Bill Dobbie likes climbing mountains. Among his conquests is the highest peak in Western Europe, Mont blanc, which is 15,782 feet above sea level. In his business life Dobbie is climbing the share price mountain and, so far, despite the ravages of the current economic crisis his company, Cupid, has been on a steep upward trajectory
Bill Dobbie likes climbing mountains. Among his conquests is the highest peak in Western Europe, Mont blanc, which is 15,782 feet above sea level. In his business life Dobbie is climbing the share price mountain and, so far, despite the ravages of the current economic crisis his company, Cupid, has been on a steep upward trajectory.
When the Edinburgh-based company floated on the Alternative Investment Market (AIM) in July last year to raise £10m for acquisitions its share price was just 66p. Since then it has soared to a high of 250p in June this year giving the company a market cap of around £166m.
Dobbie, who owns around 25 per cent of the company, is on a roll but outwardly he keeps any excitement under control as he talks about his plans for Cupid which makes its money out of online dating.
Cupid is headquartered in a handsome terraced house in the New Town of Edinburgh which Dobbie admits doesn't have the look of a go-ahead internet company. Within the building are a modest staff of 17 but beyond Scotland's shores it employs more than 260 people with the majority based in the Ukraine. Why the Ukraine? You'll find out shortly.
In just five years the company has grabbed itself a 20 per cent market share in the UK online dating market and is growing fast in the US, Australia, Canada, india, France, Germany, Spain, Belgium, the Netherlands and Italy.
A few weeks ago the company acquired several Brazilian online dating sites in a s500,000 deal. The sites include AondeNamoro.com, a traditional online dating site, and SolteirosComFilhos.com, an online dating site for single parents. The sites have 1.4 million members.
In the latest half year Cupid trebled its revenues to £25.4m and profits rocketed by 137 per cent to £5.7m. Dobbie has clearly tapped into a rich vein of the internet and is determined to mine it as deeply as he can. It marks the latest stage in the serial entrepreneur's career which has seen him start no fewer than half a dozen different businesses.
When he floated Cupid he was already known in his role as number two at Scottish-quoted company Iomart, which is headed by his brother-in-law Angus MacSween. But now Dobbie has well and truly moved out of MacSween's shadow though the two remain good friends.
Born in Edinburgh but brought up in Glasgow from his teens, Dobbie comes from a humble but interesting background. His mother Marlyn was a professional dancer and performed in the renowned Lex Maclean show and his father Bill was an accounting clerk.
Dobbie studied pure maths at St Andrews University and then joined the computer industry as a programmer with Burroughs in Edinburgh. "In those days i remember the customers were big companies like Scottish Amicable or Scottish Equitable and they would spend £5m on a computer that would run their payroll and accounts which is laughable now but that was the actuality of it then," he says.
Dobbie moved rapidly through the ranks and ended up in Australia as a marketing manager in global wholesale banking systems supporting "exotic trades" and derivative instruments. "Now they are commonplace but then they were quite new and i guess they put young people in these positions because some of the older people could not get their heads round why you would want to do anything like this."
During his time with Burroughs he also did an MBA at Glasgow University.
When he reached 30 he was doing very well but MacSween had sold his first business and earned a significant sum of money which made what Dobbie was paid pale into insignificance. When MacSween offered him the chance to play a part in starting his next business in 1990 he came back to Scotland. The new company Teledata was the first provider of outsourced call centres in Scotland. They progressed into telephone information services and later became an internet service provider.
Dobbie admits that like any other business leader he has made mistakes along the way. "In the Teledata days Angus and I almost lost our business by over-expanding overseas. We had to very quickly retrieve from that. We expanded into seven countries. I was doing my rounds of the countries to see how things were going one month and two things happened at the same time. Firstly I left Spain and left my general manager at the airport and arrived in Turkey and got a phone call from him saying the business I had left in Spain had to be closed down because of government regulations. And at the same time our business partner in South Africa began to welch on us. Those two things happening at the same time wasn't a pretty thing to deal with."
