Cazoo’s Alex Chesterman: “I’m not an innovator, just a copycat”
Serial entrepreneur Alex Chesterman likes to improve the consumer experience by spotting what’s broken, then fixing it. That’s been a successful strategy, but is he about to call it a day?
Alex Chesterman has been described as “the most effective doer of deals in British business”. He’s certainly one of the speediest, says the Financial Times. Less than 18 months after launching Cazoo in December 2019, he’s planning to float the online used car-dealer for a hoped-for $7bn, using billionaire investor Daniel Och’s special purpose acquisition company (SPAC). It’s expected to be “the highest initial listing value of any UK company on the New York Stock Exchange”. Britain’s second-hand car market is notorious for its sharp-elbowed dealers – as encapsulated in the 1980s TV series Minder. But a deal that size is enough to have Arthur Daley spinning in his grave.
Chesterman, 51, who talks of building “the Amazon of cars”, doesn’t lack confidence or backers – Cazoo’s existing investors include BlackRock, Daily Mail owner DMGT and Octopus. Yet competitors have begun to ask how a fledgling venture, which lost £88m last year on sales of £162m, can reasonably command such an astonishing price tag, says The Sunday Times. By contrast, “unloved” rival Lookers is worth just £213m. A good deal of the answer lies in Chesterman’s pedigree as a disruptor.
Chesterman is the founder both of LoveFilm, the DVD rental business that helped spur the end of the high street video store (sold to Amazon for £200m in 2011), and the property portal Zoopla, which floated in 2014 and was later bought by Silver Lake for £2.2bn. Cazoo is “Chesterman’s latest attempt to upend an old-fashioned industry through technology and logistics” – and his biggest deal yet. Unsurprisingly, his flashy entrance has attracted barbs. The boss of vehicle-leaser Vanarama describes Cazoo’s “crazy” development as “like jumping off a cliff and then starting to build a plane on the way down”.
Chesterman, who lives in Highgate in north London, “cuts a striking, wolfish figure, sporting a two-tone beard and glasses with lenses that tint in sunlight”. But he has a nice line in self-deprecation. Despite being feted as a tech visionary, he admits that he doesn’t “have a technical bone in my body” and “can’t write a line of code”. What inspires him is spotting opportunities to improve the consumer experience – “fixing stuff that’s broken”, as he puts it. “I’m not an innovator, I’m just a copycat,” he told the Evening Standard last year. The inspiration for Cazoo was a TV advertisement for the US used-car website Carvana. The latter floated in 2017, was worth around $9bn in February 2020, and now has a market capitalisation of $45bn. By comparison, Cazoo’s $7bn price-tag looks almost tame.
Enterprise runs in the family, says the Standard. Chesterman’s well-heeled father owned chains of sandwich bars, but he worked in telesales while a sixth-former at St Paul’s School in London: “I wanted to earn my own money.” After economics at UCL – “I only went to please my parents” – he accepted a post at Goldman Sachs, but gave it up when a family friend, Robert Earl, offered him a job at the Hard Rock Café in Florida. The decision to pick “burgers over banking” didn’t please his parents, but it was a great opening – Chesterman was soon managing “the highest grossing restaurant in the world, taking $1m a week”. When Earl launched Planet Hollywood a year later, he became the restaurant chain’s first employee and spent the next ten years flying round the world opening new branches. On returning to London, he set-up his own firm – a chain of bagel shops named Bagelmania – but the business foundered. Then came Lovefilm.
Assuming all goes to plan, Chesterman is set to realise his third big fortune with Cazoo, and has promised his wife to call it a day on time-consuming new ventures. “I think this is probably my last one,” he says. “But I have been caught saying that before.”