The London South East, Investing Matters Podcast, Episode 18, George O’Connor of Goodbody Stockbrokers

LSE 00:01

You are listening to Investing Matters brought to you in association with London South East. This is the show that provides informative educational and entertaining content from the world of investing. We do not give advice, so please do your own research.

Peter Higgins 00:18

Hello, and welcome to the Investing Matters Podcast. My name is Peter Higgins. And today we have the privilege of speaking with the usually talented George O'Connor, who is now a IT analyst at Goodbody. He’s got over 25 years’ experience of working in the industry. As an analyst, a fantastic analyst I've been following for years, made a fortune from George's ideas and analysis. So here's why I've got George on the show today. George, thank you very much for joining us.

George O’Connor 00:50

Hey there, Peter, delighted to be here. And of course, big shout out to everyone at Investing Matters and your community. I'm a big fan and a supporter.

Peter Higgins 00:59

Thank you ever so much, George. Now, I've got to start really with you've done your studies, double honours in BA European Studies at University of Cork, and then you did interpretation of financial statements, which I think everyone needs to go and do because it just keeps changing so frequently, how we should analyse and look at financial statements. And we're still scratching our heads going “I'm not quite sure what this is all about!” And then you've got the investment management certificate, IIMR, But you started your journey really at IDC as an IT analyst and you spent, I'm going to go through some names here now.

Granville Davis, Arbuthnot Securities, Shore Capital, I think we were at first started looking at your work, Panmure Gordon, of course, and then Stifel and now we're going to start a new role at Goodbody. I want to ask you, George, with regards to that journey, starting at IDC, your learning, your journey, what you took the most out of those 20 odd 25 years of an analyst, it seems so much come and go. So what's been your greatest learning mate?

George O’Connor 02:04

Thank you, Peter, for reminding me that I've worked in lots of places. So essentially, if I back off, I'm a one trick pony. I'm an IT analyst. So I started out with IDC, as you said, and there my job was to work with buyers of technology suppliers of technology, government, IT asset managers, and really put forward to them or answer the question for them, what's the economic impact of IT futures? And that was really exciting. And because of my inability to say no, similarly here, I found myself doing a lot of high profile stuff. In terms of the UK Tech community. There was one particular instance, I was on a podium with Bill Gates, Peter, free your younger investor community to think of Bill as a sort of as a version 1.0, Elon Musk. I'm there on a podium. Where is Bill suddenly the screen comes down and a voice says sorry, I can't be with you today.

I was so lucky that the audience did not have a load of rotten tomatoes, because I was I was first in line. And so that was fun. Shortly afterwards, I joined the capital markets land with Granville Davies, I don't know if you can remember Ruth Keech and Graham Cole there. But at the time, we were talking sort of late 90s.

Tech was a sub sector of the support services sector. And what investors really wanted was, how do they bits and pieces so how do the gears work? In terms of the tech industry? What goes where? What should I be looking at? And you know, can you find me from the UK some of the glamour that we're seeing on the NASDAQ side, after that we had dotcom, most of dotcom was about being headhunted and start to my own.com Both of these experiences are very short lived, long hangover. And then in fairness, I joined Panmure Gordon, and that was with I don't know if you remember because Tim is still around. Tim Linacre, you know, huge hat to Tim, Philip Whale, Patrick Johnson, Tom Nicholson, Giles leather, super individuals. And we just started a purple patch in terms of tech IPOs and that was really exciting to take, you know, brand new companies into investors and learning all the time about startups and scale ups.

What does good look like and what are the success factors? So we started out with Escher, we went on to do WANdisco, we did Eagle Eye, we did Focusrite and many others. That was a wonderful time, with Stiefel. I thought we could scale that up. Unfortunately, they've gone a different direction. So now yes, I'm with Goodbody, really excited by the opportunity here. So Goodbody, just very quickly founded in 1876.

So that long term thing is critical for me. In addition, the investors spanning the UK, US and Europe. And that's very important. But the icing on the cake is that AIB acquired them October last. So now there's a massive balance sheet in there as well to create that rounded offer spanning capital markets, corporate finance, asset management, and of course from that balance sheet the ability to do new things and scale. So very excited.

However, I've got to put a caveat on that by day three, I've only just discovered where the loos are. George doesn't have enough yet.

