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Former entertainment retail boss Steve Oliver co-founded musicMagpie in his garage. He evolved the second-hand electronics business into the world’s most popular eBay shop, with an annual group turnover of £150m and exports to buyers in 140 countries.
The e-commerce business lets people sell their unwanted DVDs, books and mobile phones online. It was set up in Stockport and has become the biggest eBay business in the world, floating on the AIM (Alternative Investment Market) of the London Stock Exchange earlier in 2021.
He tells us how he achieved immense e-commerce success after his previous traditional retail business failed, and provides valuable advice on what he learned from his rich experience, particularly about customer service, trust, sustainability and the circular economy.
Scroll down for his gems of advice:
Business success can come out of failure
Can we start with the backstory for musicMagpie? Fill us in the details. How did you end up creating this business?
I was an accountant by trade for many years and joined the music and film entertainment retail chain Music Zone in 2000 as finance director. I then became managing director, selling CDs, DVDs and games on the high street.
I was involved in a management buyout from the founder of that business in 2004, and it’s where I first met my co-founder Walter Gleeson, who joined us at that stage as our IT and ops director.
I’m sure we’ll go on to talk about the many challenges of the high street, but Music Zone didn’t have an online presence or trade in used product at all.
The selling of new products became very challenging. Around that time, we had supermarkets coming in, selling the latest Pirates of the Caribbean or Harry Potter for less in retail price than we were paying for it. We were also competing against factory websites, with Play.com and Amazon shipping from the Channel Islands at the time.
That business became challenging, and towards the end, we started trading in used products, understanding the power and the margin that we could achieve.
We ultimately sold Music Zone to HMV in late 2006, early 2007. Both Walt and I left the business at that stage.
We just started thinking very hard about that concept of used products and offering cash for products, which had just appeared as an online concept. People were starting to sell old CDs, DVDs and games for cash on the high street, but nobody was doing it online. Then laterally, sometime after, we moved into consumer tech products such as smartphones and tablets.
The acorn grew in 2007 when Walter was busy in his garage, and I was starting to buy and trade product stock.
We were operating literally out of the garage that my brother-in-law had converted for me. Then we took one of our old shop units in Macclesfield and started trading in the shop downstairs and the website upstairs.
That was the birthplace of the business.
When you started, the focus was CDs and DVDs, but the world has changed so much in the last 15 years.
So what is it that you guys are specialists in selling now? What are people flogging?
The business over 14 years has evolved immeasurably. We are the UK’s biggest mobile phone recycler— a product category introduced about six or seven years ago.
At the heart of the business model has always been an innovative, sustainable, trusted way for consumers to buy, rent and sell consumer products like smartphones and tablets.
You sell to us, and we provide fixed valuation, free logistics and cash when the products arrive in our warehouse.
As people are now selling consumer tech, perhaps they’re more sensitive to price and service. That trust element is essential because people are sending off items of high value to us, but our principles are to make it as trusted, easy, fast, and hassle-free.
We’re all time-poor in our modern lives, so our business model makes it as easy as possible for people to trade with us.
Technology can give you that vital competitive edge
How have you found the proper channels and processes to take consumer products and find new homes for them?
My co-founder Walter wrote the technology from an early stage. It’s been massively enhanced and is much more sophisticated and developed since those early days.
The valuation of the product is the secret source of our business. It’s why we’re very much a tech business because technology drives all our valuations, product management and inventory management. After we’ve refurbished the product and put a warranty on it, our technology simultaneously resells all the products across multiple different sales channels.
Many online businesses will probably be buying products from one B2B source, and then they will have one sales channel, which is their website.
One of the beauties of how we scaled our business very quickly was that we could simultaneously sell across many different sales channels.
Possibly the most significant single point in our history that allowed us to scale was reselling products on Amazon Marketplace and then eBay.
One of the most surreal statements for me to say sitting here 14 years later is from those very humble beginnings in the garage. We are now the world’s biggest seller in the history of Amazon Marketplace and eBay.
Globally, nobody has done more transactions than us on both Amazon and eBay, which bring the world’s eyeballs to your inventory.
The slight challenge is that you can’t communicate with them directly as you’re trading with them through a platform—we’re buying directly from the customer and reselling through their platforms. But they played a hugely important part in scaling in the history of the business.
When you are on all these different channels, for example, with a Pirates of the Caribbean DVD, would you list that same DVD on multiple channels you would assist them in selling on any of them?
Exactly that. If we look at our legacy business, it’s still 30% of our group turnover of over £150m. So, it’s a very sizable part of the business.
