Lastminute.com: Brent Hoberman
Almost a decade after leading the UK’s dot com charge with the legendary Lastminute.com, Brent Hoberman has moved on. He tellsGrowing Business about life in the bubble and where he’s going next
Mr Lastminute is living up to his name. Brent Hoberman is late for our meeting. But then for someone who has only just relinquished his ties with the online travel and leisure website he founded in 1998 – stepping down as part-time chairman in January – and who, in theory, is at liberty to enjoy some of the reputed £26m he has made from it, Hoberman is a remarkably busy man.
As well as his recent appointment as non-executive director of the Guardian Media Group, he’s on the eSuperbrands Council, governor of the University of Arts London, an active angel investor in several internet businesses, has set up networking organisation Founders Forum, and was just made chairman of WAYN, a social networking site for travellers. And that’s before we get to project X, but more of that later.
Hoberman has packed more into the last decade than most businessmen do in a lifetime. Although it seemed that Lastminute emerged seemingly fully formed in 1998, the business plan had been in gestation for two years. During that time Hoberman worked in various technology strategy consultancies where he specialised in future gazing on the effect that the internet would have on business.
In between telling corporates how the web would change everything, and helping launch auction site QXL, Hoberman met Martha Lane-Fox, his accomplice at Lastminute.com. “The ability to raise £600,000 was not as simple then as it would be today,” he says. “We were one of the earliest consumer-brand internet plays. By using the power of the internet to match buyers and sellers we were able to add value to both.”
Although keen to play down the idea that he and Lane-Fox were trendsetters for a new type of business, Hoberman admits that they didn’t play by the established rules. “I think we did bring a sense that you could just ‘do it’ to business, and that it could be enjoyable,” he says. “We showed that you could launch a consumer brand from scratch, and that the internet enables you to do it much faster.”
Indeed, Lastminute can be seen as a pioneer for the look and feel of many of the websites that are successful today. It wrestled the internet experience from the tech geeks and made the web a more friendly place. Simple ideas, such as emails that made helpful suggestions on what to do at the weekend, as well as functions like the ‘boss is watching’ button, linking immediately to business-like charts and graphs, presented a more playful technical experience.
Hoberman was just 29 when Lastminute started, and Lane-Fox, 25. Part of their success came from an ignorance of what they were letting themselves in for. “If we had known then what we know now, maybe we wouldn’t have done it,” says Hoberman. “But there’s a great power to start-ups. You always think that it’s the giant companies that will do what you are doing, but they fi nd it harder to move on a dime as Bill Gates said. They don’t take risks. I saw it when I was consulting on VoIP [voice over internet protocol] for Cable and Wireless in 1996 and they said it wouldn’t happen.”
Hoberman’s business outlook has been shaped by the Lastminute experience. Starting the business, he says his core skills were refi ning the application of technology to solve consumer needs, something still close to his heart. Quickly he had to develop his sales pitch to a whole host of parties. “We were selling to employees, suppliers, marketing partners and consumers and saying that it was going to be big,” he recalls.
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As the company grew quickly, Hoberman had to develop “lateral problem solving skills”. He delegated where his own skills were not honed. “I don’t love managing lots of people and we ended up with 2,000,” he says. “There were better people in the organisation than me at that.”
Another skill he had to develop quickly was the ability to deal with the media. The company, which skillfully used interest in its sexy, young founders and their business model to build a high media profi le, soon found it was a double-edged sword after it listed in 2000 and came under greater scrutiny. As the share price plummeted from £5.55 to 17p, they were seen as epitomising the bubble economy.
Yet even when the share price was below cash, Hoberman insists he did not panic. “Core investors stuck with us,” he says. “I was surprised at how many people thought the business was performing terribly, yet we were ahead of plan and still had £50m in cash. I suppose that’s the hard thing about running a public company.”
Like everything Lastminute did, its growth strategy was also on fast forward. Although it bought 14 companies during his time as chief executive, Hoberman says it’s unfair to say it bought growth. “It was responsible for about half of our growth. Organic growth excluding this accounted for about 100% a year,” he explains. “It wasn’t just about financial engineering.”
The deals helped give Lastminute the scale it needed to compete against bigger players such as Expedia. “Strategically we needed to do it and some deals were better than others,” he admits. “There are a couple that we maybe shouldn’t have done, such as Travelprice in France, but others like Med Hotels were superb in what they brought to the business and they all had good strategic rationales at the time.”
