Moonpig.com has changed the way we buy and send greetings cards forever. The website (named after its owner's nickname at school) allows customers to send a card from their desk and personalise it with a message, and by doing so has found a space in the market that has enabled it to surpass many of its high street competitors. The hip e-tailer is currently sending 12 million cards a year and was ranked third in the 2011 Sunday Times Profit Track league table for private companies with the fastest-growing profits. They've recently expanded their product portfolio to include flowers, personalised gifts and have also entered the US market. There are now over 10,000 card designs on the site - five times more than the average high street store can offer.
The company was sold in July 2011 to Photobox, a private equity-backed firm, for the healthy sum of £120 million. But it's taken ten years for Moonpig to get to where it is today, and it hasn't always been straightforward.
To MBA, or not to MBA?
Having studied Russian at Birmingham University, Nick Jenkins spent eight years as a commodities trader at Glencore in Russia. He decided to return to the UK after a death threat from a client who had stolen "quite a lot of our sugar". Next step was an MBA, but Nick hadn't considered doing one until three months before starting at Cranfield University in Bedfordshire: "I did it because I decided I was going to set up my own business," he explains. "It gave me a bit of time to think a few ideas through and to bounce them off other people. It's a great environment in which to test these things and to write up a few different business plans." The entrepreneur also saw it as an ideal way to consolidate his understanding of core business areas and principles, and "a very useful opportunity to brush up on things like marketing". The whole experience demystified many aspects of how to run a smaller business for a man coming from a large corporate organisation. "You realise there's less to fear than you may have first thought."
A man with a plan
One of the most useful lessons from his MBA was the importance of writing a "realistic" business plan. "When it comes to projections, they shouldn't be top down," he explains. When starting a business, the entrepreneur shouldn't just look at the big picture but needs to work out exactly what needs to be done, and how much money needs to be put in, to make the right number of sales. "The tricky bit isn't so much attracting the money," says Nick, "it's making the thing work. Anyone can start a business, but making it profitable is totally different."
Asking the right questions and setting the right parameters when constructing a hypothetical business model was an important starting point for Moonpig back in 2000. "With online greeting cards there was lots of potential, but I think you have to size the market properly and see how big it could become. The first aim of the business plan ought to be to tell you whether or not to carry on with an idea. Sometimes you have an idea, but when you properly map it out, you often realise why it shouldn't be taken further. That's a valuable exercise in itself. " If you find your preliminary assumptions are flawed, the foundations upon which your potential business rests are unlikely to be robust enough to withstand the tests of the real-life business world. "Sometimes you don't get past the first week with a business plan - you assess competition, for example, and quickly realise why you shouldn't enter a particular market."
Since he financed his ambitious start-up with the money he earned at Glencore, Nick openly admits he isn't your average entrepreneur. "There was value in having been a commodities trader before starting Moonpig in terms of personal financial security." He raised £1.3 million through investors and added £750,000 of his own savings in order to get the company off the ground. Nick suggests, though, that there are pros and cons to using your own funds in this way. "The upside of having a lot of money myself was that the business survived. The downside was that it can make you a little bit lazy. I could have pushed things faster if I was using other people's money."
Words of wisdom
Nick has few regrets, but "looking back," he reflects, "I would have started my own business earlier." He advises young entrepreneurs to set up businesses where profit can be made quickly, even though they might not make you a fortune. "It'll give you something to cut your teeth on," he explains, "as well as credibility with investors and some of your own money to take with you into the next business." For all Moonpig's success, however, Nick says graduates would be ill advised to start up a business with a similar model. "The difficulty is, to set up businesses like Moonpig requires too much cash. If I hadn't had my own money, Moonpig wouldn't be around today." Yet, like all entrepreneurs, Nick has done it his way, and Moonpig's unforgettable pink snout now adorns more greeting cards than ever.