From the brink of bankruptcy to BILLIONS: Sir Richard Harpin

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In this week's episode, Stephanie Melodia interviews Sir Richard Harpin. From running out of money to building a business worth billions, Sir Richard Harpin is the co-founder of HomeServe, the home repairs and insurance business he started in 1993 before scaling it to a multinational serving millions of customers, listing on the London Stock Exchange, and becoming a FTSE 100 company before being taken private in a multibillion-pound deal.

A passionate advocate for entrepreneurship, Richard is the author of 'How to Make a Billion in 9 Steps' - sharing lessons from his journey building one of Britain’s most successful companies.

He is also the founder of Business Leader, a growth programme that supports founders of £3m+ businesses, combining CEO coaching and peer forums, powered by the proven 9-Step framework in Richard's book, alongside practical content, masterclasses and company visits so you can focus on what matters and scale with confidence. Richard also invests in founder-led companies.

Watch on YouTube via the link below or keep reading for the transcript, where Steph and Richard discuss:

• Co-founder relationships Richard and Jeremy Middleton's 30+ year partnership worked because of clear role division and mutual honesty, even when Jeremy once told Richard to give up entirely.
  

• Near-bankruptcy to breakthrough Down to their last £10,000, a direct mail campaign with a 3.8% conversion rate saved the business and sparked the HomeServe home insurance model.
  

• Entrepreneurial mindset Copy and improve proven models, bootstrap where possible, avoid growing too fast, and embrace persistence and optimism when your back is against the wall.
  

• Knowing when to step aside as CEO Bring in an experienced CEO at the right growth stage, recruit slowly, and let the founder focus on their true strengths (vision, BD, international growth).
  

• Mentorship and persistence pay Richard didn't find his first mentor until 2009, but swears by it — illustrated by cold-calling Nigel Morris and flying to DC the next day to secure a meeting.

SM: Wonderful to have you here. So I've also had the pleasure of interviewing your longtime collaborator and friend, Jeremy Middleton, with whom you cofounded HomeServe. Now lots of things have struck me about both of you, but one in particular is the duration of your collaboration. You both started working together at Procter & Gamble back in the 90s. You tested lots of various business ideas before eventually landing on HomeServe. That's over thirty years ago at this point, so lasting longer than some marriages. (If anything, I think business is more testing than marriage!)

So, for co-founders listening into this specifically, what's the advice you can give for that long lasting relationship?

RH: Number one, it's about finding a great business partner and then being very clear about, the roles that each of you should fulfil. For Jeremy and I, at the beginning, we were sort of testing and learning, looking at multiple different business ideas. The one that we struck on that we both agreed was, in Newcastle at the time when we worked at Procter and Gamble, the big opportunity was, a shortage of young professional shared accommodation. Mhmm. So we together bought about 10 houses and, let out the individual rooms and dining rooms at £40 a week at the time. Well, how you remember?

And, that then led to our, our next business, which was, the biggest problem with the property letting business was, a tenant would ring on a Friday evening, always a Friday evening, saying we've got water pouring out of a radiator or a blocked drain in the backyard, and you could not get a, Geordie plumber for love no money in Newcastle on a Friday night. They're all out drinking. So that then led to the emergency operation. But the key thing was, we agreed that Jeremy should run some of our businesses. He ended up running our management consultancy, our property letting an investment business, and let me focus on running the, the plumbing business that then became HomeServe.

And was always involved in a non exec capacity. He was one of the people that could always tell me the, the brutal facts. And I'd always listened to him. Been there in the background for thirty years, and great that we're still best friends, and that, I'm godfather to his eldest That's so lovely. Jessica.

Aw. And he's godfather to my eldest, Jemima. You guys have relationship goals. Everyone is shipping you in the business world at least anyway. Have there been any moments where you've maybe, like, you know, you've stepped on each other's toes where it hasn't been that straightforward, especially over the course of thirty years?

