Former Emoov chief executive Russell Quirk has made his first on-the-record comments about the factors behind the dramatic collapse of his online agency.
In the first of an exhaustive 11 video interviews with property consultant Christopher Watkins, Quirk gives an insight into the funding of the agency.
He says that he put some £70,000 of his own money into starting the agency “on a shoestring” in 2010, taking no salary and not securing any bank loans or other investment for two years prior to securing backing from former Dragons Den entrepreneur James Caan.
Around 2013 with additional investment and fundraising Emoov had some £500,000 which Quirk thought might be sufficient to build the business to an ultimate value of around £10m - but within three months of Emoov’s first major crowdfunding raise in 2014 Purplebricks was launched, which proved a game changer for the fledgling online sector.
“They [Purplebricks] raised £27m in their first year … They had everything tied up and pre-considered [when they launched]. They’d had three or four years to sit back and look at the entire sector. They watched us, they watched House Network, they watched Hatched … So even though they were third or fourth or fifth coming to the market, they had ‘first move advantage’” Quirk tells Watkins.
The former Emoov chief then explains that as years progressed, he felt obliged to gear his company for the next stage - a possible floatation on the stock market. So in addition to staff required to operate the agency at grass roots level, he recruited a series of senior management figures from successful large companies.
His company was “bleeding cash as a consequence” - at the extraordinary rate of £800,000 a month towards the end. As a consequence he said he and other senior figures in the company spent up top 75 per cent of their time fundraising, which was at the very least a distraction from running and growing the company.
In addition to senior management costs, substantial sums were spent on marketing and Quirk uses the interview to criticise the entire online sector for spending sums in this area which he says are unsustainable and, perhaps, “obscene”.
He says: “Marketing is ridiculous across the online sector” and contributes towards a widespread belief that all that counts are topline figures which encourage very high valuations irrespective of whether an online agency is profitable or whether its spending and fundraising can be sustained over time.
The remaining 10 videos are to be put online over the rest of January but you can see the first (and highly fascinating) part of the interview below.