Pavlou quits software firm to return to roots

Jan 7 2009 by Karen Dent, The Journal

Chairman puts his money where his mouth is: An interview with Paul Callaghan from The Journal in 2003

Paul Callaghan, the chairman of fast-growing Sunderland-based technology group, Leighton, recently joined the board of Business Link Tyne & Wear. HOWARD WALKER talked to him about his success and how the North-East can become a major economic force again. IF YOU were looking for a place to put a hi-tech business in the North-East, Sunderland’s Doxford International Business Park would appear to be tailor-made for the job with its ultra-modern offices and tasteful landscaping. Similarly, if you were searching for someone to put on the board of a business support organisation, Paul Callaghan would appear to be the perfect candidate. A man with a track record of running a successful technology business, brimming with academic qualifications in business and a North-Easterner born and bred whose loyalty to his Sunderland roots will extend to watching the likes of Cardiff City and Wigan Athletic at the Stadium of Light next season. Yet the man I meet at Leighton’s headquarters at the exotically-named Teleport building on Doxford Park is very far from the stereotypical dotcom go-getter. While Leighton’s burgeoning success – the group is growing at something approaching 150pc a year – is built on technology, the disarmingly tall Callaghan eschews the open neck shirt look which has become de rigeur for hi-tech entrepreneurs in favour of a sober grey suit. Similarly, while his thoughts on the future direction of the North-East’s economy tally remarkably closely with the orthodoxy put forward by the likes of One NorthEast, Callaghan is also prepared to practise what he preaches – and has been very successful doing it. From the off, it’s clear that the region is one of the 51-year-old’s real passions. “It’s my belief that creating a wealthy and prosperous North-East is good, not just for us as a company but for the region as a whole. I want to live in a prosperous and successful region. I want to be a success personally and I want my children to have successful careers here. “I don’t want them to have to go off to London or Reading or somewhere like that to get a job so I think our responsibility as business leaders of the North-East is to create careers for our children and for the future.” With a manifesto like this, it’s not difficult to see why the father-of-two has recently been appointed to the board of Business Link Tyne & Wear to help improve the region’s prospects and nurture new businesses in the North-East. While he is keen to stress his appreciation of the support organisation – “I wouldn’t have got involved with them if I thought they were not doing a good job” he says at one point – Callaghan believes a further injection of practical business experience is a useful thing to have. “I think a real understanding of how businesses operate and the pressures which small businesses have is an essential ingredient to any successful business support organisation. Although I have only been to one board meeting so far, I can see that my fellow directors are of a similar view to me. “We are all committed to the region, we are all conscious that the region has under-performed in the past but it has the potential to be a really successful European region in the future.” Callaghan’s academic background – a degree in economics from the LSE and two master’s degrees in management and finance and economics – comes to the fore when I ask where the region went wrong. His explanation is as cogent and coherent a one as I have heard in a long time. “Back in the last century, the North-East was a great success. Coal from Northumberland and Durham was used to fuel the world, the steel of Teesside and Consett was used to build the world and ships of the Tyne and Wear sailed the world. “They were the new technology of the day, but those industries by and large have fallen into decline so for the last 20 to 30 years the region has gone through a transitional period. “We have to re-adjust our economy from one which is based essentially on heavy industry and manufacturing to one based on knowledge and new technology.” Easier said than done, but how can the region make such a fundamental change? “I think we have to invest for the future in three ways,” says Callaghan. “We must invest in the infrastructure of the region, not just in roads and airports but in technical infrastructure like broadband connectivity and telecommunications. “We need to invest in our businesses and that means investment both by the businesses themselves and other forms of support like venture capitalists to put money into buying the right kind of technical equipment. “But most important of all, we have to invest in our people and to do that we must educate and train them to be as good a workforce as anywhere in the world. “We have five good universities in the region, but too many of the graduates are tempted to leave once they have qualified. We have to create jobs for people who are skilled and educated.” Fine words, but Callaghan also puts his money where his mouth is. Leighton’s recruitment round, which it is currently in the middle of, specifically targets graduates from the region’s universities to retain the best talent in the North-East. Callaghan explains: “We are not a charity – Leighton is a hard-nosed commercial organisation and it’s been our success which has created jobs – and we want to have