It’s a roller coaster every day, and you can have the highest desires one day, and the next day you’re cursing yourself for getting into it.
Tom Wright and I worked together and we had quite complementary skills. We were interested in doing something together. The general idea that we were captivated by was the misallocation of resources and excess capacity. We wanted to tackle excess capacity where it affects the most people. We settled on trying to tackle this for cars. The home rental market has seen ideas like this for many years — there have been timeshares and more recently you have online companies which basically use a peer-to-peer vacation rental model. We thought we could get rid of some of the excess capacity through the neighbour-to- neighbour rental of cars.
We started this business because we think it’s something that should exist because there’s a huge amount of wastage. The car industry has suffered from decades of overcapacity. There are 29 million cars in the UK and on average they’re only used an hour per day. It costs an obscene amount of money to own a car and, in these times especially, people want to make the most of what they have. People increasingly value things like accessing services and experiences more than physically owning goods. And the car is just another one of those things.
All things considered it was pretty rapid. We came up with the idea in February 2009, started fundraising in April and set up a limited company in June. At that time, we started working with the insurance community to develop a product that worked so that both the owners and the drivers could be insured. That was a long process. It took about ten months.
Our biggest challenge is that we’re trying to change behaviour. At business school, you learn that this is exactly what you shouldn’t do! We have to educate the market. It’s not just about telling them about a new shampoo bottle, it’s educating them that something new exists, how it addresses the problem, and then getting them to try it and making sure it’s good enough that they want to keep coming back more and more. It’s normal for people to be a bit wary at first, so they might read about it in one or two places, and they might talk about it with their friends. Then they might register and there still might be a lag, and they might use it. Now we’re seeing there’s lots of recurring people on the system. We’re active in 450 towns in the UK.
I don’t think raising funding is ever an easy process. We were fortunate in that we met Delta pretty early on in the process and we liked the things they were saying. So even though we met with other venture capital firms after our initial meeting, we were hoping that we would attract investment from them. But, even so, it was certainly difficult. We essentially raised money based on the story we told.
We didn’t have an operational product before we raised the money. Conversations with the insurance community are that much stronger when you have funding and, likewise, conversations with investors were stronger with positive interest from the insurance community. It’s a challenge for all entrepreneurs. It’s just a matter of juggling lots of balls to get to the launch.
We have a really small team at the moment. We have three full time people including Tom and myself, and then we’re fortunate to work with loads of great partners. We have our developers — we have a 24/7 call centre because of the nature of our product, to ensure that we have customer support where needed; our insurance partners; and we had a great PR team we worked with at launch. So there are lots of moving parts but the core team is quite small.
I’d like to think that I thought of myself as an entrepreneur prior to this, but having started a venture I think I can say it with a little more confidence naturally.
You have to be realistic and you know that the statistics suggest a very small percentage of businesses get funded in the first instance. I think part of being an entrepreneur is you just never take no for an answer and, of course, you can’t predict the future. You use that to challenge yourself every day. There are easier ways of making money, and I don’t think that real entrepreneurs start up a business just to make money. It can certainly be a motivating factor, but it’s not the prime motivation.
Entrepreneurship is about execution. Completely. An idea will only take you so far. Everyone has ideas and they should be celebrated. But taking something from an idea to launch and then executing it, making it better, having people using it time and time again, those are completely different things. This is the hardest job I’ve ever had. That being said, it’s also certainly the most fulfilling.
You’re always thinking about things so you wake up in the morning, start doing some work, get home at night after working all day, and do some more work. That’s just the way it is. You always have a notebook at hand, and you write things down as you think of them. It is difficult to turn off, especially if it’s the early stage of the business. I think it has to be like that in order to push yourself and make things better, there’s a finite period of time that you have to make any entrepreneurial business a success.
“What it takes” can be read in full in vol 22/issue 1 of Business Strategy Review.
This article was taken from London Business School Review, for the latest business thinking from all London Business School faculty
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