Peter Higgins 05:32

Absolutely brilliant. Now, you mentioned that obviously, got purchased they'd previously owned it, the Allied Irish bank, and they are the so-called one of the big four commercial banks in Ireland.

So you're in a massive company there, George, you've already got as a stockbroker, under the 38 ish million what they were purchased for, and more than 8 billion on their assets and 300 people already. So you're joining the big team mate again. So you've mentioned being headhunted, and you've been headhunted all the time. That's why you've been all these places over the years, talent is always sought after George.

George O’Connor 06:05

But the other side, Peter, it we both know, we also have the great resignation dynamics going on. In fairness, it's something I've been talking about and writing about for the last 18 months. So you can say Peter is George, it's about time you started eating your own dog food.

Peter Higgins 06:22

Well, talking about eating, you've eaten quite a few awards George, the best IT analyst in a few years running in different places. So tell me about that. What's the competition like in the sense of you are out there amongst globally all these different analysts covering all these different stocks? What enables you to carry on being at the top of your game and what should people be looking for when they're read analysts’ reports?

George O’Connor 06:45

Curiosity, I love what I do. And I'm in a privileged position. And I have a seat where I can talk that like in the old days, when you can talk one on one to Bill Gates should be beside to show up, you get this great access to companies. And you also see the new stuff early, if I can put it that way. And technology in terms of its lifecycle, it starts out by basically replicating existing processes, you know, do this a little bit better or a little bit faster. And then what you see from a pattern of usage is that people use it to do brand new things get into adjacencies, explore new markets.

Once upon a time, I go to Amazon to buy books, and now look at it in huge in terms of a cloud infrastructure company. So there's this constant change this constant refresh constant upgrades, so it's just a really exciting sector to be in. Now it is absolutely small in terms of the UK universe so far bigger in the US, but the team at LSE have done a massive job these past few years in encouraging new companies to start listing on LSE.

So it's just such a fun, exciting time at the moment. In terms of my superpower, which I see as being curiosity, I want to get constantly deeper to the companies if I can slightly get on our soapbox for give the indulgence what method two has done, instead of generally created more broader diversification of sell side research there is less committed now to text than there has been a sort of a grey market in terms of ideas around companies. And I'm fundamentally opposed to that.

For me, technology is about the democratisation of ideas and companies and concepts. So we all improve and as a general growing awareness in terms of technology, both amongst the institutional world but also in terms of the private investor world as well. Indeed, if we look at NASDAQ, there, you can see the increased importance of the retail investor. And we are going to start seeing that on LSE as well. And what we need to do is educated form as much as we can.

Peter Higgins 09:01

Appreciate that candour mate. I mean, you mentioned your superpower, though and with regards to curiosities, I'm going to expand on that a little bit if I may, which imagine aspects of Software and Information Technology do you envisage as invested, we need to look forward to the most you know, what's going to be the one that's the internet of 1990-2020, what we're looking at in your space that investors should keep it really the big eye on?

George O’Connor 09:25

Okey dokey. So first of all, thank you for talking to the lifecycle model of technology. It's a view, I absolutely support, and subscribe to and in that we've seen waves of tech, and you'd say, well for sort of growth or a tech analyst, you're going to be looking to track the wave that is absolutely the case. And I fully support that. One of the reasons why I'm so excited at the moment is that there's so much happening at the tech infrastructure level.

Now the UK has not been great historically in terms of tech infrastructure, typically lead tech in UK is really around the sort of the application of technology rather than the creation of it. However, if we back off onto our lifecycle curve and look at infrastructure, we can see there in terms of cloud infrastructure, we look at it in terms of quantum computing, we look at it in terms of blockchain, we look at it in terms of security and privacy.