people who are the right candidates for the job. “It happens that we have universities here who we have got extremely good relationships with and I think we should offer opportunities to the cream of the talent which they produce.” The policy has certainly not done Leighton any harm. The group, which encompasses five separate companies operating in the publishing and new media fields and currently employs around 50 people, has picked up business at an enviably rapid rate – Leighton grew by 23pc last month alone, says Callaghan. Its highly successful 4Projects division, which produces collaborative software for large-scale construction products, has customers from California to Kiev and a client list which includes Microsoft, John Lewis, Tesco and Mitchells & Butlers. As well as its main headquarters in Sunderland, Leighton also has a base in Ontario, Canada, yet Callaghan shies away from claiming the credit for the group’s burgeoning empire. “All of our businesses have come out of ideas we have had and then developed,” he explains. “For example, 4Projects came about after Taylor Woodrow asked us to come up with a program which would allow them to manage all the documentation on work they were carrying out on the Gatwick South Terminal. “Also, all the companies have a degree of autonomy within the group which means the people who work in each of the companies feel a sense of ownership of that company, they don’t feel like a cog in a giant wheel. “They identify with their own company but they also see themselves in the context of the wider group. Every person in our group has a direct influence on the business of their individual company and on the group as a whole.” As well as its semi-autonomous structure, Leighton is also slightly different from other companies in that three members of the same family work there. Paul Callaghan’s younger brothers 45-year-old Bernie and 36-year-old Gerrard are, respectively, chief executive of Leighton Group and managing director of The Data Corporation, but it appears that sibling rivalry among the Callaghans does not surface. “We have always got on very well together, we go out for a beer together and we share the sense of where we want to go and the same view of the world,” says Paul Callaghan. It’s not all that often that a family produces a trio of entrepreneurs, but Callaghan puts some of that down to his father, an accountant by trade but someone he says always had an entrepreneurial streak. Callaghan was born and brought up in Sunderland, attending St Aidan’s Grammar School before taking his economics degree at the London School of Economics. Master’s degrees at Newcastle University and Salford University followed and Callaghan spent time lecturing in business studies before branching out and starting his own company. His reasons for wanting to become his own boss are set out in typically clear fashion. What I’ve always believed is that one of the key things to have an interesting life is to be able to use your own initiative, to be able to innovate and see new opportunities,” he explains. “When I see an opportunity, I want to run with it and the only way you can really do that is to be your own boss.” True to his word, Callaghan’s first business was founded when he saw an opportunity to exploit. Frustrated at only getting a quarter of a 10pc royalty rate on a best-selling business textbook he co-authored with three other academics, he decided to set up his own business publishing company, Business Education Publishers, with one of his co-authors at the end of the 1970s. That proved to be a success and the business skills and technical know-how it gave him put Callaghan in good stead when the internet came to prominence in the 1990s. His solid grounding in business and the knowledge which comes with experience ensured that Callaghan and Leighton took advantage of the new technology, yet emerged unscathed from the dotcom boom and bust. In fact, the group did very nicely from the experience, although Callaghan puts it partly down to luck and timing. He sold domainnames.com, a globally successful domain registration business, to American company Verisign at the height of the boom in 2000 and the proceeds from the sale have helped to fuel the Leighton group’s ongoing expansion. As part of the deal, Callaghan went to run the European arm of Verisign in Brussels, an experience he says was rewarding in many ways but did not replace the North-East in his affections. “I saw a lot of Europe and a lot of the things whetted my appetite to come back to the North-East and see if I could help to create a similar prosperous hi-tech region as I saw in France, Germany, Sweden and other countries.” Since returning to the region last summer, Callaghan has been as good as his word. As well as his work with Business Link Tyne & Wear, he is also a founder director of the Entrepreneurs Forum, a group of successful business people from the region who aim to pass on their skills to the North-East’s next generation of entrepreneurs. An optimist by conviction – he talks of Sunderland spending just nine months outside the Premiership – Callaghan sees the future for the North-East as bright, even in its darkest moments. “It’s very sad when you see a major closure of a big plant in the North-East, such as we have seen recently, but what we hope is that out of that set of ashes will rise new entrepreneurial businesses,” he says. “People will recognise that they can do it themselves and will try to build something of their own.”