Lastminute.com was the definitive roller-coaster ride, which left its scars. The firm’s IPO on the London Stock Exchange in 2000 was at the peak of the dotcom bubble. Shares were issued at £3.80, spiralled as high as £5.55 and then sank to below 20p in October 2001. When the business was eventually sold to Sabre, the US owner of Travelocity, Hoberman was due to stay on for three years as CEO. He stepped down after ten months, claiming he “hadn’t seen much daylight” and couldn’t bear the institutional scrutiny.
So when we ask about the financial details for mydeco.com, the online interior decoration business Hoberman launched last year, his answer is short: “We don’t give out numbers.” And he won’t budge. Even the company’s financial report reveals virtually nothing about turnover and profits. “Customers come first, revenues come later,” continues Hoberman. “I realise that sounds very Web 2.0 but look at, say, Twitter. It has no revenue. Does that make it a waste of space? “I don’t know when we’ll start making money. The great thing about running a private company is that we don’t have to publish forecasts.”
So, without forecasts, here are the facts. Mydeco.com is in the bigger-ticket consumer space at a time of unprecedented squeeze on household budgets. It’s a good thing, therefore, it has a sizeable £12.5m war chest from various European venture capitalists, family trusts and individuals. Martha Lane-Fox, who co-founded lastminute.com, owns a stake.
Mydeco.com doesn’t sell furniture directly – it’s an aggregation site, which allows users to find the best deals from retailers such as Argos and Habitat. So far, 900 retailers have signed up. But that isn’t enough. “We’re our own worst critics – and we need to make the site much better,” admits Hoberman. “If a customer is looking for, say, a futon, he should be able to filter his search by dimension, by colour, by material. Not even Google can do that, at the moment. But if we’re going to offer that level of choice, we need data from at least 2,000 retailers. And if mydeco.com is going to have influence in the sector, we’ll have to increase our monthly traffic from 600,000 to well over a million a month.”
This time round, Hoberman isn’t in a rush. His strategy at lastminute.com was to spend on a flurry of takeovers across the Continent – 14 in all, at a cost of £260m. Overheads mounted and critics said the company was too slow to cut jobs and integrate businesses. “We should have been more aggressive about hiring better people in areas such as customer service and financial accounting – but we were too busy worrying about growth,” says Hoberman.
But he’s not about to make the same mistakes again. He’s being “Darwinian” at mydeco.com, employing only 30 people and outsourcing non-core functions to the Ukraine and Uruguay. Running an aggregation site, where the retailers themselves do all the “fiddly bits” such as fulfilment and payment, persuades Hoberman that he has the model to expand overseas. He already has his sights set on the US but, again, he’s playing it safe. Lastminute.com spent a fortune on advertising – at one stage shelling out more than £13 in marketing for every customer that booked a trip. With mydeco.com, Hoberman is being more frugal. “We’re not going to go out there with a massive ad campaign,” he says. “We’re just going to let people find us.”
Hoberman reckons the market is ripe for the picking: “If the online furniture sector is worth $15bn in the UK, it’s worth $100bn in the States.” And he’s confident that the recession will not damage online retail: “After 9/11, my board [at lastminute.com] told me to sack everyone and go home. They didn’t think the online travel industry stood a chance. What actually happened was that customers went to the internet for better deals. A recession is similar. Customers are after value.”
Hoberman has also teamed up with Bebo’s Michael Birch and Peter Dubens, who built the Pipex ISP business, to launch a development fund for tech entrepreneurs. The so-called European Founders Capital will have an initial £20m of seed funding but is aiming for £50m in total. “The money will come from seasoned entrepreneurs who want to help other entrepreneurs,” explains Hoberman. “We’ll give them access to lots of great deals and help them manage the investment process. Start-ups are the motor of the economy. It’s important we showcase them.”
Will his own start-up be one of the successes driving the economy?
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