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Building a disruptive business

In Digital, Inspiration - 3 years ago - 5 min

Building a disruptive business

Serial entrepreneur Mark Livingstone loves building companies, loves disruption, but hates instructions.

Mark Livingstone, co-founder of LoveFilm, is a frustrated engineer who has successfully rebuilt three 1950s Austin-Healeys. With his son Alex, now 19, Mark has also built a superfast Caterham car.

“I am someone who doesn’t read the instructions on anything. I get on and try and do it, and I learn by taking things apart and putting them back together,” says the former Woolworths trainee manager.

As well as LoveFilm, sold to Amazon for £200 million, he has been involved with a raft of disruptive internet companies, covering everything from pet food and parcels to cinemas and online healthcare.

There are clear echoes of Mark’s approach to cars in his professional career as investor, non-executive director and chief executive.

“I am far more a builder than a creator of companies. I really enjoy taking a business that has been half built, or maybe built in the wrong way, and then re-engineering it and rebuilding it to make it successful” he explains.

His latest challenge as the Chief Executive of ChemistDirect, the online healthcare company, reflects what he means. ChemistDirect was an exciting prospect in an expanding market but was close to being “unsustainable” without further investment.

Mark went back to basics when he took over in February 2015, cutting the range of items to those that could be sold profitably and greatly reducing monthly expenditure. It has seen him take the business to “break-even and above”.

He adds: “We have turned the profitability of the business round and I am very pleased with that”.

Skipping university

The entrepreneur went straight out to work after finishing his A-levels – although he later completed an MBA – because he had a taste for earning money and a passion for work.

By the age of 26 he was responsible for an annual £650 million budget, buying all Woolworths’ entertainment products. After Woolworths he set up his own software publishing company, Telstar Electronic Studios, developing games for Sega and Nintendo consoles, before becoming Worldwide Managing Director of LEGO Interactive.

And then came LoveFilm.

“In my early career I was really content working in larger organisations but by my mid-30s I was a lot more convinced that I wanted to do my own thing,” Mark explains.

He had noticed the rise of Netflix in the US and saw the opportunity of being a first mover in Europe with a successful American business model.

“I think the expression is plagiarise with pride,” admits Mark, who believes that scale was vital, a principle he applies to all his businesses.

Ten takeovers later, LoveFilm emerged at the top by offering the convenience that the once-mighty Blockbuster, now in Chapter 11, couldn’t match.

Another lesson learned at LoveFilm was the need to pause for breath and to sometimes limit growth until the formula is right, rather than seeing more rapid developers run out of cash.

It’s like the hare and the tortoise. We ended up winning convincingly when we had a sustainable business model.

Investing in Graze

Next was Graze, a subscription health food home delivery service founded by former LoveFilm colleague Graham Bosher.

Mark invested in Graze, which is also backed by venture group Carlyle. It claims to be the largest and fastest-growing healthy snacks subscription business in the world, mimicking the distribution methods of LoveFilm.

“I have every belief that it will go on to become a multi-billion dollar brand,” predicts Mark, who usually backs a person before an idea particularly if, as with Graze, the idea involves a leap of faith in a new sector.

The interconnections continue. After Graze, Balderton Capital, an investor in LoveFilm, asked him to look at one of its problem companies – Touch Local, the online business directory.

Mark acquired Scoot, merged the two companies and sold the enlarged Scoot business to Web.com of the US for what was an undisclosed sum but represented a healthy exit.

The businessman attributes his success to his ability to be able to work with people who are smarter than he is and brilliant at what they do.

“I certainly like leading from the front but I’m very happy to share all the glory, and even more happy to share all the frustrations and the downside,” he says.

The Internet revolution

Mark counts himself lucky to be in the prime of his career during what he believes is the next industrial revolution – the Internet revolution.

“For a commercial person, the Internet is just so liberating and we haven’t seen the start of it,” Mark insists.

The Internet, he believes, will enable new players to continue to rise, while established large companies will have trouble responding to online disrupters.

Increased flexibility, speed of movement and improved levels of convenience and service flowing from the Internet will threaten the established order.

Backing his beliefs with money, Mark has invested in several online disrupters including pet food company Tails and Parcel2Go, the UK’s largest parcel delivery comparison site.

Is he still looking for new prospects? “I’m always open to new ideas but not actively looking for them,” Mark explains.

With all his online experience, if asked, would he consider helping traditional bricks and mortar companies to make the transition to the Internet?

The first thing he would want to know is whether the company was in denial about the challenge it faced or was genuinely open to change.

“If you’re in denial then I think it’s not something that I could help you with. If you are accepting of the need for radical change then maybe I could help,” says Mark, the successful serial Internet investor and manager.

This is an edited version of an article which first appeared on Strategies for growth.

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