How we built a business out of recession - chapter 47 - Ford Europe
The story of CitNOW*
This is the 47th chapter about CitNOW, the company started from a kitchen table in Winnersh, Berkshire. If you’d like to read from the beginning, here’s a link to chpt 1. Each chapter is a 5-minute read. It’s an early draft of a book.
CitNOW was founded by Andrew Howells and Donna Barradale in 2005, although the company was only registered in 2008. In February 2018, we sold the company to Tenzing, a UK private equity company. It has been sold again since.
As we rolled closer to 2018 and sold the company, the dramas were no longer life-threatening. The board, approved by the shareholders, now had a very clear target in mind. The aim was to reach a point where the company would hopefully achieve a value of £30 million.
The simplest way to know how close we were was to look at the monthly recurring revenues. We believed we’d achieve our number if we could reach £1 million a month—a rough and ready three-times (ish) formula, which was deliberately conservative. Higher multiples had been bandied around, but this ready reckoner turned out to be reasonably accurate in the end.
It was also clear which shareholders wanted to stay and who wanted to leave. It came as no surprise to anyone that Donna and I were keen to go. We’d been working the coalface the longest and had had enough. Angela, our shareholder and only real investor, would automatically be paid out if and when the sale went through.
Berrie, one of our three original developers, was the only other shareholder looking for an exit. I never really understood why. His answer when we were gathered to discuss was always the same - there’s too much money on the table to refuse. Fair enough, as long as he was happy. I also suspect he felt more detached working from home in the Netherlands. There were now a lot of good programmers in Stirling, and Berrie didn’t have such a pivotal role. A lot had changed since he’d rewritten the inherited JavaScript, and he was no longer essential to the company's product development.
Neither Donna nor I were. Neither is anyone, come to that. From Alistair's perspective, we were an annoying, immovable block, our significant shareholding giving us far too much control for his liking. He was desperate to get rid of us at the first available opportunity. The feeling was mutual, and a target was something we could all get behind.
A target helps to create focus; achieving it requires a gargantuan effort, a lot of belief and a bit of luck. We’d sailed past £500k per month relatively easily once we stopped being distracted by conquering the world and focused on more mundane opportunities closer to home. We were helped by a maturing UK market combined with significant revenues now appearing in Europe.
The increasingly rapid influence of YouTube also helped us. It constantly reminded our target audience that video was a powerful marketing tool that might help their businesses.
The German manufacturers had always been our biggest networks in the UK, and we were keen to see this replicated in Europe. We slowly saw this progress with Volkswagen and Audi in Italy, Spain and France. Our relative success with Peugeot and Renault in the UK was not to be repeated in France.
We even went backwards at one point when Peugeot (PSA) decided to create their competitive solution, rolling it out into several pilot countries, including France and Belgium, whose dealers had been using CitNOW.
We’d been warned several years earlier. They’d approached Yves, our French General Manager, about investing in our company. Perhaps rollout within the PSA network would have been guaranteed, but it would have jeopardised every other manufacturer's relationship. It was a firm non from us.
I still don’t understand why a car manufacturer would bother with third-party software like ours. Developing the app is relatively straightforward, provided the necessary integrations give the same level of functionality. A bigger problem is having the training resources to ensure it is being used, and the tenacity to keep returning when it isn’t.
Our biggest European deal was Ford Europe, which no one would have predicted, especially as all the German brands mostly used CitNOW in the UK. Typically, we had always done better with the premium brands and struggled more with volume brands such as Ford and GM.
It wasn’t because of a lack of interest. The problems always involved lukewarm pilots and the calibre of managers at dealer level. I knew how hard it could be to get their attention. To most, I was an irritating interruption to a mountain of to-dos. Often, I’d been forgotten, not even making it into the manager’s diary, an unpleasant surprise when I appeared in their reception. There were also exceptions, which helped me as I struggled to find a genuinely interested audience.
On average, the premium brands were better at getting started because they were prepared to invest more time and effort to see results. When a dealer’s sales manager or aftersales manager said, We’re doing this, it tended to be successful more often.
There had already been meetings with Ford at their now closed UK head office in Brentwood when the Ford Europe deal was done. My opportunity to see their wonderful seventh floor was as a stand-in for Gordon and a meeting with the Aftersales Director. I had my uses because the client never felt snubbed if they met the company's founder.
The meeting was essential, but routine. We were edging towards some aftersales agreement in the UK, and I was there to field any awkward questions our account manager couldn’t handle. And of course, to show respect.
The seventh floor was the executive corridor for the most senior UK management. It was wonderful and something straight out of the fifties. My first thought about exiting the lift was whether it had ever been used as a film set.
The corridor wasn’t a corridor at all; it was more the width of a modern A-road, with offices running down the left-hand side with panoramic views of the Essex countryside.
The Aftersales Director’s office was via his secretary’s office, which protected the entrance. There was dark oak panelling everywhere, which looked much less sombre when we finally entered the inner sanctum, the size of a badminton court, flooded with light from the picture windows. Our man had just stood up from his desk on one side of the room, gesturing us towards the other, a comfortably relaxed lounge, olive green cloth coloured furniture around a long rectangular coffee table. His secretary took our drinks order.
I loved the majesty and history of this 50-plus-year-old museum. I was immediately 7 years old again, going into my Dad’s Unilever office in Bromborough (Wirral) for the first time. He didn’t have one of the glass emporiums, but a desk outside his boss’s office with everyone else.
*CitNOW was our company’s trade name before we sold it in 2018.