Monthly Archives: September 2013

The value of scarcity


I read in the FT today about broker downgrades of ASOS over the last few days. 20 out of 21 brokers have a buy rating on the stock, which has a 140x TTM PE multiple.

Valuation especially in the technology sector is not about what is happening today, but what happens tomorrow, when technology adoption curves mean that not just the early adopters are using a new technology.

This is very hard for financial analysts to cope with, as it takes a leap of faith to pay these premiums.

The real reason that ASOS is valued so highly in the UK is scarcity. There are few pure play e-commerce businesses on any markets, but especially in the UK.

This means if you want exposure to e-commerce you need to invest not based on pure financial fundamentals but look through these to the market shift.

Most investors really struggle with this. ASOS has never been ‘cheap’ so an opportunity to get into an e-commerce company like ASOS is very difficult. If you wait for a buying opportunity based on financial ratios you will never get in!

I have seen this again and again within the technology space, this doesn’t of course mean that everything in this space should command these hefty valuations, but still scarcity will push valuations up.

On a macro basis do you believe the following:

  1. e-commerce is going to grow internationally.
  2. The lower cost of servicing customers utilised by e-commerce companies makes it hard to compete with.
  3. Trusted brands within the e-commerce space get the largest slug of demand.
  4. Brand owners can’t ignore e-commerce forever!

If you do — then you should look at every e-commerce business that has scale within the sectors you are comfortable investing in.

Disclaimer: I have been an investor in ASOS for quite a while and I plan to keep holding!!!


In this world of e-commerce, most marketeers have moved away from printed inserts, catalogues or magazines to move marketing online.

There are some unique businesses out there that have used catalogues extensively and are the powerhouse of their business. Boden and Charles Tyrwhitt both spring to mind and there are some great videos online about both of these businesses. One of my favourites is the interview with Johnnie Boden about Boden, here it is:

and Part Two

Orlebar Brown


I bought a few items from Piper Private Equity new investment Orlebar Brown in the last few weeks, so I thought I would blog about the experience.

As background, the company was founded by Adam Brown in 2007, bringing together his passion for fashion and photography.

Certainly beachwear for men is a very interesting area, as it can be quite horrific, so can see the appeal.

I plumped for some David Hicks design shorts which arrived a day later by UPS. Nicely packaged and I really liked the magazine within the box which is hanging around my house reminding me of their brand (NB: must write a post about catalogue/magazines)

I was followed up 24 hours later by a OB Concierge (I assume a customer services team to us mortals) and also a Feefo review request. I am not sure I think a premium brand like this needs reviews, but I might be wrong!

The website for me seemed a little disjointed and the homepage with that large carousel needs some work (in my opinion), but I think the customer experience is excellent post purchase, for some reason the email signup (with a 10% discount offer) went into my spam folder, but that might just be me.

All in all a great investment, high margin business – how do the folks at Piper find these little gems!

Black Book of mistakes

Most entrepreneurs are scared of making mistakes. They usually have a vast amount of personal equity in any business, let alone potential wealth tied up. They work long hours, fixate about the product and sell to everyone. They need to be totally positive especially with their stakeholders (usually the most important one is their family).

Spending vast amount of time working, missing important family events due to work commitments and driving themselves to exhaustion is quite normal (but hey, they still love it!)

Mistakes are the Dementor of startups, they suck the life out of decision making, causing fear, uncertainty and doubt.

So to counteract this, I have a book of mistakes. Here it is:


I carry this around with me with 1/2 page per mistake. Its pretty full!

The really important thing is not to make the same mistakes twice, but recognising that you are either open to or accept that you will make mistakes is pretty important.

Twitter and TV


I heard Don O’Leary talk about TV and Twitter yesterday. It got me thinking that looking at twitter response as a new source to TVsquared could be really interesting.

For me some campaigns are about measure the brand response and the direct response. Moving and measuring the Twitter response using some of the very clever attribution math that TVsquared has developed could be very powerful.

Social is on every brands agenda, but measuring the impact has been traditionally linked to response.

Andrew (my cofounder at Diet Chef) always told this fantastic analogy about the difference between response and sales.

He mentioned there was a Celtic shop at Glasgow airport. During a Celtic away game in Europe there is increased traffic (footfall) at Glasgow Airport. For this retailer traffic (response) and sales soar! During a Rangers away game, traffic also increases, but sales drop off a cliff. So measuring response alone isn’t enough, this has to be tied through to sales!

Working with Twitter on this problem could be really interesting and take Brand response to the next level.

