Paul Kenny wants to build the first billion dollar internet company in the Middle East and North Africa. He’s off to a flying start with his e-commerce empire Cobone, a kind of Groupon-Amazon-Expedia mashup operating in three countries with over 1.7 million subscribers to date. He spoke at NUI Galway‘s Cairnes School of Business and Economics on Friday about his story: building a multi-million dollar e-commerce empire at the age of 25.
Before his talk, Paul told me that it was strange being at the front of the lecture theatre rather than at the back with all the rest of the students, where he would have sat just six years ago. After completing a BComm degree at NUI Galway and dropping out of the Masters in Electronic Commerce, 22-year old Paul jumped on a plane to Dubai in 2007 with his beloved golf clubs after being offered an internship with the Jumeirah hotels and resorts group.
After his internship, Paul was selected as one of seven out of a thousand entrants to be enrolled on a future leaders programme where he was given executive training. He stayed with Jumeirah in an online marketing role for over a year, but eventually fell out with his boss after failing to secure a pay rise to pay for some new car tyres (old tyres ruined on a desert trip), and then resigned. He got a marketing job with AMEinfo (and bought new tyres, sending a picture to his ex-boss), then after seven months he moved to the Emirates Group (Bigmouthmedia), and again left after just eight months.
So why all the jumping around, resulting in a patchy CV? Paul says he struggled with having a boss, with being limited and sitting in a controlled box where he had to watch decisions being executed much too slowly. A keen golfer, Paul Kenny thrived on competition, and realised that sitting somewhere in the corporate ladder was not for him. Growing up, Paul was surrounded by entrepreneurs from the famous Irish bookshop business that bears the family name, and would have been exposed to sales, marketing, IT and finance from a young age. But he was also motivated to be more than just one of the Kennys, to do something else.
While working in various marketing roles on search engine optimisation and marketing tasks, Paul realised that he was making a lot of money for people online, but not for himself. So in 2010, he founded Cobone (a play on the word ‘coupon’) in Dubai, to enable online group discount buying in a country that had virtually no e-commerce up until that point. It is now one of the biggest e-commerce sites in the Middle East and North Africa, second only to Emirates. Paul raised money from Tiger Global, from a Jordanian venture fund, and from two other European funds, noting that funds usually invest in the person and not the business. He also cited issues with the ‘ticket sizes’ for some other Middle East-based funds (paraphrasing: “the minimum amount of money I can give you is $100 million for most of the equity in your company”).
Paul Kenny had never raised money in his life and had never really managed people, but he wrote a business plan that in the first year Cobone would hire 16 people and have one office. Instead, the company hired 80 and had three offices in that first year, despite the substantial time required to get a trade license, office, bank account and payment gateway: as Paul says, “doing business in the Middle East was incredibly tough”. Amazingly, Cobone could not accept credit card payments from the majority of its subscribers, who did not actually possess credit cards. Their solution: this “e-commerce” company sent couriers on motorbikes to subscribers to exchange coupons for hard cash.
The growth of Cobone has been phenomenal: 30% month-on-month growth in its first year of business and 100% year-on-year growth in year two. 80,000 pizzas were sold in Dubai over a three-month period in 2012; 5,000 iPhones were sold over Christmas; $1 million were spent in the first month after the electronics category was launched; and 100,000 fashion items were purchased in the last week of December 2012. The company employs 115 people from 26 nationalities, with an average age of 27. But it nearly all fell apart in year two: Paul claims the foundations were not strong enough and things slowed up. He has learned from this mistake, amongst others he pointed out the following:
- Keeping your ideas a secret: You probably have tons of ideas, but maybe you feel it’s best to keep them to yourself. Paul wishes that he had spoken to more people as a student. There are loads of people you can tap into in college – business leaders, fellow students, lecturers – and when you share your idea, it becomes more real such that you can learn more about it and can evolve it. If you can put yourself in enough situations and meet as many people as you can, then something is probably going to hit. It’s hard work, but you can create your own luck or serendipity, by meeting as many future partners, advisors or employers as you can.
- Growing fast without a strong foundation: You can build a house very quickly, but if the foundation isn’t strong enough, it’ll fall apart. The same for business: make sure you are ready for that second year.
- Not running fast enough: You have got to keep “running faster” than the person next to you. Paul says that Michael Bloomberg once told him that “you have to work harder than the fupper next to you”, or you’re gone. It’s better to take three steps forward, even if they are wrong, than to take none at all.
- Thinking it’s easy to raise money: Maybe it is easier for some to raise money than others, but if you do manage to get funding and have an ambitious business plan that says you will make revenue in six short months, you’re probably going to get a shock if you don’t. Make the money you get last, understand what you are negotiating on, and don’t give away too much equity early on. You can get cash again, but equity never returns, and you’ll regret it especially if you make it big.
- Going it alone: Paul was an avid golf player, where mentoring is essential. The learning from golf is that you need an advisory board for your business, made up of experienced individuals who can give advice on how they did it. Paul says he left it way too late for Cobone, but he is taking his own advice and has recently joined the board of the Galway Advertiser newspaper group.
Apart from correcting his mistakes, Paul says the experience of creating Cobone has resulted in loads of learning for him that he wanted to share:
- Never, ever, ever, believe your own PR: Don’t believe what the media says, it’s all “not real”. If you start believing the hype, your competition will “bite you on your ass”.
- Surround yourself with awesome people: This is a recurring theme in the tech sector, and Paul confirms that it’s very important to hire people who are better/more educated/smarter/know more than yourself.
- The price is not right: Never accept the price that someone gives you first, as it is just not true. If you want something, keep bothering someone for what you want until that someone says yes. They probably will eventually.
- The business plan, written by your customers: The business plan is of course important, but it will change. Paul said he had 17 versions of his business plan in the first year of trading. It’s also really important to evolve this plan based on what your customers are telling you, so flexibility and a gut feeling for going with what they are telling you is essential.
So what’s next for Cobone? According to Paul, it’s “definitely travel”, and they have already sent 100,000 people away on holidays. I asked him why travel, and he explained that its a multi-billion dollar business in the Middle East, where travellers spend a lot more on trips than their counterparts from the West. Cobone, although currently not profitable, will soon turn the corner and become profitable in the next three months. He also cited recent media hype about Cobone, but confirmed that there would be some exciting news in the next month about what’s going to happen with the company.
And as for things he didn’t expect, Paul Kenny says that the business has completely taken over his life. Working all the time means there is no work-life balance. It’s not for everyone, but Paul loves it: he now has 115 “children” who bitch, moan, fight, and cry, but they are together creating an empire that is changing the way people buy things in the Middle East. As a perceived master of all trades (accountant plus HR director plus financial analysis person plus a myriad of other roles) who should know everything about everything, Paul Kenny claims that he in fact knows very little, but he has that super smart support team.
Paul is content to be based outside of Ireland, and doesn’t feel the time is right for him to set up here. But he wouldn’t discourage others from trying to make it in their home country, especially if they can avoid corporate offices and set up their own companies. The key here is to look outside Ireland – perhaps by travelling and going outside one’s comfort zone – and then coming back. The market in Ireland is small, so people must look at the world as their market and build products for the world, not just for Ireland.
“Impossible” is a word that Paul hates seeing in the Irish media. He prefers “I’m possible”. With the right attitude – like Paul’s – you can do anything.