There must have been some moments where you didn't quite agree. It was one really difficult moment. And that was when we'd run out of money for a second time down to our last £10,000, and through half £1,000,000 of, the water company investors money. Wow. And, this was a really bad situation.

My lifetime dream was to be a successful entrepreneur. Mhmm. And, here we were, run out of money. There were now 23 people in the business, all fearful they're about to lose their jobs. Jeremy came to me and said, Richard, that lifetime dream of yours of being a successful entrepreneur, you've got to face it's over.

You better go back and work for Procter and Gamble. And you know what? When you've got a life's dream, I had to make it happen. Fortunately, I'm an optimist. And I do believe that when your back is up against the wall, you can occasionally have a bit of luck.

Mhmm. And I had a little bit of luck. Somebody called me and said, have you seen this, water company in Surrey? They've developed a plumbing insurance product. I remember getting in my car, driving down from Birmingham to Surrey the following day, and finding some of those Sutton Water customers that had bought their plumbing insurance cover.

I copied the model, improved it, and literally with the final £10,000 before the business went bust, we sent out a thousand mail shots branded as South Staffs Water plumbing insurance cover for £50 a year. T eight customers sent in the check for £50. A 3.8% take up from direct mail. I remember getting on my office desk in front of those 23 people that are about to be made redundant and said, yes. We've made it.

And that was the breakthrough moment. But it was, I look back and think, that was really hard even with my best friend and business partner saying, sorry, Richard. It's, you failed. Well, this is my point. Right?

Lasting longer than some marriages. I think business is in because you've got the money involved, especially when your back is up against the wall. I was gonna ask you about that as well. You mentioned lady luck had a part to play in that situation. My signature topic is actually all on hacking luck and how we can stack the odds in our favor.

So, yeah, being backed into a corner definitely pressures you to kind of, you know, sink or swim. It's an existential crisis. What else, thinking back to that specific moment, do you think helped you to come back stronger and not have to go groveling to P and G again? I I think it's the inherent baristics that you need as an entrepreneur. Persistence, resilience, always being able to turn a problem into a bigger opportunity, being an optimist, finding a way through.

Yeah. Just finding your way through. Right. Incredible. Something else that stood out to me about both you and Jeremy is how nice you both are, which is quite rare, not only in the business world, but especially when you reach, like, the heady heights of success that you both have.

In fact, there was one account who posted on a YouTube video, proof that nice guys don't always lose. What a top guy. But, of course, success at your level usually involves hard calls that sometimes upset people. So how do you balance being the nice guy versus having to make those tough calls in business? I think kindness is one of the skills that's really overlooked and undervalued in business.

And business is about long term partnerships. And therefore, you can be successful and be nice. I do have another friend. I won't mention his name who screws every last pound out of a deal. And I think it's short sighted because people will then say, well, not gonna deal with him on a, another deal.

So, I think it's really important that you, see life as, long term. That you always want people to say that was a nice experience working together. It doesn't mean though that if you've got somebody business, let's imagine that they've worked for you for ten years, but the business has now outgrown them. You've got to have that difficult conversation. You've got to confront the brutal facts, but it would be, today we're gonna part company.

You've done an amazing job. I really appreciate all your efforts. But now we've got a mismatch between what we need, the skills in this job, and, yours. You're gonna do really well elsewhere. I'm gonna get reference and a financial settlement, and let's stay in touch as friends.

But you've got to have that conversation. Absolutely. But do it in a a kind way. But, we all, I think, in business look back and say, we should have had those conversations earlier. Definitely.

Yeah. A running theme on my traditional closing question on the show, which we will, of course, talk about is one tragedy that's taught you an unforgettable lesson. And a lot of the time, it is that. It's not pulling the plug quickly enough. It's not making those hard decisions quickly enough.

