quite sure I'd describe it as that. I think some of the descriptions that are online aren't right. But I started, when I left university, on the Esso Grad scheme in their sales and marketing division. Really, the first proper job that I had for Esso as part of that scheme was I was given a fuel sales area and I was selling bulk tanker loads of diesel, gas oil, kerosene, fuel oil to various industries across my...

Tim Smallbone

Direct to corporates?

Bill Holmes

Direct to corporates and bus companies, mining companies, fire lighter manufacturers, fertiliser manufacturers, a whole range of transport companies, a whole range of them.

Tim Smallbone

So you had an insight into how the fuel industry worked. What gave you the idea then to create your own business?

Bill Holmes

Well, I think it wasn't about necessarily creating my own business. That's not, that hadn't really been the master plan. After my sales job with Esso, I got a head office job in corporate planning down in London. It was probably after three years or more that I was coming to a bit of a conclusion that probably I didn't want to stay at Esso for the rest of my life. Not that I particularly had a plan about what else I wanted to do, but I felt it wasn't going to be the environment that would allow me to sort of give what I wanted to sort of give. And I looked around for other jobs. I actually got a place to do an MBA in France, in Paris, but also alongside is one of my customers when I'd been on the road selling diesel, a guy called John Atkinson, who had some truck stops, who'd become a good friend. I'd talk to him about... the possibility of another fuel card company and maybe sort of starting something up and sort of in a way working for him. It wasn't so much about working for myself.

Tim Smallbone

You weren't intimidated by the competition. I mean, some people like Dave and me, we go through our lives and never create a business. We just work for other people, like the 3,000-odd people who work for you. And somehow you created it.

Bill Holmes

I've always quite enjoyed the battle of the competition. So, a sort of part of the, you know, it's not... not what I'm waking up worrying about all the time, but I like, you try and do as good a job as you can. And if you're going to win customers, well, you've got to, the only way you're going to do that is by probably by beating someone else. So, you know, I would say you can't create a business without having some sort of competitive streak in you.

Tim Smallbone

Was Esso up in arms? Did they, did they fight you?

Bill Holmes

No, they, no, I resigned, but they weren't really in the fuel card business, so it wasn't, it wasn't to compete with Esso at all. And it was in a different marketplace, one that they didn't really play in. So yeah.

Tim Smallbone

So you got up and running as a fuel business. And then you had the idea of taking it outside of the UK. Did you follow sort of customers outside the UK or what reached that sort of point, that change point in the company's life?

Bill Holmes

Well, they did. I mean, the first time we went outside mainland UK was very early on, and it was following a customer. It was a trucking customer of ours called John Miller Transport. And they at the time were moving Dell computers from Ireland across into UK and then into Europe. And they'd said, well, look, we like your network, but we really need a site in Larne Harbour in Northern Ireland. And while I was on my travels there trying to find that site, I got to know a fuel distribution business in Northern Ireland called Nichols Fuels. And we started up a sort of business relationship, which then grew. It was that really took us south of the border as our sort of first foray into Europe. And you mentioned at the start sort of inflection points. Historically, fuel in Northern Ireland had always been cheaper than fuel south of the border. And everyone used to come north and fuel at service stations just on the north side of the border. And when we arrived back in 91, as UK government put more duty on and nothing really happened in the Republic of Ireland, there began to be quite a big differential the other way, which is when we started working more closely with Nichols, Nichols Fuels in Northern Ireland, who had a big customer base of diesel users in the north that all now suddenly wanted to buy their fuel south of the border. So, we started to look for locations just south of the border and set up our card operation there. So, we had sort of customers from the north going south of the border. Within a couple of years, our Irish sort of business got bigger than our UK business and then it became the biggest bit of our operation for quite a few years.

Tim Smallbone

Getting into Ireland is one challenge, but there's a very different challenge going beyond the United Kingdom and Ireland.

Bill Holmes

At the time, maybe we thought we were growing quite quickly. But when I look back at the business today, the first 10 or 15 years of the business, I would say it looks as if we grew pretty slowly when you look at the graphs. But I'd say going into new countries, it takes a long time. For us, probably our toughest thing when we go to a new country in the fuel business is suppliers. So that's tougher than language. We need a product.

Tim Smallbone

Sourcing the fuel?