We have over a million titles in stock at any point in time. We’ve only got one copy for half of these titles, but we simultaneously list that one copy on all our different sales channels, and it’s price managed and inventory managed on each one.
For example, if Nirvana’s Nevermind or Pirates of the Caribbean sells on Amazon Japan, it will be simultaneously removed from all our other sales channels.
It’s feeding into the algorithm of the technology by saying, “Hey, I’ve sold one over here. This is what we sold it for. This is what it’s currently selling for. This is how many I’ve got in stock. I now need to open the buying channel and inform the live side of the technology to go and buy some more.”
It’s clever stuff—I’m not sure I understand it fully. Luckily, we’ve got some fantastic people who have developed that technology over the years.
It’s allowed us to pivot and be flexible into other categories such as consumer tech products because it’s the same principle.
You’ve become this unrivalled player because tech gives you an edge no single kind of second-hand operator can copy. You can be all things to everyone at once and not disappoint anybody because you update everything in real-time.
That’s a fantastic accomplishment.
For e-commerce, eBay can be a vital sales channel
What kind of business should be on eBay? Is it only for a particular kind of product, or should anybody selling a product think about having a shop window there?
Yes, that is my short answer to that.
I’ll give a slightly longer one.
We found eBay to be an excellent partner. I know they pride themselves on growing the circular economy, and sustainability with second-hand products is absolutely at the heart of our business.
Once, people thought eBay was just an auction site. Well, it’s not. Most of their transactions are buy it now, and many large businesses and small sellers trade with them.
As well as trading as we do on our musicMagpie site selling directly to consumers, we also very much have eBay in our sales mix.
I would say this to them, and I’ll say it to you now—they’ve been great partners to the business and allowed us to scale.
We’re just about to hit 10 million feedbacks on our UK accounts alone. There’s another three or four million on our US account. I think we’re planning to do a press release on that because we are the biggest transactional seller in the world with eBay.
I’d encourage anybody who is thinking about selling on eBay.
I have a dear friend, Angela, who set up a homeware business in Stockport and does crafts. She’s amazingly talented. We’ve talked about having a mix of platforms and taking your inventory to the world versus your website. Both have a place in any growing online business.
Of course, you give them a commission for the benefit of selling it for you, and you don’t have the same relationship with consumers that you have if you sell directly in terms of remarketing and talking to them. But gosh, they allow you to scale your business.
Spend time on your eBay listing equity
Can we get into the nitty-gritty? What exactly works when it comes to selling on eBay?
I just remembered going through a weird phase where I would search for the word ‘vintage’, for example. I know that a lot of people were doing sort of a similar thing.
Are there particular keywords or strategies that you have seen work time and time again?
They call it listing equity. eBay encourages you to do basic search engine optimisation—put as much description into your product as possible.
With eBay, they give you a certain number of characters, and you should use as many as you can to be as descriptive as you can of what you’re selling— so you can be as competitive as possible.
There’s quite a big difference between Amazon and eBay. With eBay, it will list and default to what it calls the best match. Not necessarily like Amazon Marketplace, which will list it in terms of who’s selling it cheapest, which is a different way of doing it.
The other T alongside the technology T in our business is trust. Why do people buy from us? Whether they see it on Amazon or eBay, they trust our brand or come to us directly.
We might not necessarily need to be the cheapest in the eBay marketplace.
Somebody may be selling a CD or DVD a few pounds cheaper than the ones we’re selling by a pound or two, but they will see our rating, our seven million feedbacks on Amazon, or our 10 million as it will be in a couple of weeks on eBay.
They’ll think they’ve got the trust to buy it from us. Work hard on your listings.
Build trust with your customer—be fanatical about customer service
I know it’s a cliche but be fanatical about customer service. As quickly as you attempt to scale, don’t leave your customer service behind. If there’s one area to focus on, absolutely focus on that customer service.
And that point about trust is interesting because when dealing with second-hand products, how honest or pernickety do you have to be about any flaws?
Do you make sure that, for example, you get a smartphone and it’s got a crack in the screen, you fix that before you sell it on?
Talk to me about how you build that trust.
Yeah, we do.
Let’s take someone selling us an iPhone. Somebody selling an iPhone is asked to grade it when they sell it to us. Is it in good, poor, or faulty condition?
Now, most people are honest and realistic about that, but I guess human nature is that sometimes someone says there’s a bit of a mark on it, but perhaps I’ll try it as good and see what happens.
