When Wendy Tan White started Moonfruit in 1999, there was more money than tech firms knew what to do with, and investors were clamouring to get a share of the new internet firms that were hitting the stock market. That all changed when the bubble burst in 2000, and many dotcom darlings were wiped out – including Moonfruit.
‘We really failed the first dot com crash. But we still cared about the business enough. Failing is really painful, and you have to really take a good look at the business to figure out what went wrong,’ founder Wendy Tan White says.
Tan White, along with co-founders Joe White and Eirik Peterson, bought back the business for a ‘fraction’ of the £5m investors had given the company and began to work on building a long term revenue-generating business. Fortunately she found customers were willing to pay for the product Moonfruit was offering, a tool which allowed small businesses to create their own website.
Moonfruit changed from being a business supported by advertising to a subscription-based service which has helped build more than six million websites to date. There are now 1,600 new people trying Moonfruit’s products every day, and the Shoreditch-based business has 100 employees. In 2012 Moonfruit was bought by Yell Group (now Hibu) in a deal worth $37m (£23m).
‘You can’t get away from having a business model that works,’ Tan White says.
She has now focused on expanding Moonfruit from a tool into a service-based business. To coincide with the company’s 15th birthday, it has launched a product called KickStart which gives customers one-to-one support in building their website from a starting price of £400.
‘Many of the people trying our products were concerned their design skills weren’t good enough to capture the brand, while other small business owners said they just didn’t have the time to build and maintain a website, so now we can do it for them,’ she says.
What does Tan White think of talk that the UK is in the grip of another tech bubble?
‘Companies like Just Eat and AO are fundamentally retail businesses with a tech platform. They can’t compete with the big software firms which own IP and have a massive channel of customers – like Twitter, which is providing revenue that at some point will justify its valuation. So people are starting to adjust their investments and to some extent the market has become inflated. But it’s not anything like it was in 2001. That was about nobody having revenue – it just wasn’t real. That’s not the case today.’
For Moonfruit to survive another 15 years, Tan White is developing the brand into a service which not only helps small businesses build a website, but also shows them how they can use other products such as YouTube to boost their marketing.
‘Everybody now wants to create the next billion-dollar company but that’s extremely rare – you’d have a better chance winning the lottery. You’ve got to be patient and build a business model that sustains,’ she says.