‘We learn as we go has to be the spirit’
Monday, February 4, 2019
Ordinarily, having your products reduce your customers to tears is not a good thing.
But in the case of Photobox Group it’s a badge of honour worn proudly by chief executive Jody Ford. In fact, the emotional connection the online personalisation giant has with its 14 million active customers across Europe is central to its ambition to create a £1bn business.
Encompassing photo products brands Hofmann, Photobox and PosterXXL and personalised card brands Moonpig and Greetz, right now the business has sales of around £325m and boasts production sites in the UK, France, Spain, Germany and the Netherlands.
And while it might not be a traditional print business, Photobox is firmly wedded to the potential of print to connect people. Something that is reflected in its £20m CMYK-themed Clerkenwell headquarters, which was formerly a Daily Mirror printworks. It’s just that in the case of Photobox Group, that connection starts with a digital display.
Darryl Danielli Looking through your biog, early in your career you did a stint at eBay. Were you always looking to get into the online world?
Jody Ford Okay, well, we’ll have to go back a bit. So yeah, I started off doing a bit of consulting and then I went to Orange and did mobile, so I was always very interested in technology – I did my university dissertation on telco. I just wanted to get into technology right from the start. I spent four years at Orange while the 3G bits, data services and web browsing and all of that were going on. It was a super exciting time to be there. And then I ended up – without boring you with the whole story – in Australia at eBay. And thought ‘this seems like a really interesting thing’, so I thought I’d love to spend six months doing it, because after that I had another job lined up back in London. But it was super interesting, just understanding how the marketplace worked, how the web worked, the beginnings of e-commerce, consumer trust... There was a lot of interesting stuff going on.
When was this?
2004. And then I came back to London to the job I had already agreed to do. But after a year I knew that I wanted to work at eBay or the web generally, so I engaged with the UK team and then did a whole bunch of different things. What I started with was running the motors division, I didn’t know a huge amount about cars if I’m honest. [At that time] eBay was the number-one place to sell or buy cars from a consumer point of view, but didn’t really have much in the way of dealerships. So, I came in to really think about how we could improve the proposition for dealerships. I was at eBay in London for around five years, and in that time, I was really thinking through feedback, reputation, and how we try and get sellers to deliver great experiences, those sorts of things, and [later] what we were doing in fashion and a number of other things. And then I left for the US and spent five years in San Jose, eBay’s [global] headquarters and most of that time was spent working on marketing, either through our relationship with Google, emails, and social media.
Essentially data-based marketing?
Using data to target people and think through optimisation of our spend, make it more personalised, because at the time we had an email for men, an email for women, but we wanted to make [our communication] relevant to you as an individual customer.
So, essentially big data, before big data became a thing?
It was how do we use what was a pretty big database there and really think through things like algorithms before the rest of the world was talking about them. That was really fun, spending five years in California doing that. And then I got the call, about this opportunity.
So, what attracted you to Photobox?
Well, I’m a long time Photobox and Moonpig customer…
…really, are you just saying that?
I really am [laughs].
I might need to check your account…
You’re welcome to. I’m the guy that loves making photobooks, I make them every year anyway. So, I had an immediate resonance with the products, I was interested in the creative part and also the technology part.
Are you a secret geek?
I just love that part of it, from a personal point of view. And as a I spoke to the investors and started thinking more about the model and the opportunity, because when you have the number one brand in a market, it’s a great place to build from, I could see how technology could play a huge role, from some of the things I had done at eBay. This has always been a tech company, but I could see that there were opportunities to invest in the culture, to be able to do more. Likewise, on the Moonpig side, I looked at the fundamentals of the business again, as an ex-pat you spend a lot of time on Moonpig using it for birthday’s back home, because it’s a lot easier than trying to use the US Postal Service. So, I saw the opportunity there, but also that there was quite a lot that could be improved. The combination of being familiar with brands and their services and then getting to know the team, as well as moving back to London, convinced me that it was a great opportunity.
In terms of the business, it grew quite organically initially and then ramped up through acquisitions, is M&A still part of the plan?
When I look at the assets we have, the opportunity now is in knitting them together to create value and ensure the [customer] experience for all those photo businesses.
Did they all have common cultures?
They were relatively different cultures, so the thought here was to bring a real West Coast tech culture and attract talent that wanted that. It was really about bringing the ability to do a lot of testing, to learn, to fail, to improve and invest in individuals and develop them as leaders. That was the cultural change. We’ve got the ‘Be that manager’ training programme, lots of resource to train individuals and help them develop specialist skillsets. In terms of the platform, when I arrived we already were and still are the number one in Europe from a consumer print point of view, so I kind of looked at the photo division, which included Hofmann [Spain], Photobox [UK and Europe] and PosterXXL [Germany] and how could we really bring the value across all of them. To the M&A question though, we don’t really need to do any more M&A as we have lots of businesses. Obviously, we made the acquisition over the summer of Greetz, which is the Moonpig of the Netherlands. But I don’t really spend a lot of time looking at M&A opportunities. There are a lot that come through the door, we’ve got close on a couple but ultimately decided to focus on what we’ve got. Greetz was the exception because we just knew we had to have it as it was so similar to Moonpig it made so much sense.
