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June 4th, 2000
Behind the screens – Cover Story

What does it it take to make a dotcom succeed? Hard work, a highly developed sense of fun and, as Sally Kinnes finds out, 48 hours in every day.

Behind a brick facade in Soho’s Dean Street, a delivery man is struggling to get two chairs and a fan into a lift. Upstairs, there is a dead plant in one office and a man lying on an upturned table, screwing in the legs, in another. Elsewhere, someone is giving a presentation to a group of staff, also lying on the floor. The individual offices are too hot for comfort, the ceilings feel too low and there is no view to speak of.

Welcome to Zoom, headquarters of the internet-shopping portal and ISP. It will take more than some new furniture to transform what is, frankly, a rather tatty office, but Zoom’s 32-year-old director of advertising and sponsorship, Jo Mosaku, isn’t bothered.

In reality, Mosaku is barely in the office long enough to notice. His job is to increase revenue and his day is typically a round of meetings and work-related dinners. To see The Sunday Times, he has dashed out of an all-day conference where he has been hob-nobbing with the Associated Newspapers chief, Lord Rothermere. As we talk, he constantly checks his e-mail.

Like most people in internet businesses, Mosaku cannot work fast enough. There is plenty of pressure. Zoom is jointly owned by Arcadia, owner of Burton, Topshop and Dorothy Perkins, and Associated Newspapers. Zoom acts as an umbrella site for other retailers and works with 100 partners. It offers everything from news headlines to beauty tips, all surrounded by hundreds of goods you can buy at the click of a mouse button. Hence the need for Mosaku to get out and press the flesh. “Our trading director came from a more traditional business background and, in the first month, could not believe how much faster everything was,” says Mosaku. “Transactions would be done in a week that would normally have taken three months.”

A paper-hating executive whose desk contains almost nothing but a laptop, Mosaku runs his life with a tiny Ericsson T28 mobile phone and a Psion 5mx. Both just happen to fit into a neat American Airlines leather pouch, originally designed for some object now forgotten. “It comes free when you fly first class,” he says. Unaffected by the recent love bug virus – “I’d never open an e-mail from someone I didn’t know” – Mosaku is so organised, he has a copy of every e-mail he has ever sent downloaded onto a CD-Rom.

The pace Mosaku maintains is typical. It’s not just that web businesses are 24/7 (online 24 hours a day, seven days a week), they are growing at what, in the bricks-and-mortar world, would be considered an unnatural rate. Web companies may not have conventional overheads, but their investment in technology is huge – or it should be, if they are to fulfil customer expectations. Most need economies of scale, which means opening offices in half of Europe within a year or two of their launch. Anxious to do a deal before the next guy does, they are growing like force-fed plants.

A year ago, David Berger was running the UK end of the American financial site The Motley Fool, which offers easy-to-understand financial advice, from his back bedroom in north Devon while working as a GP. He had been a big fan of the American site and suggested to its creators that they set up a British version – their reply was: “Sure, why don’t you run it?” Now he has given up medicine to work on it full time. The London office, which opened last April, employs about 40 people, it has just gone online in Germany, and there are plans to open in Italy, France and Japan.

Letsbuyit.com, which allows consumers to club together to buy products more cheaply, has grown even more quickly. The largest e-tailer in Europe, with 280 staff and live in 14 countries, it is only a year old.

To keep up with this kind of competition, Zoom is expanding into Europe, is about to launch its own credit card and, most remarkably, will soon offer free internet connection (so long as you buy a certain amount of goods every month). Zoom’s managing director, Eva Pascoe, admits it is a risk. “It’s a very scary prospect, but we believe it can work,” she says. “We calculate that it is worth something like Pounds 10m in free marketing if everyone has Zoom as their home page.”

Zoom has the advantage of an existing mail-order company, Dial, to handle orders and deliveries. Once you have confirmed your order, it disappears into an automated system that sends an e-mail acknowledgment back to you, automatically creates an order file, checks the goods are in stock and verifies your credit-card details. Several computer systems are involved, but no people.

Humans don’t get involved again until a stock-picking list emerges on a computer at a warehouse (probably in Preston, or for some orders in Topshop in Oxford Street). At this point, the process is the same as for any mail-order company. A picker scurries about the warehouse collecting orders from the shelves, a packer packs them, encloses an invoice, generates an address label, sends you an e-mail confirming when they will arrive and puts them in the post. The entire process, from ordering to delivery, should take a maximum of 48 hours.

Zoom’s site is operational 24 hours a day, meaning customer-support staff must always be on hand – on average, Zoom employees work a 10- to 12-hour day, along with a lot of “after-hours” networking.

For the trading manager, Guy Hipwell, 30, the biggest headache is keeping track of what is where. “In a store, if customers can’t see something, they can’t buy it,” says Hipwell, a scuba-diving enthusiast. “It’s very different online.” Once an order is dispatched, Hipwell uses the Royal Mail’s Track and Trace system to monitor movements.

Letsbuyit.com faces similar fulfilment problems. “The internet is neither fast nor cheap for net companies, but people think it’s both,” says Peter Jaco, the Harley Davidson-riding managing director for the UK and Ireland. “They want value for money and the same levels of service other retail organisations deliver, even though they are paying discount prices of 10%-60%. That’s a challenge for us.”

To begin with, Letsbuyit.com had a credibility problem. One year on, television advertising has helped it get known. In London, its sourcing staff have been recruited from companies such as Dixons, Harrods, Tesco and Debenhams, so they are already well known to suppliers. Goods are reserved from suppliers, who dispatch them themselves or send them to a fulfilment centre in Galashiels in Scotland. “We’ve spent a lot of time and money building a strong back end. We’ve still got implementation issues, but it will give us an expandable capability, so we can easily grow to a $4 billion business,” says Jaco.

The Motley Fool’s UK offices are full of brightly coloured furniture, a Smeg fridge, bikes and balloons. Most of Berger’s problems come from trying to exploit every possibility of the web. As well as online advice, the site sells financial books and Berger is editing one and writing two more; he’s also in discussion with several television and radio companies about developing programmes, and is keen to expand audio and visual content online.

Then there are his regular appearances on BBC News 24 and The Money Channel, his twice-weekly contributions to the website, and maintaining one of its live portfolios, the Rule Shaker (using his own money but, at the time of writing, down about 6%).

 

Sunday Times
June 4, 2000
Author: Sally Kinnes

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