Pip Peel built a £40m business from his bedroom. Now he’s using his experience to do it all over again – but on a whole new level…
The great thing about building your second multimillion-pound business from scratch – apart from definitely, absolutely, unquestionably proving to yourself that your first wasn’t some kind of crazy fluke – is doing it again, but better. Pip Peel set up his first consultancy company from his bedroom in 1998 and he sold it 12 years later for over £30m. In 2013, he founded his second consultancy, called P2. Today, P2 has revenues of £31m, is placed second in the Sunday Times’ Fast Track 100 league table, has offices in London, Glasgow, LA and New York, and employs 200 people. As track records go, Pip’s is right up there.
His entrepreneurial exploits began after leaving PA Consulting, which he’d joined after studying physics at Imperial College. “I was a physics spod but one that was quite good with people,” he laughs. “That made me perfect for consultancy work!”
Initially, he became a freelance contractor butlaunched PIPC Group after spotting demand for a “more practical” kind of consultancy. “Lots of people join big consultancies to do the flash, big picture stuff,” he says. “I felt that a more hard-headed, functional approach and a concentration on what I call ‘blue-collar consultancy’ – helping businesses manage and deliver their transformation programmes – would work best, so that was our focus.”
He was right, and success came slowly but surely. “I managed cashflow carefully and invested profits straight back into the business,” Pip says. “Growth was organic in the early days and not particularly fast.” Nevertheless, PIPC forged a strong reputation and attracted major clients including: RBS, Lloyds Bank, Littlewoods and Shop Direct. In 2009, demand rocketed as the global financial crisis caused several banks to seek out PIPC’s project-management expertise. By 2010, revenues were up to £40m and Cognizant – a US firm attracted by PIPC’s prudent corporate governance and strong reputation – decided to buy the business that Pip had set up from his bedroom office.
Pip exited with no plan except to take a break from all planning. He updated his LinkedIn profile to “Chief Amusement Officer for Deck Chair Ltd”, kicked back, spent time with his five sons, completed an Ironman and built a recording studio at home. But the entrepreneurial urge soon returned. “The 18 months I took off were important,” he says. “They made me reflect on what we’d done well at PIPC and review what hadn’t worked and why. But what kept returning was just how joyful building a business had been and how much buzz you get when it’s just you and your team against the world.”
In September 2013, Pip launched his new business, P2 Consulting, applying the lessons learned during his 12-year journey with PIPC. His target was not modest: to build a company that would, eventually, boast a valuation of £1bn. It was time to resign from Deck Chair Ltd.
So, what are the pitfalls that – with hindsight – tripped Pip up at PIPC? And how has this serial entrepreneur tried to sidestep these hazards second time around?
“One thing that didn’t work at PIPC was getting sucked into working 24/7,” he says. “I had a great team but I tried to do far too much myself. The other directors and I were inthe business, not onthe business. Because of this, none of us were able to step aside and think more strategically. If we had, we may well have decided to do a private equity deal so we could have grown even faster.”
Lack of strategic thinking held the business back, believes Pip. A second big drag factor – intrinsically linked to the first – was paucity of cash. “At PIPC I chose to grow the business from its own cashflow,” he explains. “That meant being closely involved in managing the finances and working on projects myself to keep costs down. In the early years, we ran PIPC on a £30,000 overdraft – despite having revenues of £10m. That sharpened my cash flow-management skills, but made it impossible to go out and recruit teams. We could only hire one person at a time.”
At P2, therefore, Pip invested as much cash as possible upfront and found a private equity partner early on. He says: “My co-investors and I put the funding together and built a team before we even had our first client. We wanted to accelerate the opportunity we knew would come – rather than winning the work first, fulfilling it and growing from there. From there, Lonsdale Capital Partners invested in P2 to help turbo-charge the business.”
Another lesson learned from the PIPC journey is avoiding work that pays too little; no matter how alluring or PR-friendly it seems. “At PIPC it felt great to win work from big brands,” Pip recalls. “But sometimes that work wasn’t particularly profitable and was incredibly difficult to fulfil. At P2 we’re careful to qualify every piece of work we win, which means turning down low-margin projects, even when it’s to the detriment of growth. Good work deserves proper fees and you must achieve a decent return for your shareholders.”
Pip also has some interesting insights on recruitment. “Talented individuals like to attach themselves to a bold, inspiring vision,” he says. “Building a team at PIPC was tough, particularly when I was still working from my bedroom, but my aim was always to build the best project-management company in the world. Everyone liked that ambition and I’m applying the same lessons at P2. We all want to go on a fantastic journey – in our case a £1bn journey. If you can be bold – just the right side of arrogant – people are keen to follow you.”
For Pip Peel, the race to build a £1bn consultancy company is well and truly on. He knows that it will be a challenge, but it’s one he relishes, and as his past shows he’s an intrepid explorer who thrives when constantly breaking into new territory. “My father gave me the best piece of advice I’ve ever had,” he says. “When you’re out there trying new stuff, it’s always scary and if you’re not scared, then you’re either stupid or arrogant, and either way you’ll fail. But as Dad always said: you’ve got to feel the fear and do it anyway.”
And after all that Pip’s learned, and with his incredible ambition, focus and energy, who would bet against him achieving his £1bn aim? As this gutsy entrepreneur says: “There’s no point getting up every morning and saying: ‘I want to be fifth best’. We’re going for the summit. Bring it on!”