How Zoopla became a £64m revenue, double-digit growth empire
Alex Chesterman, the entrepreneur behind Zoopla and LoveFilm on growing markets, following your consumer and focusing on your mission
If you hadn’t heard of property website Zoopla before – you probably have now.
Since pulling out of its £3m West Bromwich Albion sponsorship deal, the property company, and its highly successful founder Alex Chesterman (Chesterman also co-founded LoveFilm in 2003 before selling the company in 2011 for a whopping £200m) has become embroiled in the media frenzy surrounding Nicolas Anelka's ‘quenelle' gesture.
Chesterman denies that “there was any investor pressure” to withdraw sponsorship, as suggested by some media outlets, nor was it a plan orchestrated to gain publicity but “simply a desire to do the right thing.”
Whatever you think of the decision, the additional exposure has undeniably brought the Zoopla brand to the attention of the masses (not that it particularly needs more exposure).
The company has an aggressive marketing campaign in full swing with Zoopla adverts everywhere, from London buses and tubes to TV adverts. And it seems we’re only going to be hearing more.
Zoopla has seen phenomenal success, with the acquisition of nearly all of its competitors within the last five years (11 down, one to go). Its last remaining competitor, Rightmove, is the only thing standing between it and complete domination of the property search market.
With 40 million visitors a month to the Zoopla Group – and around 40 million adults in the UK, and a 2013 turnover of £64m, Chesterman seems to have the magic touch when it comes to building industry changing businesses from scratch.
Speaking at Octopus Investments’ Octopus 2014 event the business mogul shares his insights on why Zoopla has been such a success story, and what it takes to run a fast-growth start-up.
Have a simple business model that delivers
“Our business model is very simple actually – our aim is to be the best online resource for consumers and to be the most valuable online partner for property professionals.
“It’s a two-sided market, on the one hand we’ve got consumers (and we’ve got to a very high volume with over 40 million visits a month, which in a market of 40 odd million adults is not a bad stat) and on the other hand we have inventory – where having all of the market inventory is very important. You only achieve that by delivering value to your partners and we do that on a rate of about one lead per second 24/7 – amounting to almost two and a half million leads per month.
Make strategic partnerships
“We also have done a number of strategic deals, so as well as the sites that we own and operate directly we also power other sites that do property search as part of their business. We therefore power property search for nearly all of the national newspapers and for most of the regional papers – so if you’re not searching on one of our sites directly and you’re searching by another means you may actually be using Zoopla.
Pick a market that’s growing and dominate it
“Our market is the property classifieds market. 10 years ago it was entirely print but there has been a rapid and accelerated increase in the digital space. As a result of the shift from print to digital and also accelerated by the downturn in the market, digital has really taken over.
“Despite the fact that over 90% of property enquiries are now digital, digital still accounts for only about 50% of marketing spend – but we expect that to change considerably in the next few years and the benefits for us will be huge.
“As well as over 40 million visitors, we have over a million listings and 19,000 members (a member being either an estate agency office or a new home developer). That gives us about 90% market penetration – so we are pretty much a one-stop-shop for property.
Get your brand noticed and remembered
“Our brand awareness has grown every year, from 26% national adult awareness in November 2010 to the latest figure of 76% from November 2013 (and that’s probably gone up in the last 24 hours).
“And 60% of people actively looking for property are doing so using our site.
Consolidate the market
“We have led consolidation in this market. In the last five years we’ve done 11 acquisitions. Previously there was an endless list of sites all doing pretty much the same thing and we came at this from a very different angle, an angle of innovation and differentiation.
“At the time we were entering the market, everyone else was rushing for the exit and that allowed us to put our foot on the accelerator and complete the acquisitions mentioned above.
“We’ve been very consistent and precise in our execution – in our desire to remain a single platform – to not operate from multiple sites. With 11 acquisitions in a short period of time for a youngish business there’s potential for mess and one of the things we were determined not to do was let things get messy.
“One of the acquisitions we made, I remember our main competitor cheering us on saying they were delighted as we’d be tied in knots for the next two years and we integrated that acquisition in 60 days.
Follow the consumer
“Competition has never worried me – my advice to aspiring entrepreneurs would be to follow the consumer. Provide the consumer with something better than they can get today and then they will follow you.
Always innovate and differentiate your business from the competition
“We constantly challenge ourselves to try and do something that no-one else has done. When we launched there were a number of players doing the same thing but we actually came to the market from a completely different angle.
“While everyone was focused on property search, which was where the money was, we focused on a completely different area – property research, providing free information to people (an area with no money).
“We always figured, if all these other people are doing property search, it can’t be that hard, the important thing was to stand out from the crowd and be entirely different. That’s why in 2008, despite launching in January, we didn’t even talk about revenues – we did what we considered to be the hard thing first and then approached what everyone else was doing.
Implement an effective growth strategy
“We have a very simple strategy for growing a business which is built around a core revenue stream – estate agents who advertise, home developers who advertise and other peripheral advertisers.
“So our strategy is really very simple; we’re continuing to grow our brand awareness and consumer engagement on the marketing side – those based in London will have seen a lot of Zoopla advertising – we’re investing very heavily in marketing.
“And we’re also investing very heavily in product, differentiation is really important in this space and staying ahead of our competition so we’re always thinking about how we can stand out.
“And we’re building new products that we can monetise, so becoming a better partner for our customers. We are a great marketing partner today for our customers, through providing marketing services and exposure and enquiries but there’s all sorts of other areas that we think are interesting that we can apply our expertise to in order to better help estate agents and developers.
“Like all two-sided businesses, the more traffic we can get the more exposure we can get for our customers which in turn provides us with more market penetration and more data.
Focus on your mission and don’t deviate from it
“We’ve been very focused on the mission we set out to accomplish back in 2008, we haven’t deviated from that.
“For me, success is reaching a goal you initially set out to achieve. With LoveFilm, we set out to move the market from traditional high-street stores like Blockbuster online to become the biggest player in Europe and we achieved that in five years.
“I sat with the board of Blockbuster in late 2003 and told them about this service that could transform how people rent films and I was told that it was a very small market that would never exceed 50,000 people. A few years later they shut their doors.
“In Zoopla, we’ve set out to transform the consumer experience by providing more services that are really helpful and to transform the professional experience by delivering much greater value at a lower cost, so to create greater marketing equity for the industry. We’ve also set out to win, to become the leading player in this space.
Keep striving for success
“To use an American analogy, we’re at the beginning of the third innings, there’s a lot more we can do – there’s more services we can provide, more markets we can look at. We haven’t quite won but once we reach a position of comfort we’ll turn our attention elsewhere.”
Alex Chesterman, founder and CEO of Zoopla Property Group, was speaking at Octopus Investments’ Octopus 2014.