Episode Transcript
Charlie: Hello everyone, and welcome to the Be Inspired podcast. My name is Charlie Walker. I'm Deputy CEO of the London Stock Exchange. I've got the pleasure of being here today with Nikhil Raithatha, the CEO of Moonpig. Nikyl, welcome.
Nikyl: Thank you. Thank you for having me.
Charlie: It's our pleasure. So I suspect people are hopefully familiar with Moonpig and hopefully customers of Moonpig, but for those who aren't, do you mind just talking a little bit about what the company does and what life moments you help people celebrate?
Nikyl: Of course. Well I'd hope most people are. I think we've sent at least one Moonpig card to every postcard in the country for the last 15, 20 years, so many people will be familiar. But we have a vision to be the ultimate gifting companion. And really that means helping our customers celebrate life's moments with the people they care about. And to do that, we have four amazing brands. So we have the two leading brands for online greeting cards in the UK and the Netherlands, which are Moonpig and Greetz. And we also have the two leading gift experience brands in the UK, Buyagift and Red Letter Days. And between the brands, we help customers celebrate around 50 million moments each year.
Charlie: Wow. Okay well I can attest that I'm a customer myself and so I'm very familiar with it. Can we talk about you and the journey you've been on for a moment? Because I think you originally were in finance right? How do you go from sort of that background to being CEO of a FTSE 250 business like Moonpig?
Nikyl: So going back to post-university, I studied economics, went down the finance route. So I started work at Goldman Sachs and did three years there before I sort of got an itch to sort of do something slightly different. And then kind of took the opportunity then to do an MBA in the US at Harvard Business School. And I think that MBA really gave me a different perspective on life, just showed me there was a lot more out there. And also just gave a lot of learning, but also gave me a peer group that had a much more broader range of experiences. And yeah, I think it was 2012, I sort of made the jump and ended up working for a company called Rocket Internet, which is an incubator based in Germany, which has set up a lot of internet startups across the world. And actually I was really thrown in the deep end, probably more than I anticipated, where two weeks into the role, I was told to go to Australia as acting CEO of this business called The Iconic, where I found myself in a pretty unusual situation where having never managed a single person in my life up until that point, suddenly I was de facto CEO of a business with 300 employees, 100 million in revenues and a business that wasn't performing at all. And yeah, just had to figure out everything through first principles, living in a new country with no network, no friends. So I probably got 10 year's worth of experience in those nine months and actually just fell in love with it and realised actually this is really the path that's going to give me that level of enjoyment and reward and excitement. It's about building things that are real, which I kind of describe as moving from a world of doing things on Excel to doing things that actually customers can feel. And I think just being able to deliver products to customers, being able to talk about what you do at dinner, my mum can understand what I do.
Charlie: I envy you.
Nikyl: These things just fall into place. There's a funny story, my mum will hate me for saying this, but I worked for a hedge fund and I overheard her once telling someone that I worked for a hedge. And it just kind of struck me that actually when you work for a consumer business, it's just so much more real and there's something very rewarding there. So I kind of decided right, I wasn't going to go back into finance. So I spent a year or so at Rocket doing kind of moving between Russia and Latin America and then eventually decided to take the plunge and start my own business. And so came back to the UK and started what was at the time I think probably the third D2C brand that existed in the UK. So it's a funny concept now, because there are so many direct consumer brands that exist in the world. But back then there weren't, only 10 years ago. And it was a brand called Finery. It was an online women's fashion brand, which I started with a close friend of mine. We hired a great creative team, scaled the business, got a lot of positive PR interaction, and the business did reasonably well. But ultimately there kind of came a point where I realised that actually I was running a business which I didn't kind of fully connect with the product itself. And actually I find it's quite hard to be an effective leader of a business when you really have no input in the product other than sort of based on data, which isn't that relevant in a fashion-led business. And so I kind of made the decision actually to sell the business to a fashion entrepreneur, a chap called Touker Suleyman, who's one of the Dragons. So I sold the business to him and then took a full year off to go travelling around the world with my wife, which was great.
Charlie: I bet you look back on with fond memories?
Nikyl: Yeah, a great experience and kind of also just time to reflect on actually having done sort of different scales of businesses, done the sort of the founder route, done the sort of running larger businesses, where did I want to park myself and go next? And yeah, essentially travelled until I ran out of money and then came back to the UK and started looking for a job.
Charlie: And then Moonpig came knocking?
Nikyl: Yes, exactly. So Moonpig at the time was part of a larger group owned by a private equity fund called Exponent. And I think it was a business that because it was kind of a smallish part of a larger group, it wasn't a problem child. It was a profitable business. It grew steadily every year. Had kind of not received that much attention. And I think the private equity fund saw an opportunity that actually maybe if we gave this business some love, we could really do something exciting with it. And so I joined under the premise that we could kind of carve out the business. I could form an independent team and be able to invest in seeing how could we sort of take what was already a great brand and a great business, but really make it something special. And that's kind of when I joined in 2018.
