This is a copy of the first chapter of the book. Where we interview David Soskin the CEO of Cheapflights.co.uk.
Chapter 1 - Cheapflights.co.uk
In this, one of the hottest sectors of the internet Cheapflights are the leading comparison sites for cheap flights and travel deals in the UK and its Cheapflights.com site is carving out a respectable leading position in the US.
We caught up with their CEO David Soskin, to find out more about him and his company.
Your company / website vision statement / goal:
To be the No. 1 independent travel price comparison guide in the UK and other territories the company targets; to provide the easiest and fastest navigation for consumers on our sites to provide the broadest range of up-to-date choice and comparison on our sites; to provide the cheapest and most cost effective advertising for the travel industry.
What you sell / services you offer (brief description of your company):
Founded in 1996, and profitable since launch, Cheapflights.co.uk pioneered the travel price comparison model in the U.K. Each day, Cheapflights displays over one million fares on flights, holidays, short breaks and accommodation, from over 700 travel partners. This makes Cheapflights the most comprehensive directory of travel deals available and a natural starting point for travel.
Leading online measurement company Hitwise describes Cheapflights.co.uk as ‘the UK’s favorite travel comparison site’; and the Company’s unique user numbers support this, reaching over 2,000,000 unique users in August 2004 (source: WebTrends).
The company estimates that it will generate travel product sales of over £525 million for its more than 700 UK partners this year. And these advertisers read like a Who’s Who of the travel world – ranging from British Airways, Thomson and Lastminute.com to specialist operators like Barwell Travel, Santaland and Serenity Holidays.
Additionally, Cheapflights is one of the few British Internet Companies successfully to establish an operation in the USA with Cheapflights.com.
Launched in May 2003, it is already in the top 25 US travel sites (source: Hitwise USA, Travel Agents Category) and heading for similar popularity.
The company also operates the highly successful global accommodation website Cheapaccommodation.com and launched a similar site for the package holiday market – Cheapholidaydeals.co.uk – in January 2004. Cheapholidaydeals, the only major UK internet travel site to launching 2004, won the WebUser Gold Award and was runner-up in the travel category for New Media Age effectiveness awards.
In 2004 Cheapflights won The National Business Award, South East Region, for the “best growth strategy” category. Cheapflights was also included in The Sunday Times Microsoft 100 League of UK Fastest Growing Technology Companies.
Have you always wanted to run your own business? what were some of your previous jobs / companies?
Commenced with Chemical Bank, Boston Consulting Group; Bain & Co and onto Redland PLC (a FTSE 100 company) as Director of Corporate Planning and Business Development (1984-1989).
Was then a Co-Founder, Chairman and MD of one of the fastest growing and profitable 1990’s companies, Asquith Court Schools Ltd – the market leader in nursery and independent day school education provision (1989 – 2001). In 1995, David’s entrepreneurial achievements were honored by the European Foundation for
Entrepreneurial Research when he was named as one of Europe’s 500 most dynamic entrepreneurs. He became a non-executive director of Asquith Court in 1994 and remained on the board until the company’s $100 million sale to West Deutsche Landesbank Private Equity in 2001. During this time (1991) he also co-coordinated the White Rose Television bid for the Yorkshire Television Franchise which, apart from the incumbent, was the only other bid to pass the ITC ‘quality threshold’ test.
In 1994 David was appointed to the Prime Minister’s Policy Unit, 10 Downing Street, where he remained until 1997, developing domestic policies for Her Majesty’s Government. In 1997, he joined ABN Amro Corporate Finance as Global Head of Mergers and Acquisitions within the media sector.
Have you got any qualifications? Please tell me about yourself academically.
David Soskin, Senior Scholar at St. Pauls School, graduated from Magdalen College Oxford (First Class Honors in Modern History, President of the Oxford Union) and an MBA from the Harvard
Business School (Harkenss Fellow). Resident Tutor, Lowell House, Harvard University.
How / when did the idea of your website / company come about?
When working at ABN Amro, I was approached to see if I would be interested in Cheapflights which had been founded by John Hatt, the much respected Travel Editor of Harpers & Queen. The business model was so unique and unusual I had it checked out by Spectrum, a leading internet consultancy, who came to the conclusion that John had found a “killer application” for the internet in using it for travel advertising rather than as a booking engine as everybody else was doing. I liked it so much I bought the company with other private investors.
If you could give readers of this book one piece of advice, what would it be?
If you do require funding, if at all possible try to ensure you secure investors with the capability and desire of taking a long term investment view of your company. I have consequently tried to avoid venture capital as it tends to have a short-term view of investment.
Who are your role models / mentors and why?
Sir Colin Corness, my old boss at Redland PLC and subsequently Chairman of Glaxo. Colin had tremendous strategic ability combined with ruthless analytical talents and was always able to cut to the chase of any business issue. He also had a healthy skepticism of consultants, investment bankers and other advisers.
Excluding yours, what company / website do you like / admire the most?
What do you look for in an employee?
Commitment and enthusiasm as well as experience. All our travel industry employees have considerable experience and our technology people all have impressive track records. We also look for a “can do” mentality.
