Doing it all again
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Like a singer penning a second album, round two for an entrepreneur inevitably leads to comparisons with the first business. GrowthBusiness meets Streetcar co-founder Brett Akker to find out how he’s trying to outdo himself.
After spending eight years slogging away night and day to make a success of your business, it takes a brave man to step away and start all over again.
But for Brett Akker, half of the two-man team behind car-sharing business Streetcar, the enjoyment of being involved in a start-up is where he gets his buzz.
Fresh from completing the handover of his Streetcar business to US acquirer Zipcar, Akker is now taking on a new challenge, shaking up the self-storage market.
Akker’s entrepreneurial streak emerged at university, when he and his university flatmate Andrew Valentine began throwing ideas around about the kind of business they would one day like to create.
The two then went their separate ways and Akker began his professional career by entering the recruitment world and working in the Middle Eastern and African market.
After moving on to work for Mars Confectionary, Akker and Valentine reignited their creative brains in 2003 and began brainstorming three to four nights a week after work.
Having sidestepped the idea of either starting an organic food business or importing fine wines, the duo stumbled across what they saw as a niche in the market whilst reading a business magazine, car sharing.
Akker’s immediate thought was why no one else was doing it in the UK and making a success of it.
‘We spent a good nine months researching worldwide operators trying to work out why it hadn’t been done here,’ he explains.
‘To be honest with you the companies that had tried to do it hadn’t given it enough focus. Avis [the car hire firm] had looked at it, but as far as we were aware they had half a person on it so we were confident that with the right focus we would be able to succeed with it.’
Pounding the pavements
Getting the business off the ground in the early days was, as Akker puts it, very much a case of word of mouth.
The two held a series of focus groups to find out what people would want out of a car sharing business and, most importantly, what kind of areas would be best to target initially.
‘Our marketing was pretty minimal. It was just us standing outside of tube and train stations with flyers handing them out.
‘If I saw a mate coming out of the station they were roped in for the next half hour,’ he admits.
Streetcar began by targeting the Clapham area of South London, so Akker and Valentine’s PR efforts consisted of canvassing Clapham Common on the weekends to build up local demand for their new business.
In the early days cash flow was aided by £60,000 worth of savings accumulated over the previous few years and Akker says that for the first nine months it was very much a case of living hand to mouth.
An angel investment from Carl August Ameln, himself a customer of Streetcar, then allowed Akker and Valentine to recruit their first employees and start to expand.
The business had already presented to the London Business Angels network but it was ultimately the power of the business proposition that saw one of its users decide to back it.
By keeping the business local Akker and Valentine were able to focus on its key element, providing the best customer service in the UK.
‘We met every member with the car to start with to take them through how it works,’ he explains.
‘It wasn’t very scalable in the long term but we built a core membership and those first people were the best marketing tool we could possibly have had as we were getting 50 per cent of members through word of mouth.’
Trying to keep overheads down meant that the two went door-to-door offering free usage of Streetcar to anyone who was willing to provide their drive for parking spaces.
This also meant that competitors would have a hard time infiltrating the areas Streetcar was targeting, with a lack of car parks and on-street parking provision making it tough going.
Streetcar bypassed the traditional venture capital route that many angel-funded businesses might have taken. In March 2007 the company secured private equity firm Smedvig Capital as an investor, and with it, £6.4 million worth of growth finance.
Akker says that it was the quality of Smedvig’s people that made him decide to link up with the firm. The same reason led him to return to Smedvig with his new venture.
‘When Smedvig came in we had several other people and had other angels who were willing to come in,’ he adds.
‘But it was more about the expertise that they could bring, it was the people that we bought into.’
With the Smedvig investment, Steetcar also took on industry heavyweight Trevor Chinn as chairman. With previous roles at RAC, AA and Quickfit, Akker says that Chinn was ‘the best thing that ever happened to the business’.
Akker adds, ‘He was maybe 72 when he came on board and had more energy than me and Andrew combined. When he came in he took all of our senior management out for dinner and they were all incredibly inspired.’
Under Smedvig and Chinn, Streetcar grew its locations to 1,200 across ten UK cities and started to move towards an exit in 2010.
Having never gone through a deal process before, Akker had nothing to compare it to but says that Smedvig were a big help when it came to the negotiation. A chance meeting with Smedvig CEO Johnny Hewett and Zipcar in Boston started the sale process and it was only when the Office of Fair Trading waded in that the transaction hit a snag.
‘Once the deal was done in April 2010 it was referred to them, and ultimately the Competition Commission. It was a very interesting experience but not one I’d want to repeat as from our perspective it was very time-consuming and not ideal when you are in a fast-moving growing business,’ Akker explains.
After spending time bedding the Streetcar business into Zipcar’s operations, Akker began to get the start-up bug again and teamed up with Streetcar’s first angel backer to launch his new venture, LoveSpace.
Having already revolutionised the UK car-sharing market, Akker now hopes to take the self-storage sector and apply to it some of the Streetcar principles.
The concept works by sending customers the boxes and packaging free of charge and having them pack up their belongings. LoveSpace then picks up the boxes and transports them to regional warehouses, again free of charge.
The difference between other operators in the space such as Big Yellow Self Storage and Safestore is that users do not have to rent out an entire room, only the space that they need.
Users then pay £4.95 a month to store the box and receive £100 worth of insurance cover per box built into the price.
Though it only launched in July, LoveSpace has already attracted Smedvig to return as an investor, this time out of its comfort zone as an early-stage backer.
Carl August Ameln, Lasse Hoydal and Jonny Hewett have seats on the board and Akker hopes that Ameln and Hoydal’s expertise in setting up their own self-storage businesses in Scandinavia will work well with his experience of building a business in the UK.
Having set up a business first in the pre-recession era and now in the very depths of it, Akker says that the new business is in a very fortunate position given that it already has backers.
‘But there is also a focus [from policymakers] on small new businesses that there wasn’t when we started Streetcar – they are seen as the way to recovery,’ he adds.
The biggest lesson Akker has learnt from his Streetcar days is not to do things by halves. ‘If you’re going to start a business you need to go all in with it. The amount of friends who have talked to me about doing something themselves and said they are only meeting up a couple of times a month to discuss it: that isn’t going to work.’
Having made a success of his first entrepreneurial endeavour, Akker has no plans to return to the corporate world that he started his career in and believes we really are in an era where those in power are looking out for start-ups.