We want to delight our customers. We’ve built our business on trust and reputation. So, we’ll do our very best to be as fair as possible when regrading the item. We try our hardest, but there’s always a small number of customers who might not believe us when we’ve regraded their product.
If there is a crack in the screen, we will be as honest and fair as possible in saying, “Look, I’m sorry, there’s a small crack in it. Here’s your new offer. Would you like to accept it?”
There’s a critical trust point in the middle. If you don’t and you’re not happy, we’ll send you the phone back free of charge. It won’t have cost you anything. It’s cost us because we’ve paid to come and get it from you, we’ve paid to look at it. We’ve paid to send it back to you.
That’s good motivation for us to accept the product. When we’re reselling the product, we’ve very much refurbished it.
I draw a comparison with buying a used BMW from a BMW dealership rather than Arthur Daley (showing my age) down the road.
If there is a problem with the phone, we have a 12-month warranty. A vital part of the trust equation is that if there’s a problem with the item, we will deal with it, repair it, and replace it if we need to for 12 months.
The physical refurbishment of that product is very much at the heart of the relationship we have with the consumer.
They can rely on the fact that we’ve done a 70-point quality check. We check the battery, screen, microphone, and camera.
We will try and replicate as near as possible the experience of buying a new item when you buy a phone from us in as close to as good as new condition as possible, with the same warranty of 12 months.
That’s absolutely at the heart of the trust in the brand and our relationship with our customers.
Sustainability can give you a competitive edge
We touched earlier on sustainability. Have you seen a massive increase in people who want to switch to second-hand?
Climate change and the circular economy is everywhere right now. I’d like to think that means consumers are trying to buy more consciously. If you can get something second hand that’s working, and you have a guarantee for a year, why wouldn’t you?
You’ve just used our brand strapline there. That idea of, well, why wouldn’t you sell to musicMagpie?
It’s quick and trusted, et cetera. Why wouldn’t you buy from them?
Branded products as good as new condition for a fraction of the price. Forgive me. That was a sales pitch line.
Going back to your original question. When anybody sees the strapline under our brand, they’ll see, “Smart for you, smart for the planet.” That ties into your first question of how important is sustainability?
The answer—page one of wherever I’m presenting the business now is talking about our sustainability credentials and the global problem of e-waste. People are ignorant of what e-waste is and what they should be doing about it.
On average, we’ve got 11 old consumer tech devices lying in drawers, under the stairs, and in a box somewhere. There’s £16bn worth of product lying around.
Three or four years ago, we didn’t have a green recycling emblem if we looked back at one of my investment decks for the business I was doing with my CFO.
Three and a half years ago, we brought in a little recycling symbol at the bottom right-hand corner of page 11. In passing, we thought that the business has excellent green credentials because nearly 100% of our turnover is from recycling activities.
Wind the clock forward three and a half years—it’s on page one of the investment deck. We’ve rebranded to bring green into the logo—with an emblem now that’s a lovely leaf globe one of our clever graphic designers designed for us.
This isn’t us trying to greenwash anyone. There are lots of businesses out there trying to demonstrate their ESG (Environmental, Social and Governance) credentials and why sustainability is important to them.
This is our business. It’s what we do. We give a second life to products. We give a second life to two and a half thousand tonnes worth of physical media products like CDs, DVDs, games, and books, much of which is plastic.
We give a second life to half a million consumer tech devices.
It’s so important. Consumers, especially young ones, know how crucial ethical spending and making ethical choices when shopping is.
In the past, we didn’t use the word second hand in our business because it was a bit niche and, dare I say—a bit grubby. Most people were a bit suspicious of it.
Now it’s this mainstream activity that’s smart and savvy.
You’ll tell your friends you’ve saved money. You’ve got something that’s in as good as new condition for a fraction of the price, and you’ve got a warranty on it. And by the way, you’re doing something good for the planet.
We want to be at the forefront of that sort of sea change in consumer attitudes.
For anyone listening, considering a business idea, or thinking about starting something, would you say that looking at a business that feeds into the circular economy and recycling is now a big opportunity?
Massive. It’s the way the world is going.
We’ve just IPO’d our business in April, and they’re recognising the green economy mark, which is from businesses that have more than 50% of their turnover coming from sustainable activities. The very top corporate body in the land recognises how important it is.
I know life isn’t all about investment forms, and indeed, when you’re starting, you’re just thinking about how you can make a success or living from your business.
But ultimately looking forward, I think the pandemic has massively accelerated this whole trend to be kind to yourself, neighbours, community, your environment around you. Being mindful and caring of what’s going on around us.
