The reluctant entrepreneur
Graham Hobson may have been a reluctant entrepreneur, but he was ready for a change. He says: “I’m not a very conformist person and I’ve never liked being bossed around."
Graham Hobson founded Photobox in 2000, acting as CEO and then CTO. The group was sold to private equity in 2016. Since leaving the group he has worked in supply chain tech, resulting in another sale, and has worked with many startups and tech-enabled businesses.
Graham Hobson was a reluctant entrepreneur. Even as he was developing his digital photo printing group, he admits to secretly hoping that Fuji or Kodak might come up with the same idea and do it instead. They didn’t - and Photobox was born.
The idea came to him when he was in his mid-thirties, married, with two children, working at an investment bank. He took many photos of his young family, but the experience of taking them to Boots and getting them developed was often dispiriting. Only one in five would be any good and most of them would remain in the packets.
“It just seemed a waste – of money, of the world’s resources.” He decided it buy a digital camera to be more selective about was printed. “It was 1999 and there was nowhere to print them yourself. I thought ‘maybe I can do this’.”
He may have been a reluctant entrepreneur, but he was ready for a change. He says: “I’m not a very conformist person and I’ve never liked being bossed around. I wasn’t the type to immerse myself in an organisation, to go to office parties, so the prospect of working for myself really suited me.” He was also tired of investment banking, which he believed had become very controlled and compliance-driven.
He set out to try and solve a problem. He wrote a business plan (on the tube). “I kept thinking ‘I don’t really want to do this. But no-one else did it, so I had to.” He raised £500,000 from his friends and former colleagues in the City.
In the beginning, it was just him and he admits to a real lack of confidence as to whether it was going to work. He worked hard to try and get Mark, one of his former City technology colleagues to join him. “I must have tried three or four times. Luckily (for me) he was made redundant! He still wasn’t sure that it was for him, so I gave him a huge chunk of equity.” Mark Chapman has since described himself as the Andrew Ridgeley of Photobox, but he was a vital part of the group’s development, says Graham.
Early funding was piecemeal. His father was keen to invest, but Graham wouldn’t let him “I told him that if it did well, we’d all do well. If not, that’s when I’d really need his money. Some of his golfing buddies put some money in and that was pressure enough. As it was, it took them six years to get their money back and they were constantly pestering me.”
The business rode out the technology boom and bust in its early days. This, he said, meant that the business was run as a small business for longer than it should have been. “I just didn’t pick it up fast enough. All family life was on hold for a long time. We had no holidays, I had to re-mortgage, sell my car. It was a tough period. After the initial launch we needed to do another raise. The Nasdaq crashed and everyone thought B2C was a bad idea. We were introduced to Middle Eastern investors who said they were going to give us £1m, which never materialised.”
In 2005, he decided he had to grow the business significantly or give up. Plan A was to do a small Aim listing to expand into Europe. Initially the group had planned to buy a Swiss company but found some accounting errors on its books. He ended up doing a deal with his arch-rival in France, as they had just raised some US VC money.
Even then, there were complications. The Venture capital backers wanted to see a stronger management team. The French CEO left. Graham and Mark didn’t feel experienced enough to lead the charge across Europe so the VCs recruited an experienced CEO from AOL.
Graham stayed on as chief technology officer. At the time, they had six websites across Europe, and he suggested they consolidated into one website, a project that was optimistically supposed to take nine months. Two years later, the web platform challenge was still running and he was approaching burn out. Eventually Graham got the project under control and delivered it in 2008. “Whilst late, it was the engine of a sustained period of European growth and profitability.”
That said, there were many near-existential crises along the way: postal strikes, occasional technology “code reds”. There was one very challenging week in December 2013 when they suffered the complete outage of their London factory due to thieves stealing copper cable from the industrial estate (and cutting all fibres at the same time). That same week they experienced a small fire in a French factory, had the website brought down by a submarine destroying a North Sea fibre cable, and there was a temporary asbestos outbreak in the London HQ. Graham reflects that the two most important behaviours for entrepreneurs are “resilience and adaptability. Those are what get you through the toughest moments”.
“Whenever I speak at events, attendees want me to tell them the secret, to sprinkle the magic pixie dust that will allow them to achieve success. You realise that it is a process of natural selection. For all the start-ups that launch, only a small proportion achieve their dreams and beyond. In retrospect, I made 1000 decisions that got me to the finishing line and any of them could have gone wrong. Certainly, I had a certain determination, a lack of acceptance of failure. If there was a code red situation, I would go for a walk and then say, ‘ok, what do I do next?’.
Today, he is an angel investor and sees many good ideas fail for trivial reasons: “Start-ups fail because they hit a bump in the road, make a stupid decision and don’t recover. I can tell them what not to do because I feel like I’ve made a lot of the mistakes. There are so many dead-ends and tar pits.”
His exit from Photobox came "very slowly with lots of false starts.” 2010 was the first year that we tried to exit the business through a trade sale. That didn’t complete and we reflected on why. We felt there were some gaps in our business model and profile that gave us less options for exit. This prompted us to buy Moonpig and create a larger group. Later we considered exit through IPO or sale to private equity and eventually the latter was the right way to bring in new investment and take the business to the next level.
“A lot of people who come out of entrepreneurship have imposter syndrome. I have certainly wondered if I was lucky or skilled? In truth it was a bit of both. It was a tough journey at times but I’m so glad I took the leap.”
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