Philip Letts' stealth approach to riches

Convinced of the success of his idea, Philip Letts had to move swiftly to get his marketing-exchange company off the ground.

Philip Letts got his business training early in life; as a child he was groomed to take over the family business. "I spent time in factories, in offices and learned how to manage an international company." Sadly, Letts Diaries Britain's oldest family-owned company and manufacturer of the world's first commercial diary was sold before he was made CEO. But his time at the family firm wasn't wasted.

On the way up, he ran one of Britain's first online publishing businesses, CMI that gave him a head start in the nascent internet industry. After CMI he acted as a CEO for several internet start-ups and "learned the secrets of Silicon Valley". By 2006, he felt ready to start up on his own. "I had always thought I would be boss of my own company and I didn't want to just be the CEO in somebody else's."

He already had capital and contacts now he just needed an idea. Having paid "for lots of marketing and advertising" in his time, "I never felt that I was getting a good deal". In particular, Letts felt that the large international advertising agencies did not offer an accountable service. His idea was to create an exchange where big brands could award contracts to the most competitive agency.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

"Unfortunately, it was a classic case of chicken and egg. It wouldn't work unless I had lots of companies on either side of the exchange." Letts's solution was to keep his plan for an exchange secret and start off as a networking hub for creative agencies. "It was a stealth operation because we didn't want a competitor to jump in on our exchange idea."

He targeted different parts of the advertising and marketing industries and created niche sites to serve them. For example, one site was a platform that allowed designers to share content, instant messages and network.

Each of his sites had a different name and identity so that nobody would realise what he was doing. By the end of 2009 he had amassed 2,500 "small and medium-sized agencies and skilled creative individuals", and decided he was ready to launch.

In January 2010, blur Group sprung into life. Clients use the site to target agencies with the right potential and offer them a brief. Competing agencies then put forward their best bid. Then blur Group provides the exchange for the parties to meet, handles the money for payment and takes a cut of the overall project value. As blur Group's commission is around 20%, "obviously that means we have to offer clients a saving bigger than 20%".

Clients and creatives loved it and within a year more than 11,000 advertising agencies registered to offer services, while hundreds of clients, including "one of the world's biggest brands", issued bids. His success encouraged Letts to open similar exchanges for technology services and accountancy and legal services. Both have been a success.

Late last year, Letts listed the firm on Aim, raising £4m by selling a 20% stake. "I didn't want to go down the route of selling to trade. I wanted to list so that we could raise funds and remain independent." Now Letts, 46, aims to create a "billion-dollar business by 2020".

That might sound ambitious, but Letts believes his firm is on the cusp of a wave. "We are pioneers in services commerce. This will be a transformation even more radical and fundamental than a switch to e-commerce in the 1990s."

James McKeigue

James graduated from Keele University with a BA (Hons) in English literature and history, and has a certificate in journalism from the NCTJ. James has worked as a freelance journalist in various Latin American countries.He also had a spell at ITV, as welll as wring for Television Business International and covering the European equity markets for the London bureau. James has travelled extensively in emerging markets, reporting for international energy magazines such as Oil and Gas Investor, and institutional publications such as the Commonwealth Business Environment Report. He is currently the managing editor of LatAm INVESTOR, the UK's only Latin American finance magazine.