Friday Funny – My CV

© Flynt |

I have never really applied for any jobs since I left University, which is quite odd.

I was once asked if I would like to apply for a job with a large public sector body. I thought about it and although I didn’t see it likely to go anywhere, I thought that I would!

So the next problem arose when I was asked to send in a CV. I hadn’t written one for 10 years and apart from the odd bio that I had, it was pretty hard to pull together my hodgepodge career (I am not sure you can call it a career really!) Into any sensible, logical order.

A day before the closing date I started to panic. I didn’t even have a template so I went through an old e-mail inbox and looked at the CV of someone that I thought had great formatting (I am sure that will swing the job!)

I started editing it and got distracted so had to crash through it before the 17:00 deadline for submission.

Amazingly I got an interview!!

I think everything went well up until the last 10 minutes (everyone tells me that is quite important as it leaves the entire impression that you discuss post interview).

One of the panel (yes this was a panel interview!!) then totally floored me by asking about my interests. Post Modern Architecture, The works of Picasso and Kite surfing.

At this point I went completely RED! I suddenly realised that I had not properly checked the CV pagination (I blame online submission!) and had forgot to delete the killer CV formatters interests from the bottom of my application.

I then totally fell apart a little like Spud in Trainspotting (except there were no drugs involved!)

Needless to say I didn’t get the job and started Diet Chef instead – so thank you to the panel for pushing me again into self employment, I am much better at interviewing than being the interviewee.

Forward TV Event

I attended an event this afternoon on TV Advertising for Online Businesses run by Forward Internet Group in London.

They surveyed a group of marketing directors of e-commerce businesses and a large percentage of them used TV to drive response and sales.

The range of budget for creative was from £6,000 to £350,000 which is an amazing range. How you could spend £350,000 on a creative is unfathomable to me.

In addition measurement really was pushed back to Google Analytics which to me seems amazingly blunt as a tool. We all know TV creates response but does it actually result in sales. Even if it creates response which channels, day parts, creatives etc worked, surely you need to know that?


Best quotations from the presentations:

“TV delivers ‘Known Unknowns’ for seatwave – Guy Hands seeing the seatwave TV ad.

“Most advertising in a mature consumer economy is about trying to differentiate a parity product in a crowded marketplace”

“Most disruptive online brands the product IS the differentiation – show the product!”

Don O’Leary from Twitter also talked about the Social Soundtrack of TV, a link between TV and social networking. Volumes of tweets mirroring what is happening on TV.

90% of online public conversations about TV happen on Twitter.

How to succeed online?

The online world is a very competitive one. Barriers to entry are pretty low so lots of people launch online to compete with established brands. The issue really comes up with the business structure and the ability to succeed.

Yes, you can easily sell anything online, but the real difference is can you make any money doing it!

There are some key characteristics that are pretty important to ensure that you make it past the startup stage into a business that is sustainable and can grow (ideally without external funding).


There was a huge land grab in DVD’s, CD’s and other entertainment items in the 1990’s and early 2000’s. Amazon is the only one that has managed to get any scale in this market as the margins are brutally low. So ideally launch with a product that you make a decent margin from. What’s a decent margin – well that depends on what you’re marketing costs are!

Marketing costs

Costs of acquiring customers never really goes down as you grow – so you are likely to use your most efficient marketing channels first. If your costs of customer acquisition is more than the margin you make on your first order, then beware – you have a funding gap.

Working capital cycle

If you have to pay for your goods upfront then you need to fund this cash flow too. So every retailer in the land tries to push the liability of funding working capital to their suppliers. Most large retailers don’t pay you for 60+ days so you have 60 days to generate enough sales to pay for the goods. This cycle gets worse the quicker you grow, so try and agree it upfront, your suppliers usually like to grow too, so your interests are aligned.


OK, I am a broken record, it’s much better to sell a product with lower margin that customers like than a higher margin one that they hate – fixate about your product, listen to the customer, fixate again!

Measure everything

Sloppy marketeers hope that they can find a pot of gold at the end of the marketing rainbow – it does happen (in fairytales). In reality you need to get clarity on every marketing activity you do and don’t fool yourself. I have heard the phrase “it’s been good for the brand” as an excuse for a failed direct marketing activity too many times 🙂


Brands are successful at satisfying their customer needs. This is repaid by the consumer with loyalty and reorders, which funnily enough = higher sales and higher margins!

So you might be an online marketing guru but no matter what – if you ignore these simple rules then you are better working for someone else than yourself, they can have sleepless nights worrying how to fund the business, you can enjoy a peaceful nights sleep.