Nick Jenkins: How I fattened up Moonpig
Ex commodities trader Nick Jenkins launched his own card copmany in 2000. It took five years to turn a profit, but now his company, Moonpig, sells ten million cards a year.
As death threats go, Nick Jenkins, 42, couldn't have asked for a timelier one. As a Moscow-based commodities trader, "one of my clients stole $10m worth of sugar. I pursued him, had him arrested and he took offence." Shortly after, Jenkins found a less-than-friendly warning pinned to his door. "I can take a hint," says the founder of £21m-a-year greeting cards firm Moonpig.com. "Which turned out to be lucky, because the economy collapsed within three months of me leaving."
Shropshire-born Jenkins returned to Britain in 1998 and took an MBA at Cranfield business school. "I wanted to do something entrepreneurial, but I hadn't come up with a plan. So I thought I'd do an MBA while I came up with a clever idea." While looking at online options, "I decided I wanted a product that I could improve. And the only way to do that was through personalisation."
Jenkins spotted his opportunity while buying greeting cards he'd Tipp-ex out the card's caption and write in one of his his own. "It made it more relevant." Allowing customers to create their own cards over the internet was his brainwave. "You could print them from scratch, which solved the problem of having lots of stock." And because digital printing was beginning to develop, "it was possible to come up with a single personalised greeting card".
In 1999, Jenkins bought some factory space in the Lotts road, Chelsea, at £25 a square foot and put £160,000 of his own money into the business. Having hired a web company and recruited a printing specialist, in August 1999 he signed up greetings card publisher Paperlink as an investor. In return, they gave Moonpig the rights to sell its card designs online.
In June 2000, the company was ready for launch. However, the dotcom crash meant it "took four years and four different rounds of drawn out and painful fundraising" to keep them afloat.
Jenkins had "no marketing budget", so during the first six years, 90% of sales came by word of mouth. It took five years just to break even, but it taught him a valuable lesson that the most important part of marketing is getting the product right. "If you have a good product, it will sell itself."
Losses of £1m in the first year were followed by shortfalls of £0.75m, £0.5m and £0.25m until 2005, when the firm finally turned profitable on £3m of sales. "In some respects I feel lucky that I didn't raise a large sum of money at the start from venture capitalists because the pressure would have been to spend it all on land grab and develop a massive overhead." Business only built up gradually, but "the gap between how much money we raised and our sales would have appeared much greater if we had raised more money".
This year, the firm will send out ten million cards, after taking orders for 6.7 million in 2008. "What I love about this business is going to the factory and seeing all these cards being printed and thinking that's the best birthday card anyone will get." And with the business still growing, "it's quite a buzz to know that 30,000 people a day will open an envelope and have a laugh".