I would encourage anybody to think, can I do something that recognises the way the world is moving and how consumer attitudes have changed?
Raising brand awareness is a crucial part of your marketing strategy
When it comes to getting the word out about how green you are as a company and the fact, you’re recycling all this stuff that might end up on the scrap heap, but also just letting people know that you exist. What are the most valuable channels? Because I know you have some crazy socials going on.
Talk to me about how you’ve raised brand awareness.
We now have what they call unprompted brand awareness of nearly 50%, which sounds brilliant.
It’s quite a surreal statement that this little business that started in a couple of garages is now recognised by half the UK population.
That means there’s half of the UK population who haven’t heard of us, by the way!
We’ve used TV to get brand awareness out a lot in our history. There have been various adverts that people may remember with a magpie on the back of a couch over the years.
We used eBay and Amazon to get the brand name out there. We’ve used social media to demonstrate how important it is to be sustainable with our ESG credentials.
We launched the consumer awareness campaign Mount Recyclemore—it’s a play on Mount Rushmore, where we built the G7 leaders’ faces entirely out of e-waste. I make it sound like it was us, but it wasn’t. Joe Rush, an exceptional artist we commissioned at the G7 summit a few weeks ago in Cornwall, built this fantastic sculpture.
It was 20,000 pieces, or 12 tonnes, of e-waste.
It depicted the seven leaders’ faces and was a non-political consumer awareness campaign of, “Hey, you’ve got to do something smart. Please go home and look at your drawers.” Our biggest competitor is all that product that sits in people’s homes. So we’ve used a campaign like that, which has gained incredible momentum.
We’ve just moved Mount Recyclemore up from Cornwall a few weeks ago to outside our head office in between our office and Stockport station. So, if you happen to be going through Stockport through the summer holidays, there are loads of good things going on, but Mount Recyclemore is there.
It’s a spectacular sculpture, but it’s what it stands for in raising consumer awareness of a global problem—50 million tons a year of global e-waste.
The UK is the second-worst culprit in the world per capita for contributing to that. We have all woken up to how vital the damage that we’re doing to our planet is, and if we can do our bit with that, it very much plays to our values.
You have a go-to-market strategy and product to sell—with money you must spend on things like social media, events, and investing in the platforms you’re selling on,
Is there a clever way to figure out when you’re determining pricing, etc, just how much will have to be spent making sure you’re maximising those channels through brand awareness?
It’s so complicated to know how much you need to budget to get something sold.
If my CFO, who’s now our COO post IPO, were on this, and he was answering that question, he’ll talk about marketing and constantly needing to cost in. So roughly about 6% of our turnover is spent on marketing. He challenges our heads of marketing and CMO to make sure that our marketing constantly costs in.
That’s incredibly difficult when you do something like Mount Recyclemore. How would you cost in? How do you derive an exact benefit? Again, going back to my accountancy roots, sometimes I’ll catch myself saying, “How much money is that putting in our till today?”
However, when you start up, we all recognise you must get your brand out there. You must invest in your brand.
We’ve seen many, many tech startups and online businesses that are loss-making for many years. Amazon lost vast amounts of money. Deliveroo, which IPO’d a few weeks before, wasn’t the easiest of rides—they’re losing money. Uber has lost lots and lots of money. They’ve lost more money than their turnover.
But it’s this drive to get your brand and brand awareness out there. There is no magic formula.
Sometimes I joke the worst thing you can do as a business is start to make EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation). Because then the investors will start valuing you off a multiple of your EBITDA.
It’s a good idea to get out there and publish to your audience. If people believe in that story, they’ll very much back you. I think you can start to build a brand that way.
Ultimately any business must turn a profit. In the commercial world, it must make sense, and marketing must cost in.
So, look at the margin you’re making on each transaction and see how much of that transaction you are willing to invest in marketing to drive further volume through the business.
That’s fascinating. 6% of turnover—not even profit, but turnover. That’s a sizable investment.
Lean on family and friends for support
You mentioned drive a while ago, and I want to talk to you about yours, because it takes quite a lot of grit and determination to be sitting there in your garage, buying this stock.
Where does that determination come from in you? Can you trace it back? Do you have entrepreneurial parents?
Talk to me about how that spirit has grown within you.
My parents were self-employed. Dad left a well-paid job in computers to run his own post office, and we ran other shops. I very much have retail blood running through me. Dad had me behind the counter at a very early age serving customers, where I fell in love with retail.