And we also look at it in terms of 5G. In each of these areas, we can see accelerators, and these accelerators will then come to fruition in terms of new use cases, and absolutely new startups and new companies. And for me, you can criticise me, Peter and say, George, do you know,

I've heard about all of these before? And I'm gonna say, Absolutely, you've heard about all of these before. But the whole sort of time is right, we've wasted two, well, two and a bit years in terms of COVID and pandemic and lockdown. But if we look at the pattern of usage that really accelerated from COVID, so, for example, work from home, so we can do this have this conversation pretty much anywhere. And those forces are now being unleashed. So you had the eminent and the hugely impressive, Reg Hoare on last week, and in the old days, you would have had to go around to Reg’s hallowed offices. And now you can speak to Reg on the end of the connection, and he's possibly golfing in Andalusia, or he's sitting in his swim shorts beside his swimming pool. That is just a wonderful world that we are living in. We can work longer, harder, but be more productive, and do it so much more on our terms. It's a magical world we are embarking into. Absolutely, your timing today is horrific, NASDAQ 30% year to date, in terms of our own UK market software and tech services down 29%. Pretty well, hundreds all over the place, but 3%.

But this is a great time to have a reset tech valuations came off the boiler last October. So we're used to it, we know exactly what we're doing in terms of valuations and stuff that was expensive, is now so much cheaper. And we also know, why is it cheaper, So huge opportunities abound.

Peter Higgins 12:22

Yeah, I think it's a very interesting point you make there regarding that almost a hype cycle goes on regarding certain trends in technology, and another industry is as well. And we've got so much going on regarding the technology space. And we've seen so much going on in one particular space, in particular, in a sense of how much sheer vast amounts of money being pushed at it. And that's the metaverse space.

Lots of people talking about it. Not sure quite where it's going to go. We've seen something called the Metaverse Standards Forum just been set up recently with 37 technology companies involved Google, Meta, Facebook, Nvidia, Epic Games, Roblox, Snapchat, etc. building products around the Metaverse.

Now, that is something I was talking on another podcast recently about David Bowie saying this is what the internet is going to be like in 1999. And they all said he was talking absolute nonsense. I think the same conversations happening in certain spaces now where people say, oh, Metaverse, people look at other people go, that person's talking nonsense. Where are you at? Where's your thoughts are the technology as an analyst regarding the metaverse, George?

George O’Connor 13:26

Great stuff and hat tip for flagging the hype cycle because as you know, that was a Gartner Group invention. And if anyone kicked our asses at IDC in the 90s, it was quite well done you for opening a wound Peter that that I thought had scabbed over so So honestly, we must always always be wary of baubles. The tech industry absolutely adores worshipping false idols.

However, we do have to back off and think what is the use case in here? And if I go back to my curiosity, well, one of the areas where my curiosity goes is what is the demand side equation? Is this solving a problem that anyone really wants to solve? What what are the what are the underlying and market dynamics looking like? What you can do is look at the Metaverse and say that's a collection of bits and pieces that is really looking for a home and worse is looking for a market texture, a marketing architecture, rather than technology, architecture to call a home, I would encourage you to sort of sit down with Suranga at Balderton, the VC community is actively investing in this and this for me would be the smart end of the VC community. Our conversation is so one dimensional right now.

Screen technologies. One of things I was involved with back in the 90s was the whole tilt swivel industry and that's where now PCs do this prior to that it didn't there were boxes. And first there were three boxes, the the screen box, the processing box, the keyboard box. And then once there were even just one big box that drove the whole development of ergonomics with the metaverse.

For me, as we overlay stuff, like let's say augmented reality, this whole sort of you know, work from home saying shopping from home, you know, returns being such a huge thing, not just for consumers, but also for the industry as well. Imagine this expert creating this experience whereby the suit, sadly, I don't really wear suits anymore. I've got to upgrade my wardrobe we both know. But when we can look at products and have this sort of relationship with them, admittedly, this is about applied reality, not actual reality. But I really love what they're doing. Let's pick a PLC, the guys at Aveeva FTSE 100 company, we go back to Hurricane Katrina, guys going out only half the oil well is there. What was there, what should be there, we've got to go back to the drawings thing put a call through to Aviva to get the drawings. But imagine now if you could walk through that, and that is the technology that they are developing. And they don't call it Metaverse, but it is absolutely in terms of how the engagement with technology work.

So you know, I'm from the Qwerty generation. For me, it's about tap, tap tap, well, admittedly tap tap tap. And from my children, it's got nothing, it's about speaking to each other. But what if it should really become about haptics and about touching and doing that relationship there? So it's early days? Absolutely, you can poopoo it in terms of what it's trying to do. But if you come back, you can get some really interesting use cases evolving. But there's some really interesting thinking going on in there. And as I said, so the smart VCs are putting thought into it.

