February 20, 2008
Stelios the founder of easyJet held a free lecture at LSE. I attended, here are the main points I picked up on:
- After founding easyJet he decided to keep the brand in his own personal company.
- When starting easyCruise they used the side of the ship as a billboard as per easyJet. Turned out this did not really work as passengers have a different relationship with a ship (which they will be living on for a week or two) from a plane (which they only spend a few hours on). Plus the branding on the side of each plane was to drive direct sales via their website rather than through a travel agent.
- When expanding the easy brand Stelios mentioned he is happy if he gets a 1/3, 1/3, 1/3 mix between failures, ok businesses and great business. Said after starting so many businesses he has a good idea of the level of risk he is taking before each business gets started.
- But did mention in expanding the brand he can not let one of his ideas fail – as that could damage the brand for all the businesses.
- Gave the example of easyCinema, which used the easyJet type business model of trying to optimise yield management. So if the cinema is empty then sell tickets at £0.20 each, as £0.20 is better than an empty seat. But this failed to catch on as the companies that make the movies spend a lot on marketing and generating hype. So don’t want to see tickets for the latest blockbuster being sold at low prices. He went on to say the business then became a property play, with the easyCinema website now being used for a Netflix / Love Film online DVD rental business and customers being able to book tickets to other cinemas online.
- Talked about eight values a business needs to be an easy business:
- great value
- taking on the big boys
- for the many not the few
- relentless innovation
- keep it simple
- making a difference in people’s lives
- honest, open, caring and fun
- Then went on to talk about how these brand values rule out entering a lot of markets. For example funeral services and healthcare. And how the values tend to apply to consumer facing businesses rather than business to business type companies.
- He also discussed the drawbacks of using the easy brand, and that it carries the values of the budget airline. So sometimes needing to explain for easyCrusies, that the cabins are spacious, and you won’t have to pay for each bag of peanuts etc.
- When asked about if starting again with no capital what he would he do, Stelios thought getting into a franchise was a good idea. Due to the low capital requirements.
- Couple of points about running a business:
- Always look to get at least three bids or tenders when purchasing something.
- Did not see cross selling as particularity useful for easy group of companies. Just wanted each company to be competitive in its own market. So someone might fly easyJet then stay in a five star hotel rather than easyHotel. But noted that when booking on easyJet you are asked if you would like to book an easyHotel at the destination.
- Best time to take a risk as an entrepreneur is 28 to 29 years old. At that point you have enough experience but not too much that rule out what others may tell you is impossible.
- When BA launched a competitor to easyJet Stelios brought a few tickets for the first flight, then turned up in an orange boiler suit and started handing out free easyJet tickets to passengers. Highlights the power of using your persona to grow the business.
- Most admired business people:
- On Airline the TV program featuring easyJet, in 1998 he saw no downside to doing it. Even if the TV programme showed unhappy customers, some publicity was better than none. And trusted that any intelligent viewer would realise the show is dramatisation and most flights / check in etc go smoothly. Mentioned that as the company matures the TV programme may not suit the company, but did point out if it is not easyJet then someone else will probably do it and try to take business away from easyJet.
- Talked about the difference of charity, business and social entrepreneurship. He liked the distinction that businesses make money while charity is giving back / repaying your debt to society.
February 13, 2008
Two links from this week’s Economist:
- Free audio guides for business travellers to major cities.
- An article about stickK – a website that aims to help people making seemingly irrational (well according to economists) decisions, like smoking, not exercising etc.
February 1, 2008
What does Marko Bogoievski joining Infratil mean for their investment strategy ? Lance points out they might be looking to unlock some value from Telecom. With Telecom looking to separate its retail business from the infrastructure, there looks to be an opportunity for Infratil.
Another opportunity could be Kordia (formally BCL) which is currently owned by the Government. Kordia operates a national communications network and provides network feeds and broadcast services for the major television and radio networks. The company recorded $264m in revenue and $12m in net surplus for the year ended June 2007. This would look to be a good fit for Infratil with Makro Bogoeivski on board.