So, Richard, I absolutely love how you you you really let business leaders know that you can still make those tough calls and have those difficult conversations, but you can still do it in a nice way. So definitely very, very inspirational there. I guess circling back to your cofounder relationship with Jeremy, you're both on the same page with that too. Right? Like, thinking long term, not burning bridges, valuing relationships.

Was that something that you just kind of clicked on when you first started working together or something you both had to kinda nurture along your collaboration? I think you learn along the way. This is all about business is about trial and error. It's the reason why I made so many mistakes in business. So I make sure that, others at an earlier stage in their entrepreneurial career can get there quicker than I did, making, fewer mistakes.

Yeah. What's the biggest mistake you see early founders making? Trying to do too much. Maybe trying to grow the business, too quickly and too big like I did, and then you, you run out of money. Key bid, I think, is I've got a lot of admiration for any founder that can bootstrap the business, test and prove the model, copy from elsewhere because we're taught at school that copying homework is bad.

In business, I believe copying is a a great thing to do. Improving that, pivoting, researching, testing, and making sure you get the right business model. That's absolutely critical to success. Try and do it on a limited amount of money, ideally your own money. If you wanna bring an investor, that's also a good thing to do, but do it when you press the accelerate button, and you need somebody that has scaled a business that can help you to get there.

Exactly. Yeah. That makes perfect sense. Don't give up a majority shareholding, the 52% that Jeremy and I needed to sell in order to get that half £1,000,000 worth of investment. Ideally, you're selling a minority, and you're doing it to somebody that is not just providing the cash, but is providing that help and advice.

But that is show rather than tell. Yeah. Makes sense. Well, no. Serving me, that segue on a platter there.

What is it that you look for in an investment deal? First and foremost, business is about people. So it's that founder entrepreneur and, somebody that even if the business plan changes, and it always will, that they can turn a problem into a bigger opportunity. Mhmm. I don't want somebody that says, well, we didn't deliver the numbers because Brexit or COVID or cost of living crisis or Trump tariffs or Ukraine war.

A great leader will take any of those problems and say, they don't matter. We will find a way through and turn them into opportunities. Then it's about, I'm only investing in businesses where, me and my team have got some expertise and we can provide that help. So it's around consumer and consumer services, retail, health, and tech would be the, would be the main sectors and focused in the The UK. And any sweet spot in terms of stage that you would come in at to turbocharge their growth?

Yeah. These have got to be businesses that, want to scale. And the big issue that we've got in this country today is that, we have loads of startups Mhmm. And some venture capital money to support those businesses. We only have seven and a half thousand large companies, so that we need to create more large companies.

So My Capital from Growth Partners is focused on backing scale ups. Yeah. Typically, these will be businesses that are already making between 2 and 5,000,000 of profit. And can we help them to be the next billion pound business, or at minimum turn into a very large and successful company? Yeah.

Love that. Okay. Makes sense. You You talked about optimism, and I think it is so easy as you listed out all these cons, whether it is Brexit, tariffs, whatever. The list can go on and on.

Is there a way you test for that? Because I imagine in any sort of pitching or even interview scenario, obviously, everyone's gonna put their best foot forward. But how do you as an investor test that someone's got the resilience and the optimism to take this company to the billion pound level? We're looking for some of the characteristics which would be level five leadership as Jim Collins would call it. So, curiosity, resilience, and persistence that we've already taught.

People that want to learn, that are prepared to listen. They're hardworking. They will roll up their sleeves, but they also, appreciate the benefits of hiring great people that are, better than themselves. That was pretty easy for me because, I'm not very good at much stuff, so very easy to hire people that were much better than me. I definitely wanna ask you about that as well.

But before we do move on, can you give me an example of some of those killer questions? Yeah. So, my number one question I always start with is, what was your childhood achievement? And I'm looking for something that's a bit quirky or different that overcame a barrier. I then be looking at, what are your biggest business achievements?