Six years later they sold Teledata to Scottish Telecom where Dobbie stayed for another two years developing the ScottishPower subsidiary's internet division and overseeing the acquisition of a number of complementary businesses.
In 1998 Dobbie and MacSween reunited to form integrated telecommunications and internet services company Iomart. During his years at Iomart Dobbie had a bit of a roller coaster ride with fast changing markets but he and MacSween succeeded in keeping it on track. "Iomart had a challenging beginning. The crisis there was that we picked the wrong business model. When you get the strategy wrong things can go wrong very quickly. But testament to everybody - the board and team - we decided to get out of it and we did. We were able to change and adapt and get out of the crisis. We raised money from the business we sold out of and used that to develop into another area."
However, after years of being number two Dobbie wanted to be a leader. "It was a personal ambition thing," explains Dobbie, who was also fed up with commuting every day from Edinburgh to Glasgow. "The driving force has been getting financial independence and success. I have more or less achieved that. It does make you begin to think about what you could do on a wider scale and that is the phase I am going through.
"I didn't do anything other than leave Iomart and get myself into the position of 'what the hell am I going to do now?'. That is when I noticed the online DVD rental business. I looked at several ideas and this just stood out to me."
He invested nearly £1.5m of his own money into his new company DVDs 365 and during its development made a crucial connection with a Ukrainian software house run by Max Polyakov. "I put out a tender on the internet to write the software for DVDs 365 and was all set to go to India to see two or three different companies when out of the blue came this tender from the Ukraine. I went and saw them and they were by far the most responsive company. Max Polyakov was clearly a very able young guy - he was just 26 years old at that stage."
Dobbie built DVDs 365 up to around 15,000 customers but was finding it a very capital intensive business. "Although it was going well it was eating up pounds like you couldn't believe because you had to keep buying DVDs," says Dobbie, who sold the business for a small profit to Lovefilm.
By then Dobbie had all the expertise to run an online business, had bought half of the Ukrainian software house and Polyakov had joined him in Edinburgh. "I persuaded him that if he really wanted to realise his ambitions he should up sticks from the Ukraine," says Dobbie.
The duo created web analytics software company Hit Dynamics which was later sold to Experian. "One of my skills is knowing when to get out of things," says Dobbie. "We got out and did rather well out of it."
They also created Maxymiser.com where Dobbie has an active board role as the largest private investor alongside Pentech. Maxymiser's software helps convert the visitors on websites more effectively by displaying content that is relative to those visitors based on what their personal surfing habits are.
After the sale of DVDs 365 Dobbie and Polyakov pondered what to do next. "Max said he got a lot of requests for online dating systems via his software house in Ukraine. I looked at the market and saw there weren't many big players in the UK and it wasn't capital intensive. So we said let's do that then."
They created Easydate - a name they would later have to drop because Easyjet founder Sir Stelios Haji-Ioannou predictably objected to them using the 'easy' brand.
The company's first website was www.youcangetme.com. Although it didn't take off it still exists. They then bought a London business called www.datetheuk.com which gave it some more volume because it wanted to accelerate things.
One of the interesting things that happened along the way was the Daily Mail Group came to Easydate because they couldn't run their dating sites www.girlsdateforfree. com on a platform they had acquired and wanted to outsource it. "We built a relationship with them and it was obvious to me that was a strategic opportunity for us to buy that because it was clear it wasn't part of their core business," he says.
By 2009 the company was doing well in the UK but Dobbie and Polyakov decided the only way to grow into a very big business was to expand overseas. In order to do that they decided to float Easydate on the AIM. After his experience with Iomart Dobbie knew floating wasn't as complicated or onerous as people seem to make out.
Nevertheless although the placing was oversubscribed it was not hugely oversubscribed.
