Moonfruit: Wendy Tan White

Ten years ago, Moonfruit was staring into the abyss. The web building specialist, set up to make web design simple with drag-and-drop technology, had suffered heavy losses in the dot com crash. Founder and CMO Wendy Tan White had filed for insolvency and even fired her future husband, Joe, to make ends meet. The chances of survival were slim to nil.

Today, the company is approaching its zenith. Almost 3.5 million websites have been built using its user-friendly self-build technology, and this number is growing all the time as new templates, images and functionality are added to the site.  Moonfruit now offers services in several languages, and has become a Twitter phenomenon through its marketing strategy.

How have Wendy and her team pulled it off? How have they risen from the ashes of the dot com crash to become one of the most dynamic companies in the online space?

Origins

Part of the answer lies in the company’s solid foundations. Before launching Moonfruit in 1999, Tan White had worked first at Arthur Andersen, then at internet bank Egg, a background that brought credibility and contacts.

“The guy who launched Egg was kind of a mentor of mine,” says Tan White, “and he persuaded me to stay for an extra year at Egg but work part-time while I built up Moonfruit, and he seeded the business.

“Other friends and family helped to seed us, and management consultancy Bain set up an incubator business; they were looking to seed small firms and were a big help in packaging up a professional business plan.”

The company also received a £6m investment from luxury giant LVMH. Tan White says this investment came because “we had good seed investors, we had Bain on board, we’d all worked in blue-chips, and I was coming out of Egg which was a big internet float.

“Also, many people were looking for businesses they could scale, and our product is scalable, it can be international, it can be global, it can have big growth margins because, like all virtual companies, the cost of fails is low.”

, Right from the outset, the company showed it could raise awareness with original marketing campaigns. Its first campaign, based on sharing passions online, featured guys with freaky moustaches, priests swapping football cards and a group of weirdos painting with their bums. Unorthodox, but it got people talking.

The crisis

Tan White now freely admits that her company “grew too fast” in the early stages, and tried to expand like a corporate, “which wasn’t appropriate.”

Although the company attracted more than 400,000 users in its first six months, overheads were high –  Moonfruit moved into plush new offices, and, by the time of the dot com crash was employing 60 people.   Revenue was far from guaranteed; by marketing itself as a free-to-use service, Moonfruit left itself heavily reliant on advertising and investment.

But when the crash came, and Moonfruit’s main investor pulled their portfolio, Tan White moved swiftly and decisively – her conviction arguably saved the company from oblivion.

As losses mounted, she embarked on a two-year period of brutal bootstrapping. The company retreated back into its original attic, and the staff roster was cut from 60 people to two. Future husband Joe White was far from the only close acquaintance who had to leave.

In addition, the founder changed her business model – asking customers to pay for the service.

Even as she was filling out the insolvency files, Tan White was planning the rebirth of her company – with clarity, even regarding the business’ current predicament, and customer satisfaction more important than ever.

“We definitely lost customers, but [those who stayed] liked the transparency; even today customers tell us when they’re pissed off and when they’re happy.

This commitment was rewarded. Tan White believes the twin pillars of Moonfruit’s revival were “the relationship we had with LVMH, and our customers. Our investors allowed us to buy back our assets at a reduced price, provided we handled the customers, because they didn’t want the liability.

“By paying for our service, our customers kept the business going. Several of them are still with us now – we had 12-year olds then who are 24 now.”

Gradually, the tide began to turn. Moonfruit became profitable at the end of 2001 and staff numbers returned to double figures in 2004. Joe White returned to the company and became steadily more entrenched – after taking a leading role while Tan White was on maternity leave, he’s now CEO of the company.

The rebuilding period was slow, largely because Tan White was understandably determined “not to scale the business too quickly”. Eventually Moonfruit returned to a free-to-use model, but with a tiered twist; in addition to the basic free package, it offered subscription-based packages for businesses, costing between £3 and £35 per month. The company also offered bespoke deals with individual companies, facilitating the roll-out of white label versions of the Moonfruit software.

New templates were added to the Moonfruit library, giving users more choice than ever. New functionality was added for Facebook and Twitter, and the Moonfruit designers have added technology to create customised blogs and integrate with mobile technology.

And the marketing has remained fresh and funky. In 2009 Moonfruit launched a twitter campaign, giving away a free Mac Book Pro every day for 10 days – the only catch was that followers had to send a creative tweet to enter the draw. The result was a deluge of poems, jokes and cartoons; the campaign trended for three whole days, testament to its impact.

Rapid growth

After a period of solid expansion, the company began to grow exponentially. Turnover reached £$1.9m in 2009, before shooting up to nearly $4m last year – and the numbers are still rising following the company’s recent relaunch, the fifth in its short history.

Outward investment has continued; series A funding was secured last September, and additional capital has recently been provided by micro VC Dave McClure, a Silicon Valley vet whose contacts will help the company expand its presence in America – a country which now accounts for around 30% of the company’s total business.

Tan White says: “Our growth in the last two years has been phenomenal, partly due to the change in the economy, and partly because people now expect to be able to publish more easily online – ours is a truly literal design service, in fact it’s almost like building with PowerPoint.

“We’re in a high-growth phase, but we want to make that curve steeper; we’re getting a lot more interest from venture capitalists and the white label side is growing, so it’s a very exciting time.

“Since the time I started Moonfruit, web development has gone from being about formal project management to a much more agile, flexible process – and we’re right at the forefront.”