Peter Higgins 16:48

Yeah, there seems to be a lot of money going into it at the moment and other aspects of the sector. Now, there's an interesting thing we see often when we're talking about valuations regarding some of these companies. And for us, as private investors, we often seen us the innovative companies talk about total addressable markets, George, for the ordinary investors.

George, how should we measure the potential of a company's ability to penetrate that TAM that total addressable market, because it's all about, oh, we've got access to this billions and billions of market, but actually, you're only an innovative company with a market cap of 10 million quid. So how should we as investors try and assess their ability to penetrate that market?

George O’Connor 17:29

Excellent point, Peter, its success is not just about having the code. It's about product market fit, and then the ability to execute and in fairness, I'd say great timing, as well kicks in. So it's very difficult to do this on a part time basis, you have to do a lot of work, you have to get away from just talking to senior management.

Remember, they are coached to the nth degree, they can take you down a particular path. LinkedIn is a huge resource to enable you to get deeper into companies, because well, maybe unblessed with my sector tech is very gobby, you'll always find people talking and that can be on LinkedIn, R&D, trade shows, London is a great hub, in terms of trade shows, if we're getting that one to one and then from there, you will also find users talking through it.

So why what problem is it actually solving a problem that you want to solve and then where is the underlying potential where this can go and then you've got other again, just thinking online resources, you've got stuff like glass door indeed and other downside of these that it's a bit like TripAdvisor, you know, spent too much time in there. And you never leave your house you've come in shut the curtains, just you know, let's whack up on Netflix subscription and just order in from just eat.

So there's a caution there. But what they do is they enable you to see into the companies and get a better real understanding around your critical point, which is the company's ability to execute.

So sales people leaving left right and centre. Now there's always attrition in sales teams, however, it is more positive than negative. The layoff. Always a useful source, you know, who's hiring and who, who's getting rid of people, and what are the key actors in these companies saying, I'm always going to go back to getting demand side research, and that can come from industry analysts, but also talking to CIOs.

For me, one of the huge changes in the industry has been from the demand side of the equation. So the CIO superhero in terms of COVID getting through that work from home infrastructure deployed rapidly through organisations, but the other side of it that isn't really commented on is that they've also been expanding their supplier base.

So, you know, once upon a time, one of my customers was UK. gov, and the buying agency there, you know, we just buy from IBM, anyone else that doesn't count and that has completely change, where you now have very entrepreneurial CIOs who are picking products from startups and scale up organisations, and really giving them a leg up I can recall a conversation with CIO at Mercedes Benz, Scottish Government recently and it's like, do the bill payers even know that these little startup companies are part of your supplier list? Yes, yes, yes. We, we love them. So that's a huge positive change in terms of the environment. So look there.

Peter Higgins 20:21

I think we've said those really, really important jobs because it's only happened in the last 10 years or so that the importance of the CIO became absolutely pivotal for certain companies, whose always used to be the case of the CFO and CEO with a go to people now, there's potential for the CIO to become the next CEO. That's how important they are. So why do you think that's changed? And why do you think that's so important for people to note the importance of who is the CIO? Because that could be the actual person, male and female, who could actually push this company to further growth?

George O’Connor 20:54

Absolutely correct. And And again, if we go back to our IT model, first of all, it replicates what you've got the status, and then you use it to do brand new things. So what you want is to have the CIOs who are looking forward in terms of enabling business change. And then you'd say, George, now you've got to start talking about digital transformation. And that's where I Peter put the line down and run away. So no, I'm not going to cycle into that. But they will develop and drive business change. So the attributes are incredibly important.

I know I talked about the great resignation earlier. But if we look at our tech companies, as staff are the key factor of production. If you look at R&D and say, well, what's the breakdown in R&D? It's about software engineers creating product. If we look at the operating costs of a tech company, 70% is tied to the people. So the people are absolutely critical in terms of their factor of production. So I'm always conscious, find the individuals, what are they up to?

LSE 21:51

Investing Matters in association with London South East one of the UK is leading share information websites for the private investor community, providing share prices, news and data straight to your desktop, tablet, and phone.