I’ll go back to that moment in time where Music Zone had gone wrong, and gosh, it hurt.
It was a professional and personal heartbreak for both myself and my team. A close team of many wonderful people has been a great pleasure to then work again with at musicMagpie.
But ultimately, you must pick yourself up off the floor and dust yourself down. I had a good week or two of sulking and feeling sorry for myself, but you must snap out of it.
I retracted only to want my family and very nearest and dearest around me like Cath, my wife who helped me get up and say, “Right, let’s go again.”
She’s been so incredibly and amazingly supportive over the years, and it was her when we had lost money towards the end of Music Zone on a personal level who said, “No, I’m going to back you. I believe in what you’re doing.” Her brother, my dear brother-in-law and friend Nick, also invested money and helped set up musicMagpie.
With Walter, we got ourselves together and said, “Right, let’s go again. We believe in this.”
It would have been the easiest thing in the world to go and get a job.
And some people said, “Told you so. You’re a responsible family man, Steve. You need to go and get a job now.”
And I replied, “No, Cath’s backing me, I back myself. I am entrepreneurial, and I want to go again.”
The failure made me twice as ambitious and determined to succeed next time around with musicMagpie.
I love that story because sometimes, with founders, you get this sense of this unwavering self-confidence, and there’s never a shred of doubt.
The fact is that you’ve built this incredibly successful business, but at the beginning, you didn’t know that it would necessarily be a success. I feel like that’s so much more human when you’re putting everything on the line, but you’re not necessarily 100% positive it will work.
Absolutely not. Gosh, I could have never predicted the journey that we would go on.
We’ve taken the pivots, the change in product category, launching our US business, and ultimately ending up with an IPO in April.
I’m even more excited about the next stage of the Magpie journey. Now I have absolute belief and knowledge that we’ve got an incredibly exciting future ahead of us, but in those early days—yeah.
There were days when I paid the payroll out of my and Cath’s bank account because it was the only way we would do it. I had to get a job in the early stages of musicMagpie because I put all my personal money into it, so we had none left, and it couldn’t pay me a salary.
So, I went and joined another retailer as MD. I had a very enjoyable time, but it was the hardest 12 months of my life because in the background, in the evenings and late into the night, I was growing musicMagpie.
I was answering every single customer service inquiry till 1am or 2am.
My dear eldest daughter, who was about eight or nine at the time, used to leave little Post-it notes on the screen saying, “Daddy don’t work too late. You look tired.”
It was emotional at times, but it was just something you had to do. I meet other entrepreneurs and people who’ve got great ideas, and they think, “I’m going to get this to go, and it will be great.” Just remember how hard work is.
You must put the hours in. It’s a hard slog, and there are times, and this is the bit that nobody sees, where there are agonising nights of doubt and stress because I’ve got payroll to make.
I’ve got a responsibility to 750 to 1,000 people to make a payroll.
I’ve been sick in the middle of the night, worrying about this.
Luckily, it has not been like this for many years now, but there are always those moments in the journey. It is not a straight line curve.
There are many undulations on that journey, and every entrepreneur must be ready for that. Sometimes it’s just about sheer hard work and determination, with brilliant people who believe in you and the business. Having them around you gets you through.
I think anyone that says their first year in business isn’t a struggle has been fortunate. Did you have something you would say to yourself—a mantra when you were at your lowest?
I know you said you had great people around you, but what was the one thing that you used to dig yourself out?
It was belief. I never doubted what we were doing, the business model, the people around me, and what we could get out of it.
I had people around me sometimes external to the business who were saying along the lines of, “Come on, we’ve had a good run,” or it’s, “You’ve done well, but this is tough now.”
They were many people thinking, “How did he grow a business that was CDs and DVDs—who buys those anymore?”
The answer was that there’s still plenty of people buying them, but absolutely, we were trading in a product category that was in decline. That’s why we pivoted the business into consumer tech and across the water into the US. But it was with belief and sheer determination.
I was unwilling to accept. I’m not a dreamer—I deal in reality.
But if we were 10 days away from payroll and I wasn’t sure how we were going to make it, it was, “Right—the next million pounds of income that comes into this business is going to pay that wage whatever happens.
“If I need to go and have difficult conversations with other people, I will do, but I’ll never let my people down.”
And it’s that responsibility to the people, colleagues and friends that got us through.
But I don’t want to make it sound like this was a one-person ship. Some incredible people believed in the business who were with me every step of the way.