What did you do that somebody else in that role wouldn't have been able to do? Mhmm. And then, what motivates you? And this is not about sort of money and success. It's the the warmer stuff underneath of having a real purpose for the business, which is really, really important.

That deeper drive. Working with great people, bringing in people better than myself and, wanting answers like that. Yeah. Yeah. Fantastic.

The first two are looking at empirical data, like evidence of past successes. Do you have a particular childhood achievement, something that you overcame when you were much younger? It was really about, I was the, the red headed, freckly, ginger kid. And, so I had to sort of and I was pretty introverted. So I got to really push myself on getting into business early, and then getting myself on stage.

So I was, Ricardo, the famous magician of the North, on stage at the, Imperial Hotel in Harrogate in front of, 500 colleagues that were all members of the, the Northern Magic Circle at the annual convention doing one of my tricks as a, seven or eight year old on, on stage. That's incredible. I never knew you're a magician, Richard. That is amazing. And that was sort of it was pivoting from my very first business, which was, breeding and selling New Zealand white rabbits to all of my, friends at school.

And then thought, what do I do after that? Because they only want one rabbit. Well, they go on holiday for two weeks in the summer. I'll run a rabbit kennel so they can bring the rabbit back, and I'll, charge them to look after it for two weeks. Oh my god.

This is amazing. Why did you wanna be an entrepreneur at such a young age? Who did you look up to dream come from? It was, it was going back to when I was four years old, and I was born in Huddersfield in West Yorkshire. And I remember to this day, my father putting me on his shoulders, and we looked over the wall of the big house at the end of the cul de sac, and it was a Sunday, and we watched the helicopter land.

I remember saying, dad, I want one of those. He said, well, don't be in the civil service like me earning a pittance. You need to run your own business. That was when I knew that I wanted to be an entrepreneur even though the word at the time. I found out about three years later, it was Lord Hansen, the famous industrialist that was flying his helicopter in to land on his parents' lawn for, for Sunday lunch.

So that was he was my inspiration, and that was why I got into business age five or six. That's so amazing, Richard. I didn't realize you're a magician. I did read on your LinkedIn profile one of your first businesses was selling Conkers. I mean, between Conkers, rabbits, caring for through to home emergency repairs.

I mean, the amount of businesses you've tested must be, like, in the tens, if not getting up to a 100. Right? Have you counted them? No. Maybe we yeah.

Maybe I should, but I think Yeah. The key bit is you learn from those. Yeah. Exactly. They certainly weren't all successful, but you learn more from your mistakes.

100%. And that's why I'm a great believer that, mentoring is so important. Yeah. Yeah. And I'm amazed by the growth workshops that I run-in my home in Marleybone every week for, entrepreneurs that are running a business turning over between 3 and £100,000,000, that, there'd be a show of hands around the table.

Who who here has got a mentor? And only one or two hands would go up. Wow. And, yeah, I think that's one of the most important things, because if you can find the right person that can help you with that problem or opportunity that you're trying to solve, they've got the gray hair, they've made the mistakes, they've got the experience, and most successful people have had mentors. Yeah.

More than one. And so they're all happy to give something back. You only need to identify who you want and knock on the door loud enough until they submit and say, yes. Yeah. That, that value or behavior that is persistence pays.

100%. Richard, I could not agree more. Hence, number one, the name of the show, strategy and tragedy because the best lessons come from the biggest mistakes. My regular listeners when I say that on a weakness. But also, it's literally what I I do for a living because I experienced that firsthand with my last company.

And to mention very briefly, on the way here, I had some voice notes from a from a mentee of mine who, who said all of her friends were encouraging her to go down this direction. I was absolutely adamant against them taking. They're like, this is this is why I don't have, lots of gray hairs, but there's one or two mixed in there. But I I do I completely agree. Did you have any mentors then throughout your entrepreneurial journey, or were all of these just testing and learning?

My, my first main mentor was not until 2009. Wow. So a long time into, into HomeServe. Yeah. And, we'd been in America for six years at the time.