Peter Higgins 22:10

Now, I want to ask you this question, because we often talk about the tech pioneers and leaders and names are often mentioned. Steve Jobs, Mark Zuckerberg, Jeff Bezos, Bill Gates, Sheryl Sandberg, and of course, Elon Musk, which names do you consider that are often overlooked? And you can mention some of the CIOs out there as well, if you want to, I think we're always go to the same group of cohort of people. But there's loads of innovative companies out there with CIOs and CEOs that are doing absolutely fantastic work out there in the tech industry.

George O’Connor 22:38

So let's not do that, because lots of people can go down that route, let's come back one step and say, who were the people who weren't driving growth in tech companies. And there, I would point you to the light. And here, let's just look at the UK. We're then looking globally. So here, let's look at somebody like John O'Connell from the ScaleUp Group. So John's a PLC guy sold out.

Him and his cronies are developing the next generation of tech companies by providing not just cash because you can get cash in lots of different places.

But by the smarts in terms of this is the process. This is the model in terms of how you scale up. That's the name. Let's look at Stephen Kelly. So Stephen Kelly is unique being the only PLC guy who is in two FTSE 100’s, his day job now is running tech, UK, and what are they doing? It's a big industry group. And they are growing and developing the UK tech companies through a range of services.

Really, though, on the advisory side, this is how to do it. This goes to your point, how do I understand the ability to execute? These are people so they have been there done that, that that kind of an idea.

You've got Dr. Steve Garnett, formerly chairman at Salesforce, now investing in companies but it's not just the cash, it's the skills and the awareness. And this is how to do it. You've got I mentioned the exchange earlier, they have, you know, the Future 50 programme, but they've got a whole series of programmes in there, you've got Marcus, you've got Neil Shah, we've got a whole group Claire in there who are going up developing companies showing them this is how to scale this is where to go when you need da da da. And then let's talk all of that. And let's set the seed at the startup.

You've got the likes of Chris Lowe who is also in there developing and growing those small companies. If you go into sort of to the tech industry, you find lots of engineers who are themselves then also investing in startup companies. So we all bemoaned the loss of Arm. I mean, it was horrific that it happened and now it might go to NASDAQ not stay here or dual list. But one of the some of the unintended consequences that lots of engineers came up with. They're clever people who have money and understand the scaling up of a company who can now go in and go for startups.

So it's very easy to say, oh, let's go It's fine. The next Bill Gates, Mark Zuckerberg, but it's the sort of the true heroes are the guys and gals who are in there developing their own companies and creating the next generation of global champions. And I will say they are supported by the likes of scale up organisations and Stephen Kelly, but they're also supported by those highly entrepreneurial CIOs, who on the demand side of the equation, saying, Yes, let's go for that with this solution.

Absolutely. It's not IBM. But this addresses a business need for us. And then let's come back again and say, we have been blessed in terms of the UK with a group of highly entrepreneurial investment managers. So Reg was talking. Sorry, Reg Hoare was talking. You mentioned the team at Herald superb team in there. But you've also got Guy Feld over in Canaccord Genuity, the Hargreave Hale team.

Again, similar thing there Octopus, the team with Kate Tidbury, hugely entrepreneurial, supporting startup scale up companies. There's a list there, we look broader. You've got the likes of Randy Baron from Pinnacle associates in America, a global investor travelling into the UK, using his shoe leather.

So it's that supportive environment that we have now that we never had at all, can be 80s 90s, early noughties, we now have this supportive ecosystem of other people, which is why the UK is in such an exciting spot right now. It's easy for us all to get carried away in terms of fintech. You know, we have the companies, we have consumers in terms of both of us who are early adopters of fun ways of banking, and financial services. And of course, you've got all the capital here as well, given that London is there, but it's not just a FinTech thing. This goes far wider and deeper than that.

Peter Higgins 26:49

I love that response. I'm glad you mentioned Stephen Kelly, because he's one of those that got me interested in literalistic companies that he was with when he left one particular company, I won't name names, but I was like, oh, and I think their peak just before we left, and have not recovered ever since.

So that tells you a lot. I think about somebody. Now, I want to change something up a little bit now and talk about your investing now. Join your family, your own ISAs if you have it, and your investing style could tell us about that. And the diversification if you do have it.

