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The Andrew Davidson Interview with Clive Humby and Edwina Dunn

The Andrew Davidson Interview with Clive Humby and Edwina Dunn

17 January 2011

Cheery and chunky, the founders of Dunn Humby have plenty to celebrate. They have just sold the last 10% of their consultancy business to their biggest client, Tesco, pocketing a cool £48m. For a couple who met and married on the job - their first, in data analysis - that's pretty good, by any measure.

"And now we are going to take some time off," says Clive Humby, looking like the cat that got the cream. Edwina Dunn, his wife and business partner, purrs in unison: "Then we'll decide if we feel like being entrepreneurial again."

Humby: "Though we are on a no-compete clause."

Dunn: "And we would never go against our old business."

Humby: "But there are so many new data sources opening up - social networks, mobile phones, digital TV... "

On the surface, they seem like any other affluent couple, taking tea in the kitchen of their beautifully appointed Victorian villa in leafy Turnham Green, west London. Dunn is well-groomed and direct, Humby rotund and thoughtful.

But behind the amiable chatter, they are really something special. Their data mining business has transformed how the rest of us live, helping to push Tesco into being Britain's No1 retailer, and causing some controversy in the process.

Dunn Humby, set up in 1989, provided the nous that changed Tesco's Clubcard from a basic loyalty scheme into a sophisticated tool for analysing shoppers' habits and fine-tuning promotional offers.

It became so important to Tesco that the retailer bought a majority stake in Dunn Humby in 2001, while allowing it to operate at arm's length, working with other store groups across the globe. Tesco completed its buyout late last year. Humby, 55, and Dunn, 52 - chairman and chief executive respectively - move to non-executive roles next month.

So how much has the 10-year earn-out made them? "About £93m over the years," says Humby, the numbers man. The price, linked to company profits, has risen every time Tesco has bought more. "So the last little bit is worth infinitely more," says Dunn, the pragmatist.

Married for 29 years, their way of working hasn't dented their relationship. They don't finish each other's sentences, but just wait politely and then add on And they split it 50/50?

"We are one," grins Humby.

Dunn: "But we haven't actually got it yet."

Humby: "Yes we have."

Dunn: "Have we?"

They both laugh. "But we're Midlanders, so guess where it'll be?" adds Dunn. "In the bank. We're very risk-averse."

Married for 29 years - they met at CACI, an American data firm - the two have a way of working that hasn't dented their relationship. They don't finish each other's sentences, just wait politely, then add on.

That, says Humby, comes from having complementary skills. He is a mathematician drawn to pulling trends out of data. She is a driven businesswoman with a point to prove. Some clients don't even realise they are married with two children.

At the heart of their business's success lies a 17-year relationship with Tesco which they have built on astutely - first showing the supermarket chain how new technology could optimise data, then persuading it to sell the insights it mined to suppliers as well.

Those insights, taken from analysing our shopping baskets, extrapolating trends and predicting our preferences, allowed Tesco to pull in a greater share of consumers' spending by tight targeting, increasing loyalty. More than 24m consumers now have Clubcards.

But would Tesco have got there without Dunn Humby? Probably, says Andrew Higginson, the chain's chief executive of retailing services, but they speeded up the process. "They helped us go hard after what consumers like and pull back from what they don't like."

Selling the data also helped Tesco's suppliers target more effectively. Dunn says that was a first. "But we didn't own the data; it was Tesco's. That's why they took an equity stake and that's what propelled our business forward."

In a third coup, Dunn Humby expanded abroad, launching joint ventures with rival retailers. In America it paired with Kroger, one of the biggest retailers there and a rival to Tesco, which has stores in California, Arizona and Nevada.

How did they persuade Tesco to allow that? "I think they thought it better to let us expand than crush us," says Dunn.

In fact, the experience gleaned overseas can only benefit Tesco. Now Dunn Humby works with 20 grocery retailers worldwide and 100 manufacturers, including giants such as Kraft, Coca-Cola and Unilever. It is also highly profitable, making £53m on £133m revenues with 1,400 staff last year.

