It’s not every day that two young and imaginative colleagues cultivate a novice idea into an established European e-commerce leader….....within two years.
Business partners Brent Hoberman and Martha Lane Fox launched lastminute.com
in 1998 after raising £600,000 from investors to start the business. Subsequently, lastminute.com floated in 2000, at the peak of the internet boom, raising a very significant sum of £107M, with a share price of 380p, standing the company in good stead.With the dot com crash, however, shares fell dramatically, as did the shares of other dot com companies. Whilst internet companies disappeared into oblivion, lastminute.com survived.
Brent Hoberman attributes his survival and success to innovation and the ability to capture the consumers’ imagination. This has been demonstrated most recently with lastminute’s vast expansion into the lifestyle entertainment arena and their recent acquisition of Holiday Autos.
Brent Hoberman has witnessed his brainchild grow from standing start to budding stock market sensation, and as it has evolved, lastminute.com has increasingly become a reliable brand in which consumers trust. In an exclusive interview, Brent Hoberman tells Internet Travel News about the trials and tribulations of his lastminute journey.
ITN: Can you tell me about the origins of lastminute.com?
The original idea of lastminute was based on customer demand. We wanted to be able to give customers what they wanted, literally at the last minute, offering more choice, inspiration and solutions and the internet is the medium at which we deliver.
I persuaded Martha to join me. The two of us wrote a business plan and we raised money from Venture Capitalists. Then we expanded beyond the UK to several European countries. We continued to raise money from strategic investors and then did a little IPO. We became a public company in March 2000, raising £120 million which helped us consolidate our leadership position in Europe. Today we are the pan European e-commerce leader in travel and leisure.
ITN: How many of the original founders have stayed on the board?
100 per cent - Martha and myself. (Brent now owns 5.49% and Martha owns 3.54% of the company shares)
ITN: Do you have any idea what percentage of Internet travel companies that started up at the same time as you have survived?
I don’t know the figures, but many companies were either unable to raise adequate funding, or copying ideas that had been done elsewhere. We have always thought innovation is key to being a dot com leader, so by imitating someone else, it was unlikely that you would capture the consumer’s imagination.
ITN: When you instigated lastminute.com was it just a bit of fun, or experimental, or were you aiming to become a public company? Did you have any inkling of just how the business would evolve?
When Martha and I drew out the initial business plan, I turned to my girlfriend at the time - (now my wife) - and said: ‘Good god in a year’s time if this happens we could be managing 12 people’ - and I’d only managed 3 people before that!
That said, we were always doing it very seriously and we were always aiming to be the European leader but we didn’t quite realise how big that could become, how fast it could happen. We also didn’t really think that much about being a publicly held company.
ITN: What kind of pressure does being a publicly held company hold?
The down side with being a public company is quarterly reporting, which I don’t think is ideal when you are running a business, particularly when you are a young company that is growing fast. Quarterly reporting puts a lot of strain on the business, but it is a good discipline and it also brings with it many advantages, so we are still very happy with those pressures that being a publicly held company has brought us.
Of course one of the main advantages is giving you a public currency with which to acquire other companies - we have bought over seven businesses.
ITN: What is your current global reach? Which regions are you planning to expand to in the near future?
We are the European leader and Europe is our core focus, but we do have joint ventures outside Europe in Australia, Africa and Japan.
We also have European leadership in almost all the markets in which we operate - the UK, France, Spain, Italy and Belgium, so we do have a strong market position.
ITN: Do you have an acquisition strategy? Can you tell me about your recent acquisition proposal for Holiday Autos?
Holiday Autos fitted very well into a vertical in which we weren’t strong which is car rental. They are the world’s largest independent car rental broker, but they still maintain great customer service with a growth margin of over 30 per cent. That was why the possibility of the deal could be beneficial for our investors and give our customers some better deals.
We have just announced that we raised about £70 million to acquire further companies. Some of the geographies that we believe are going to be fast growing like Spain and Italy and also product areas like lifestyle - where we are less strong.
ITN: Can you elaborate on which brands you are going to be developing?