Charlie: And in terms of that journey then with Moonpig, what did it look like on the day that you joined versus where you've gotten to today?
Nikyl: At the time, the great thing about Moonpig was even though it was a reasonably small scale at the time, it had this extraordinary brand awareness that wherever you'd go, people were sing the jingle at you if you told them you worked at Moonpig.
Charlie: I couldn't help myself hearing it actually when I was getting ready for this.
Nikyl: Exactly, yeah. So both the founder and the team had just done an amazing job from that marketing perspective of building that brand. And that comes because Moonpig, it's now 25 years old as a business, and it invented the concept of selling a personalised greeting card online. But the business was run as a shop or a card shop, I think I would describe it as, which is more of a traditional online retail model where you're looking at customers on more of a transactional basis. It's how much marketing you're putting in, how much revenues you're getting back. And I think the thing that I saw when I first saw the business and more and more as I really dug into it, was there was an opportunity to turn the business from being a card shop into being a loyalty platform. And the magic nugget in that was understanding that the product that we sell at our core, which is a greeting card, is this incredibly rich product where the customer gives you an extraordinary amount of data that they otherwise would never naturally volunteer. And so if you take a traditional online business, someone might go and buy a tennis racket or a champagne bottle, and you know what they bought, but you don't know why they bought it. Did they buy the champagne bottle because they like alcohol or because they're having a party, or because it's their sister's birthday? You have no idea. Whereas when you buy a greeting card, in choosing the card, in writing the message and in sending that card, you have to reveal exactly the nature of why you're on our site. It is your sister's birthday. What is she like? How close are you? What message do you write inside the card? Do you have a humorous relationship or a sentimental relationship? We build this extraordinary picture of wealth of data, which we call the 'relationship graph', internally, and we can use that data to personalise your experience. So you'll come back more often. You'll come back year after year, because everything we do repeats on the same day every year, pretty much for the rest of your life, birthdays, anniversaries, Christmas, and so on. And so we can use that data to basically help the customer get a better experience, bring them back more often and forever. And we can also use that data to upsell to the customer. So if we know what card you're buying, who it's for, and what it's for, if it's your sister's 35th birthday and she happens to like Harry Potter because of the design, well we can recommend you a Harry Potter tour of the Warner Brothers studios or a Harry Potter book or a Harry Potter gift. And so actually we have this incredible engine where actually just putting the greeting card and the data of the greeting card at the core, allowed us to build this platform where we have extraordinary customer loyalty. And that drives a completely different financial profile to any other online retailer where we have margins, which are probably, I think, probably the highest in the world for any online retailer. And it's because of actually we're much more of a loyalty platform now than we are a card shop.
Charlie: I mean that growth has shown through in the financials. During your tenure, and I'll have to say this because otherwise I'll spare your blushes, but revenue has grown fivefold, I believe, and profit by about sixfold. You've also done some acquisitions, I think. Is that right?
Nikyl: That's right. Yeah. So we realised that actually we needed to change the strategy away from just growing revenues to actually putting the card at the centre, building a platform around that, and then leveraging that to grow. And the idea was actually if you build an amazing platform that is leveraged to capture the data inherent in a card, then you essentially want to capture all of the cards that you can around the world. And so there was a natural sort of acquisition to make where Greetz was an equivalent business to Moonpig. Actually a clone of Moonpig, the founders had come and spoken to the Moonpig founder in 2005. And essentially we had an opportunity to acquire the leading online card player in the Netherlands, with over 60% market share of that market. It meant that we had kind of one leading greeting card business. We kind of scaled really pretty successfully. But then beyond that we actually also had an opportunity to move into the gift experience space. And so two years ago we bought Red Letter Days and Buyagift, which are the leading gift experience brands. There was two reasons for buying those; one, there is a sort of global mega trend away from more material gifts towards experiential gifts. And I think those brands really tap into that. But I think secondly, the platform we built for Moonpig, which essentially means we have this huge volume of cards where we have data and we can recommend gifts, if you can actually integrate gift experiences into that range of gift options and serve those digitally, so essentially printing the gift in the card, then we can do something very powerful that actually if you are giving a gift to your uncle on his birthday and you know he likes golf and he lives in Bath, we can say actually what about a golf day at the Bath Golf Club followed by dinner and we can print that inside the card. And I think there's something there that we saw an opportunity to be able to put those two things together and create a really unique personalised gifting experience that no one else can do.