Bill Holmes

Sourcing the fuel and a network and something to sell. And if you don't have any customers, you don't really have much to negotiate with. And look, not many countries welcome you with open arms when you go there. So, it's it tends to be you don't have a great, you get going with not a great supply position and it's hard to sell and you've got everything against you, and it takes a long period of time.

Tim Smallbone

So, you’ve got to back some good people on the ground?

Bill Holmes

So, you've got to find some good people on the ground and that also is super hard and it's still hard, you know, I'd say people's our toughest bit of the job today.

Tim Smallbone

And you've just grown it bit by bit, remorselessly, year after year?

Bill Holmes

And with varying degrees of success in various countries. And most of that comes down to, whether we've been successful or not, the product — has the product been good enough? And then have we found people, good people? They've been the two sort of critical things.

David Whileman

You bring everyone together a lot though, don't you? I mean, the culture is quite important for you, isn't it? You're always kind of bringing people; you're going out there and holding events with different countries. Yeah. And that big party where you brought, it was almost like the Eurovision Song Contest. You had all the different nations there and you know, you can see how that Radius culture kind of permeates all the way through.

Tim Smallbone

You got over the big barrier of getting going, getting the suppliers and getting going. You got over the big barrier of getting yourself into Europe. But you did something else with the business. You sell a huge range of different solutions to these customers who originally presumably were just buying fuel. Where did that come from?

Bill Holmes

I mean, over the years, we had a go at a few things, none to any degree of success. We didn't get enough scale in the things that we'd had a go at, and we didn't get the method of cross-sell right. So, I think the product wasn't right. But the first thing we really tried, which started to resonate with the customers, was telematics. When we've got something that is working quite well or in a geography or in a place, we're quite good at putting more effort behind it.

Tim Smallbone

This is vehicle tracking?

Bill Holmes

Yeah, this is vehicle tracking. But that did really start to resonate with customers, and we started to get our cross-sell operation working better.

Tim Smallbone

So, you know, it wasn't like a light bulb moment; it was a bit of trial and error, tried some things that didn't work and gradually you, then the telematics came on.

Bill Holmes

Yeah, I think, look, light bulb moment, on reflection, maybe there were a few, but we just didn't know them at the time. And look, it's only, most of the things or pretty much anything we've got that's good has taken us a lot of time to get good.

Tim Smallbone

Yeah.

Bill Holmes

Not one or two years. Our outlook is when we do something… five, six, seven, eight years.
Tim Smallbone

Dave, we look at different sectors at Inflexion and make decisions that we're going to focus on this sector or that sector. What on earth led you to fuels?

David Whileman

I remember being at something, I think it was Wimbledon, and I overheard a conversation that I think, Bill, at the time you were looking at raising some money over in New York and the process wasn't going very well. So, I just cheekily sent Bill an e-mail and saying, I understand that you're looking to raise some money. Give me 30 minutes; I think I can convince you to come and talk to us. And you literally did give me 30 minutes, didn't you? You said, yeah, come on up. And we kind of, what, six hours, seven hours later, we kind of shook hands on something that worked, wasn't it? And that was...

Bill Holmes

Yes, it wasn't a hairdressing salon, it was an Italian restaurant. Yeah, that's right. But we were sort of noting down a few of the sort of key bits of what we were trying to agree.

Tim Smallbone

It's a Partnership Capital investment. It's worth just saying what that means, what's different about that compared to another Inflexion deal?

David Whileman

Yeah, so private equity is very much known for companies where they're for sale or where there's a controlling stake that's bought, where Partnership Capital isn't about that at all. It's companies that aren't for sale. But for one reason or another, having an investor like Inflexion on board on a minority basis and being able to access all the value add that we can bring, but it's still very much their business and they control the destiny. And that for a lot of companies is quite attractive. And hence the reason we started the journey with Bill five years ago and very much continuing and had some fantastic successes and a lot of fun on the way. And we've now completed 20 transactions like that in the last, where we've invested nearly 2 billion pounds into those 20 investments in the last nine years.

Tim Smallbone

It was clearly important to you to retain control of the company at that time when you were talking to Dave. How have you found the Inflexion relationship?