That was a geographic opportunity.
Exactly. Greetz, like Moonpig, had brand recognition of more than 80% in its home market. If I can give you a few numbers: as a group, we delivered 30 million ‘moments’ or personalised items to our customers last year, which is amazing, but if you just look at the card division, we have delivered something 65 million birthday cards since we started, and last year alone we did 25 million.
It sounds like exponential growth then really?
Which is incredibly exciting and yet from an online point of view we’re just getting started, I think maybe 10% of the total card market is online. So, it feels like there’s a lot of opportunity to grow.
I think I read somewhere that the grand plan is to create a £1bn business, is that right?
I’ve been here around two and a half years and we continue to invest and to see the opportunity and I think there are another two or three years of runway ahead of us in terms of how I think about it. There are lot of opportunities and we remain on course, improving the customer experience, broadening the product range and then increased frequency, we want our card customers to keep coming back more often and all those combined is absolutely how we deliver that.
Realistically though, what do you think the growth potential is?
That’s a great question, if you look at other categories then you would say that 25%-30% online is not ridiculous at all, right? If you look at fashion and things that we didn’t really think would grow online, cards seem like a fairly simple proposition in comparison. There will always be a place for the high street, but what we do really well at Moonpig is that very personalised [card] for people that are important in your life.
And I suppose there’s the value add of things like birthday reminders?
Exactly right, we’ve had a lot of success with those reminders, a lot have been set and people actually want us to remind them, because everyone is having to juggle so much in their lives. We’re also getting better with ‘intelligent’ reminders that don’t just tell you that it’s your brother’s birthday, but suggest three or four interesting cards that might be relevant.
Do you use that intelligence to sell marketing opportunities to others? I’m thinking like the targeted inserts that Amazon puts into its packages?
Not really, no. I wouldn’t rule anything out for the future, but it’s not part of the core mission at the moment. Obviously we’re very sensitive to people’s data. For now our opportunity is how we sell a gift with the card, so we’re putting a lot of energy and focus into that cross-sell algorithm, so when you checkout on the card we offer you 16 other different things and we’re getting better in using our AI here to improve the quality of those recommendations.
Is adding new products and services, so selling more to your existing customers the focus?
If we take the photo business, the opportunity there is around improving the experience of creating those products, especially for the more involved purchases. So, we’ve invested quite a lot and over the coming months we’ll be improving that experience by making the tools better, more intuitive, just making it easier. The other thing we’re doing is emotionally intelligent AI. When you look at the customer journey, when they’re presented with 30 blank pages [in a photobook] starting the project can be quite intimidating. We know people can stop creating at that point, and actually what we’ve been doing with our AI tech team is creating tools that help, something called ‘smart book’ which takes those photos and fills it out based on its understanding. So, if it’s a wedding, say, it would recognise that and put them in an order and composition that is a really good starter for the customer. It probably won’t be perfect, but the idea is that we’ve done 90% of the work for them.
And new products?
New products is another big area of growth. Having probably not really done much in the previous two or three years, last year we had a big focus on getting new physical products out. We launched around 100 new products, all sorts of different things; new book formats, printing on things like wood, wall decor, totally new things like cushions, embroidered products, tote bags. We’re seeing good growth on those new products, but the opportunity is telling more people about them.
You mentioned culture earlier, how important is that to the business?
Hugely. The first thing is what I describe as a tech culture, meaning that the product and technology engineers feel that this is a place where they can thrive and try new things. We’ve had to try to attract really great talent to create our new platforms. And it’s a competitive market. Anywhere in the UK, but London particularly, if you want to attract great people it’s about so many different things and being part of a brand that people care about, but also being in an office that is a great place to be and has a collaborative culture, where people are able to have honest, direct conversations and it’s not political. That’s important. So is people knowing what’s expected of them, so that they can progress. That’s all been a journey, because I don’t think we had all those things [in the past].
And I suppose as a rapidly growing business it’s difficult to keep on top of things sometimes? It’s interesting to hear that recruitment and retention is a challenge too, because I assumed that was just the realm of more traditional print businesses?
Honestly, I think it’s an issue for any business, even what you might think is the most exciting tech business out there. The individual has to feel that they have purpose within their particular role – no matter how great the brands or the businesses. It’s about how do you challenge everyone? How do you develop everyone? We spend a lot of time talking about that.
So, what were some of the quick culture wins?
