The dotcom that benefited from the crash

When Richard Downes, the 38-year-old founder of ski holiday website Iglu.com, started his two-year MBA course at London Business School in 1996, he couldn't have imagined that his love of skiing would see him graduate with a quarter of a million in start-up capital from the university.

Downes knew only too well the frustrations of trying to book skiing holidays from brochures printed three months before they hit the shops, and then dealing with poorly informed travel agents, only to find that the holidays advertised were either more expensive or had sold out. He thought there had to be a better way and believed that the internet provided the perfect opportunity "to change that model and the rules of the game". He put together a business plan for his MBA, and that was when he got his first big break. "I was very fortunate that London Business School (LBS) was setting up a seed fund to back some of their students, and I was their first principal investment". LBS gave him £250,000 in start-up capital and the race was on to set up the site in time for a vital trade fair in October.

"We had three and a half months to get the site ready from graduating in June," he says. "It was the usual start up, with 101 things to do build the website, the product and get a sales team behind it." But that was when their second stroke of luck came along LBS's second investment was in a web-design company.

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The two firms teamed up and "they managed to put up with me, cajoling them and beating them up about how we should look, and they were good enough to deliver it". Just in time, the site was completed at 2am on the morning of the show. Response at the fair was "fantastic" and Downes made vital contacts with suppliers and industry partners, who "hadn't seen anything like it before". The site differs, he says, from competitors who have a more generalist approach: "they may be a mile wide and an inch deep; we're an inch wide and a mile deep". For example, "we don't do flop and drop holidays, but we cover pretty much 95% of the skiing market".

By 1999, Iglu.com had attracted £3.1m in venture capital funding as the dotcom boom saw money chasing anyone with a PC and a modem. The bust inevitably followed but even this didn't put the group off its stride. In fact, says Downes, "it was good for us". He was forced to shift his focus to breaking even in three years rather than five, as originally planned, to avoid relying on further rounds of funding. Meanwhile, costs for web advertising and programmers, which had soared during the boom, suddenly became more affordable "the crash kind of corrected all that".

Iglu.com is now the largest ski-holiday retailer in the UK, on or offline. It has moved into other areas, including cruises, and is a top 20 supplier in each of the other niches it has targeted. "We'd like to get them into the top five, if not the top three." Turnover is set to hit £40m in the year to May. Downes advises budding entrepreneurs to have a passion for the product they sell. As a skiing fan himself, he can "get a lot more out of working than if I was selling a bag of nails".