Launching a successful business is one thing - managing to sell that business at the right time and make the right profit in the process is quite another. For Giles Clarke, CEO of StepStone, Europe's largest online recruitment company, picking the right moment to rush in has become something of a habit. The former investment banker has managed to launch both Majestic Wine and Pet City, and has also successfully sold them.
According to Clarke, any company can be successfully launched and sold, no matter what sector it's in, provided the right principles are adhered to. These, he says, are to keep an eye on the markets, to realise when you've run out of enthusiasm for your company, never to become too enamoured of your own business, and to be constantly on the search for new, untapped markets. Staying focused and trusting your own instincts also play an important role, especially if you're considering taking a company to market.
By following these principles, Clarke, 53, has amassed himself a fortune, barely putting a foot wrong since starting his career as an entrepreneur. The pattern began when he joined Stewart Nairn as chief executive and proceeded to expand its assets from pounds 88,000 to pounds 11.5 million before he left in 1985. While he was there, he and colleague Bill Mullins spotted an ad in the Financial Times for a company in receivership - Majestic Vintners. Clarke and Mullins bought the company and launched Majestic Wine Warehouses in 1981.
At first, Majestic Wine was just an evenings and weekends business for Clarke while he remained at Stewart Nairn. But the company road-tested a new tactic in wine marketing, which was to buy wine in bulk from undiscovered vineyards in countries such as Bulgaria. Until then, wine had tended to come from tried and tested areas of France and there was little call for anything more exotic. The concept proved so popular that Majestic became a full-time occupation for Clarke, and eight years later he was able to find a buyer for the company, by then a nationwide chain of retail wine warehouses, at pounds 15 million.
'In retrospect, it was a fantastic time to sell a business,' he says. 'I think the summer of 1989 was right at the top of the market and this was a consumer business where the whole market was fine for another year before it nosedived. So it was a great time for dealing in cash.'
Clarke had been monitoring the market for some time, deciding when to sell to get the best price. Since then, one of the people behind the acquisition of Majestic, Nick Talbot-Rice, has admitted that his venture capital firm paid 'a very full' price for the wine company. When Majestic was later floated in 1996, it was valued at pounds 20.4 million - not much more than Clarke had sold it for seven years earlier. He'd picked a time when the market was still buoyant and when a company supplying wines from a country other than France was a relative novelty.
Clarke followed his own principles about watching the market when he sold Majestic. But he also sold because he'd run out of enthusiasm for what he was doing. 'I couldn't get excited about doing another wine weekend on Bulgarian white,' Clarke recalls.
A few years later, Selim Zilka, an investor at Clarke's new company, Pet City, offered some advice that chimed with Clarke's experience at Majestic. 'He told me that when you run out of ideas, always get out because you're the wrong person to be working there,' recalls Clarke. 'It was true at Majestic and it was true at Pet City as well.'
One of the few mistakes Clarke made was when he ignored this advice after selling Pet City. The new owners, US chain PetsMart, asked him to stay on as CEO, but he soon regretted his choice. 'It's not a good idea to keep on running a business when someone else has taken over,' he says. 'I ended up bored and probably very unsuitable for that position.'
Yet the launch of Pet City a few years earlier had been a typical case of good timing. Having sold Majestic, Clarke wondered what to do next.
For inspiration, he and his wife took a trip round Sainsbury's on London's Cromwell Road, examining the different consumer goods on offer. The sector that caught his eye was pet food.
'No-one had done pets then,' he says. 'And although I knew nothing about pets, I did know how to build a retail brand and I had a clear idea of what I wanted to do.'
Clarke had spotted an interesting opportunity, for although there was a large market in the UK for pets and pet products, it was divided up among numerous independent pet shops. Clarke believed that a large out-of-town retailer offering a wide variety of goods at lower prices couldn't fail to succeed.
The result was Pet City, the UK's first pet superstore. It caught on immediately, despite the challenges faced by Clarke, with his minimal knowledge of the sector. 'The hard part of that business was the livestock; that was a serious challenge,' he says. Although the advantage was that, with the wide range of animals sold in the stores - everything from guinea pigs to tarantulas - Clarke found he could do good publicity stunts, which boosted sales. 'In one year, I think I sold 282,000 hamsters,' he says.
The business was a financial success and when Clarke took it public in 1995 there were 56 superstores across the UK. Then PetsMart announced that it was coming to the UK and made it known that it was prepared to make a good offer for Pet City. Clarke faced the decision of staying and competing or selling the company he'd started from scratch.
He says it wasn't a hard choice. 'When it's a public company, whatever your own views might be, you've got serious responsibilities,' he says. 'And the issue was that it was an outstanding offer. You can never guarantee you're going to do better.'