What / when do you think the turning point for your business was?
When we introduced pay-per-click in 2000 which monetized our growing site traffic and radically improve our revenue model.
When did you realize that you / your company were successful?
Right at the beginning when we bought it from John Hatt as it was already profitable. This meant we have grown out of cash flow and not had to borrow at all.
What tools / methods do you use to motivate your staff?
The Company has maintained a policy of recruiting highly experienced staff. Because of its profitability its employee share scheme provides real prospects for the staff to benefit from their dedication to the company and from their commitment to publish the best online travel website.
Furthermore, the company only has about 50 employees and management and staff; all work in close proximity in the same shared office. Hence communication is very direct and interactive – there are no long management chains.
It is also true that because each member of the staff has an impact on the performance of the company and works in a close knit team, measurement does not have to be on a strictly based formula. It becomes evident very soon when and if the common values shared by the staff are not being met and can be resolved before they become a major issue.
We organize regular out of office activity for our team including a monthly drinks party, birthday lunches and an annual barbeque.
What kind of culture exists at your company? How did you establish this tone and why did you institute this particular type of culture?
We have a very open culture which fosters creativity. The internet is very competitive and our performance rests on the ability of the team to engender rapid change. We share a passion for travel which differentiates us from other price comparison sites.
When someone new comes on board, how do you integrate them?
Highly focused induction programme including sessions with all the different parts of the business. Each new person is allocated a mentor, a senior colleague outside of their direct reporting line.
How do you motivate and retain talent?
The biggest motivation is our continued rapid growth and success. We have never had a redundancy programme unlike so many dot coms. Our share option programme is clearly a motivation. We try to promote from within outlined as above.
Where did you funding come from and how much was needed before breakeven?
Our funding comes, 100%, from our own cash flow. The current team started with £20,000 in the bank. When we bought the company from John Hatt in 2000 the company was profitable and generated cash.
Tell us about how your business does offline.
We are entirely web-based.
How has your business grown / expanded since you launched your website?
Taking our base-line from when the current management took over in March 2000, we had one site and around 70 advertisers and some 300,000 unique users. Since that time, entirely out of organic growth funded by our profits, we now have four sites with around 900+ advertisers (including the US site) and 2.4 million unique users a month. We are an independently ranked top 20 travel site and the most bookmarked travel agents sector in the UK according to Hitwise.
We have gone from displaying 20,000 deals to in excess of 1 million. Sales have multiplied about twenty times.
How do you compensate your employees?
Fair salaries commensurate with their experience and contribution; and through our EMI scheme which gives everyone a stake in the company.
How many hours do you work a day on average?
10 – 12 hours
What are your five key elements for success?
Relentless focus on critical areas of the business.
Relevant experience including one previous successful start-up.
Spending a lot of time on recruitment.
Not believing in ‘internet hype’
Rigorous cost control
Are you a member of any clubs / institutions?
Beefsteak in London and Phoenix/SK in Cambridge, Mass.
Do you exercise? If so, how much?
Regular walking on Hampstead Heath, regular walking holidays.
What was the last book you read?
Walter Issacson’s Biography of Benjamin Franklin
Describe / outline your typical day.
Begin work at 8 am. Respond to overnight emails (mainly from US) and check news & media.
At 9 am have an internal meeting to discuss any business developments or marketing.
At 11am see an important customer e.g. airline, consolidator or media agency.
Between 12 and 2pm working lunches e.g. with industry or press. At 2pm there is another internal meeting and at 3pm there is a conference call with the Boston office. At 4pm there is a telephone interview with the press and at 4.30 pm interview potential new team member.
At 5pm prepare conference speech.
At 6pm review and reply to emails and go home at around 7.30pm.
What are your hobbies / what do you do on weekends?
Hobbies include going to the theatre, cinema, opera, traveling and the American Civil War. At the weekends, normally go walking and read. Occasionally take short breaks either in Europe or here in the UK (Devon, Cheshire). Also see friends and family.
Number of years your company has been in business?
Since 1996 – since March 2000 with current management.
Size of premises?
3500 square feet.
Number of staff?
Page views per month?
Visitors per month?
2.5 million (ABCe)
Revenue (approx.) per year?
£7.5 million estimated for 2004
Is your company profitable?
Where / how do you advertise?
Cheapflights has spent very little on advertising. We estimate that we have spent only around £1 million since we were founded in 1996.
The US launch first year spend was only $800!
Growth rate year on year?
It was over 50%, now it’s over 100%
What country does most of your business come from?
The UK and increasingly the US.
What countries / places have you received orders from?
As we do not actually sell travel products, we do not receive orders per se. However our global accommodation site has advertising partners from all over the world and many of our other travel advertising partners are based abroad, e.g. Air France, Swiss, Malaysian Tourist Board etc
What websites do you go to frequently?
Google, Hitwise UK, Amazon, IMDB and of course our customers’ sites e.g. Lastminute, Easyjet, BA, Virgin Atlantic, Airline Network and the other 900…
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