Think at London Business School
Lyz Swanton MBA2016 reflects on the execution of a classic startup strategy
By Nick Mickshik
For Rosie Bailey SLN2019, being optimistic goes with the territory. “If you’re going to be an entrepreneur, that’s the first exam you have to pass – you really have to believe that your idea is going to work.”
That might be true under normal circumstances, but how do you keep taking positive steps forward during a global pandemic? It hasn’t been easy, admits Bailey, who co-founded Nibble, a price negotiation chatbot, at the start of last year.
“Of course there was huge uncertainty, but then you have to adapt, like everyone has had to,” she says. “In some ways it actually fast-tracked what we’re trying to achieve with Nibble – although there were a daunting few months.”
For many people in business, the Covid pandemic has presented personal as well as professional challenges. As a mother of three, for Bailey it meant juggling working from home with homeschooling, while contemplating what impact consumer belt-tightening would have on the startup.
Bailey and her Nibble co-founder Jamie Ettedgui SLN2019 came up with the idea for the company while undertaking the LBS Sloan Masters in Leadership and Strategy programme. “I’d spent two decades in investment banking advising the likes of Tesco and Unilever on financing and acquisitions, but felt ready for a change of direction,” she admits. “The programme was something different, an environment where you can learn and really challenge yourself.”
“Of course there was huge uncertainty, but you have to adapt. In some ways, it fast-tracked what we’re trying to achieve”
That challenge included creating the blueprint for Nibble, a technology that enables customers to negotiate a personalised price for ecommerce. For the retailer, it cleverly sidesteps the need for voucher codes and blanket markdowns, while customers benefit from securing a personalised discount on a product or service. “It’s reminiscent of haggling in a bazaar, but also talks to the very real fact that only half of people feel comfortable negotiating in real life, but that increases to 85% when it’s a negotiation with a chatbot,” reveals Bailey. “Nobody is afraid of losing face with a computer.”
The concept piqued the interest of multiple retailers, but the founders decided to delay building a prototype until they had some firm orders. “And that’s when Covid hit,” recalls Bailey. “As soon as we realised the impact wasn’t going to be a matter of weeks, we knew we needed to readapt.”
Research soon showed the exponential growth of ecommerce during lockdown as customers swapped the high street for online shopping. It also highlighted the growing fight for digital attention being faced by online shops – a problem that Nibble deftly solves. “To react to that, we decided to quickly create the actual application so we were no longer presenting a PowerPoint slide deck but the real thing,” says Bailey. “People actually being able to try out the technology really became a game-changer.”
Fast-tracking the process also meant they could apply to last September’s LBS incubator cohort, which “lit a fire under them”, enabling them to connect with mentors, like-minded entrepreneurs and potential clients through the programme, all while tweaking the technology to react to the changing market.
“We have created something that works with the way people shop now and which recognises that there’s a difference between online buying and online shopping,” says Bailey. “Nibble aims to help with the latter and convert those items languishing in abandoned baskets on websites into sales.”
Strategy was flipped 180 degrees as a result. “Previously, we’d have been looking for a headquarters first off the bat to house our staff,” she points out. “Now, we have a team of four permanent and five part-time staff all working remotely. We’ve been able to employ talent outside the UK and streamline the way we communicate. I can have tens of meetings a week because travel time is non-existent.”
Rather than opening a traditional bricks-and-mortar HQ, focus has shifted to product development. As a result, the current Nibble technology can be onboarded in just 10 minutes.
Having such a slick prototype (via a Shopify app) has also helped secure new clients, with the startup onboarding new customers every month since January despite the renewed UK lockdown, and supporting the other LBS ecommerce startups to scale fast.
Bailey and Nibble have no intention of resting on their laurels; rather the plan is to build on the momentum they’ve created, against the odds. “I think the main thing we’re seeing from Covid is the need for innovation, but also how the need for agility remains post-pandemic – no one can go slowly against the competition any more.”
“The need for agility remains post-pandemic – no one can go slowly any more”
Abdulaziz Al Loughani MBA2012 fully endorses that sentiment. For the Kuwait-based entrepreneur and CEO of Floward, a premium online flowers and gifts delivery service that has been shaking up ecommerce in the Middle East for the last four years, the stats speak for themselves. “The flowers vertical is a $1.5 billion industry in the Gulf region, but probably 99% of it is actually offline,” he reveals. “And primarily that is used for gifting to other people, not for self-consumption. So, in that respect, we are far behind the European flower market.”
Determined to bridge that gap, Al Loughani founded and launched Floward as an online store in 2017 and has seen exponential growth. Revenue grew 11-fold from 2019 to 2020 alone. “We’ve become the largest flower business in the whole Arab world in that short amount of time, which is a great position to be in,” he says.
Then came Covid: “We were on a good streak where we were growing quite aggressively at the start of last year. But then the pandemic hit us, right at our peak season of Valentine’s Day and Mother’s Day.”
Al Loughani remembers weeks of uncertainty as cost-cutting measures were put in place and shops were forced to close. There was also constant disruption to the supply chain as lockdown measures were instated across the Gulf and beyond.