It felt like there was an opportunity to better connect everyone with the leadership. So, just after I joined I started a weekly or fortnightly video, which was me just straight to camera, not rehearsed, just saying ‘hey, this is what’s going on, this is what I did last week, these are the things I’m excited about, these are some opportunities, these are some challenges and this is the reality’. The videos are generally four minutes long, recorded on the phone, sent out Friday morning. We’ve developed it a bit now, where I do maybe every third week and then we cycle around the leadership team the next week and on the third week it could be anyone in the business that is doing something really interesting, a product lead, someone from licensing that’s been to an interesting show. We also improved the technology a little bit and held our first ‘all hands’ for the whole business, where every couple of months we get all employees, well as many as possible, together for an hour and just talk and have people on stage talking about different parts of the business, some senior people, some junior people, some just for 90 seconds and others for a longer deep dive on what is going on. It all helps give a shared sense of purpose.
And recognition of people across the business?
Absolutely, you can call them out, high five them for great work, whatever you want to do. There are a series of other things along the cultural path, but that’s just some of the quick wins.
And I’ve heard about your ‘hackathons’ too.
Yes, that’s a great example.
How do they work?
To be fair, they pre-dated me joining. We bring people in from all over Europe, and put them into small teams, no more than six or seven people, and they have an idea of something they want to do and then work on it for 24 hours and then present. These ideas can be anything from a cool app, to a new feature, marketing promotion or new product. The energy is unbelievable, because it gives people an opportunity to develop one of their passions. We do it here, lots of people sleep over, order lots of pizzas, get in some beers – it’s just a great way to come together and see the energy and innovation. Out of those, we can get ideas that we actually run with.
And does that translate to production?
One of the things we’ve done in the factories from a cultural perspective is our own lean programme ‘Box in Motion’, which is led by the production team. The essence is very similar [to the hackathon]. It’s about trying to get ideas from the team on the ground, from the guys on the factory floor, and drive improvements. We’ve rolled that out across the factories and from attending a few of those, it’s about getting information in the right place, getting the metrics in the right place, having a stand-up in the morning where everyone talks about what went well the previous day and what didn’t go so well. It’s really about trying to get to the truth and to the point that people aren’t scared of failure, and thinking about ways they can improve – I’ve seen entire production lines or packaging lines reconfigured as a result of a great idea from one of the team.
I suppose creating that culture in a trendy office in Clerkenwell is one thing, but managing to do that across the production sites is more challenging?
Often people [on the production side] have not been asked for their opinion before, they’re just told what they need to do and it’s sometimes hard to flip that round. But when you do, the rewards can be almost more dramatic because of the nature of what’s done and we’ve seen some really nice wins, costs savings and improvements for the customers, as a result of those of ideas.
You mentioned the importance of not being afraid to fail, have there been things that haven’t worked that you learned from?
It can be very granular or specific things, for example I was convinced that Moonpig should send out an email that listed the most popular cards for a particular event, we’d seen that at eBay and I’d seen very high engagement. But we tried it and it didn’t work, and that was okay. But what could have happened is that everyone was ‘err, it’s the CEO’s idea we’ll just keep doing it’, but everyone was okay to say look we’ve done the test and let data answer that question and it didn’t work. And I was ‘great, thanks, let’s move on and try the next idea’. We should have lots of good ideas, but we have to let the data test them and trust it. My quest is not to say this is the right idea, but to ask how many tests have we run this week or month, and are we’re pulling from a broad enough set of ideas so that we get to the right answer. We learn as we go has to be the spirit, and we’ve embraced it more and more.
And they’re small bets too, it’s not like you’re betting the business on them?
True. One of the behaviours we talk about are one-way doors versus two-way doors. Meaning if it’s a two-way door, fine, of course, just try it, run with it and if it doesn’t work, we’ll just go back through that door and try something else. A one-way door is where, well, we’re not betting the business, but it could be a really significant thing and in those cases we have to really think through hard on what’s the investment we’re making and what are the risks if it goes wrong, and what are the mitigating factors – and you still have to make those bets sometimes, because you can’t always test something. We try and educate people to think about that. One of the things that was part of the culture change, and is much more sophisticated than me sending a video out, was getting to what we call these ‘agile squads’. They look at particular elements, so for Moonpig it might be search, like how do you help a customer find a card and we have a team of eight or nine people, it might be a project leader, three or four engineers, an analyst and some others. We would set a high-level goal and their job would be to come up with a set of different activities that they think will improve their goal, so all the ideas [to achieve the goal] come bottom up and the idea is that every two weeks they do a sprint, they get a couple of things live, perhaps one works one doesn’t, they then test some more elements the following fortnight and over time we build up these areas. The spirit of this is that you move so much faster than by having a top down plan, because the idea is that you have a level set of things you want to achieve, a goal, and then you just chop it off piece by piece until it’s achieved. And how we’ve set the building up is by having those people [the agile teams] sitting together, rather than sitting in teams by function, so people that are working on the same problem sit together to encourage knowledge sharing.
