Tom Allason’s journey from fake ID purveyor to e-commerce trailblazer

Ahead of delivery company Shutl's US launch in 2013, founder and CEO Tom Allason sits down with GrowthBusiness to explain how he came to offer 1 per cent of his business to Usain Bolt.

There aren’t too many entrepreneurs who can say that their first business venture ended up with them on the run from the law – but for Tom Allason, his maiden endeavour did just that.

It was while studying in the US that the British-born Allason decided he was going to make some extra cash by supplying a product which will never fail to be in demand at American universities; fake IDs.

Having fled the US without the degree he went there to earn, and with the American authorities breathing down his neck, Allason says that he was very much unemployable when he landed back in his country of birth.

As luck would have it, a friend of his was in the early stages of starting up a ship broking business and, seeing that Allason needed someone to take him under their wing, offered him a role.

First in the door

As employee number three, the young upstart was thrust into the world of buying and building oil tankers and other vessels. With BP as its main client, the business had the tools it needed to grow, and grow fast it did.

‘BP would come to us and say we have this ship we need, and using our experience we were able to get much better deals than BP’s fat, lazy in-house brokers could manage,’ he explains.

‘We were able to leverage BP’s credit rating. So we could get a guarantee from them to charter a ship from us, and by having that guarantee from someone which at that time had a better credit rating than any bank in Europe, we were able to borrow at LIBOR when credit was super cheap and available.’

While the shipping business quickly grew from three to 40 staff, Allason says he knew it wasn’t his thing and that despite his previous business misdemeanours; he wanted to be the master of his own destiny.

Going alone

A chance bad encounter with a courier company led to the inspiration for his first ‘legitimate’ business, and from there he entered the delivery world for good.

‘I’d been given ten tickets to Queens for the tennis and ended up not being able to go as we were having a deal close early. So I couriered the tickets to a group of my friends and everything that could have gone wrong went wrong,’ Allason remembers.

‘The courier was late and when he arrived he wasn’t the kind of guy you would trust. In the end he delivered them to a janitor who had then gone to the pub or something.’

With none of his friends able to attend the tennis, Allason got into a heated argument with the courier company’s MD and in no uncertain terms told him that he could do a better job. Having been told by the flippant director that he should do just that, Allason set off to develop a plan for what would ultimately become eCourier.

His research led to him discovering that there was a diseconomy of scale in the sector which was seeing smaller companies maintain profitability while the larger ones struggled, leading to the market becoming fragmented.

Using the rouse of a friend doing a Masters degree on the courier industry at LSE, Allason visited courier companies of all sizes and gained access to accounts. While the tactic got him in trouble later (a theme of Allason’s business methods perhaps), he says that the stunt revealed some interesting findings.

‘I could see they all had identical gross margins, which makes sense as couriers are low skilled and there are lots of them,’ he says.

‘What didn’t make sense was that, below the line, the proportion of admin to turnover was growing as they were.

‘It was immediately clear to see the problem and that was the number of people that connect the courier at one end to the courier customer at the other, the human supply chain.’

Market gap

This led Allason to what he viewed as the business opportunity. Build a company which could ‘intelligently’ automate the supply chain to not only get rid of the extra costs but also use information to make better decisions.

His efforts to get eCourier off of the ground mirrored his gung-ho approach to business and he quickly racked up a number of credit cards and found a way to, as he puts it, ‘recycle AMEX cards to get an infinite credit limit’.

The courier business, like his current venture Shutl, was particularly adept at raising investment cash. Throughout Allason’s tenure, the company closed a seed round worth £1 million in 2003, an angel commitment totalling £2 million in 2005, and then went onto close further rounds in 2006 and 2007.

However, the young entrepreneur is quick to point out a number of ‘schoolboy’ errors that the company made as it grew.

Both of the two biggest slip-ups were market related, Allason explains. ‘Although we were growing fast, our market was declining so each client we won would spend progressively less and less, so it felt like you were swimming up a waterfall.

‘Problem number two was that the issue we were solving wasn’t big enough. People at work didn’t care if deliveries were a bit late as they’re there all day.’

These two conundrums led to Allason deciding that eCourier wasn’t going to be his defining venture; it wasn’t going to ‘change the world’.

His solution was to try and find a way of combining the practice of buying goods online with a way of getting those products to the consumer right away. Allason’s efforts took him to Amazon, which very quickly yielded no opportunity due to its distribution warehouses being in the middle of nowhere.

Research into the UK commerce space highlighted an interesting discovery for Allason. Of the top ten multi-channel retailers in the UK, seven have a high street presence. Scaling out, 40 of the 50 biggest have the same presence.

An ability to aggregate all of the stock in these big-hitting retailers was Allason’s eureka moment for his ‘change the world’ idea and he quickly set out to exit his interest in e-Courier and once again forge out by himself. 

Sale time

A partial exit was achieved when logistics company TNT stepped in and bought a stake. Allason ended up exercising some of his options, which they paid him cash for, and left the business. However, while away from the helm, TNT decided that it wanted to sell itself to UPS, and to do that it had to get rid of everything that was non-core.

With the eCourier business deemed as non-core, it was sold for what Allason describes as a ‘pittance’, giving another courier company the ‘deal of the year’. Despite receiving nothing for the shares he kept, he had £50,000 to get Shutl going.

Rather than go and secure some angel backing, Allason decided to pool his capital with that of some founding members and non-execs to build a ‘really really dirty product’ and take it to the market. With Argos, the biggest customer in the market, saying yes, Shutl then had the power to raise angel finance on more suitable terms and did so, netting £500,000.

By raising as little as possible at a time, Allason says that Shutl has reduced its risk. ‘We then got approached by one of our angel partners who is a partner in a VC firm,’ he explains. ‘We met up with them and they said they wanted to invest. From our perspective, we wanted to keep things simple, but they said they would be happy to invest in as angels in ordinary shares.’

Shutl’s latest funding round has seen it take on corporate backers as it looks to garner support for an assault on its biggest target, the US. The business now counts the UPS Strategic Enterprise Fund as one of its equity supporters.

To date, the e-commerce delivery business has raised nearly £5 million across six separate fundraisings.

In 2013, Shutl will be setting up shop in 12 American cities. Having already successfully launched in 60 towns and cities in the UK, Allason says that no one else is doing it at this scale – evidence that the courier business is ready to crack the States.

Nuggets for equity

Allason’s unique approach to business is shown in the way his business approached the task of getting some Olympics-related coverage over the summer. Instead of going the generic route of producing some relevant research or signing up to sponsor an athlete, Shutl went straight for the top and the fastest man on the planet.

In a letter to 100m and 200m star Usain Bolt, Allason outlined Shutl’s standing as the ‘world’s fastest delivery service’, highlighting its 898 seconds ‘click to door’ record.

He went on to write, ‘We’re confident that given an hour or two or your time, we can SMASH our current record. Think about it, the world’s fastest man doing the world’s fastest ever delivery…

‘In exchange for your time, we will give you 1 per cent of our company and all the McNuggets you need.’

While the offer is still in the pipeline, if Shutl can build on their UK successes and crack the US market in a similar way to Bolt’s summer endeavours then it’s sure to dominate the e-commerce delivery space for years to come.

Hunter Ruthven

Hunter Ruthven

Hunter was the Editor for from 2012 to 2014, before moving on to Caspian Media Ltd to be Editor of Real Business.

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