George O’Connor 27:17

Yeah. So sadly, I am the growth guy. So I am incredibly unfashionable and out of favour. At the moment, I do a lot of work in terms of the underlying demand side of equations that is critical. For me, as I said, it's really difficult to do this on a part time basis, I tend to go smaller rather than larger because I'm looking for growth compounders at the same time, because it is tech and both of us know you've got a lifecycle model, your timing can be perfect, but also can be a nightmare. I like to remind everyone of a little startup called Sage.

And I also remind everyone of a little IPO called CaDCentre, CaDCentre became Aveva. Those were 33 million market cap IPOs that struggled to get away. And they are now the two FTSE 100 constituents. So hold on to your winners for the long term, there will absolutely be bumps and Reg and you had a great conversation. And in terms of when markets come off, what happens then? And should you be averaging down and using that as a tactical thing. But for me, I love profit warnings because they flush out the momentum money. And as long as you know, why did that company war, what went wrong? And you're still convinced the underlying proposition remains just as strong. You can get some great bargains in there. So long term preference for small rather than large.

Peter Higgins 28:47

Well, it certainly says something really, really different to anyone I've ever spoken to there George. You said, You love profit warnings. Now most people a profit warning comes and they love the company for the past year and a half or whatever. Love, love, love profit warning out and gone. You just said I love profit warnings please expand on that. For me. It I think that's brilliant what you just said.

George O’Connor 29:10

Okay, well, let's remember Warren Buffett, buy when others are fearful. And that for me is the king. You know, you know, these tech companies. They're all illiquid, you can't buy the stuff where it's going.

And then you can buy shedloads of it all the way that the important thing though, is to know the company from that deep perspective or product market fit. What are the end users saying and what are the internal dynamics the whole setting of glass door indeed put those together. And then you can absolutely love profit margins because you can build holdings at far better prices and momentum will come and go and again, remember Sage 33 million market cap, boom, how many billions today?

So yes, I'm a believer in it. Clearly what you don't want to do is encourage companies to have profit warnings. But once you have a group of companies that you are pretty much sure you know exactly what they're doing, then yeah, the the opportunity that comes along, where you can pick them up and get great timing is a wonderful thing.

Peter Higgins 30:06

Brilliant love that love that now, very important part of what you've just said, there is the value side of it, one of the difficulties that private investors have is valuing these ordinary or tech companies, what in your views a simplified way that most private investors could go about getting to value these companies?

George O’Connor 30:25

So cash is absolutely critical. And coming up with their ability to generate cash FCF Yield is absolutely critical in terms, you're going to say, George in terms of momentum companies, and early stage, and particularly my area, which is the risky side of early stage, they probably don't have cash. And they're at the consumptive side of cash, you can say, George, you know, park that one.

So you go back to growth. And what you do there is you find the underlying characteristics and dynamics of growth. So it has to be growing growth. And what you find there, as you break down numbers and sort of build up a spreadsheet is that you will see, a there's a shortage of growth as a premium put on growth, but also, faster growth gives better end valuations in our IPO days, you can float growth can absolutely do that from very small numbers, as long as investors can see the underlying traction. And customers are saying great things. And you can see an underlying pipeline coming through there.

But absolutely, in the first instance, understand the cash dynamics, make sure the company understands the cash dynamics as well.

Also look at your co investors in there. So will this group fund further cash calls from company ABC as well, in the old days, we tended to look at profitability, that sort of less in favour and simply because it can be flexed. And you'll have a whole series of adjustments that will go through. So that's why I tend to look at growth, in fairness, just because they will use operating cash to fuel growth. So is that payback? Is the ROI on growth actually delivering anything?

Peter Higgins 32:03

Okay, so with regards to the growth stocks in your portfolio, how much of your portfolio is made up primarily of growth? Or is it all growth? Are you just purely down that track of come on that's have it!

George O’Connor 32:15

Your theory of being very harsh, and I think you're, you're referring to the hangover from the dotcom times, because then what happened was, investors looked for returns. And the key was, so they had cash, and they're giving it back to me.

And there were some great stories then where they could do growth and returns, and you have this whole dilemma should they be doing returns are growth, and a lot of investors like the income stream because it shows competence in the underlying cash flows of the company. So that's a plus.

