The Linlithgow-based firm provides test instrumentation equipment to some of the world’s biggest telecoms companies, and in October last year it undertook the first Scottish stock market flotation in two years, debuting on London’s Alternative Investment Market (Aim) in a move that raised £22.5 million.
Mr Cook has more than 35 years' experience in telecoms test and measurement, and prior to starting Calnex, he held a senior role with California-headquartered analytical instrumentation development and manufacturing company Agilent Technologies.
Calnex, whose backers include Heart of Midlothian F.C. owner Ann Budge, in May reported forecast-beating sales in an “exceptional year” for the company. Revenues in fact jumped 31 per cent to £18m in the 12 months to the end of March.
It also undertakes a large amount of work for good causes such as Parathyroid UK and The Turing Trust, which gives computers donated in the UK to disadvantaged communities in sub-Saharan Africa. Mr Cook says: “Working with charities is the right thing to do and we have always wanted to ensure that we are doing our bit for society.”
Can you explain more about the rationale behind and timing of your IPO (initial public offering) last year, and how it is catalysing the firm’s growth?
Calnex is fundamentally a growth company. To achieve our goals and targets, it is of paramount importance that we identify opportunities to produce new product lines and gain access to new customers.
For a number of years, our strategy has involved both an organic and inorganic approach to growth. So far, we have successfully executed on two acquisitions, one in 2018 and one in 2019. Both were relatively small companies and we have recognised that if we are to acquire larger companies, we will need access to capital.
After due consideration of the routes available, such as bringing a new investment company on board as a minority or majority shareholder, we came to the conclusion that floating on Aim offered the best route forward for the company.
We began the process at the start of 2020 and, despite the pandemic arriving when we were in the middle of the IPO process, we were confident in our investment case, and remained committed to [our plans to float]. After ten months of solid work, we successfully listed on Aim.
Being listed has raised the profile of the company and we are now in a position that offers us better access to capital, which will allow us to drive growth and fund acquisitions as and when we need it.
Can you give more details of your acquisition plans? Although obviously as a listed company there is only so much you can say about your strategy...
If you look at the acquisitions we have done thus far, they offer an interesting insight into the selection criteria that we use. The first we did was the acquisition of a product line that we build our Field Sync product line on, Sentinel. At the time, we did not have a platform to address the network maintenance market and this platform opened this opportunity to address a new set of customers.
The second acquisition was Jar Technologies in Belfast. Its product complemented our Attero product line, so we had a far richer and broader set of products to address the many applications for which Network Emulators are used.
In summary, we look for acquisition opportunities that will enrich the product offering we can provide to our current customer base, or products that will allow us to broaden this by addressing different test needs.
Calnex is eyeing the potential offered by the ongoing transition of the telecoms industry to 5G and the growth of cloud computing. How can the company really harness these areas?
These are the two major growth engines in the telecoms world. They are both incredibly broad and multifaceted areas. Our challenge is to identify specific aspects within these where there is a need for new, innovative test equipment.
This is especially important with 5G as it is presented to the consumer as a spot technology. In my humble opinion, 5G is a euphuism for the evolution of the mobile network to support the needs of the Smart Cities of tomorrow.
To support the demand for much faster data access to smartphones, the appearance of millions of Internet of things (IoT) devices, plus the data needs of high-reliability applications like self-drive cars, 5G is not simply a new radio technology, it is a complete transformation of the network behind the radio towers to support the explosion in connectivity expected by the Smart City vision.
This is not a one-off spot change as some might suggest. As long as people demand more, then the network will have to keep evolving to satisfy this demand.
A similar picture of massive evolutionary change comes from the movement to cloud computing, both to transport data across the networks between users and data centres, and the technology within these vast data centres to store and manage data integrity across multiple sites geographically distributed around the world.
On the flipside, what is Calnex’s biggest challenge in the coming years?
The perennial problem is always growth, looking for new customers and new products – but that is a simple statement of fact for all growth companies. There are always challenges, but from challenges and problems come opportunities to learn and it is vitally important that we use these experiences as positive opportunities to educate ourselves.
Of course, with growth comes the need to build out the team to support the demand for new products and drive research and development. The more people we add means the dynamics and internal structures within the business will have to adapt in a pragmatic fashion.
We hired 25 people during lockdown and managed to onboard them remotely, and we plan to hire another 20 this year.
How have you and the business adapted to the pandemic? You’ve highlighted how your supply chain has stayed strong, but have forecast that it may generate some short-term change in customer spending patterns, for example…
Like so many companies, we had to react quickly to deal with the fact office-based work was severely limited. As we prepare to emerge out of lockdown, we have learned a lot about the different ways of working that, quite frankly, we never believed would be as successful as they have been.
We plan to implement a hybrid model of working, whereby everyone is required to come to the office three days a week (once restrictions are removed).
Operationally, the pandemic had little negative impact on the telecoms industry and, if anything, it has only served to highlight the need for robust, fast broadband and resilient telecoms networks and infrastructure. We believe that the pandemic brought forward customer spending patterns last year, but we expect this to return to pre-pandemic levels this year.
What led to you working with Ann Budge, and how is she helping direct Calnex’s strategy?
I was incredibly fortunate to be introduced to Ann as a potential investor when I was looking for seed funding way back in 2007. Ann was at the time still with Sopra, the firm that acquired her company Newell & Budge, and she was looking to start investing in young companies.
That is what I always consider to be a lucky break. I appeared in front of her at the right time and since then, she has always been there at key moments to listen and provide advice on a wide range of aspects associated with leading a company. She is a vital part of what we do, utilising her wealth of experience as a CEO and leader within the organisations she has been part of to help us on our journey.
What has been the most pivotal moment in your career so far, and what do you now aim to achieve professionally in the coming years? Would you consider starting another company?
The most pivotal event in my career was getting my jotters from [being laid off by] Agilent! In 2005 Agilent decided to close the division where I worked, and, whilst it didn’t feel great at the time, this set in motion the sequence of events that led to the start of Calnex. Had the division continued, I would never have thought of starting a company. It genuinely taught me that you can only truly judge events with hindsight!
Would I start another company? Well, before I started this one, I would have said “no”, and yet here we are! I would say it was the best thing I have done in my career to date, and I would have said that even if it hadn’t achieved the success it has today.
You learn so much from running your own firm and strengthen your understanding of all the core dynamics involved in business. The value it adds to your CV is huge, so even if it doesn’t work out, the knowledge you gain makes you a far more valuable contributor in your next job.