Earlier this month, Smedvig Capital and Entrepreneurs Universe jointly hosted an event at Home House. The evening included a lively conversation with Streetcar co-founder and entrepreneur Brett Akker, and Sir Trevor Chinn, whose previous roles include Chairman of Lex Service PLC that became the RAC PLC, Kwik-Fit, Chairman of the AA, ITIS holdings and The Mayor’s Fund for London.
Sir Trevor Chinn was appointed as Chairman of Streetcar during Smedvig Capital’s investment in the business. Brett worked closely with Smedvig Capital and Sir Trevor for a number of years during Smedvig’s investment in Streetcar, a pioneering business which revolutionised the car-sharing market. Brett is now moving on with his second venture, LOVESPACE, exploiting a current gap within the self-storage market.
Sir Trevor and Brett were in conversation with Philip de Lisle, a serial entrepreneur whose last venture had a $1.5Billion valuation when he exited.
Below is a snapshot of what was said.
How did the idea for Streetcar come about?
Brett: Myself and Andrew went through quite a structured process, we knew that we wanted to start a business but didn’t have a clue what business to start. Whilst we were both in corporate jobs, we used to meet up regularly. We talked through all sorts of things that would have failed horribly.
We happened upon an article on car sharing in the States and in Europe, and had this sort of WOW moment of ‘this should work well in London’. That was when the seed was planted. We then did 9 months worth of research, focus groups, business planning etc before we launched in April 2004.
Moving onto Lovespace, do you want to give us an example of how it works?
Brett: Lovespace is effectively bringing the Streetcar concept into a different arena – self-storage. What streetcar did to car rental is what we are looking for Lovespace to do with self-storage.
We collect and deliver from your home anywhere in the UK, and you can store one box at a time rather than forking out for a minimum of £70/80 per month for a traditional self-storage unit. You can store as little or as much as you like and you can store from anywhere in the UK as we can come wherever you are to pick up and drop off.
It is a new paradigm; a new way of doing things.
Sir Trevor, given your range of interests, how do you choose what projects to get involved in?
Trevor: What I’ve learnt in business is I better get involved in things I understand, and my record is that whenever I have been involved in things I understand I have made money, and whenever I have been involved in things I didn’t understand I’ve lost money. So it’s pretty straight forward, and for me that really means automotive.
Moving to Private Equity, what is the difference between chairing a Private Equity company vs. a non-PE company?
Trevor: I spent most of my life in a public company, and I think basically the private equity model is a better model. Interests are aligned; everybody sitting around the boardroom table has exactly the same interests, they realise that what is good for the business has to be also good for the customers.
I think the private equity model works brilliantly; not for all companies and not at all times for companies, but certainly for a period of time, particularly in the building up.
Smedvig was involved with Streetcar, and is involved with Lovespace, so Brett it is clearly a happy relationship for you. How have you found working with Private Equity?
Brett: The fact I am working on Lovespace with Smedvig as well says it all I think. They were very supportive with Streetcar, and they were challenging when they needed to be challenging.
A lot of the reason why we chose Smedvig over others was because we felt that they would challenge us. We felt that others may give us an easier ride but they wouldn’t add as much value to the business, outside of just money, as Smedvig would.
We also saw both sides of success and failure. When Smedvig came on board, and in our first meeting with Trevor, he said to us, ‘whatever you do don’t get yourselves into a position where you need money again because it won’t turn out well for you’. We spectacularly didn’t do it once, we did it twice. Smedvig were very fair with us and saw us through that. So that was another big positive from their side.
What’s it like working with a heavy hitting Chairman? What have you learnt?
Brett: I think if anyone asks me what the best thing that happened to Streetcar was, I will always say it was Trevor coming on board as Chairman. He was a fantastic sounding board for myself and Andrew; he really was a mentor.
He gave us structure in terms of the processes we went through as a business, in terms of board meetings, that we just didn’t have beforehand.
He also single handedly opened doors for us that changed the business overnight. For instance we had been knocking on the door of Volkswagon who were our vehicle partner for 3 or 4 years, trying to do more with them; telling them all the good stuff that we were doing but we didn’t get anywhere. The second day that Trevor came on the board, suddenly they were calling us.
What have you learnt from Trevor which you can take forward?
Brett: I am chairing Lovespace at the moment; so I think if, when I am Trevor’s age, I am half as good as him, I will be pleased with myself. He was fantastic at giving us time whenever we needed it; he was always there for us. We always had a monthly meeting that never got pushed, he took them very seriously and that meant a lot to us. He was also fantastic at managing a board; when you’ve got execs and non-execs there is sometimes that healthy tension there and Trevor was great at managing that.
Trevor, most entrepreneurs cut their teeth two or three times before they get private equity backing. Streetcar was Brett’s first attempt. How does he differ from other CEO’s you have worked with?
Trevor: When Smedvig were looking at Streetcar, two things really impressed me with Brett and Andrew, their enthusiasm for what they were doing, and their total commitment to customer service. I happen to believe that in service businesses it is all about customers.
When Smedvig were looking at the business, they saw that in the call centre they employed graduates, and the first thought was, ‘they can save some money here’, until they understood what it was about. Brett and Andrew realised that if you want to give great service and it’s a call centre business, you better have damn good people in the call centre, and that’s what they set out to do. People would consider themselves members, not customers.
It was this enthusiasm, and dedication to customer service, very high standards and clearly two very bright guys that impressed me. It was a pleasure.
If you could re-run the clock, and do the Streetcar story again, what would you change?
Brett: I think the Zipcar deal happened at a good time; it was the right time for us. We had been approached by them and a few others over the years, but it just felt like it was the right time.
When we were very small, we had 5/6 employees in one room, and therefore the decision making was generally was all encompassing, so everyone felt a part of that decision making process. I don’t think we did a good enough job bringing those people along the journey with us as we grew. They obviously were not going to be part of every decision, but I think we could have managed that better.
I am very interested in the way that we interact within companies and society. How important are your people to you, and more importantly how and where do you find them?
Brett: People are absolutely crucial; the success and failure of the business is down to the people. I think one thing we were good at was not being too proud to get in people far better than ourselves to look after different areas of the business.
In terms of how you bring them in; we use advertising, we might use agencies, but I think at the end of the day a lot of the senior people always come through recommendations from friends or recommendations from other businesses.
What do you think the biggest challenge is today facing entrepreneurs?
Brett: With an unknown brand I think it’s one of trust, and that goes across all aspects of the business. Being perceived as trustworthy in terms of people investing in the business; do people actually believe that you’re the right person to take that business forward; do customers, members believe enough in you, in the brand, and in the business to actually join in the first place?