For me, you can get better dividends elsewhere, you don't need to go to tech for dividends go elsewhere. But sadly, I am the growth guy, splurge it on the growth, there is no shortage of opportunities and use the cash to fuel your ability to execute on sales and clearly come up with sort of absolutely great products as well. And I can't go away without mentioning ESG, ESG is absolutely critical. And you say well put a P/E on ESG.

That's something we're all struggling with. But absolutely ESG has come from the demand side of the equation. So buyers of technology are really keen on ESG, there's company that we floated, called TPXimpact was floated as the Panoply, superb company, the CEO there Neal Gandhi from the design stage ESG was a critical driver for him. I confess, I never really got it till I sat down with his customers who utterly stressed the importance of it. So I'm a big fan of that. And you're always trying to how do I put the P/E? on ESG? But it's absolutely it is important.

Peter Higgins 33:54

That's a great point there on P/E on ESG. I like that phraseology. I'll use that part of what you've just said there and go to the question I was going to ask a bit later on. How has technology changed the face of investing and what lies ahead? And you've already touched on ESG aspects of it there, George.

George O’Connor 34:08

So growth solves all problems. And the absence of growth creates and magnifies problems to your point on Stephen Kelly leaving their company absence of growth and that sense that there's that great consistency, it does not change, we still don't have enough listed software and tech services companies on LSE.

So we need more investors understand. We have in London now an educated investor group who understand tech, but more importantly, they are entrepreneurial. And they will invest in tech rather than just look at it from afar. So that sort of widening of the sphere of interest is hugely positive. I commented earlier in terms of London, we don't have a huge number of infrastructure technical, we have lots in terms of the application of tech. And I would imagine that we will continue to see that of course everyone can say, well FinTech because that's so evident and sort of omnipresent for all of us. But we can look beyond fintech.

So for example, the pandemic was all about health tech. Well, it wasn't all about health tech. But it spawned a whole generation of health as the NHS, you know, massive on the demand side of the equation was comfortable enough to spawn this whole generation of little tech companies, and hat tipped to the CIOs in there on the procurement side. So that will continue to be great.

Retail Tech has always been strong in the UK, simply because of the demand side of the equation has favoured it and said, Yes, please, we'll go down that path. And you will see that as well. Reg tech, government tech, the whole digital transformation will also be large spawning lots of new companies in there, I have a personal weakness in terms of robotics, and what's going on there, particularly as that fuses with database, there's so much fun stuff going on in that neck of the woods, very strong use of propositions. And when when we think of sort of, you know, tech inflation, much of that is around a skills shortage in terms of an absence of people and bodies. And that can be addressed that way.

That said, on that, if we go back to the sort of to that sort of, you know, hangover, from dotcom, that time did spawn, the whole offshore movement, would like sort of UK gov as it goes into the world, to sign relationships with other companies to remember that it must nurture and develop the UK, young graduate, young STEM graduate. So my youngest, Emily, in Emily's class, everyone wants to do STEM previously, everyone would have wanted to do PPE, so we can see it sort of coming up there, and they need to be nurtured. There are a number of POCs. With academies, I don't know if you know, FDM, Kainos, TPX, which I mentioned, UK Government needs to positively support them, in terms of opening contracts, for the likes of those companies who are in there, at the front line developing this next generation of young software engineers, let's not have all of the entry level jobs go offshore, and that let's not repeat that mistake, this time.

And then of course, then to build up the UK apprenticeship scheme as well to encourage companies to hire in younger, new, younger, green raw graduate talents.

Peter Higgins 37:23

You mentioned, the growth of tech and the need for the governments in the UK to actually manage all that growth and encourage that growth. But one of the things you've touched on there also is that there's not enough tech companies listed. And when we do get some good technical companies, we don't nurture them. And we don't we don't have anything the scale of Microsoft or Apple, the last big one, we had major, big one was Arm, and we ended up getting that I always say stolen, you know, I actually held the stock at the time. And we've never had a replacement for that. Why do we not allow our companies to grow and stay independent George in the UK?

George O’Connor 37:58

it's part of how we are it's part of our DNA. If you're on the market, if you live by the sword, then you will go by and so if you're on the market, you're for sale the whole time. Now America will put in poison pills to stop that. But in the UK, there is an ethos around free operating markets. That the opportunity as I said, the opportunity from Arm is that the all of those engineers who made money, and so I don't want to work for that company, I want to now create my own company.

