FOOL'S EYE VIEW
Five Years Of The Fool

By Bruce Jackson (TMFGoogly)
September 23, 2002

Happy birthday to us. Today marks our fifth anniversary. Like any five-year old, we're very proud and very excited to be celebrating our birthday. We're also very much looking forward to a long, rewarding and happy future.

As a co-founder of the Motley Fool here in the UK, I've been here from the very start. Along with David Berger, we first started this adventure from our living rooms, both whilst continuing to hold down full-time jobs. We were both keen followers of the US site, Fool.com, which had sprung to life in 1994. Our first articles were cobbled together in record time. If the Fool's Eye View was published before 8.30pm, we thought we were doing well. The fact that two men and a dog were probably reading it was irrelevant to us - we both loved writing, the challenge, and the fact that, through the Internet, our words could in theory be read by anyone in the world.

1997 - Fool UK goes live

I'll never forget the Motley Fool UK's first day - Tuesday September 23rd 1997. On that day, I snuck off at lunchtime from my day job to go to the AOL offices and switch on the "Fool live" button. David Berger's original superb '10 Steps To Investing Foolishly' made up almost all of the site's content. At about 9pm that first night, our first ever piece of dynamic content was published. Called the Evening Fool, it featured a story about a certain investor called Warren Buffett, and a story about a certain company called PizzaExpress (LSE: PIZ). To this day, both Buffett and PizzaExpress still feature heavily in our writings, although over the past five years, the former has certainly done a little better than the latter.

The discussion boards were always going to be a big part of the site, and a big part of the 'stickyness' of the Motley Fool. But, I don't think I ever thought they'd be as BIG as they've turned out to be. In fact, the boards started out as being BIG from day one. On that day, whilst I was being an accountant in the day job, quite a few people had already discovered our discussion boards on AOL. By the time I got home that evening, the boards already had over a hundred posts and my email box was overflowing. My life was never going to be the same again!

Today our discussion boards receive over two thousand individual posts per day. The community we've built up is one of the most popular and most respected on the web. Over the years, our boards have won us numerous awards, and have frequently been featured in the press. We are very proud of them, and thankful to the thousands of people who read and post on them every day.

1998 - The year of the bestseller

Our first year was a blur. We were doing something new and exciting, and enjoying every minute of it. Our growth rate was phenomenal. And all this from our respective front rooms. But, that was nothing compared to what was about to hit us. In October 1998, we published our first UK book. Called The Motley Fool UK Investment Guide, it received much publicity and much critical acclaim. David Berger's classic book has gone on to sell over 200,000 copies, and this year we will be publishing a third update. For a book about money, finance and the stock market, those sorts of numbers were previously unheard of.

The success of the book translated to success for the web site. More staff were recruited, some to write and edit our content, some to sell advertising space, some to serve our users, some to police and populate our discussion boards, some to cut deals with other content sites, some to develop products, some to design the web site, some to develop the web site, some to count the money in and count the money out, some to market and promote the site, some to look after our people, and some to answer the phone. If that wasn't enough growth to manage, we also had some to start and develop our German site.

1999 - Dot com fever

More books were to follow, most of them hitting the top seller lists at Amazon. Yours truly even co-authored what will be my first and last ever book. Page impressions and unique visitors to the site were growing at double digit percentage rates per month. Our business plans budgeted for yet more staff, and yet more marketing money, and yet more office space, and yet more computer equipment as the site and the company continued to grow at these gang buster rates.

By this stage, although we probably didn't realise it at the time, we were well and truly in the dot com bubble era. Venture capital money was slopping around us, and we were busy using it to recruit staff and to continue the great Internet land grab. In those heady days, companies were valued on a multiple of their registered users, and the more registered users you had the higher your company's valuation. Profitability was always "two to three years out" but was never the short-term focus of Internet companies. Although I'd like to think we were never profligate in our spending -- we never embarked on any TV or radio marketing campaigns -- we were certainly spending more money than we were making. But at the time, that was all ok!

2000 - The bubble bursts

In early 2000, one of our competitors, Interactive Investor International, floated on the London Stock Exchange. At their peak, on February 18th 2000, they were valued at just short of £700m. In theory, that made the Motley Fool UK worth quite a few hundred million, and on paper, in theory, meant we had some quite wealthy employees working for the company.

I'd like to think that none of us made these apparent riches go to our heads. There were certainly no discussions of Ferraris, Dom Perignon, French villas or first class air travel. While the world around us was going crazy, we remained focussed on growing the business as fast as we could, and managing that growth as well as we could. Of course, we now know that Interactive Investor's share price peak was virtually the peak of the market. The dot com bubble was about to burst, and burst big time.