Lucky Tesco, lucky Dunn and Humby. Yet some have worried about what they have unleashed. Many other firms are now burrowing into our shopping habits - nobody really knows how much information they hold. At what stage does data mining become an invasion of personal privacy?

"People are obviously concerned," says Dunn, "but we've taken great strides to separate what is personal from the facts and figures."

And do they ever say no to a client?

Humby: "We'd never work for cigarette companies."

Dunn: "Yoghurt is hard enough..."

Humby: "If a drinks company wanted to identify alcoholics and sell them more, we'd say no."

Dunn: "Because we see ourselves as protectors of the consumer interest."

Simon Hay, Dunn Humby's head of UK and Ireland, who has worked with the pair for 25 years, says they are true pioneers. "When they started, data were seen as a by-product of computing; now they are seen as a core asset. Dunn and Humby have changed how business thinks and operates."

Neither expected to be a pioneer. Dunn was born in Buxton, Derbyshire, her father an engineer who followed his work to Brazil. "I grew up in an era where girls were told they would be a secretary or a nurse. I was not academic, so that's what I expected to be."

Humby was born in Leicester, second son of a builder. He loved maths and computing, and returned to his home city after university to work as a programmer for the East Midlands gas board. "Then I realised going back to Leicester was a mistake." He saw an ad for a programming job in Bermuda, working for Consolidated Analysis Centers Incorporated (later CACI), and snapped up the post. The firm used census figures to help the American government pinpoint optimum locations for army recruitment, and later spun off commercial applications.

By 1976 Humby was working in its London offshoot. Dunn joined as a trainee. "I thought he was lovely but he ignored me for a year," she laughs.

Eventually she rose to be marketing director, he became chief executive, and they married. But when he resigned, determined to set up his own outfit, his wife was instantly sacked.

That sacking spurred them on, says Dunn. "We were so mad and so scared, we thought we would have to work really hard to design something."

Their timing was smart - just as data boomed - but colleagues say their roles changed too, with Dunn calling the shots while Humby focused on analysis. "Clive's driven by the idea, Edwina by the execution," says Hay. "I think she was competing against him a little, and wanted to prove herself."

Dunn Humby was bankrolled by a friend, Geoff Squire - former boss of Oracle Europe - who put up £250,000, and eventually made £7m back. It was his decision to sell out that prompted Tesco's initial buy-in, says Higginson. "We didn't want it falling into the hands of a rival."

The question now is, what will the pair do next? Nobody expects them to lounge on the beach for ever. Yet the idea that social networking is their next target will worry many people. And the idea that they could set up a new firm may worry Tesco.

Dunn insists again they would never do anything to damage their old business. They are directors of it, after all. She predicts the next leap forward will be a world where consumers control with whom their data is shared and what benefits they expect in return, even offering their data in "an auction scenario".

Humby can see only opportunity. "There is so much new data, and if everything goes digital, what we understand applies in so many ways..."

Suffice to say, these two aren't going to be retired for long.

Working day

The founders of Dunn Humby wake before 7am at their house in Turnham Green, west London. "Clive and I drive ourselves separately to work," says Edwina Dunn. "We learnt that early on. It's no good falling out over shared lifts."

They start in their office in Ealing by 8.30am. "Normally I would be focusing on a client relationship, or helping if something was not working well," says Dunn. Humby focuses on data. "I'll be backing up the numbers and working out the implications," he says.

The couple have adjacent offices. "In the past we've tried to be on separate floors," says Dunn. "Distance is better. And we play tag on travelling - we rarely go away together." They finish by 6.30pm.

Downtime

Edwina Dunn and Clive Humby love to do up old houses. They recently refurbished their Victorian home in London and have also been working on their country house in Gloucestershire. "It's a bit of a project, with an old Georgian walled garden which we are trying to restore to all its glory," says Humby.

Both like to sail, though Dunn says she doesn't have time for hobbies. "Clive likes fixing things. He is the most practical man," she adds. Humby plans to do more cooking when they leave the firm and to spend more time on their boat in Majorca. The couple work out. "Unfortunately, we take exercise and we still look like this," laughs Dunn.