The result was that Pet City was sold in 1996 for an impressive pounds 150 million, almost doubling the money of those institutional investors that had bought shares at its flotation a year earlier. It was perfect timing and it made sound financial sense, a fact that was brought home in 1999 when PetsMart, struggling to make a financial success of Pet City, sold the company to a rival for just pounds 31 million, a fifth of what they'd paid for it.
This is why Clarke insists that, if the right offer comes along at the right time, you should take it, regardless of how attached you are to your company. 'I'm not in love with businesses,' says Clarke. 'It's very dangerous to fall in love with a business. They're like girls you once knew. I don't feel remotely sad over them.'
Many entrepreneurs might find this view hard to accept. A business is a personal endeavour and selling it can be an emotional affair. Yet it was his cool-headed approach that enabled Clarke to make such sure-footed decisions, earning him and his shareholders high financial rewards. 'As an entrepreneur, you live your business and you spend all your time on it,' he says. 'But in the end, it's a business - there are other things in life.'
Shortly after leaving PetsMart, Clarke was introduced to Jobshop, an online recruitment company in Norway, owned by four venture capitalists - Venture Partners, Investor AB, GeoCapital and Index Ventures. It was looking for a new CEO and Clarke felt that it had enough potential for him to take on. Within a few months, he had relaunched it as StepStone and was preparing for an IPO. StepStone was floated last March, just six months after the rebranding. 'My view is that if the wave's there, you surf it,' says Clarke.
Clarke took it to market early because he feared - correctly - that the strong market wouldn't last. StepStone floated for pounds 121 million and the shares have continued to perform well. 'It does help when you've been around for some time. You've got the impulse, you've got a sense of the market around you,' says Clarke. 'It's slightly instinctive. But also you're always assessing the economy.'
Clarke has worked hard at promoting StepStone and the StepStone brand, believing that, with companies crying out for talent, it is the ideal time to be in the recruitment industry. The company recently launched in India, a country with a greater proportion of IT-skilled labour than most others, having fostered the establishment of good technical colleges. In this, as in everything that Clarke does, there was a strong element of timing.
'We'd been looking at India because there is a very high quality and standard of technical ability there,' says Clarke. 'It has some of the best technical colleges in the world turning out one million qualified people a year, which is not a lot in India but is an awful lot in Denmark. And the debate about the lack of IT skills was just starting in Europe.'
Clarke had already sounded out friends in India about the possibility of launching StepStone there when Gerhard Schroder, the German chancellor, made a speech about Europe's lack of IT skills. Then Norway added its voice to the debate, quickly followed by Tony Blair. Clarke realised the time had come to make his move. 'It was pretty clear that it was a very topical opportunity,' he says.
He also feels that now is a good time to be in an essentially international business. He enjoys the cultural differences that he encounters across the 18 states that StepStone operates in, and has deliberately chosen his key staff from a variety of countries. 'I believe very strongly that this is where the multinational of the future will go, enabling you to draw on the widest possible talent pool,' he says. And so he has a German chief financial officer, one Swedish and one Dutch chief operating officer, and a German HR director who lives in Paris. 'I speak a number of European languages and that makes life a lot easier,' he says. 'You forget where you're from. We don't really operate as somebody English in Germany; we do all our German business in German. But that's Europe and you have to operate like that.'
Clarke plans to stay at StepStone for some time. Because it has been launched across a swathe of countries, he has in effect 18 different businesses to keep him occupied. And as long as he remains interested and focused on the company, there is every reason for him to stay. As Clarke sees it, the CEO should be the visionary and the strategist of the company. 'If the CEO at any time isn't passionate about his or her business, and isn't focused on it and doesn't care about it, then why the hell should anybody else?'
Clarke believes that to run a company well, you need to be able to dedicate large amounts of time and energy to the business without becoming too attached to it. He has travelled so extensively with StepStone that he has barely been home in the past few months, working in a 'virtual office' environment via mobile phone and e-mail. 'I live StepStone now,' he says. 'I spend all my time on it and I don't do anything else because that's how I do things.'
The launch and flotation of StepStone bear the hallmarks of Clarke's principles in action - spotting the right time for an online recruitment company (it was one of the first to launch in what is becoming an overcrowded market), watching the markets to assess the timing for an IPO, then launching across Europe and into India, thereby keeping his interest and enthusiasm high. It remains to be seen whether he will become too committed to the company to want to leave. For the time being, he looks set to stay - at least until he spots the next big moment.
HOW TO CATCH THE MOMENT
- Trust your instincts.
- Be self-confident without being arrogant.
- Learn to spot and act on trends within your industry.
- Recognise when you are running out of inspiration.
- Look outside your industry for openings and niche markets in other areas.
- Appoint some unofficial advisers whom you trust and who have experience of launching or selling businesses.
- Don't be afraid to move on. Putting all your effort into a company doesn't mean you have to stick with it for life.
- Keep an eye on financial markets.
- Don't pass up a good offer to sell because you are too attached to your company.*****************************************************************