The business, I've got a great chief exec that was running it, but it was going much more slowly. And I was aware that America is a graveyard for many British entrepreneurs. And I identified a guy called Nigel Morris, a Brit. He was a cofounder of one I know him too. Credit card company.

He's also been on the show. Right. And, so I thought he's cracked America, and he's a Brit. He lived in Washington DC for eighteen years when I, tried to get in contact with him. I emailed him.

I sent him a a letter, a DHL package, and, still no response. One evening at 11:00 UK time, 6PM Washington DC East Coast time, I had his landline landline number, and I, called him. And lo and behold, he answered the phone himself. And, I said, you know, I'm a struggling British entrepreneur trying to make it big in America, and I just need one hour of your time, Nigel. And he said, oh, I'm really sorry.

I do remember you now. Sorry that I ignored all your communications. Persistence pays. Next time you're over in America, I'll give you an hour of my time. I said, it just so happens, Nigel.

I'm in Washington DC tomorrow afternoon. Of course, I wasn't. Yeah. I got on the next flight out of Heathrow. 2PM the following afternoon, I was in his office, and he gave me two hours of his time.

And he held back and conquer America. Bravo, Richard. I love these I was not expecting at all to recognize the name you were gonna say there. So what a small world. Tune in to my interview with Nigel Morris after this.

I'm glad to hear I'm not the only one that he ignores. Sometimes he's a very busy guy. I love love love hearing those stories of persistence, how creative you can be to kinda get someone's attention. That's such a phenomenal story. Alright.

Something we've touched on that I wanna come on to as well is you've mentioned already a few times about hiring talent better than and I know you stepped down from HomeServe as a CEO. Now I firmly believe that founder and CEO do not always go together, especially when you're at the growth stage of business. At the beginning, it's fine. You're chief everything officer. But when it's time to let go of the reins, it's easier said than done.

So for people who still have that double barrel job title, founder and CEO, what are the signs that it is time to let go and bring in a better CEO to lead the business? Yeah. It's absolutely the magic model. It's my step number five, hire your replacement. And as entrepreneurs, we're really really good at copying, pivoting, coming up with a business model that works.

When you get to the size that you now need to scale, really important that, you bring in a, experienced chief exec. That doesn't mean that the founder is leaving. You just work out what you're really good at. That could be owning and designing that. That could be chief salesperson, business development.

Find your niche that you're really good at. Bring in somebody to run the day to day. Because I think as entrepreneurs, we're not that focused on the routine of the day to day business. It took me eight years before I realized that I was a rubbish chief exec. That, at the time, we only had a UK business.

I'd hired somebody that was business development director. After a year, I thought you've done an amazing job, and called this guy into my office and said, Jonathan, you're promoted. I am giving you my job, MD HomeServe UK. That then meant I could work on the business rather than in the business and started thinking about, I wonder whether HomeServe would work in a foreign country or not. Yeah.

What was it that made you realize that you weren't perhaps the best place to CEO of HomeServe? Because, I didn't like the routine of the day to day, that the vision and the strategy, the door opening, and figuring out international growth. And if you said, what was what was the biggest thing that then sort of turned HomeServe into a, a billion pound business? It was replicating that model and saying, as we go into each of the 10 countries, we're gonna hire a great chief exec and put them in, give them a level of autonomy within our, strict business model, and they will make that operation a big way, in a particular country with people on the ground. Mhmm.

What are some of the other specific signs? If someone is listening into this now and they've still got that founder and CEO job title, and maybe they're at a point where business is starting to scale and is definitely out of that early stage scrappy startup phase, What are some things that they could maybe resonate with to say, okay. It's time. In order to take this business to the next level, I need to delegate my job here. I think it would be, the time of every weight of the business sits on my shoulders, and I'm working incredible hours.