I’ve felt like I was with you then. I could smell the stress in the air, feel that tension and that desire to succeed. You paint such a vivid picture.
Never stand still and rest on your laurels—keep looking forward
Let’s talk a bit about pivots, because you mentioned being in a declining market. At what point did you think we have to make a change, and how far ahead can you look as a leader to try and anticipate where the business needs to move.
I think there are times in a growing business, certainly when you’re young and small, where you roll your sleeves up and get on with it. I mentioned I was answering all the customer service inquiries or picking orders—I’ve been out there and done it.
But certainly, now more as we’ve grown, you lift yourself out of that and strategise a bit more. You sit back and think if you stand still, you’re going backwards. You must constantly look at where you’re going to pivot the business and take it to the max level by disrupting yourself.
In 2013 and 2014, you could see where physical media was going, especially disc media.
Books are fine— a great, growing market. People have returned to physical books, and there’s a nice relationship between the digital and physical.
In discs, streaming services have come in. Some people still enjoy touching, feeling, listening, buying, and collecting physical media. But we had to recognise that we would constantly be pushing water uphill with that product category.
So, we looked around—what else is in people’s houses that have value, where they’re changing it potentially every year or two—phones. So, we looked at that product category and applied the same principles, tech, and trust.
We’ve got trust with all these millions of customers who’ve dealt with us over the years—what else will they sell us? We looked to develop a one-box strategy to trade with people in different products, and many do.
The other pivot was looking at the territory, where we launched in late 2013 and early 2014. That was a brave move. It was at a time when, looking back, we arguably tried to do too much, too quickly, with too little resource and too little cash.
But sitting here seven or eight years later, we’ve got an established, thriving business base.
It’s branded Decluttr over there in Atlanta, Georgia, and it’s an essential part of our future. We’ve turned it around from loss-making to break-even, and now it’s a profit-making division of the business that we’re excited about.
Are there some fundamental differences between how you do business here and how you do it in the States? You mentioned it took a while to get off the ground.
What were the significant learnings about selling and buying from US consumers?
We’re divided by a common language; I think is the phrase. I’m an entrepreneur with a business that launched a brand name in the US that didn’t know or understand Americans don’t have magpies.
We just launched musicMagpie.com in the US, and I’d been over there two or three months. We set up our base, met some of our team members, and employed a lovely lady in our first-ever American customer service. I shan’t name her, although she will go down in history for the following story.
She came down the corridor, and asks, “Steve, what is a magpie?” And I reply, “Sorry, what do you mean what’s a magpie?”
And she says, “I’ve worked here two months, and I don’t know what a magpie. I knew you were coming today, so I asked my mother, and she doesn’t know.”
I opened my laptop and showed her the cartoon magpie on the website. I said, “What do you think this is?” And she went, “It’s a penguin.” And I said, “No, it’s not a penguin, it’s a magpie—why would we have a penguin on our website?”
I got everybody out of the warehouse and said, “Can anybody tell me what this is?” One guy out of 25 put his hand up and said, “It’s a magpie.” And I said, “Thanks very much. How do you know that?” And he replied, “I knew you were coming, so I looked it up on Wikipedia.”
They didn’t know what magpies were. They had bluejays, which they have in one or two states.
So, we’d launched a brand name, but M-A-G-P-I-E isn’t even a word. It’s not that it means something else—they just didn’t recognise it.
So, we had to rebrand and make sure that we talked to them in their language, with the spelling and presentation of the website.
On a logistical and practical level, the US is a massive country. In the UK, bringing a parcel in or sending one out is about average weight and distance—it’s a straightforward logistics model.
In the US, you must accept that if you trade in Georgia, you must deal with logistics in California, Alaska or down the road in one of the Carolinas.
You must think if it is more complicated. Get local knowledge and do your research are my top tips.
Make sure you have the cash, resource, and bandwidth for growth
Do you think that before you try and sell into the US, you need a stable proposition? All businesses are different, but it’s good to have a stable domestic market because there are many steep learning curves, and it might take longer than you think to establish there.
Absolutely, yeah. I think again, looking back, we were a bit overambitious. We thought this is going well. Let’s pile over to the US and set something up over there.
I remember going and meeting marketing agencies and asking, “How do we get the brand out there then?” And they replied, “Be aware that you need to spend somewhere between $10m to $20m a year for the next three years to get your brand out there.”
And I replied, “Really? Is there no other way?” But we’ve been great believers.
Affiliate and digital influencing-type relationships over there have served us very well. We haven’t yet done a Super Bowl half-time advert—maybe that’s for another day.
