If society is fascinated by youth, it’s fair to say the internet world is obsessed by it. Every other day you hear about another teenager who has developed the rival to Google, and when it comes to established web businesses, the experienced players tend to lose out on glory in favour of the young bucks.
British internet entrepreneur and investor David Soskin, who is 56, doesn’t begrudge the youngsters their success but he laments the stereotype: ‘There is this Silicon Valley mantra that if you are over 25, you are dead in the water. It is obviously complete nonsense. The world’s great internet leaders are not 21 years old – all respect to Facebook’s Mark Zuckerberg, who is a genius and is one of the great businessmen of our era, but you can’t extrapolate from just one example.
‘If you look at Jeff Bezos, the founder of Amazon.com, he is certainly not a Zuckerberg-type person, and neither is Apple’s Steve Jobs. The idea that successful technology companies are led by 21-year-olds is a myth, and really is part of the rather silly, macho culture that emanates from Silicon Valley, which doesn’t really survive any detailed analysis.’
It’s fair comment from a businessman who has led one of the UK’s fastest-growing internet companies in the hyper-competitive online travel industry for the best part of a decade.
Soskin has grown Cheapflights, a flight price comparison website, from a small internet business based in the South London attic of founder John Hatt to a major international player. For seven years in a row the company has featured in the Sunday Times Tech Track 100, an industry table of the top private technology companies in the UK.
Sales have grown 35 per cent a year since 2006, soaring from £12.3 million in that year to £30.2 million in 2009, and the company now has eight websites that cover ten countries.
After serving as the CEO of Cheapflights for eight years, Soskin stepped down to become a non-executive director and pursue other internet interests. He is the co-founder of digital media investment firm Howzat, a board member on grocery price comparison website mysupermarket.co.uk and executive chairman of swapit.co.uk, a trading site aimed at teenagers. This year, he adds author to his CV, publishing Net Profit: How to Succeed in Digital Business.
Soskin was firmly part of the “old economy” before joining the new. After graduating with an MBA from Harvard Business School he became a business strategist in the construction industry and founded the Asquith Court Schools chain of nursing schools, which he kept for 12 years before selling it in 2001 for $100 million. It was after 1997, when ABN Amro approached him to establish a media corporate investment banking arm, that he decided he wanted to invest personally in the burgeoning world wide web.
‘I could see very clearly that the internet was going to work. It wasn’t really thought of that way at the time, but I knew digital media was something that was going to take off,’ recalls Soskin. ‘However, I saw these rather ridiculous business plans and masses of money going into what I thought were rather odd, obscure ideas. Some of the business things that I looked at were completely, terribly crazy – an online gym for example.’
It was then he received a phone call from a friend who suggested he contact John Hatt, an experienced travel writer, who wanted to sell his flight comparison website, Cheapflights.
‘I didn’t know the website, and I asked him to tell me about it, thinking that it was going to be another nutty internet business,’ Soskin says. ‘He told me that the client base included some of the best-known names in the UK travel industry – which was interesting because other internet businesses had no clients at all – and that the company had sales and was very, very profitable.’
Soskin immediately liked the product and found a like-minded soul in Hatt, whom he describes as a little bit older than the average internet entrepreneur – well into his 40s when he started Cheapflights in 1996.
He opted not only to invest but to buy, so in 2000 he combined with a competing consortium, led by Hugo Burge, to outbid a third party and secure the company. He and Burge then formed a business partnership that lasts to this day. At the beginning, he remembers: ‘It was Hugo, me and a sales guy sitting in a serviced office in Wandsworth, around the corner from the founder’s house.
‘John didn’t stay on, but he was a big tea drinker, and he was always dropping in for cups of tea, and he kept on telling Hugo and me how totally useless we were, how totally incompetent we were, and that we were both blithering idiots.
‘I think he saw that we weren’t doing things up to his extremely high standards, but thankfully Hugo and I had a reasonable sense of humour and reasonable self-confidence, so we didn’t wilt under this onslaught.’
Soskin has a measured approach to doing business and an ability to keep his eye on the details that matter. In achieving growth he says the key thing was remaining ‘obsessed’ with the website’s appearance and functionality, ‘always changing, testing, trialling and making the website better and better’. He also wanted to include as many providers as possible offering different products for consumers to compare and contrast prices. And he always made sure he ‘watched the cash’.
He and Burge expanded the company, launching in the US in 2003, initially on a small scale but growing within three years to three million unique users a month, and later to Germany, France, Italy, Spain, Australia and New Zealand. Soskin says that now more than half of Cheapflights’ business is in North America (Canada and the US).
‘We are a company that values its margin,’ he says. ‘We are quite cautious in our approach and we like to get things right. There are probably other people on the internet who expanded internationally more quickly than we did, but it’s like the tortoise and the hare – we get there but we have our own approach to doing things.’
The cautious style is also crucial to his investment vehicle, Howzat, created with Burge in 2006, which Soskin describes as ‘a small fund that Hugo and I run in our spare time’. Howzat’s portfolio includes: a small investment in WAYN (Where Are You Now), a travel social networking site; CheapToday.com in Boston, a discount website aimed at American mums; Academia.edu, a networking website for workers in higher education; and Trivago, the European competitor to online travel review website TripAdvisor.
For the companies he invests in, Soskin hopes to be a ‘sounding board’ rather than a micromanager. ‘I cut my teeth in big corporate strategy – I know strategy inside out – and I am a very, very good planner as well,’ he says. ‘But I also believe you have to back your CEO; I don’t really want to get involved in day-to-day operations of my investments if I can help it.’
While there is currently no exit plan for Cheapflights, Soskin says he is committed to and buoyant about the future of the internet in Britain. ‘As you get older and wiser your judgement becomes better, and the trick with investing is to invest in things you really do understand – don’t invest in things that you don’t,’ he says.
‘What I know is digital, and you hope, everyone hopes, that you’re going to get it mostly right, and that one or two will be hugely successful.’