The low profile founders of one of the dotcom era’s greatest successes give us a rare interview
If you draw up a roster of London’s tech titans, you’d be forgiven for missing out Michael Pennington and Simon Crookall.
Founders of Gumtree.com, the UK’s largest classifieds website, the duo rarely speak to the media, don’t like having their photos published (they’ve refused on this occasion too), and don’t enjoy celebrity status like many of their dotcom peers.
Pennington, 44, and Crookall, 45, have made some big deals in their life but make no big deal about it – no photo shoots, no TV appearances and no advising the government for them.
They rarely give interviews.
Yet both are more than qualified. In 2000 they set up Gumtree.com, selling it to eBay in 2005 for an undisclosed figure.
Then, in the same year, they launched Slando.com, another classifieds website for Russia and Eastern Europe in which eBay took a 20 per cent stake. In 2011, both sold their shares in Slando to Naspers, South Africa’s biggest media group.
The duo could have easily been the face of the UK’s dotcom boom, so why did they choose to keep a low profile?
And why sell off Gumtree when it was still growing so strongly? A Google search brings up little on the founders. So, I put it to them: “How did Gumtree.com happen?”
How Gumtree.com bore fruit
Pennington explains: “Simon and I worked for Hambros bank [a private banking division of Société Générale]in the early nineties and work took us abroad a lot. We were very fortunate to be sent to Hong Kong and Australia – you get paid a nice amount of money, and of course to your friends it appears quite glamorous.
“The reality is that although it is quite privileged, it can be a very lonely experience – you miss your social network.”
Pennington and Crookall’s experience of looking for a new flat, a mobile phone and even friends in a new city formed the trunk of Gumtree.com. And this being the late nineties, with the internet growing at an unprecedented rate, they saw an opportunity and set up a site that would connect people with similar needs.
So on a night out, over a couple of drinks, Pennington and Crookall decided to launch the website for the one million Australians, New Zealanders and South Africans based in the UK at that time (although they are British themselves). They quit their jobs to start the company, funding it entirely with their own money, and Gumtree.com went live in March 2000.
“I think the website had only eight different buttons. There was literally one for flatshare, one for rentals and one for sale – it started off in a very simple way. We didn’t really know which categories would be successful but I guess you just learn from your users what they want and that’s how it grew,” recalls Crookall.
But what does a gum tree have to do with flatshare and other adverts? Isn’t that a bizarre choice of name for a website?
“Yes it is,” chuckles Pennington. “We were looking to target Aussies, Kiwis and South-Africans and we wanted to find a term that could connect those three communities. We did a lot of brainstorming and there is very little that links those three.
“Gumtree is a word they use locally in Australia for the eucalyptus tree which also appears in New Zealand, even though it’s not indigenous there. And in South Africa, there is a totally different kind of tree also called a gum tree.
“We had that connection, and because a tree and a community have roots and branches, we thought it gave lovely imagery for the community.” They then visited internet cafes and asked their target audience to vote on different names. Gumtree won.
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From two-person start-up to eBay acquisition
Being on a shoestring budget and with no venture capitalists bankrolling the project, the pair tried various permutations and combinations to drive traffic to the website.
“In the early 2000s, most people accessed the internet from work and not from home, so getting them first thing in the morning with an advert in the Metro proved quite successful for us.
“We’d always have a spike in the traffic on the website around lunchtime. We tried advertising in the London Evening Standard as well, but it didn’t work that well because not many people had internet access at home,” explains Crookall.
They also distributed flyers around the capital, posted ads on the back of pub toilets, and didn’t shy away from embarrassing gimmicks either.
“I remember, actually, one day being outside Putney Bridge Tube station wearing a billboard with Gumtree adverts on the front and the back. I was also wearing a stupid hat with horns and I was handing out flyers. I remember someone I was in school with walked through and I sort of saw him looking at me thinking ‘Is that him?’ I was looking like a complete idiot,” explains Pennington with a giggle.