Having built the business from scratch, the sale of Lastminute to Sabre Holdings in July 2005 for £577m was an impressive piece of business, considering the company had made a £77m loss in 2004. Hoberman says the deal was good value for shareholders and that the business was stalked by several possible buyers. “We had scarcity value at the time,” he says. “We had good hotels and car rental businesses rather than just relying on low margin fl ights. We had a strong brand across Europe and Travelocity did not have that scale.”
Although he initially said he would stay on for three years as chief executive, Hoberman’s role became that of part-time chairman and chief strategy offi cer last April, with chief operating offi ce Ian McCaig taking over as chief executive.
“My job was done and Ian was in a position to take over,” he says of the change of heart. “He had worked with me for three years and was more comfortable with big operating structures.”
Hoberman says he did not like working for a subsidiary and you sense that he missed the entrepreneurial spirit of the early days of the business.
One way of getting this thrill vicariously is through angel investing, and he has stakes in a number of businesses, including ticket exchange Viagogo and home moving site Moveme. Yet he has so far steered clear of playing entrepreneurial guru on TV shows such as Dragons’ Den. “To make good TV of that sort you have to be negative. I want to be supportive and encouraging to entrepreneurs.”
Which is exactly what he is doing with his latest venture WAYN. Short for Where Are You Now, the website is a social networking play that brings together travellers, allowing them to post details of their trips, pictures, tips and contact fellow travellers through email and SMS. Hoberman joined the board of the venture as chairman after investing as an angel along with Esprit Capital Partners and a host of other dot com big players, such as Cheapflights’ David Soskin and Hugo Burge, and Adrian Critchlow and Andy Phillipps of online reservations business Active Hotels, which was sold to Priceline.com for £82m in 2004. In total, the high-profi le consortium is in for a total investment of £5.6m.
“They knew of me and I knew of them and they were looking for a chairman,” he explains. “I was impressed by what they had already done in building the membership to multiple millions, and they are profi table now.”
Hoberman claims the WAYN team is not overawed by the presence of so many dot com successes in the investment team. “We bring a range of skills,” he says. “It’s been a smart thing for them to do, but it depends on how they use the angels. We’re there to keep them enthusiastic and excited about the business.”
WAYN has seen huge growth in the past 18 months, booming from 45,000 members in March 2005 to seven million now, a figure that is increasing by 35,000 a day in 220 countries. The main aim is to maintain the growth rate of the company which makes money through advertising and subscriptions. “The key factor is to further emphasise the travel tips side of things and allow people to share tips with each other,” says Hoberman.
One area where he thinks he can add value is in developing the brand. “It has huge usage and is a big company, but has little awareness,” he says. “We need to work on that.”
Competition comes from travel sites, such as Trip Advisor, but WAYN is also up against dating sites which perform a similar role in bringing people together. Social networking, though, is all the rage in the Web 2.0 sphere. In the UK, networks already have in excess of 20 million members, with 160 million subscribing to the likes of MySpace, Friendster and Bebo globally. eMarketers research estimates advertising on such sites will top £0.9bn by 2010. But Hoberman doesn’t think WAYN will necessarily follow the same evolutionary path as Lastminute in raising fi nance and ultimately fl oating.
“The cost structure is lighter,” he says. “The most important thing is keeping up the momentum and keep it profi table, and the way to do that is to keep people using the site for a broad range of needs.”
The next big thing?
But WAYN is just one diversion post-Lastminute. Hoberman’s next venture will be back in the world of start-ups. He refuses to elaborate, but the project should be unveiled in the next couple of months.
Unlike Lastminute’s own chairman Allan Leighton, he doesn’t see himself “going plural”. “All of my engagements are synergistic so they work well,” he says. “The Guardian Media Group calls on me to think about the future of newspapers and media in the internet age, and the fact that I am engaged with other interests feeds back into that.”
After Lastminute, he says he was getting an offer a day, but is choosy about his directorships. “It has to be people that I’m interested in working with and an opportunity where I feel I can add value as well. I’ve turned down things that were not fast growth or were not being faced with technology disruption.”
Unlike his erstwhile colleague Martha Lane-Fox, he has not been tempted from the technology path. He has been to her Lucky Voice karaoke bar, but professes he doesn’t sing.
Inspiration comes from working with people who are passionate. “At the beginning of most companies, you are a small and passionate team and that is a very rewarding. You can break the business rules and think of ways of doing things differently. I love start-ups – there is nothing more rewarding than turning something that is purely paper into reality.”
So what’s next for Mr Lastminute? Well right now he’s off to lunch, but knowing Brent Hoberman, you suspect there’s more to it than that.
Name: Brent Hoberman
Companies: WAYN, Founders Forum, Viagogo, Moveme
Other roles: Non-executive director of Guardian Media Group, University of Arts London governor, eSuperbrands Council member