Bill Holmes

Yeah, I think when we did the deal, I'd not really had any dealings with private equity before. And it was a sort of first bite and a first experience for me. So, I didn't really know what to expect. But no, we've had a really good relationship. And I want my guys always to be open and honest with me, that work for me and tell me about everything that's going on underneath them. And that's how I feel about my shareholders and things, that I want to be open and honest with them. And I think that's quite a key starting point for David to believe that I am telling him everything that's going on and have that sort of open relationship.

Tim Smallbone

Have that trust.

David Whileman

Yeah, to have that trust. And look, that takes a bit of time to build up. And when that relationship sort of develops and that trust builds up, then... as we're wanting to do things and suggesting doing things, I think we've really felt that Inflexion has sort of backed us.

Tim Smallbone

I remember the investment decision, I remember the investment debate, and you referred earlier on, Bill, to the key issue that I wanted to understand, which is the UK is supposed to be going carbon neutral, and the core of the business is fuel. So, Dave, how on earth did you get comfortable with it? And Bill, how is the company going to cope?

David Whileman

Well, I think the core of the business is about making life easier for SME businesses. So businesses that are ambitious, but the owners of those businesses are very much time poor. Yes, Radius at that time was very much a fuel card seller, allowing those businesses to access better prices than if they just drove their vehicle into a petrol station. And I think what we really liked about Bill and the philosophy he had was around how can I be more helpful to those SMEs? And we know that those businesses that are able to service what is a very large part of the UK economy, in Radius' case, European and global, it can be very exciting because it's a huge part of the global economy and as a whole, it's poorly served. So that's what the opportunity was with Radius. It wasn't necessarily about fuel; it was recognising the journey that Radius was on. And it's about that part of the market where, you know, a brand like Radius that does a really good job of making their life easier, allowing them to get on to do what they like to do and what their customers want them to do. You know, there's a huge opportunity, and it's proven to be the case.

Tim Smallbone

And now we're selling an EV solution?

Bill Holmes

I mean, probably the first point I'd make is it is going to take a while to transition. It's not going to happen quite as quickly as everyone sort of thought. And the recent sort of announcement that the ban on ICE vehicles being pushed out from 2030 to 2035 is only what we knew was going to, you know, the infrastructure and things aren't ready at the moment to allow the transition to happen as fast as maybe everyone would like it to. But we've probably stopped thinking about our business so much in terms of how much volume of diesel we're selling, and more in terms of how many customers we've got. So, I think the number of customers that we've got is now a much more important metric to us. And we think that we should be in the best position to help those customers as they then have to make decisions on the energy transition.

Tim Smallbone

Must be huge for them.

Bill Holmes

Yeah, I'd say most of the small business van population hasn't transitioned yet, but we'll have to at some point. And we'll look at whether that's in three years, four years, five or six years. It's coming, and we want to try and be the best person that they could look to help them through that transition, whether it's to supply them with a charger or supply them with electricity or an electric vehicle. So, we want to be a real sort of full-service provider there and sort of use the customer knowledge that we've picked up because our customers are really all mobility vehicle owners to help them through that transition.

Tim Smallbone

We invested in 2017. It's 2023. In the meantime, there was a big event, and presumably everybody stopped driving their vehicles when COVID hit. There must have been an awful schism in the business?

Bill Holmes

Most of the taxi drivers, obviously, stopped working as taxi drivers and became home food or takeaway delivery people. So, I mean, volumes sort of dropped down dramatically for really only a couple of weeks, two or three weeks, and then bounced back, not to where it had been running at pre-COVID, but probably jump back to 90% of where it had been, because things still had to continue. Look, people still need to eat, and the building trade didn't stop completely and so lots of things continued. So it was a very big shock at the time and I think no one really knew quite what it was going to mean or how, but look, we had to adjust quickly and then there was a sort of a, I'd say, a long, slow rebuild over a couple of years at least to sort of get us back to where we'd been pre-COVID.

Tim Smallbone

And since you started in 1990, you must have been through a few gyrations of the oil price and huge events in the Middle East at the moment. Presumably you watch that very closely, do you as a business?

Bill Holmes

We don't, it's funny enough, although we're in the oil business, we don't really think about it too much in a way we, we want to make a margin obviously, above what our buying price is to pay for our costs and make a profit. And whether the price is a pound, or a pound ten, or two pounds, or a pound fifty, we've still got our metric we need to work to on that. So, for customers, for sure, a lower price is better, and higher prices tend to bring more credit problems for customers, and it makes it harder for them to operate, but it doesn't really affect the business, and we're not coming in talking about it as a senior management team.