From a pan- European perspective - lastminute.com first and foremost and then Holiday Autos, which is still a strong brand, but we intend to support it.
ITN: I have the impression that you don’t give up - your company has been through a rollercoaster and it seems to be on the up. Have you actually achieved your mission statement?
“lastminute.com aims to become the number one European e-commerce lifestyle retailer by delighting our customers with great value inspiration and solutions.”
Yes we have, but to me - from my initial vision - we are still half way through our journey. We are still a very exciting place to be as we still have an awful lot to do. The business can still get a lot better and the customer proposition and economic model will only improve each day.
ITN: What kind of backup plan do you have in case of “another 9/11”, high terrorist alert, or SARS outbreak, which would ultimately lead to a dip in confidence?
I think a back up plan is to have a flexible business model. It is important to have a reactive team, and to vary products for market shifts, which we found was achievable after 911. It is also important to be very well funded.
Today’s analyst forecasts say we have £100 million cash in bank so that would position us very well for any shocks that may occur.
ITN: What are the group’s expectations with regard to sales volumes in 2004?
The analyst expectations are over £800 million in gross bookings.
ITN: How does customer experience now differ from when you started?
It’s wonderful to see that it is leagues better than it was. When we started it was much more of an inspirational website, so it was rare to find a full range. Now we have a very full range and it’s much easier for the customer to find what they want at a great price. The customer service on the backend is much better and more reliable.
ITN: As consumers become more internet savvy, isn’t it feasible to suggest that consumers may wish to contact the resorts directly when making an online booking?
Being the European market leader is important and being the largest e-commerce provider in the sector means that we can get better deals for our customers than they would get by going direct.
ITN: How do you ensure that you make the service available to consumers everywhere and all the time?
We are great optimists about mobile technology. We are on almost all mobile platforms - we are the first external partner to work with 3 and we are also available on digital TV.
ITN: How has broadband technology affected your business model?
Many people say it’s about three times more likely that they will make a purchase if they are on broadband. It enhances the customer experience and makes it faster for them. Anything that does that is great. Over time there will be more information on the products including video and that will make the online buying experience more rewarding.
ITN: With regards to your recent partnership with Tesco.com, what were your key objectives other than expanding your customer base? Do you plan to expand on this partnership with any other offerings?
The key thing is to be a partner with the UK’s largest e-commerce company and the world’s largest online grocer. That gives us incremental customers as well as great brand association. Tesco also stands for great value brand. Going forward we would like to deepen our relationship with Tesco and see where it can go.
ITN: Do you have any other partnerships in the pipeline?
None to announce but we are constantly working on partnering with the best brands on Europe. We also have strong partnerships in France.
ITN: Have you found your email marketing campaigns to be a success?
Yes. We email over 7 million people who request our email every week. We target those to over 150 different segments, so combined with the fact that these are requests and that they have great product depth, we find the emails to be very effective. We also get advertising revenues from 3rd parties.
ITN: Do you use any specialised booking software solutions?
The vast majority of what we do is actually in-house. We have a technology team of 200 people and invest about 17 million pounds a year in technology so that we can have cutting edge booking solutions.
ITN: lastminute.com now appears to be taking a new direction with your expansion into many entertainment sectors. Have these services been popular so far? Can you explain what your objectives are?
The lifestyle entertainment sections have been growing 100 per cent a year. They are a great way for customers to make their first purchase and a great way to sort your life out at the last minute in terms of having a broad range of services. We are excited about improving these services further, deepening the range of product and improving the buying process as well.
ITN: What has been your most popular summer destination this year?
Surprisingly this year, Egypt has been a popular choice.
Also Greece and Spain.
ITN: What part of lastminute is your biggest revenue provider?
The biggest revenue provider is still package holidays. By volume we still have almost 40 per cent of customers buying non travel items.
ITN: Can you comment on the takeover bid rumours?
What takeover bid rumours….........?
ITN: What factors do you think have contributed to the rise of online bookings in recent years?
We are very fortunate in terms of the sector we are in. Lifestyle and travel are particularly well adapted to the online experience. They have databases reaching over a huge fragmentation of suppliers and that makes the customer experience better online than offline.