They've been through a great learning, and they can now create their own companies and then benefit from that ecosystem around it. The other reason going back to the old days, was that in terms of technology that the UK was a consumer of somebody else's technology, going back to UK, Gov. Well, you buy IBM stuff, don't you otherwise, you get fired. So we didn't create global champions. We didn't create global champions. But now we are.

Peter Higgins 38:49

I want to go backtrack a little bit. You mentioned your daughter, Emily, and you've got five kids, what's the situation with their investments? And how do you manage it? And what where do you put some of those investments George? I'm hoping less growth here, less risk, by the way.

George O’Connor 39:03

So the five kids are autonomous individuals, they do their own things, learn the hard ways, but they are all young, they're at the consumption side, rather than the rather than the investment side. I probably need to stop having kids now that you mentioned five seems like a large number. It's flown. It's flown by.

Peter Higgins 39:20

Brilliant now, I've got a couple more questions. But I want to I want to touch on the charity side, if I may, the charity Oscars for the IT industry, tell me about that George, please?

George O’Connor 39:30

Okay, this was this was something I got involved in about 10 years ago. And it's down to my passion in terms of UK startups and scale ups and clearly the enterprise software sector. And you could argue it sort of started out as a drinking club, part of the Worshipful Company of Information Technologists.

It has expanded from that ably managed and driven by John McConnell at ScaleUp also I don't know if you know the industry advisory TechMarketView Big shout out to them. Great people, great people. All in. And I've been I guess my official title is probably hanger on.

Peter Higgins 40:08

Yeah or chief cocktail maker, one of the judges though, that's what I heard.

George O’Connor 40:10

Yes, I am. We keep that one under a bushel. For the last 10 years, it's a privilege to be involved in it. And all it does is basically feed my imposter syndrome time after time, when you're sitting in there surrounded by some huge industry stalwarts who really know what they're talking about.

Peter Higgins 40:29

Brilliant, brilliant. Now I've got final question. I was throw something a bit oddball when I when I asked this question, and I'm going to quote Bill Gates, who you've mentioned earlier, Bill Gates famously said, we are changing the world with technology. George, if you were given all the resources required to meet your goal? How would you change the world for you, your family, and humanity?

George O’Connor 40:49

Oh, wow, Peter, I can't answer that. I'm a sell side analysts my one track, you can firstly off, we need peace in this world. We also need to see greater humanity and we need to see greater kindness. And that's from all of us, from everyone. I'm convinced a lot of this can happen from the profit motivation. And I don't know if you followed any of the writings around profit with purpose. But that is a very strong movement, where investors are brought along and absolutely it sidles into ESG which I guess was where you were going with this as well but technology can improve our world not just our world but but the the future as well. So we need peace we need we need kindness we need better in terms of ESG and technology can be an enabler on each of these. I firmly believe.

Peter Higgins 41:44

Brilliant, that was my last question. I'm not sure if you want to add anything, but that was absolutely superbly answered. Given how much spin I put on there. You're still battered it back. fantastically.

George O’Connor 41:53

Peter many, many thanks for for this operation, opportunity and operation. I referred to myself a little bit as a sort of a a one trick pony earlier gave you some illustrations and maybe you think George really just a little bit of a of a show pony. And hopefully we've had some horse sense shared between two of us, sort of for me in terms of final thoughts. I'm reminded of that pony who went into the doctor with a sore throat. And the doctor said, you know, don't worry, you're just a little hoarse. And in fairness, that is my predicament. That was That's my predicament as well.

Peter Higgins 42:29

Yeah, you're absolutely fantastic. You are not just a one trick pony, but you've been at it for 25 years and to be at this level at this standard consistently shows how talented you are my friend. So thank you so much. That was George O'Connor IT analysts at Goodbody part now of Allied Irish bank, George has an absolute privilege, love to the family. I look forward to seeing you in London at some point in the not too distant future my friend thank you.

George O’Connor 42:53

Thank you Peter, bye.

Peter Higgins 42:56

Take care. God bless.

LSE 43:06

Thank you for taking the time to listen to Investing Matters. Be sure to check out the London South East website for free tools and info to research your next investment. You can also join in the conversation on our social media channels. And don't forget to subscribe to our YouTube channel for more content, including our CEO interviews. Catch you next time.