The initial strategy had been to sit tight and hope to weather the storm as consumers reduced their spending across the gifting and luxury sectors – but the data told a different story. “We saw more eyeballs coming to our website, and more people actually using our application,” says Al Loughani. “And despite us not knowing what the future really looked like, I went back to my partners and said, ‘We need to invest on a big scale.’ That wasn’t the easiest conversation to have.”
But the gamble paid off as consumers turned to gifting as a way of connecting with loved ones they weren’t able to see in person and more shoppers converted to online. Floward began 2020 operating in three cities. By the end of the year that had risen to 18 across six countries, including a thriving set-up in London – the first venture into Europe and no mean feat, given just how competitive the UK flower and gifting market is.
Launching in London also has personal significance for Al Loughani, who completed an MBA at LBS in 2010 before pursuing a career in venture capital. “I wanted to learn from the best and my time at LBS really enabled me to,” he says of the two-year course. “I hope I’ve made the school proud by taking all that experience and then bringing a business homegrown in the Arab world back to London. And that my future plans will continue to make them proud.”
Apart from actually growing the flowers, Floward fully owns all of its operations and the customer journey, from receiving the flowers, arranging them in its own fulfilment centres to last-mile delivery in its own fleet.
This allows the company to continue to push the envelope in the sector. One of their latest offerings allows customers to send QR-enabled video messages with their flower gifts, in a further attempt to bridge the gap created by Covid.
Innovation is at the heart of Floward’s roadmap out of the pandemic and beyond, ensuring that the company will continue to be an industry leader. And that means getting inspiration from every corner. “As of January, we have a company inbox just for ideas, from anyone who has a thought on how we can improve what we’re doing. And I personally read them all, because I am blessed to have such a great team,” says Al Loughani of his now 380 employees.
He admits many things will remain uncertain as we re-emerge from the pandemic. To counter that, he advises entrepreneurs to focus on the constants; the factors that are unchanging. In Floward’s case that is quality and innovation, but above all it’s listening to those who know the company best. “We are all founders of what Floward has become,” Al Loughani says with evident pride. “We all played a part navigating through 2020 and will collectively futureproof what we’ve built. A business’s greatest asset is always its people.”
For Polly McMaster MBA2011, bringing it back to the individual has also been the secret to business success. When she founded clothing brand The Fold in 2011 it was to address the difficulty women faced in buying appropriate businesswear. “The key thing for me was that I really believed that I was the customer. It was then a case of identifying if that pain point was felt by other women, too,” she says.
McMaster’s lightbulb moment arrived during her MBA at LBS, which meant she was able to use her learnings to test and develop each element of her business idea.
That began with extensive research via focus groups and surveys. “We literally used every single sort of class or case study opportunity to ascertain if The Fold was just a good idea or if it had legs and was a viable market opportunity,” recalls McMaster. “Really feeling that I know the customer base very well, and understand their needs, has enabled us always to have a very, very clear compass.”
“It’s given us all an opportunity to think outside of the box and that’s what makes a great business”
Such a clear vision quickly translated into commercial success. By 2019 The Fold had a thriving online business, supported by a flagship central London store and growth of 60% year on year. The UK-based enterprise had also made great waves in the US, a market that was accounting for around half of all sales.
“We had identified our audience and were building a community of working women via events and networking. In fact, unbelievably, the last event we hosted, just before Covid, was at our store to celebrate International Women’s Day 2020 last March,” says McMaster. “Then within two weeks our store was temporarily closed. It really was like going off a cliff edge.”
While the company’s “incredibly passionate and committed” staff of 40 assessed the impact of lockdown on their supply chain and current orders, McMaster was faced with the very real and “completely terrifying” prospect that the pandemic would completely negate the need for The Fold’s offer. “Where do you go with a workwear brand, which is about getting women out of the door, feeling and looking amazing when doing that presentation, when doing an interview, when on that business trip?” she asks. “Pretty much the only end use that we didn’t really cater for was sitting working from home.”
To answer that question, McMaster returned to where it all began: asking The Fold Woman what she needed to navigate the new normal. “We surveyed our customers and got thousands and thousands of responses, which really helped build a picture of what we needed to do next,” she says. That meant completely changing up the offer to create clothing to help women negotiate the colliding worlds of home working and home life. The result was items that were smart/casual, practical and empowering.
“We asked, ‘Where are people getting some positivity from at such a difficult time?’ And for many that can be shopping and feeling good in what they’re wearing, so we’ve created clothes with that in mind,” says McMaster. The thoughtful response has already begun to pay off, with increased sales, rave reviews and 100% growth in markets outside the UK and US.
The outlook is positive, but McMaster concedes that the long-term impact of the pandemic is still largely unknown. To navigate that, she plans to keep listening to her team and her customers – the original Fold Women.
She also acknowledges that consumer priorities have changed dramatically in the last year. We are all living life more flexibly, economically and sustainably than ever before. “This gives us all an opportunity to think outside of the box and that’s what makes a great business. It gives you that lens to look more broadly and think more creatively and opportunistically,” she says.
Does that mean that, like Bailey and Al Loughani, McMaster is feeling positive about the future? “Absolutely,” she replies instantly. “That creative energy and sense of opportunity is so exciting. It’s simply why we do what we do.”