GB talks exclusively to the internet entrepreneur.
The scene is Disney’s headquarters in LA, an architectural icon featuring 19-foot tall dwarves. Alex Hoye, then in his early twenties, worked in an office ‘somewhere between Doc and Sleepy’.
He’d come back from Japan with a piece of paper that represented a theatrical deal for Disney that was ‘bigger’ than anything pulled off by musical maestros Andrew Lloyd Webber or Cameron Mackintosh. Understandably excited, he presented it to his boss, who took one look at it and ripped it in half.
‘He said, “Go back and double it”,’ Hoye recalls. ‘And I thought that was so inconsiderate. But I got on the plane, went back there and doubled it. I learned a lot at Disney.’
While the anecdote hints at the early promise of this serial entrepreneur and investor, it doesn’t give the whole picture. Hoye is no brash dealmaker. He gives the impression of being someone who is thoughtful and cultivated, while possessing the determination to get what he wants. Moreover, he has a modest, unaffected way of talking about his achievements that perhaps derives from his upbringing on a farm in Idaho, where ‘we raised horses, cows, chickens and pigs’.
From barnyards to cyberspace
Hoye’s early education encompassed Stanford, Oxford, Harvard and Silicon Valley, and he had stints working in Germany and Argentina, where he learned the respective languages.
He ended up founding online auction company GoIndustry, which was valued at $100 million when it went public in 2006. From there, he’s gone on to get involved in the European venture capital (VC) scene via Vitruvian Partners, and he now heads up digital marketing agency Latitude, itself a Vitruvian investment.
‘Everything we talked about in the mid-1990s has come to pass in some way, shape or form,’ he declares. ‘The rules of marketing remain the same, but the tools have evolved dramatically.’
Latitude’s big idea is to bring together these tools – from search engine optimisation to social media – and combine them with traditional media to achieve a company’s goals. What’s more, Hoye wants to do it in a way that growing businesses can access as easily as blue chips.
Hoye believes the current state of the digital marketing sector, with hundreds of practitioners targeting thousands of niches, is set to change as cutting-edge tools become mainstream.
‘We’ll see a lot of consolidation,’ he says, adding that Latitude generated sales of £58.5 million last year and profits to boot. Other, smaller players will be left behind.
‘We’ve hit a point where three things matter: the technology you’re working with, the skills of your team, and scale. ‘If you’re missing any of the three links, you’re going to feel the squeeze – the client is so sophisticated that they will not pay for your services.’
Showing the money
Another trend, accelerated by the downturn, is a shift in focus from attracting traffic to monetising it. ‘Many companies are getting a lot of traffic to their sites, so rather than “chasing the bottleneck”, the emphasis for them is on how to improve conversion,’ Hoye states.
Hoye’s involvement with the internet began when he left Disney. Despite achieving his success there, launching a division in his mid-twenties, he never considered forgoing his place at Harvard Business School. He’d seen an opportunity.
‘My plan was to concentrate on this new thing called the internet,’ he recalls. ‘I wanted to use the two years [at Harvard] for some independent projects and see if I could become a bit of a leader in it.’
Hoye founded an internet club at Harvard with Raj Kapoor, who went on to establish online photo service Snapfish. But his clear focus on the web didn’t preclude other interests. He also founded Harvard’s wine club, modelled on the one he’d enjoyed at Oxford, but without the snobbery. ‘Between the internet club and the wine club we had about three-quarters of the students,’ he chuckles.
Striking it rich
Though Hoye still enjoys his wine, it was the internet that went on to make his fortune. His approach to starting his own business, with friends David Nahama and Andrew Heath, was typically methodical.
‘We felt there was an opportunity in Europe,’ he relates. ‘Our initial idea was to copy and paste an idea from the US. We went through about 450 business ideas and asked the same questions: Is it big enough? What is the competition like? And would technology change it?’
But the approach failed. All 450 concepts were rejected and Hoye, Nahama and Heath had to resort to ‘the hard graft of coming up with our own idea’.
That turned out to be GoIndustry – a B2B auction website which helps companies dispose of surplus equipment. When Hoye co-founded the business in 1999 his competitors were still ‘sending telephone directory-thick catalogues around the world, then showing up in a warehouse the size of an aircraft hangar hoping someone was going to turn up’.
Coming to fruition
Backed by Atlas Venture almost from the outset, the founders planned to take GoIndustry public in two years, ‘as one did in 1999’. Though he liked living in Europe, Hoye was not anticipating a ‘life sentence’. But the dot-com crash put an end to that strategy, and just like at Disney, Hoye had to think again. It was seven years, not two, before GoIndustry joined AIM via a reverse takeover.
‘Our ambition was to become the market leader globally,’ says Hoye. ‘By going public, we gained the acquisition currency to [buy] the last of our remaining significant competitors and capitalise the company.’
By that time, the founding team held approximately ten per cent of GoIndustry’s equity. Was Hoye happy with what he got out of the float? ‘One never feels one is valued appropriately,’ he says. ‘But we were quite happy.’ Hoye still has a ‘limited interest’ in GoIndustry (now renamed GoIndustry DoveBid since its acquisition of a US competitor), but with the shares worth about a tenth of what they were three years ago, he’s not rushing to cash in.
‘All public markets are under fire at the moment,’ he says. ‘When you have Microsoft saying they can’t give earnings guidance for the next half-year, that’s not an AIM problem, that’s a public market problem.’
Away from Latitude, Hoye maintains a number of other interests. He remains involved with early-stage ventures such as affiliated marketing company Skimlinks, as well as giving his time and some of his money to the Venture Partners Foundation, which allocates cash to charities on a VC model and has deployed almost £1 million so far in the form of donations and “soft loans”.
Though he has the occasional pang of homesickness on a cold, rainy day (‘Do I miss California’s weather? Oh yes’), Hoye relishes the internationalism of London and the variety of Europe, which is one reason he’s made his home on this side of the Atlantic. From an entrepreneurial perspective, he also sees ‘a lot of opportunity to build things here’.
‘While America has a better track record of generating innovative companies that become world-beaters, Europe has one inherent advantage, because it is a requirement of European companies that they think internationally,’ he argues.
- Year of birth: 1969
- Place of birth: Oregon
- Marital status: Unmarried
- Childhood ambition: To be an astronaut
- Most overused phrase: Chasing the bottleneck
- Favourite music: Bruce Springsteen, Shakira, Girl Talk
- Languages spoken: German, Spanish, Portuguese, Chinese