And where do you see the big opportunities in the future?
If I take the two sides of the business, if I take the US market for Photobox and we look at the extension there into home, kids and travel then there are areas there where we’re dipping our toe with some of the items we’ve got, but it seems like there’s an opportunity to do more. And if you take Moonpig, where only in a few categories right now. We’re quite good in alcohol, food and flowers, but if we look at what we’ve seen at Greetz since we’ve acquired them they’ve got a fantastic balloon range, a really great personalised chocolate range and those are still quite close, right, then we can look at books and maybe beauty and all of those things. We’ll get them to when we’re ready. It feels like there are a lot of occasions when the customer looks to us, because they’re already buying their cards from us.
Do you think the gifting market is pretty mature now, meaning the barrier to new entrants is high?
My take is that there’s no one really doing what I call emotional commerce. Amazon does transactional commerce and is just, well, amazing. And there are a lot of other big players, eBay and high-street players, but I don’t think anyone in the UK is really helping the customer.
How do you mean?
Gifting is a massive sector, multiple billion around the photo celebration space, and no-one is really helping people with that. So, having a brand that people know they can go to to find a gift for someone, while there are a few brands out there, no-one has really worked out the scale for that, and we feel that we’re pretty well positioned. And if we take the card market specifically, then it’s £1.75bn and only a small proportion of that is online and so it feels like there’s a lot of growth to go at in the card market and in the gift market which is several billion associated with that is largely untapped, certainly by card providers. So, I feel like by getting that combination right, then people [will say] I want to go to Moonpig rather than I want to go to Amazon for the gift or the high street or supermarket. That’s where I think the opportunity lies for us.
There’s a bit of a trend among the photo products printers to get involved in commercial work to plug non-peak times, is that something you would look at?
It’s not something we’ve looked at. At the moment we’re really focused on the consumer proposition and getting that completely right.
And I suppose that there are enough birthdays to keep you busy?
Certainly, in the Moonpig world, 5.5 million customers, that’s a lot of birthdays.
What are your big challenges though?
We’re investing a lot in our customer experience, but just getting the talent in to enable us to do that has probably been the single biggest challenge – just making sure that we have the right people at every level. From staffing up for peak, to having the right engineers. That was part of the story for developing the new technology hub in Manchester, that’s been really successful. And the other part, which is probably the same for any business, is getting your message out to customers. We’ve launched a hundred new products, but how many of our customers know that we’ve launched five new products let alone a hundred? At a customer level, it’s really about making it easy for them. Don’t get me wrong, there are some customers, and I’m one of them, that absolutely love creating that book and taking their time and telling a story. There are very few presents or gifts that reduce people to tears on a regular basis, so we know what we do has a massive emotional resonance and we know people love therefore receiving or giving it, but we also know there are a lot of customers that are nervous about the amount of time it’s going to take. So, making it easier and then communicating how easy it can be is important.
It still seems though, that despite the emotional value of the products, it’s still an incredibly price sensitive market. Everyone has a 60% offer, a 40% offer – no one ever has to pay full price, is that a challenge?
I see that in a slightly different way, and it relates to the previous point. It’s about the customer’s decision to commit the time today [to design their project] and the discount is the trigger [for them] to decide to invest the time today. It’s an industry-led thing that there’s a discount to make it happen. So, it’s not really a challenge for us, as it’s not a dynamic that has changed in recent years.
And what about big external challenges, I’m thinking Brexit?
We’ve obviously made provisions in terms of raw materials and inventory, like any sensible business. Then if we look at the photo business, we have natural hedge as we have production in Europe and the UK. In the event of a full crash-out, no deal Brexit I think there will be so many different challenges around logistics, talent and consumer confidence that all bets are off at that point and we’ll just have to take it as it comes.
What’s the best piece of business advice you’ve ever been given?
I think it would be that culture eats strategy for breakfast. Because it doesn’t matter how good your strategy is, if the people and the team aren’t bought into it and fired up then it’s not going to happen. So, what I’ve learned most over recent years is how to incentivise teams to want to go after their goals, because I’ve seen the most success from teams that feel the most ownership and the most purpose. That’s all a function of culture. Strategy is important, but you have to change it so often.
Final question, in terms of the business itself, do you think of it as first a technology business or a print business?
It may depend on where you are in your history and your background. I think we’re a technology business, that’s fundamentally what we are about. We’re about helping customers to use their phone, tablet or computer to create a really amazing product for someone important in their life, whether it’s a simple card or complex photobook. Print is the way that comes to life and it’s a really important part. I guess the best way to put it is that we’re a tech-focused print business.