A guest blog from David Soskin, who spoke at our recent CEO Tales event around Scaling Digital Businesses.
How do I condense the lessons of my book Net Profit: How to Succeed in Digital Business – which is nearly 300 pages long and is devoted entirely to the topic of scaling digital businesses – into a timeframe of 5 minutes?
OK: here goes
In 2003 Cheapflights launched in the USA. Having been successful in the UK we were a little perturbed when the first journalist to whom we spoke, a leading authority on American travel, looked at the US website and said that he really hated it. He added for good measure that American consumers would never use it. If that was not bad enough, our expensively retained New York based PR company told us too that we were bound to fail. I asked them why and the response came “That sandwich chain Pret a Manger has found it very hard to get established here and we think you will too” Too this day, I am not quite sure what a sandwich chain and a digital travel search company have in common. But as both British companies did succeed in the USA, it shows that you can’t always trust PR companies.
Anyway we were brave. We did persevere and within a couple of years 3 million Americans were using Cheapflights.com every month to find great travel deals.
MIND THE CASH
Scaling can be expensive as well as expansive. Watch the cash very, very carefully. Do not believe your own projections. Plan for the worst. And do mind the pennies.
BUILD THE RIGHT TEAM
A Harvard Business School professor once told me hire for where you want to be and not for now.
The Cheapflights team was the right team. Today’s board of directors include three individuals who have each been with the business for ten years. Those three started when Cheapflights operated on a tiny scale in a couple of rooms in a serviced office above Foxtons near Clapham Station. But they were all capable of great things.
We did not always get it right. Finding the right CTO was a nightmare and we got through CTOs as fast as legendary rock band Spinal Tap got through drummers. After six years our luck changed and we at last found the right CTO. But that was after lots of trials and lots of errors.
BUILD A SOLID TECHNOLOGY PLATFORM
If you want to scale fast, you really need a solid technology platform. One of the advantages of Cheapflights was that we grew organically. We resisted the temptation of making lots of acquisitions.
Actually we did not have any money for acquisitions but that was good. Lots of other better-funded companies in the travel area found that they ran into almost insuperable tech problems as they bought other businesses and tried to create a single technology platform.
LEAD YOUR OWN MARKET BEFORE YOU CONSIDER FOREIGN ERXPANSION
Because the digital world is global there is a great temptation to run before you can walk. At Cheapflights we wanted to make absolutely sure that we led the UK in flights search before expanding overseas. The UK is the most competitive flights market in the world and if we could lead with the best consumer offering in the UK then we felt we could succeed in other countries. Today over half Cheapflights business is overseas.
The UK is a small overcrowded island with limited number of consumers. So to scale you will need to go global but be aware of cultural and business differences.
GET OVER THE FACT THAT YOU ARE NOT IN SILICON VALLEY
Despite the love affair that the UK government has with Silicon Valley, a love affair all too frequently reflected in the pages of the FT and in BBC broadcasts, the world is changing. Silicon Valley’s lock is slowly being eased.
Historically, lots of great internet companies are not in Silicon Valley. Amazon is in Seattle. Priceline -by far the most successful travel.com with a fifteen billion dollar market cap -is in Connecticut. Just look at all the great digital companies coming out of Europe: Sweden’s Stardoll and France’s Vente Privee to name just two.
And of course the UK is producing increasingly interesting and successful digital businesses as the recent billion pound plus flotation of Betfair surely demonstrates once and for all.
To recap then
- BE BRAVE
- MIND THE CASH
- BUILD THE RIGHT TEAM
- BUILD A SOLID TECHNOLOGY PLATFORM
- LEAD YOUR OWN MARKET BEFORE YOU CONSIDER FOREIGN ERXPANSION
- GO GLOBAL
- GET OVER THE FACT THAT YOU ARE NOT IN SILICON VALLEY
David Soskin Author of ‘Net Profit: How to Succeed in Digital Business’ and co-founder Howzat Media LLP
Now, go and buy: Net Profit: How to Succeed in Digital Business!