Having a PhD in physics wasn’t enough of a qualification as far as Dr David Taylor was concerned once he had decided to start a science-based business. So he studied for and gained an MBA too, realising there were benefits in combining an academic skill-set with hands-on business acumen.
Indeed, the founder and CEO of MR Solutions - the only British manufacturer of MRI scanners and one of only a few in the western world - describes himself as being by instinct an entrepreneur rather than an inventor. "Entrepreneurs spot something and see what they can do with them, rather than invent them,” he says to explain the nuanced difference. “The guys that work here are the real inventors. I just come in and say ‘this is what I would like to see’ , and they take the concept and convert it into a bit of kit."
Dr Taylor says ideas tend to emerge in a very natural – one might say unforced - way. "I just talk” he says. “I like to talk a lot, and as I talk a pattern emerges, and something floats up to the top.”
"We have even been asked to supply a device that scans melons."
One example has been to use MRI scanning, which uses strong magnetic fields and radio waves to produce detailed images of the inside of the human body, for applications outside of its traditional purpose. The company has just sold a system to an oil company to analyse how oil flows through rock. "We get some interesting propositions,” observes Taylor. “We have even been asked to supply a device to scan melons. You would think there would be an economic mismatch because of the cost of the scanner; however melons in Japan in particular are so expensive that the customer can get their investment back through the course of a single harvest.” And then Dr Taylor provides a self-deprecating explanation of what his company produced. “The product is fundamentally a magnet with a hole in it, and that hole could be melon size.”
Developments in technology have completely changed how MRI scans are done, Dr Taylor says. Such as the “revolutionary” pre-clinical MRI system that involved finding a way of making magnets cold without having to put them in buckets of helium - which was very expensive and potentially dangerous.
"We started displacing the market leader, who sees us as the new kid on the block and they are fighting back like a wounded elephant"
"It was positive disruption for customers but negative disruption for the competition as there is huge reluctance to abandon traditional wet magnets. We started displacing the market leader, who see us as the new kid on the block and they are fighting back like a wounded elephant. But we know we have the pieces that can change the game and we are winning more sales. It's all about credibility."
Meanwhile, magnets typically weighing up to 900kg have replaced older technology which weighed tons. “The name of the game now is multi-modality imaging (combining the output of different capturing methods into a single image),” suggests Dr Taylor. “It's the holy grail. MRI gives wonderful soft tissue imaging and if we merge it with new positive image tomography scanning which uses radiotracers, we can tell exactly where in the body a glow is coming from. We realised that combining the two modalities would enable this to be achieved. "
Advances like this helped the business gain the Queen’s Award for Enterprise (Innovation), and Dr Taylor thinks the business could realistically grow from its £12million turnover to £50million in five years – and has the potential to increase both revenue and profit by ten times.
“This sector is one with high barriers to entry,” he explains. "It takes many years and many millions, often through funding from venture capitalists, to become competitive.” He had to raise more money repeatedly after previously founding SMIS, a manufacturer of research MRI systems and spectrometers, in 1985, and it was something he found uncomfortable. "Over the years I raised eleven rounds of venture capital and I got royally stuffed eleven times," he says. "I'm a slow learner! I have decided not to try a twelfth time."
He owns all the shares in MR Solutions, saying that having investors was “frustrating and debilitating. Having outside finance coming in can be a death knell to a business like this. You can't optimise the management of the business when you have outside investors. To get the money you have to over-promise and they know you are, so when you fail to meet those targets they feel able to start interfering with the running of the business.
“It's a numbers game to them. They operate on the basis that one in ten investments will really fly, which means they are prepared to write off nine that could have been perfectly viable businesses. I knew of a business which was actually profitable but was shut down just because it didn't fit the model of what NASDAQ wanted to see in terms of share price. So my advice to a technology company is to go slow; live within your means.”
Dr Taylor escaped the VC “circus” in 1999 when SMIS was divided up and sold off by its institutional shareholders. He bought a license to the MRI technology and founded MR Research Systems before separately co-founding Hallmarq Veterinary Imaging, which is now the worldwide leader in equine MRI systems.
The fact that the money stays in MR Solutions and doesn't have to go to outside shareholders means that Dr Taylor can take a longer view. "We can still make good progress as a completely independent business. We’re still an SME, but the emphasis was on the S and now it's on the M. And If we want to spend money on a new technology we can.”
"The first impact of new technology can be to depress the market, because customers are not confident enough to buy the new technology, but now they don't want the existing technology anymore. It's all about timing."
That’s important because it takes time for a market sector to adopt new technology, he says. "The first impact of new technology can be to depress the market, because customers are not confident enough to buy the new technology, but now they don't want the existing technology anymore. It's all about timing.”
The business has been able to disrupt bigger and more corporate players, he says, citing a NASDAQ-listed competitor. "I hear that managers there are leaving as they are fed up with being told how to count revenue every quarter," he says. "That’s a business which has milked the market for twenty years but invested nothing back in the technology and all of a sudden we have disrupted them."
All of the production by MR Solutions is exported, given a reluctance, says Dr Taylor, among British academics to buy British. There is competition from the Far East, but he points out the Chinese find it difficult to manufacture the brains of the system, which is the spectrometer, so MR Solutions sell that clever bit to them. "That gives us a nice steady rhythm and it is nicely profitable,” he explains.
As the business continues to grow, he would like to bring in some non-executive directors to give the group gravitas. He has no problem with the fact that a new NED might question his leadership. "I don't mind being challenged," he says. “It’s more about the background of the non-execs and who would add value.”
Dr Taylor has already identified two NEDs who couldn’t be closer to home: his daughters, who have PhDs in astrophysics and chemistry. In addition his brother and brother-in-law, both engineers, work in the business.
Having family on board gives him a sense of security in a sector where industrial sabotage is not unknown, he says. He recalls a situation where his wife, who was having coffee in a hotel, happened to overhear two of the company’s directors talking to their biggest customer about their intention to set up a competing business. “Within hours I had spoken to my lawyers and suspended them both,” says Taylor. “One kept talking about a pen he’d left on his desk and asking for it back and we discovered that there was a memory stick hidden in it."
His biggest challenge is finding staff with PhD qualifications. He thinks the problem stems from our education system. "In my youth, it was all very simple: you studied maths or physics or chemistry at university. Now the focus has gone and you have all these fuzzy degree courses that don't add value."
For the country as a whole, Dr Taylor argues the challenge is having an insufficient manufacturing base. "You can't run a country selling only services,” he avers. “We need to rebuild our manufacturing capabilities.”
But isn’t the loss of big production plant made up for by the many small-scale manufacturers that have set up in business? "That's [expletive]," he observes. "And I'll tell you why. We’ve replaced industries that employed tens of thousands of people with ones which have taken on tens of people. To prevent future social unrest we should make at least 50% of what we consume in our own country.”
Although Taylor is approaching retirement age, he has no intention of leaving the stage. "Being retired gives you the chance to do other things, but I'm already doing what I really want to do. Why would I retire and stop doing it?"
Neither is he considering selling. "Everyone asks me that question,” he says. “I could drop into fluent Anglo Saxon to give you an answer. No, I'm not for sale. I didn't spend my life trying to get rid of outside shareholders just to present this business to them now.”