All of a sudden, as the venture capital money dried up, profits were the name of the game. To get to profitability, you first had to preserve your cash pile. There were two ways of doing that. First was to increase revenues to a level which they covered costs. For most companies, with their bloated costs bases, that was impossible to achieve in the time before their cash pile ran out. The second was to cut costs to a level where they covered revenues, a much more realistic option for most companies, ourselves included, but a much more painful option, since salaries were the biggest cost.

2001 - A year of pain

Cutting staff at the Motley Fool UK was the most painful thing I've done. Saying good-bye to great people, great workers and great friends when they'd worked very hard for the company and done nothing wrong, was very difficult, and very unfair. Our German site was also closed. But it had to be done - in the business world, the company has to be bigger than any one individual.

Despite cutting our staffing levels by two-thirds in the space of three months, there was still no guarantee of survival, let alone profit. We had to take some very harsh decisions, like decimating the customer service and community teams, cutting back on writers and editors as we reduced our daily content levels, reducing our marketing and public relations spend to zero, and taking a conscious decision not to make any significant short-term enhancements to the website.

All these actions cut our cost base, that's for sure, but the thing we weren't sure about was what effect our reduced service level would have on our revenue levels. Our survival was far from assured, let alone profitability.

That was October 2001, just under a year ago. It was the low point for me, for the company, for the staff who'd been forced to leave us, and for the staff who were staying on with us. Back when this adventure all began, on September 23rd 1997, it just wasn't supposed to turn out like this!

As a co-founder and one of the management team, I also had to face up to the fact that I was partly responsible for the state of affairs we now found ourselves in. Yet I still had a job. In fact I'd been promoted to Managing Director of Motley Fool UK! Work that one out. Corporate life can be very unfair.

From that low point, the remaining Motley Fool UK staff knuckled down to business. It would have been very easy for them to start looking for new jobs, to start jumping the sinking ship. But, to their credit, they stuck it out. They worked even longer hours as they attempted to maintain a service level similar to that which they'd been providing with many more staff.

To our collective relieves, the staffing changes we'd made had very little impact on the number of people visiting our site, the number of people posting on our discussion boards, and the number of companies advertising on the site. In fact, revenues began to rise as we became a commercially focused company, and more and more advertisers realised the Internet and the Motley Fool site could offer them cost-effective and measurable marketing solutions.

2002 - The Fool of today

Today I'm proud to say that the Motley Fool UK is a consistently and sustainably profitable entity. Since the low point of October 2001, we've gone from strength to strength. Although we've survived to date, we don't take survival as a given. That's not because we don't think we'll survive, but because I happen to think that companies should live in permanent survival mode, no matter how big they are, no matter how much money they've got in the bank. Andy Grove, ex-boss of Intel, once famously said "Only the paranoid survive." Bruce Jackson, co-founder and Managing Director of Motley Fool UK, now says "Operate like you're in permanent survival mode".

Survival mode however doesn't mean you're without ambition, and without growth prospects. The Motley Fool UK has built a very strong brand over the past five years, and a very loyal customer and user base. But there are many more people out there who've not yet heard of us. We believe that virtually every single person in the UK is a potential user and customer of our service. Inertia is such a powerful force in the financial services industry, and IT'S COSTING THE UK PUBLIC MILLIONS OF POUNDS. Our longer term aim is for our message to reach each and every person in this country.

We continue to innovate, testing new products, new areas, new site designs, new partnerships, upgrades of the discussion board software and new books, amongst other things. For example, responding to what we see as a perceived need, we have recently partnered with BT click&buy to launch a new piece of premium content called "A Share To Make You Money." In October we will be publishing our 10th UK book, called A Girl's Best Friend Is Her Money. We've many more initiatives planned for the coming months and years.

The mission of the Motley Fool is to tell people the truth about finance, helping them take control and make better financial decisions. Over the past five years we hope we've gone at least some of the way to fulfilling that mission. But, we could never have done it without YOU, our valued readers. We thank you for your loyalty, and your custom, and look forward to a continued long and mutually beneficial future.

Finally, thanks to the Motley Fool employees. They are the most passionate, loyal and hard working group of people I've ever had the privilege to work with. Together, we'll be working hard to bring you another five, ten, twenty and more years of Foolishness.

The author owns shares in PizzaExpress. They haven't performed too well over the past 5 years. Oops.