"It wasn't a walk in the park," says Dobbie, though he can now afford to smile with the company being one of the few to see its shares rise during the past year. "People talked about our company quite dismissively before and now when they see the size of the figures and the seriousness of the profits, the amount that is invested in technology, they look at us as a more serious company. If you take a longer-term view what we have built up is nearly now a worldwide footprint to do e-commerce."
One of its first acquisitions was www.cupid.com in the US which enabled it to get its hands on a substantial database in the US rather than spending money building one organically. "That principle applies in any of the countries we want to go in to," says Dobbie. "There is a trade-off between how much you are willing to spend and therefore wait to build up your own database or build up an initial database and get on with it."
The acquisition also allowed it to change its name to Cupid. "We did the English-speaking countries and that took us through 2010 and then we started expanding into foreignspeaking countries in the last part of 2010 and through this year."
He says one of the advantages of having a huge Ukrainian labour base is its ability to adapt to working in different countries. "I have been involved in other UK businesses where there has been reticence to expand overseas for all sorts of reasons. Clearly our Ukrainian people see the UK websites as foreign so there is no difference in the process of getting them going in France or Germany."
He says the Ukraine also provides more advantages than just lower costs. Most of its employees are based in Dnipropetrovsk and Zaporizhia which are probably the equivalent of Liverpool and Glasgow in the UK. "Dnipropetrovsk was the research centre for Soviet missile science; the parents of all the employees have been involved in that programme at some stage of their lives so they are very numerate. So we have a great pool of talent and ability there with virtually no staffturnover for the ones we want to keep.
A key part of the company's strategy is that it has a network of niche sites to cover a variety of customers. "We have people aged from 18 to 78 on our database," says Dobbie. "I don't think one brand or one service suits all of them so we are trying to bring out products that go across that spectrum."
Consequently its websites include www.maturedatinguk.com for older clients, Planetsappho.com for lesbians and www.datingforparents. com for single parents.
Another key strategy is it is willing to be number two or three in any of the markets it is in. "If you try to be number one you are almost fighting a losing battle against those large established brands," says Dobbie. "I have quite a healthy debate with analysts because they always come out with this usual MBA stuff- if you are not one or two you are not worth anything. That is wrong because if you looked at pubs in the UK there are some successful chains of pubs but there are some very successful private chains of pubs that do quite well and make quite a lot of money."
Dobbie has ambitions to double the size of the company. "We had the analysts over in Ukraine a few weeks ago and we showed them what we are doing now and what we are investigating and what the potential is outwith that. Clearly what we are doing now is sizeable, what we are investigating is sizeable and what is outside that is sizeable. If we could get 15 per cent of most of the markets we are in over a five year period that creates a pretty sizeable business."
Another challenge for Cupid is policing its sites. "We have 100 customer service people now," says Dobbie. "We approve all content within 24 to 48 hours so there is no nudity, ludity - you name it we have got to censor everything internally. We have a lot of technology and people watching out for what we call scammers on the internet. We are very vigilant and, as a plc, clearly aware of the ramifications of negative publicity around the industry."
In the meantime employee numbers are growing not just around the world but in Edinburgh. "Some people are moving over from the Ukraine at the moment," he says. "The Government's recent decision on highly skilled migrants was a bit of a blow but thankfully there is another scheme available as we are transferring more of the people to our central base here. In addition to the recruits there will be people transferring from other areas to the centre."
Over the past four years Dobbie has also been an angel investor in other businesses. His portfolio includes Dundee-based mobile phones games specialist Tag Games run by Paul Farley. He met the company at a Connect event in Scotland. "They said they were doing mobile games and I wasn't aware of many people that did and thought right let's see what we can do. I knew immediately they had a worldwide market which is still one of the huge attractions for that business for me. It is profitable now and it is growing."
He also has a stake in London based Voucherbag which owns www.comparemoredeals.com, an aggregator site for the daily deals websites such as Groupon.
Inevitably the father of four does not have a huge amount of spare time on his hands but he does have a hankering to climb even higher mountains than Mont Blanc one day. "I have a vague notion to keep trying going higher but we'll see," he says.