By 2003, the roots of Gumtree.com had outgrown the Aussie, Kiwi and South-African community. From an ad selling footballer Christiano Ronaldo’s house to one announcing the loss of a half-empty Walkers crisp packet, Londoners were logging on to post ads in their droves.
Soon it was time to monetize the website. The pair decided to start charging employers to place job adverts on the site, but kept the site free for other people to post ads.
By 2005, Gumtree.com had become a roaring success. With just 12 employees now in the London office, the website had spread to 31 cities around the world including Edinburgh, Adelaide, Durban and Paris, and was profitable.
So why sell it to eBay?
“When someone comes along with a large cheque, it has various attractions,” says Pennington. “eBay approached us at the end of 2004. We weren’t looking to sell or talk to anyone. Our initial proposition was that we were happy to sell them 25 per cent of the business – but that changed, and we decided to sell off the whole business.”
Crookall says: “In 2005, the online classifieds field wasn’t proven a good business model. So, we were still shooting a little bit in the dark. We obviously knew it was generating a fair amount of cash but after rounds of negotiations we decided that it was more worthwhile to finally part ways with what we’d created.”
Pennington and Crookall won’t divulge the amount they sold Gumtree for. Today, the website has 13.7 million users every month and over 100 million adverts have been posted on the site.
So, didn’t Pennington and Crookall ever regret selling Gumtree.com?
No, they didn’t. They didn’t have time to. Just a month after selling off the website, they launched Slando.com for Russia and Central Eastern Europe.
The Slando story
“It was during the negotiation on the sale of Gumtree that we started discussing terri
tories where similar business models might work. We sat down with eBay and looked at Russia and its surrounding countries like Ukraine – because even giants like eBay can’t be everywhere at the same time.
So, they put some money up and we put some money up and got the project off the ground,” explains Crookall.
Much like Gumtree, Slando’s revenue model was based on advertisers paying more to make their adverts more visible than the others.
The pair almost made the ultimate faux pas by naming the website Kalava. A very similar word in Russian means “slut”. They settled for Slando in the end.
Speak to them about working in Russia and they have no mafia stories to tell, but the bureaucracy in the country drove them up the wall. “Doing business in Russia is frustrating. To move money from one party to another, or to pay an invoice is extremely complicated.
“In the UK, if we buy a service from you, you will give us an invoice and we’ll pay you the money. In Russia you have to provide four to five different documents to get the business done,” says Pennington.
“Russia is still largely a paper economy, you have to do a lot of faxing and couriering and no PDFs are acceptable, they are very much paper and ink,” adds Crookall.
With just under 30 employees, the pair were running the Slando show quite successfully from right here in London.
Then they decided to sell their shares to Naspers, South Africa’s biggest media group. “We had reached a stage in the business where perhaps for the growth of the business it needed to be based closer to its customers,” explains Crookall. “So, we got it into talks with Naspers, they had a big presence in Russia and Ukraine already.”
In true entrepreneurial style, the pair seem to be addicted to the thrills and spills of starting up business and building it quickly, rather than the later stages of managing slower, steadier growth once the business has matured. Pennington agrees: “To me, it’s more thrilling to start the business from nothing, and going to the internet café to get a name and going through that whole process, than necessarily running a young-adult of a business.”
So what’s next for the Gumtree founders?
“I personally have been watching with interest some of the struggling businesses in the UK going into administration – one option is to buy one of those and try to turn them around,” says Pennington. “But I have no definite plans at this stage.”
Crookall says: “We might or might not start another business in partnership, we don’t have many ideas as of now. But classifieds or no classifieds, I’m sure both of us will venture into a business that we feel passionately about.”
With two successful dotcom deals under their belt, one would imagine that the Gumtree/Slando founders must have indulged in a lot of extravagances.
Which flashy car do they drive and how many houses do they own?
“We’d have to disappoint you on that one Shruti,” says Pennington. “I have a red scooter.”
“And I’ve never owned a car in London,” giggles Crookall.