7 tips for scaling your business from AO.com founder
Throughout 2018, we’ve hosted a series of #ScaleUpSeries events in London with our partner Enterprise Nation, where five successful entrepreneurs share how they scaled their business.
Our final #ScaleUp event of the year featured John Roberts, founder of the hugely successful online retailer, AO.com. It’s hard to believe that the company launched nearly 20 years ago, back in the earliest days of internet retailing and online payments.
So how did AO scale up, and what are John’s top tips for scaling your business?
- Pretend to be bigger than you are
You often hear people talk about the ‘fake it till you make it’ approach to business. For the founders of AO, who were competing against larger, more established retailers, this meant finding ways to make the company seem bigger than it actually was.
“We often played a recording of a busy call centre whenever we answered the phone, so it seemed like we were a big company with plenty of staff. It gave customers the confidence that we knew what we were doing.”
- Turn a lack of cash to your advantage
A shortage of cash in the early days forced the company to seek out creative and innovative ways of doing things. For example, rather than invest in sophisticated anti fraud systems they opted for a simple yet remarkably effective alternative:
“We would phone the customer and ask them to confirm their date of birth. Then we casually asked what star sign that made them. Almost everyone knows their own star sign, but not someone else’s. So it became a very easy way to identify a bogus transaction.”
- Focus on self-development
AO is a very different business today to the one John Roberts founded back in 2000. John has always sought to adapt and update his own skills in line with the needs of the business, and believes that if you are not feeling almost permanently uncomfortable about each new challenge then you’re probably not pushing yourself hard enough.
“It’s important to recognise that the skills required to launch and manage a business from a single location, with 30 staff, are very different to the ones you need to run a business trading in three territories, with 48 sites and many thousands of staff.”
John questions his own worth to the business on an almost daily basis:
“I believe that the day you think you’re not adding value, or you believe that someone else could do a better job, is the day to go.”
- Use technology practically
For John Roberts and AO, implementing technology on their website must deliver a practical benefit or advantage, for example by bringing products to life in a way that is useful for a customer.
“Before incorporating any new technology we tend to run a sanity check and ask ourselves: What problem am I trying to solve? What will this do for our customer or for the business?”
One example is the way that AO have been working with augmented reality applications, which enable a customer to see what a television would look like in their own living room, or whether a large fridge freezer would dominate their kitchen.
- Keep core competencies in-house
John’s advice here is simple: “Don’t outsource a core competence. If it touches a customer then we want to be in control. No one cares about your customers as much as you do. If they do then you’re obviously not trying hard enough.”
It’s easier to say than it is to implement, but retaining every customer touchpoint is something that is inherent in the company’s culture. It’s why, for example, AO will not be hiring in contract workers for Black Friday.
- Remember that people invest in people
A business looking to #ScaleUp is likely to seek funding or investment at some point. When pitching to investors, John’s advice is to remember that the most important thing to sell probably isn’t your idea, it’s you.
“People tend to invest in people rather than ideas, so think about what makes you investable and how you might communicate that. Your enthusiasm, energy and passion count for more than the idea you are seeking investment for.”
- Look for structural advantage
At launch, AO’s competitive advantage was all about price. When other retailers started lowering their prices the company focused on service, becoming early adopters first of next day delivery, then of Saturday and Sunday delivery.
“We’re always looking for the next substantial point of difference. We look for what we refer to as structural advantage. I want our competitors to see something we do or offer our customers and think ‘that’s completely ridiculous and unsustainable’.”
This was the last in 2018’s series of #ScaleUp events. You can learn from the four other #ScaleUp entrepreneurs here.