David Whileman

You'd say though, as the fuel prices go up, more SME businesses are looking to try and save money and therefore they get drawn towards Radius. You get lots of new customers, don't you, that you wouldn't have had before when things are tough.

Tim Smallbone

You've painted a vivid picture of how you've built the business. year after year, step by step, over a long period of time. Were there any sort of step change moments? Any acquisitions, for example?

Bill Holmes

The first 25 years, no, we'd not made any acquisitions, really. Our modus operandi was really an organic model. That's at the heart of our business, our organic sales model, and that's how we want to be different. But as you try and look away from fuel to try and build these new divisions, we can't just start from scratch in those divisions because we don't have enough time to do that. So, we've really had to use acquisitions as a way of really building a base from which we can start these new businesses. So, from not having done any M&A, we really probably bought nearly 30 companies in a period of about three years. So that was quite a new thing and a learning experience.

Tim Smallbone

That's what it's happened since Dave and Inflexion?

Bill Holmes

Really, most of the M&A stuff has happened since the Inflexion investment and that, and it wasn't that we changed our model from, as I said, from organic to M&A, it was we need to do this to build a base. And now we've really slowed our M&A down, and we're trying to get our organic model and cross-sell model working in the new divisions.

Tim Smallbone

1990s, 33 years ago, and you're still talking about the next five years. Are you still as full of energy and still as enjoying it as much as you did?

Bill Holmes

Well, most of the time. So, I do feel a bit tired sometimes. But I like coming to work. I like getting up in the morning. I like the challenge of trying to do something new in a new market and create something. It's never been about making money. It's been about trying to build a nice business and do something in a way you can't do that without having a business that is profitable.

Tim Smallbone

And what's the next challenge for the business? What's the next challenge for you?

Bill Holmes

Building a new team that are going to be there to drive the business for the next 10 or 15 years.

Tim Smallbone

Retaining that culture?

Bill Holmes

Yeah, retaining that culture and really unearthing more of the talent we have in the business and moving it around and developing more as well as finding some new people, but a new team for the next couple of decades.

David Whileman

It's all about kind of catering for the next generation and making sure that Radius is as relevant to them as the people that have been there many years. It's a constant thing, isn't it, the people side? It's probably the thing we speak most of in board meetings and everything else.

Bill Holmes

Yeah, I mean, I'm sort of quite passionate about the culture and where young people are going to learn. And when you see some people leave uni, and their aspiration now is to work from home. I think, well, where are they going to learn what they need to learn? And who are they going to learn it from staying at home? I've learned everything I have from getting out and about, seeing customers, suppliers, colleagues in the office, travelling. I don't think I was sort of born a good business guy. I've just got a lot of experience now that I've picked up over many, many years. And I'm hopefully I still see myself on a learning curve and I like getting up and learning about, you know, EV charging software and the new things I have to learn about now.

Tim Smallbone

The world is always changing.

Bill Holmes

Yeah, and I do that by getting out and about.

Tim Smallbone

And it's clearly come with the result of an enormous amount of graft and ingenuity. And what's been fascinating is learning about how the culture of the business in particular is a key ingredient of the success of the company.

Thank you very much for sharing with us. That's it for this episode. My thanks to Bill and David for joining me. Remember to subscribe to Inflexion Point wherever you get your podcasts so you don't miss an episode. And check out the Inflexion website if you would like to learn more about how we back ambitious business owners and help them to accelerate sustainable growth. Thanks for listening.

Driving a greener future with Radius

Bill Holmes started Radius in 1990 in a small office above a hairdresser in Crewe, selling fuel cards to local hauliers. Today the business turns over more than £4 billion, employs almost 3,000 people across 18 countries, and helps SME fleets with everything from telematics and insurance to EV charging.

In this episode, Bill and David Whileman, Head of Inflexion's Partnership Capital fund, join Tim Smallbone to talk about growing slowly and deliberately, why culture and finding the right people on the ground is the hardest part of the job, and how Radius is positioning itself for the energy transition rather than betting on diesel volumes. Inflexion made a minority investment in Radius in 2017 through its Partnership Capital fund.