And I need to be hiring that c suite team of great talented people. And then when you've done that, say, well, actually, maybe they should be reporting into a, a trained chief exec, and you can then step up to chairman or chief product officer or something that is crucial within the business, but you're working hand with that professional CEO that's done it before and can help you turn your, business into something really, really large, valuable, and exciting. Yeah. And from a more emotional perspective, because obviously, when it's your own business, it can feel like your own baby. Have you ever had any community members maybe within the business leaders program who have just struggled emotionally to let go of the reins?

And if so, how have you helped them get over that? Yeah. I think there'll be some that say, well, I don't want to hire my replacement and I do want to grow. And in which case, that's, that's fine. But maybe they're over the opportunity and they're not going to be as big as they, possibly could take the business to.

Yeah. And then what would be a checklist that you could give someone for a brilliant CEO to bring in? Obviously, it's gonna vary from business to business. But, again, what would you test for to be able to trust this person can lead my my business? Let me turn it around the other way.

When does it go wrong and why for a founder that, is hiring a chief exec? And that is they bring in a big company with loads of experience, And that person comes in and says, oh, I've got to hire all of these expensive people to do my work. I'm gonna bring in management consultants to, help advise me on what to do. And there's a mismatch on cultural fit. So I would say you've got to look for somebody that is, proven on paper that they've been the MD of a business.

You can see that it's grown the revenue and profit, and you wanna say, come to the sand, do it again. They will come from a medium sized business, not a large one. Yeah. And the key bit is recruit slowly, take a long time, make sure that you do a final interview which is come and present on 10 slides, your three year plan for how you're gonna run this business. If you're not learning something from those 10 pages and getting so excited about wanting to hire that person, well, keep looking.

Don't hire them. Even if you're desperate, the difficulty in hiring the wrong person and then having to let them go, far better to know that you found the right person. Absolutely. It's one of the biggest truisms, isn't it? Hire slow and fire fast.

The other bit is take a ten minute call on mobile, to get a genuine reference from somebody that you know that knows this person and will give you a highly confidential off the rack. Would you rehire this person, or what do you know about them? Are they as good as they say they're gonna be? And that is so, so important, and you've got to do that call yourself. Yeah.

Great tips, Richard. I love that. Really practical great tips. And as I'm listening to you, I'm thinking to all these other examples where they've fallen into those same traps. And not necessarily even just at CEO level, but even bringing in you know, my background is in marketing.

If they've suddenly, they've got this venture capital funding, and they've now got the resource to bring in a senior, you know, head of marketing. Or they look at the shiny logos. They've come from all these big companies, but it's just such a mismatch because they've come from this world where they've had a team of 20 people to manage. And it's like, well, even though you're out of that scrappy start up phase, you're still, you know, going through that scale up journey. So fantastic tips.

We mentioned some of the common traps that founders fall into. Maybe it links into my next question here, but we've got here How to Make a Billion in Nine Steps, your fantastic book. Thank you for bringing this in. Can you give us a bit more of a teaser of maybe one or two of your favorite steps from the book? Yeah.

Let's take, step number four. And, you know a bit about this given your marketing background, Stephanie. This is quite surprising, I think, this step, given that surely we're in a digital marketing world. And why am I saying that my step number four is bricks and clicks and paper.

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Strategy & Tragedy: CEO Stories with Steph Melodia is the best podcast for curious entrepreneurs and ambitious founders. Learn from those a few steps ahead of you in these candid interviews of the highs and lows of scaling and failing business.

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About Stephanie Melodia:

As ex-CEO of an award-winning marketing agency, Stephanie now hosts Strategy & Tragedy, advises MBA students with Oneday, coaches founders 1:1, and travels the world as an international keynote speaker on her signature subject of ‘Hacking Luck.’

She has delivered impactful sessions for household brand names including Qatar Airways, Soho House, WeTransfer, LinkedIn, Xero, Harvey Nash Group, Web Summit, and more - leaving audiences feeling inspired, motivated, and energised.

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