UCL Entrepreneurship Guest Lecture: The Lovefilm Story
By news editor, on 24 January 2012
UCL Classics student Carolina Mostert summarises the talk below.
Simon Calver has an interesting story and CV for an entrepreneur. Since he was a child, the atmosphere around him was ‘entrepreneurial’, as his family owned a supermarket chain.
At university, he studied Computer Science and worked as a consultant for Deloitte. During his employment at Pepsi, he launched Pepsi Max and was Head of Sales in New York. Later on, he worked for Dell and for Riverdeep.
Having been part of various corporations, Simon decided he wanted to become an entrepreneur. He thus joined Video Island, and later became CEO of what was Lovefilm’s main competition. All the lessons gathered from his previous experience turned out to be the key to success in setting up Lovefilm. Amongst them, “to never underestimate what’s important for the customer” is probably the one Simon holds dearest.
Lovefilm had three founding principles: range, value and convenience. Against them, “everything we did got screened”. The growth of the company was immediate and Lovefilm’s DVD rental system soon reached about 75 million households and two million subscribers.
After launching its services on Xbox, Lovefilm moved from ‘physical’ to digital, but still kept its three customer core values at the business’s heart.
Keeping up with new formats, such as Blu Ray, helps the company’s growth, Simon says. The next goal is to get Lovefilm connected to as many technological devices as possible. One of the ways to increase Lovefilm’s popularity is through customer experience: “word of mouth is our secret sauce”.
Year after year, Lovefilm grew bigger and bigger. In 2004, three venture capitalists invested in Video Island along with Simon. Simon strongly believes that at the beginning, a start-up’s success depends on the amount of cash available. “How much you have and burn per month is the key for start-ups” he claims.
2005 presented the company with an unexpected hurdle: the distribution centre burnt to the ground. Within 24 hours, a mini-version of the centre was reconstructed in a mini-room with the whole team working on shifts for a fast recovery. Simon remembers this disaster as “a huge success that pulled the team together”.
In 2006, a giant step was taken: Simon went to America and merged Lovefilm with Video Island. It was a revolutionary union, not only because the two businesses were different and competing with each other, but also because of the cultural challenge this involved.
2007 saw the opportunity of building the brand in the market, and Lovefilm began to invest in TV campaigns. One year later, discussions with competitors and other companies started.
Dealing with Amazon led to Lovefilm’s acquisition of all Amazon’s customers, who automatically became Lovefilm’s as well. During the economic crisis, “we chopped off what didn’t work and reinvested” and Lovefilm, as a whole, continued to grow.
Simon Calver concluded by describing Lovefilm as “the most fun and hardest work” he has been confronted with. It gets him up in the morning and shows him the bright side of many aspects of entrepreneurship. Changes are opportunities; competitors boost creativity.