But yeah, make sure you’ve got everything working in your home market and that you’ve got the cash, resource, and capacity to do it.
Make sure you send somebody you trust over there who won’t cast any aspersions on anybody and any nation.
Have somebody on the ground you know you can phone day or night and ask, “How’s it going”? And get an honest and correct answer.
The business is so international, do you manage to sell everything that comes in? And if not, what happens to the waste? Because obviously, you guys are committed to sustainability.
How do you deal with the stuff that you can’t sell?
I’ll go back to the technology point, because with the buying technology in theory if we can’t sell it, we don’t buy it.
We may end up buying something that we can’t repair, and you need to deal with—we will break it down and use the parts of it. Anything leftover, all individual components, get recycled responsibly.
In consumer tech products, it is literally a handful of items. We give a second life to 95% of it. Most of that remaining 5% is broken down into different components. We have all the official waste licenses and partners and follow WEEE legislation.
Somebody told me years ago that structurally broken black DVD cases go into road surfaces. The aluminium in the disc itself goes into car headlights. The plastic from the cases goes into plastic cups at water coolers. Our waste partners reuse everything.
What a fascinating answer. Imagine walking on a tarmac created from CD cases.
You’ve painted a vivid picture of the hustle and drive needed in those early years. Now you’re super successful with the business listed. Has success changed you at all?
That’s one of those questions people around you should answer. As a person, I very much hope not. If I ever thought about changing, I think my pals and Cath would slap me back down very quickly.
Yes, I’ve moved house. It’s not a footballer’s house, but I do enjoy some of the rewards of what we’ve achieved and what we’ve done. I can choose to do things. I bought myself a Tesla, which was my treat from the IPO. And it’s great fun. I thought as an ESG responsible CEO, I should have a Tesla. So that’s been great fun.
Many of my colleagues and friends at Magpie would see me as the same person. And I guess, professionally, now we must acknowledge, understand, and respect the fact we’re in a more governance-driven environment. I can’t be as open and talk about the business without understanding what I can and can’t say.
But I’m enjoying the new world of being in this. Why did we decide to do what we did with the IPO? Well, on a personal level, it was all about the final challenge. I’ve worked with private equity for many years.
I’ve built startups, MBOs, scaleups, et cetera. So public life was the last area for me to challenge myself professionally.
I turned 50 in February—we completed the IPO in April.
But I’m massively excited about the future, what it’s going to bring us, and what going public has meant for the business in terms of awareness and consumer profile. It’s also the access to capital that we’ve got to go and convert some of the massive opportunities we’ve got.
What informed the decision to go public? You said it was the final frontier. But was it something that you dreamt of for quite a long time? Was it a path you needed to set down early on regarding how you structured the business?
For anyone who would love to list on the stock exchange and be a public company, what route do they need to follow to get there?
It would be too strong to say that I dreamt of it for many years. We first started considering it in early 2018. One of the barriers at that point was having some retail shops in our sales mix, which created 10% of our sales.
But when we met brokers and advisers, they said, “We love the story. We get it.” ESG was starting to creep in. They liked the disruption and where we were heading in terms of product categories, but they said, “We’re worried about your shops.”
We made the most challenging emotional decision but the most straightforward business decision in selling them. When we analysed it as a sales channel, it had gone from positively contributing to break-even to slightly negative. And it was only going in one direction. Externally, investors were worried about that being in our sales mix.
We first started thinking about going public properly towards the back-end of last year. We were a beneficiary of the dynamics of what the pandemic meant to the world.
People were going online and being at home more. We positioned ourselves as being here to help, whether you were looking to sell products and raise cash as you were at home and decluttering, or looking to buy a product, stay connected, and work from home.
We were a beneficiary, but there had been a significant change in already turning into a pure-play online business.
We thought about our plans, and I’ll quickly cover both because they’re both exciting. We’ve got a new acquisition model and a new income model.
So, the new acquisition model makes it even easier for people to sell their old mobile phones to us. We’ve launched what we called a SMARTDrop kiosk, launching them in 20 or so Asdas, rolling those out nationwide.
You can sell your old phone to us in three minutes in the foyer of a supermarket when you do your shopping. You go in, get a valuation, and pop the phone in. We do the same diagnostic checks and security checks. You get cash instantly paid into bank transfer or PayPal. It’s a massive sustainability statement for us, customers, and retailers to host in that environment.
But we needed access to capital to fund that kiosk rollout.
So that’s exciting.
