John Perceval is still getting used to being a 62-year-old pensioner at the head of an internet business – one that this year is looking to increase its turnover from £2.3 million to £4.5 million and more than double its profits from £527,000 to £1.2 million.
Find.co.uk (an acronym of financial information net directory) is, as its name suggests, an internet directory for UK financial websites. These websites basically pay Find to advertise their financial wares to its growing and sophisticated audience.
It was set up in 1996 after Perceval retired as marketing director of Save & Prosper (now part of JP Morgan), having previously been at Flemings Asset Management. The business was self-funded by Perceval with £10,000 and two partners who run financial advertising agency Alison Mitchell, whom he persuaded to invest £5,000 each.
The financing of the business is one area of which Perceval remains extremely proud. In the first year the business lost £18,000 but since then has been growing from strength to strength. The business is still 100 per cent owned by the same three shareholders and an Employee Benefit Trust (part-financed by the bank), set up to enable employees to acquire a stake in the business.
‘I’ve never put in another penny, raised any external finance or had an overdraft. If we needed money for expansion, the venture capitalist route might be the way forward. But the demands of VC firms in terms of the equity they take are too rapacious – VCs have talked to us but I wouldn’t give them the share of equity they would want,’ affirms Perceval.
A working family
In the early days, gaining critical mass was Perceval’s biggest hurdle – and persuading people to stump up money for a medium that was, at the time, free to use. Keeping costs down was imperative and Perceval took a conscious choice not to hire a sales person.
‘I was used to corporate life but then I found myself a pensioner, an accountant, a salesman and IT person all rolled into one. The first year was tough and anyone I would have hired would have been destroyed. And it took even longer to get the ball rolling – I didn’t pay myself for two years,’ recalls Perceval.
What he did do was enlist the help of his daughter to work on the administration side (it was only in 1999 that the business took on additional staff), although he claims, ‘she didn’t know a thing about computers!’
The next stop was to outsource all the technical development from day one, to Aspect Internet. ‘It’s very much my philosophy to get better people than yourself to do things you may be unfamiliar with. We were very fortunate to have a state of the art website – I think Aspect undercharged us at the start but they have since put it right!’ grins Perceval.
A gradual migration to automated IT systems over the years has helped the company to increase sales by seventy per cent in the last year, as Perceval explains.
‘We had a lot of invoices that were being completed manually – some are now automated, completed in the middle of the night and emailed in the morning. Last year we increased our sales by 70 per cent with no increase in staff numbers.’
Dare to be different
A refusal to be swept into the e-commerce mania of the late 90s has served Perceval well. As he says, ‘there were many stupid start-ups that never should have got off the ground – it was an era of connective insanity. I was at the receiving end of an awful lot of advice – none of which I took. For instance, my rigid focus on the UK, even though I was told the internet was global, was a big indication that I was clearly nuts,’ he chuckles.
That said, his instincts and stubbornness haven’t always paid off handsomely. Wary of the many newfangled internet e-commerce models, Perceval originally started charging on a ‘tenancy’ basis, where companies paid for their advert to be positioned on a page for a period of time (such as six months or a year). Says Perceval, ‘I was slow to understand that tenancy wasn’t a good idea – tenancy is completely unscaleable, we had companies paying a mere £1,000 for unlimited mileage.’
He opted for tenancy to begin with because he had little faith in the tracking ability of the ‘cost per click’ systems (the internet payment model whereby advertisers pay the likes of Find when a customer clicks on their advert or link) and was not prepared to take financial risks to invest in that kind of model. ‘When pay-per-click started, I was also slow to see its importance – I was too concerned with its integrity, as I knew there was a lot of artificial spider traffic.’
Now, however, with much proven commercially, the business uses a combination of tenancy, cost per click and cost per acquisition pricing. In all, there are around one hundred clients who pay on a pure e-commerce basis.
One area where the business has been a pioneer is banner advertising – it claims to be the market leader in terms of number of campaigns for a financial services website and 25 per cent of turnover is generated from banners.
Perceval believes a strong focus on employees (they now own 28 per cent of the business) has helped contribute to Find’s ongoing success. Although staff numbers are relatively small (there are currently 13 employees) and the group is not yet large in terms of sales and profits, there was virtually ‘no time off sick in the last year’ and all positions (bar one) were filled by word of mouth.
‘We have an exceptionally low staff turnover – which I guess could be seen as a bad thing, as we don’t get new blood or ideas. But I ensure that all staff are paid well – I don’t want to be too fat a cat. Every member of staff has an equity stake – I think a share option scheme does motivate and retain people,’ acknowledges Perceval.
He is keen to emphasise the ‘no rivalry, no hierachy’ atmosphere as key to the company’s success – ably demonstrated by the fact that all the top management team – Perceval included – sit in the same office space as the rest of employees.
The future for Find
At 62, Perceval acknowledges that he has grown the business to a considerable level – and although he has scaled his working day down from five days to three, he’s not quite ready to take a backseat.
‘The answer has always been a trade sale but we will wait for the right time and the right price. We need to keep on the path of sustained growth and maintain a strong cashflow – and I don’t want to sound too complacent. I am deeply paranoic, but try not to let it show!’