The UK needs more companies like this...
Let me introduce you to Kainos + Bitcoin pizza day + some admin
Let me introduce you to a company that has succeeded in doing exactly what the UK needs more of. It is a university spin-out based outside London that went from promising start-up to the FTSE 250 and taking on global tech giants. Its name is Kainos, and while you may not have heard of it, or know much about it, its story is important. This morning Kainos has reported its 12th consecutive year of growth (revenue up 29 per cent to £303 million, underlying profits up 3 per cent to £58.8 million) and its shares are up more than 20 per cent on the back of the results. As you can see from this share price graph below, while shares in the company have taken a hit over the last year, its performance since floating in 2015 has been stellar…
Kainos is based in Belfast and was founded in 1986 as a joint venture between Queen’s University Belfast and International Computers Limited (later bought by Fujitsu). Initially it was just founder Frank Graham (who has made a video on the history of the company here) but Kainos now employs 2,692 people and has 731 customers across the UK, Europe and North America. It is valued at more than £1.5 billion.
If you haven’t heard of Kainos before that’s because what it does is not that glamorous on the face of it. It helps organisations to bring their operations online (payroll, accounting and much more) through its software and consultants. But while this may not seem glamorous, it is fundamental to the running of any organisation and is an area that is growing fast. Kainos’s sales were boosted by the shift to home-working during the Covid-19 crisis and it is now investing in a data and artificial intelligence practice, a sign of where future growth is likely to come from.
Kainos has done what promising start-ups in the UK often fail to do in transitioning from a venture with potential into a global FTSE company. This is a transition that the UK needs to get better at if the economy is to flourish in the future. John Lillywhite, the former chairman of Kainos, attributed the success of the company to how it hires and treats staff. “It's harder to get into Kainos than it is Harvard,” he told the Belfast Telegraph in 2019. I put that to Brendan Mooney, the chief executive, this morning, who put it more straightforwardly. “We treat people fairly,” he said. “We do difficult things so you need to be good at your job.” Interestingly, Kainos grants shares to staff every December, and Mooney speaks to every new starter at their induction session on a Monday. “My job is to answer questions and your job is to answer them,” he tells them. Mooney himself has risen up the ranks of the company after joining as a trainee 33 years ago.
Over the last year the fastest growing area for Kainos has been its work with Workday, the US tech giant, which you are more likely to have heard of because of its sponsorship of Formula 1 and golf events. Kainos helps businesses to use and integrate Workday’s cloud technology. It also provides software that allows businesses to test the technology is working and protect data. Kainos’s customers in this area include Walmart, Salesforce, Netflix and Chanel, meaning it is being introduced to a new collection of global businesses. Kainos customers in the UK include the government and other public sector bodies.
Mooney is optimistic about the future despite the recent drop in the share price and the wider sell-off of tech stocks. “I have never seen a demand environment like we have now,” he says. This high demand has created demand for staff, pushing down Kainos’s staff retention rate from 92 per cent to 86 per cent over the last year. However, Mooney expects this “will moderate in the next 12 to 18 months”, adding: “It doesn’t cause me huge concern.” There has been “no angst” among Kainos’s big shareholders, he adds, and when you consider the long-term performance of the business, you can see why.
A tweet that helps you understand the world
Yesterday was bitcoin pizza day, the first time that bitcoin was used in a real-world transaction and a pivotal event in the growth of crypto industry. Despite the recent market crash and controversy of TerraUSD, it’s a reminder of how far cryptocurrencies have come in a short period of time.
You should also read this
Sam Ro at the TKer newsletter has done a cracking run-through of what the end of the inflation squeeze could look like, pointing to the Walmart and Target results from the US last week, who talked about their inventories (supply of stock) rising sharply and staff shortages easing. The “bullwhip effect” is something we might all hear more about in the coming months… (TKer)
Sticking with inflation and its impact, two pieces on the high-end restaurant industry over the weekend in The Times and Sunday Times caught my eye. Firstly, L’Enclume, Simon Rogan’s three-star Michelin restaurant in Cartmel, Cumbria, has put prices for its tasting menu up to £250-a-head this summer (Times, paywall) while Tom Brown, who runs Cornerstone in East London, has said he is removing scallops, monkfish and some other seafood from his menu before their cost has risen dramatically (Sunday Times, paywall)
A couple of weeks ago I mentioned the Jimmy’s Jobs of the Future podcast had interviewed Andrew Bailey, the governor of the Bank of England. That interview has just gone live here.
Banks are using blockchain for trading in some markets, a sign of how take-up of the technology is increasing (FT, paywall)
And finally…
Some admin to finish today. A few readers using Gmail have mentioned to me how Off to Lunch drops into their promotions tab rather than their primary inbox. This, sadly, is a Substack-Google issue that affects other newsletters too. The good news is that there is an easy fix. In the desktop version of Gmail, open your “promotions” tab (it’s at the top of your inbox alongside “primary” and “social”) and then simply drag your latest Off to Lunch email into the “primary” tab. This is how those tabs look….
On the Gmail mobile app it works slightly differently. Open the Off to Lunch email then click the three vertical dots in the top right corner of your screen. I have tried to illustrate where these are below…
This will open a menu that looks like this…
Now simply click on “Move to” and then click on “primary” in the menu that follows and that should be the issue sorted, with all future newsletters going into your primary inbox. If that doesn’t fix it, or you have any other queries regarding how and where you receive Off to Lunch, please just contact me at graham@offtolunch.com.
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Graham