In our latest blog, Simon Challis talks to Bertie Stephens of Flubit.
Bertie Stephens is the CEO of Flubit, a website aiming to “change the world of e-commerce”. From an idea he had back in late 2010, Flubit now has 35 employees and seed investment of £1.5 million.
What is Flubit?
Quite simply we create lower prices on the product you’re about to buy. When you’re ready to buy something let Flubit know about it and we’ll create a lower price for it than the one you’ve already found. The price we offer you is unique, because we have negotiated that on your behalf with the merchant.
Where did you get the idea for Flubit?
It originated from an original idea that I had, but it’s the product of a lot of hard work from our entire team. I used to work in the film industry and had to buy lots of props and costumes as part of my job, and I thought wouldn’t it be great if there was a way of getting lower prices by going straight to the vendors?
How did you get the initial funding?
I got £50,000 from a stranger over an orange juice on a film set. But that came about from a misunderstanding. A friend of mine, who’s now my co-founder of Flubit, put me in touch with someone he’d met. I sat down with him and told him my idea and he asked me how much money I was looking for. I told him I needed £5,000, but he said “£50,000? That sounds a reasonable sum to me” and told me he’d give it to me. I was in a terrible dilemma wondering whether to put him straight on the figure, but that £50,000 allowed me to leave my job at my media-production company, hire a developer to do some freelance work for me and pay myself a small salary up to that first Christmas.
How has Flubit’s business model changed since you first had the idea?
It has changed completely. That’s the wonderful thing about a start-up and also about having supportive investors. The basic concept remains the same – if you want to buy something we can get it for you cheaper – but our original idea was based on creating groups of shoppers, as we came out at a time when Groupon and Living Social were very hot.
We quickly realised, however, that a customer isn’t interested in being part of a group. They just want to buy it for themselves.
Also, a merchant’s whole e-commerce strategy is based on selling to one person, so we also realised that it’s impossible to try to persuade thousands of businesses to change their strategies to focus on groups.
We soon saw that having a one-to-one relationship with retailers was the most effective way and that we could still negotiate good discounts with them. Once we recognised that we stripped down everything on our website to a customer’s basic requirements: you need to say what you want, get a discount on that product and track your order. Those are pretty much all the functions we now have on it.
So you think you can avoid the problems that Groupon has encountered?
We’ve a very different business model than Groupon. So much so that we don’t even regard them as a competitor. I would be very surprised if we encountered the same problems as them. We are based on a much more traditional buying method, which innovates on the value we can offer to the customer and merchant. We plan to turn that open marketplace into a closed one and to achieve a 30% conversion rate, as opposed to the average 5% rate.
Flubit is your second start-up. What drives you to be an entrepreneur?
I’m not keen on the term “entrepreneur”, because I think it’s been diluted a lot. People who simply have an idea are termed entrepreneurs, whereas I think it’s a lot more to do with turning your idea into a reality.
I was a film producer, so my role was to put projects together. I also think I’m pretty creative. I had an idea, and, though I don’t have a background in e-commerce, I have the skills to bring together a group of people who did and who could work on this project with me. I thought of myself as the producer of Flubit.
I didn’t like the term CEO, because it seemed to be much too grand for a humble start-up. But now the project’s moved on and I realise I need to have the title I’m much more accepting of it. Also, I’ve proved to myself some things that have helped me to earn the title in my own eyes, even though we’ve got a long way to go.
What’s been your lowest point?
I can talk now about how our business model completely changed, but you can imagine what it felt like at the time. I had this vision and had put together a team, but we came to realise that it simply wasn’t working. There were several months when it was extremely hard, and it took a lot of resilience to get through that dark period.
Probably the scariest moment was when I raised the first £50,000. I had bootstrapped my first start-up, but now a person I didn’t know very well had deposited all this money in my bank account. Suddenly, I realised it was my responsibility to make a return on that investment. But often making a return doesn’t happen all that smoothly.
Our team has the ability to adapt, so when we realised the group idea wasn’t working we managed to salvage something. We discovered one fact among all the data we had: that if we were to offer a one-on-one transaction we could probably get a good conversion rate on it. So we developed a beta version of that, it worked and we have gone on from there.
You spent months living out of a rucksack after you’d first created Flubit?
Yes, my first start-up was based in Newbury, so that was where I lived. But my co-founder told me the only way we could get the money to start Flubit was if we were both based in London. I knew he was right: the only way to attract and keep the talented people we needed was to be based around Tech City in London. We had £50,000 in the bank, but we’d just signed a lease on an office that we couldn’t afford unless we got in more funding. I certainly couldn’t commute from Newbury on the salary I was paying myself. So I backpacked around for a couple of months, staying B&B at people’s houses. Then my brother offered me his sofa, which I slept on for four or five months. Now I have a small bedroom in a shared flat. It’s not a glamorous life, but all the money is going back into the business. If I can make Flubit happen then I will do very well out of it, so if I need to live in a pokey bedroom for now then that will only make me work harder to ensure it does work out.
What milestones have you set for Flubit?
We have 30 or 40 KPIs [key performance indicators] that we download every day and distribute to each of our heads of department. They all have targets to meet, so these allow them to see if they are hitting them from week to week or month to month.
But everything we do is about gearing up for this Christmas. It’s the most important time of year for e-tailers, so we’re building our technology so we can really hit it hard.
What tips do you have for people thinking about starting up their own businesses?
It won’t suit everyone. In fact it would be terrible if everyone did, as there wouldn’t be anyone willing to work for you! Some of the brightest and best people just aren’t interested in running their own business.
If you decide you want to start up a business then make sure you have a couple of really good co-founders. You are going to have some very lonely days, when you think that everything is broken and all you want to do is just walk away. But if you have co-founders then you’re all in the same situation and you can pick each other up and keep motivated.
My other tip is to just get out there and do it. I’ve spoken to so many people who tell me they have an idea for a start-up. My next question is how long have you had this idea for? They often say: “Oh, for about a year, but I’ve got a job which takes up a lot of my time.” No one will create the next Big Thing while they’re holding down another job. You need to ask yourself how much you want to do it. Are you willing to give up everything to pursue an idea that will have a good chance of failing? Most sensible people will say no and that’s fine. But if you say yes then you have to stop dithering and get on with it. If you give yourself a get-out then you probably won’t take the risks you need to succeed.
Do you have any heroes?
I admire anyone who’s gone out there and done it, whether they have succeeded or not. The main problem we have here in the UK is that we’re embarrassed by failure. It’s completely different in the US. I was in New York recently and experienced the American start-up scene. The ideas and concepts they have are very similar to ours, but their attitude is so different. They’re not worried that people will look down on them because they’ve failed. Americans think that it doesn’t matter if you fail because at least you tried, so they just pick themselves up and move on.
So I admire someone like Richard Branson, for example, because although he has enjoyed a lot of success he has also had his fair share of failures and he’s just carried on moving forwards.
We failed miserably with our first business model. But out of that failure we built a stronger model.