Charlie: It's hugely exciting. I've also been a customer of Red Letter Days so I feel like I'm flying the banner. I've received a Moonpig card and I've got a friend of mine who I've always thought, God, he's so diligent, every year I get a card from him and now I know it's because he's getting prompts.
Nikyl: He's getting the reminder.
Charlie: And then I guess the IPO and listing business, can you talk about that a little bit and motivations for it?
Nikyl: It was kind of a pretty wild ride. So the business was scaling very nicely. We'd built a strong leadership team. We started re-platforming the technology. We re-pivoted the strategy towards this 'card first' model, and so growth was kind of picking up. And then the pandemic started in early 2020. And it was actually a pretty strong tailwind for us, as it was for most online businesses. And so we saw pretty extraordinary growth during that period. And it was probably more of a decision from the owners, which was the private equity fund. We had a conversation in I think early September 2020 saying we should IPO this business. And what was interesting was it was the first time I think we'd mentioned the word IPO in any conversation in the previous three years. And it was less than four months until the day we IPO'd, which I think was probably, you know, still maybe a record out there in terms of just from start to finish in the process and obviously doing it all from our bedroom. So it was an extraordinarily intense four months, as you can imagine. I also had just become a father. That was a year I’ll mark as a busy one. We went through the whole process, choosing the banks, the advisors, the lawyers, meeting investors, you know, doing the road show, the analyst presentation.
Charlie: All digitally.
Nikyl: All digitally. And then actually I never got to ring the bell, which, you know.
Charlie: I know, that's right, because we were doing virtual market opens to celebrate.
Nikyl: Exactly.
Charlie: To celebrate listings at the time, right?
Nikyl: Yeah, we kind of missed the opportunity. We actually IPO'd the business on my 38th birthday. So it was a good thing for a birthday business to sort of to celebrate.
Charlie: You're coming up for five years now, so it feels like we can get you in for a five year anniversary.
Nikyl: Exactly, exactly. That would be great.
Charlie: And then I guess it would be interesting to talk about the future. Where do you see the business going now? More geographies, more products to plug into that relationship engine that you've built?
Nikyl: In the last six years of the business, even though we've seen pretty extraordinary growth, our focus for the majority of that has actually been on building the foundations rather than actually delivering the growth. So re-platforming the entire 18 years of legacy technology, building new factories and warehouses to give us operational capabilities to scale, and APIs to be able to connect with partners in different ways. So that's where a majority of the focus has gone. And it's only really the last year or so that we've really turned our attention to saying we've now built the car, let's drive it. And that kind of means that actually now we're in a sort of world of focus on growth, innovation, expansion. And so we're starting to see that already. So if you look at our core product, there's still a huge runway of growth ahead of us just in the UK. You know only 6% of cards are bought online in the UK today.
Charlie: Is that all?
Charlie: Yeah, we think that that gets to 30 to 40% in the next few years. So huge runway of growth. And actually one of the ways we're doing that is innovating in the card. So now when you get a card, you can put a digital gift in, as we've said. You can put a video message. You can get your friends to sign it. You can get your kids to doodle in it all digitally. So we're about to launch a digital handwriting. Our AI team's been working on an ability where, you know, you'll be able to create ‘Charlie's font’. And you can type messages and it will kind of appear in your font, which is a world first. And so really innovating on the core product is something that we've started to do. But we're also looking at expanding. And that's one of the things, again, just having this platform allows us to do pretty seamlessly. We launched in Ireland a couple of years ago. We have almost, I think, a third of the population as customers already. So it's been an incredible success story in a small market. We launched in Australia a year ago and in the US six months ago.
Charlie: Did your previous stint in Australia have anything to do with that?
Nikyl: It did. It was more around the fact that Australians like to send birthday cards. And there aren't that many countries in the world that do. So we're kind of expanding there. And we're also about to make our first foray into the corporate segment. So we're in a private launch mode of a business that we're calling ‘Moonpig for Work’ which essentially allows corporates to send their employees or their clients' birthday or anniversary cards. We think that's a product that actually doesn't exist and could be really interesting, especially if you can add gifts onto those cards.
Charlie: No more passing cards around the desks then of offices.
Nikyl: Well, exactly. I think if you can do that digitally but still end up with a physical product, we think that's actually a pretty compelling offering and pooling that gift money together in a more seamless way than dropping coins into an envelope. We think there's a big opportunity there. And right now we're kind of in a mode where the majority of the business is focused on the core, which we think there's still a tonne of growth to go. And we've got our pockets of innovation teams that are kind of exploring these new markets. And so it all kind of sets us up for a pretty exciting few years ahead.
Charlie: It sounds wonderful. It sounds like a great future runway. Thank you very much for spending the time with us. And I hope everyone listening has really enjoyed that.
Nikyl: Great. Well, thank you so much for having me. And it was a pleasure to be here.
