Business

Cazoo boss reveals how he built three British tech giants from scratch

Most entrepreneurs spend their lives trying to convince the world that one of their ideas works. Only a few can turn their vision into a business worth hundreds of millions of pounds. In addition, hitting the jackpot twice is even less likely.

Against such a background, Alex Chesterman is a very extraordinary businessman. He has just recorded a great success hat-trick.

His online car dealer Cazoo will be listed on the US Stock Exchange with a valuation of approximately $ 7 billion (£ 5 billion). This follows the float of online real estate agent Zoopla, which sold DVD-by-post company LoveFilm to Amazon for £ 200 million in 2011 and was subsequently acquired by US private-equity fund Silver Lake for £ 2 billion in 2018.

Fortune: Alex Chesterman’s investment in online car dealer Kazoo made him a millionaire

Float later this year is expected to value his stake in Kazoo at around £ 1.5 billion and push him into the billionaire club. And that will lead the company, which was just established in late 2019, to the greatest success ever. To achieve the so-called “unicorn” status (a company worth more than $ 1 billion), it has rapidly become the fastest company in the UK.

Now, Chesterman has revealed that Kazoo “is aiming to make nearly $ 1 billion in revenue this year.” He adds: “Every company in the world, not just the one in the UK, is said to be the fastest ever.”

It will be welcome news for a group of investors who were initially behind Kazoo. This list includes investment groups Octopus, Fidelity, BlackRock, and DMGT, the parent company of The Mail on Sunday. So what’s the secret of Chesterman? His trick is as a technical “destroyer”. In other words, he found a way to harness the power of technology and the Internet to transform the entire market head-on. He is simply not interested in grabbing small slices of large sectors.

“If I have a skill set, I can start with a blank slate and understand how I want to solve problems, such as transparency, convenience, and efficiency,” he says.

Chesterman openly describes himself as an “impersonator.” It does not mean stealing the unique selling points of other companies, but translating the model to identify successful ventures abroad and appeal to UK consumers.

For example, his Cazoo blueprint was Carvana, a $ 46 billion American internet car retailer launched in 2012.

“In the case of LoveFilm, Zoopla and Cazoo, we saw a model in the US that really solved the problem and improved the market … and brought it to the UK,” he says.

But, as any entrepreneur testifies, turning the bud of an idea into a big British company is not as easy as Chesterman saw. “These are long journeys,” he admits. “None of these will succeed overnight, so you have to be prepared to make an effort.”

He says that an important part of the puzzle is building a team of loyal people and a “supportive investor base” around him. Several backers, including the DMGT, have invested in his business many times. However, Chesterman reveals that Kazoo is likely to be his last adventure.

The 51-year-old spent a blockade in London, where he dyed his distinctive beard celadon (the greenish color of the Kazoo brand) for charity. Except for the hair on his face, he is significantly different from the image of a hipster tech entrepreneur on the West Coast of the United States. He is older than the California-based evangelical cohort and speaks plainly (no jeans, T-shirts, or black turtleneck) and is suitable.

But he believes investors in UK tech start-ups are starting to look like investors in GungHo in the United States. ‘One of the historical differences is that all ideas were funded in Silicon Valley. It wasn’t here. But now more companies are on track and have the opportunity. ”

The result of better access to capital is that more companies stay private longer, he says.

Chesterman believes the UK and US are still a few miles apart when it comes to investing in large tech companies. It explains why he snubbed London for the US listing of Kazoo, which lost £ 19m last year. ‘I took my last business [Zoopla] I’m a fan of the UK market because it’s open to the public in the UK, “says Chesterman. “But it’s been six years of travel and it’s profitable and very well received. This is the type of business that UK investors usually like. It has a longer track record, is more profitable and pays dividends. Businesses such as paying. The right type of investor for our business at this stage is a US investor who is familiar with the types of models we have.

His claim seems to be validated by Cazoo’s $ 7 billion valuation. This is compared to the £ 250m price tag of traditional UK-listed car dealers Lookers and Pendragon.

Chesterman admits that the money he earned could have given up his job after the love film trade. His three major ventures have made Chesterman a wealthy man. He earned £ 20m when LoveFilm was sold, £ 200m from a Zoopla deal, and has already sold £ 100m worth of Cazoo’s stake.

He describes the money as “a wonderful by-product of effort and effort.” Except for vacations with his boy, his main passion for investing is betting on other early stage companies. “I describe it as an endorsement of myself 20 years ago. I’m trying to find those guys, or gals,” he says. “It’s about finding the right people and then giving them enough oxygen and capital to be able to build a great business.”

Among his notable investments are travel specialist Secret Escapes, snack box company Graze, and online grocery store Farmdrop. Recently, he has helped Mindlabs, a mental health app, Trustshare, a payments firm, and Fenton, an online jewelery business.

Chesterman was nominated for the OBE in 2016 for services to the digital entrepreneurial spirit, but his arrival in the automotive industry has fluttered. An industry CEO told me he was attentive when he read a bold statement in Cazoo’s prospectus, which claims market leadership in a range of areas. He also questioned the lack of car experience among Kazoo’s directors, including his boss himself.

Chesterman fights back: “You’re saying,’I think there’s a better way,’ and joining as a destroyer gets people’s support. And I’ve always found that the less knowledge you have, the better when you’re trying to make something different. The less luggage you bring in, the more you’re looking at all the issues from a whole new angle. ”

When I ask him what to drive, as if to emphasize the point, he replies:’Range Rover. black. And I don’t know the model. ”

The car salesman who admits immediately knows nothing about the car. There is something new now.

… and he supports Deliveroo with share chaos

Cazoo founder Alex Chesterman defended Deliveroo after a stock market debut and a stock crash.

“It’s a great business and it will work,” Chesterman said. “You are always influenced by the power of the market and that type of short swing [in share prices].. “When I was running my previous business, Zoopla,” Chesterman said, “I didn’t bother me if the stock price fluctuated because of what we did.” ..

He added: “What bothered me was when there was a wild swing that had nothing to do with what was happening inside our building.

“For Deliveroo, it was an event that disappeared over time.”

Deliveroo went public in March for £ 3.90 and the food delivery company’s stock is currently £ 2.60.

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Cazoo boss reveals how he built three British tech giants from scratch

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