I used the word disruptive before. Disrupt yourself. Don’t sit on your laurels and think, “Oh, we’ve got a great model, we’re the market leader, consumer awareness is growing, and it’s a growing market. So, we’ll sit tight and keep growing at 10, 15 and 20% growth.”
Well, that’s great, but we’ve got loftier ambitions than that.
The new income model comes from the fact that we’ve only ever resold products that we refurbish on outright sale.
It was my dear niece about 18 months ago who said, “Uncle Steve, do you not do anything monthly?” And reply, “No, we don’t.” And she says, “Well, that’s what I do with the network.” And I said, “They did do, but more and more people split their handset and do an independent airtime deal.”
And from that acorn and doing research– we research everything we do now. Key learning in the business is don’t go off your gut reaction all the time. Go and ask your customers.
And the customers said, “We would love you to do a monthly subscription rental model.” And that’s what we launched about six months ago. And again, it’s going down amazingly well and gaining real traction.
So instead of buying one for an average price of £250 to £300, you can do it for as little as 6, 7, 8 or £9 a month. Typically, people spend between £15 and £20 a month for 12 months.
If they keep the same phone for a year, we’ll reduce their subscription and offer them a discount. “We’ll reduce it by 20% to renew that subscription into the second year.”
So, it’s accessible and flexible. Customers can upgrade if they want to, or they can keep the phone. Looking at the younger consumer, people are subscribing and owning less and less and renting and subscribing more and more. It plays to that.
Now, that’s transformational for our consumers’ relationship because we can go and talk to them more often. It was a bit of a challenge for our business that if we sold them a good phone, they didn’t need another one for 2, 3, 4 years.
Now we can talk to them much more regularly. Without getting into all the detailed accounting, the financial model is that subscription income is high-quality recurring revenue for the business.
But both of those models needed capital to go back to your very original question. That was a big motivation behind going public.
I love that point about a subscription model because everyone just wants to break down costs now. No one wants to have a significant upfront lump sum to pay out.
When thinking about new business ideas, look at solving problems
Could you share some advice with anyone who is looking to start an online business? Because you’ve been there, done that, got the T-shirt.
If you were starting from scratch today, what kind of business would you start, and what advice would you give about making it a success?
I’d look to try and find something topical and of the moment. So, we talked about sustainable—it’s absolutely where the world is going, whether it is a product or service.
Perhaps it’s ironic coming from a CEO who started a business doing CDs and DVDs, which was a category in decline, but there were many years of success I had with that. And then, as we talked about, we pivoted.
Believe in what you’re doing. People say to me, “What does be an entrepreneur mean?” And I say an entrepreneur finds solutions in life, not problems.
I find myself doing that a lot. I drive the family mad. As I go round life, whether in a restaurant or elsewhere, I turn into some sort of weird mystery shopper and come across problems.
I don’t dwell on the problem, and I don’t think, “Oh, that’s frustrating. It’d be better if something were like that.”
I’ll constantly be thinking, “What’s the better way to do that? Is there an app that does that?”
Like now, we’re ordering and running our lives with apps. Now I’ve got my Tesla. I only need to leave the house with this phone in my pocket. Years ago, it was wallet, car keys and a phone if you had one. All sorts in your pocket.
With my phone, I can now drive my car. I can pay for everything. I can run my life. I got my diary, contacts, photos, music, and everything on it.
Look at something that is going to change the world positively. I haven’t talked much about Magpie values, and that was remiss of me. We care. Magpies care.
My excellent chief people officer Rach joined two and a half years ago. She said, “How would you define Magpie values?” And she’s come up with five of them. But they start with Magpies care, and Magpies make a difference.
I’ll go back to the very start of the story with my dad. He was my hero in life. He made a difference. He ran his community from his post office. And if you can do something in life that not only answers life’s problems with a digital solution and makes a difference, but everyone will also respect you for doing that.
But be strong. Be accepting you’ve got to work hard—very hard at times. Don’t think it’s going to be easy. Don’t underestimate it.
Take people with you. I couldn’t have done any of musicMagpie, starting with Walter next to me as co-founder and then right through the years, without all the fantastic people. Reward them, and make sure you incentivise them. Make sure they enjoy working with you.
I won’t go all David Brent on you at this stage and go mate first, boss second, that kind of stuff. But you have to enjoy what you do. You spend so much time at work. Create an environment that people are inspired by and enjoy coming to.
Make them feel like they’re working with and for somebody who both cares and intends to make a difference.
Feel inspired to set up your own business?
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