Archive for the ‘Irish Times’ Category


Friday, May 12th, 2000

This time next year Jeremy Glover will be one of the richest men in Northern Ireland. By then, the internet entrepreneur and his two partners, Darryl Collins and Tony Bowden, will have floated their online video retailing company.

Taking BlackStar public will raise more than £250 million and net each of them a large fortune.

These are uncharted waters not just for BlackStar – Europe’s leading online video retailer – but for Northern Ireland business generally. Their story shows that we can produce industry-leading companies; that Northern Ireland businesses can survive and thrive in the new e-economy.

It could, however, have been very different had the trio allowed themselves to be beaten by the “negative and sceptical” attitude their plans initially received.

Jeremy explains: “In everything we have done, we’ve adopted a pretty ballsy approach. It’s been that kind of attitude that has kept us going, because there were a few times here when people didn’t believe in us, when we encountered total sceptisism. “They were asking us questions like what are you going to do if the internet collapses? Why would anyone want to be involved with three guys from Belfast?”

Jeremy, a former creative director with McCann-Erickson in Belfast and now marketing director of BlackStar, admits he found the experience very frustrating but says they never contemplated giving up. “At one point I returned from London having had two really good meetings with EMAP and the Times. They were really excited about what we were doing. “I came back really buzzing and I walked into this office in Belfast and these guys behind the desk were saying we were a load of rubbish, we were from Northern Ireland, how could we possibly take on the rest of the UK? “We had to overcome that kind of inward-looking negativity but when people did eventually get it, the support was there.”

As it turns out, the business has proved even more successful than they anticipated. Most readers probably won’t have heard of BlackStar. There are, though, people in more than 134 countries around the world who have. They are among the tens of thousands of customers who regularly buy online from the company. The reason they do, is because they can choose from more than 50,000 titles, have them delivered direct to their door and, more often than not, pay less for them than they would in the High Street.

It’s not exactly rocket science but where Jeremy and his two business partners succeeded, is seeing and acting on that opportunity quicker than anyone else. “We knew the internet was a way of making money, we just weren’t sure how,” says Jeremy. They plumped for video sales after initially toying with other ideas such as a loyalty site based on Green Shield stamps and a wedding site. “We were watching what was happening in the United States and noticed that videos weren’t being shipped outside because our PAL format differed from theirs. With books and CDs there was a standard, but with video there was zero penetration over here.” There was as Jeremy says a “window of opportunity” which they exploited very quickly. Selling videos online was also a way for all three to indulge in their passion for movies. “We knew instinctively that we were onto something, that we were ahead of the game,” says Jeremy.

BlackStar began trading in March 1998. In that first month it turned over just £2,000, packing videos from the top of a table tennis table. This year revenues will top £15 million. That is expected to quadruple next year and double the year after that. The company expects to make its first profit in 2002. It employs around a hundred people in Belfast – two-thirds at its Alfred Street HQ with the rest at a distribution warehouse on the Ravenhill Road.

Jeremy says: “We are growing, the internet is growing, and the market is growing. “Penetration in Europe for VCR households is only 70 per cent compared to 95 per cent in the States. All the indicators are that we are in a very healthy, growing market and we are riding that wave. The trick is stay ahead of the wave and not fall into the water.” Jeremy admits they got off to a headstart but that larger rivals like Amazon are beginning to catch up. But, he’s convinced BlackStar can survive and compete when the others get their act together. “We will be one of the survivors in this game,” he says bullishly.

Jeremy and his partners had planned to go to the market later this year, possibly in September, but the recent rollercoaster ride in technology stocks, especially dotcoms, has forced them to reconsider the timing. “We were looking to float at about £250 million to £300 million prior to the whole market going crazy. I would say that we still have a chance to get away with that valuation, if not in September then very early in 2001.” In the meantime work is continuing on expanding the business. Jeremy explains: “We set out a whole string of things we wanted to do this year with the money that we would raise from the flotation. It looks like we are actually going to achieve 60-70 per cent of those on a fraction of the cost.” This includes rolling the business out into Germany, Italy, France and Spain as well as acquiring several companies that will support its business in the UK. “When we go back to the investment bankers in two months time they are looking at a much stronger proposition,” says Jeremy.

When the company does float, Jeremy (38) and his partners will become multi-millionaires overnight. The £250 million to £300 million flotation price being bandied around is based on BlackStar remaining a major player in online video and DVD sales which, in two to three years time, is expected to account for 30 per cent of all such sales. Globally, the market is currently worth around £30 billion. Jeremy says: “There was a time when Darryl, Tony and I did think about that. But I can tell you we went through a reality check when the markets collapsed and our paper wealth, which was potentially £45 million, went down to £10 million. Then, you thought, oh my God I’ve lost 30 million! “I liken it to a conversation I had with a friend who was offered a significant amount of money for a pub he ran. He said ‘Jeremy, why would I do it? I am having a ball’. “It’s hard work but it’s a new industry. We are leading our field; we can rewrite some of the rules. Why would we want to walk away from that?”

It’s their passion for the business and the product they are selling that marks them out. Jeremy and his fellow directors are as determined now as they were two years ago when they took on the sceptics. Only fools would bet against them twice.

Allure of Emerald Isle

Friday, August 20th, 1999

Ryanair chairman, David Bonderman, seems well and truly enamoured with the island of Ireland as a location to invest.

This week, Mr Bonderman and two of the founding partners of his investment vehicle, Texas Pacific Group, joined with the US venture capital group, Atlas, to take a $6 million (€5.8 million/ £4.6 million) equity stake in the Belfast-based Internet video company.

Together TPG and Atlas have taken a 33 per cent holding in the Northern Ireland company which is toying with the idea of floating either on the London market or Nasdaq in the next year to 18 months.

The bulk of TPG’s investments are in the airline sector with substantial holds in the US Continental and America West airlines. In the Republic, TPG is a shareholder in Ryanair and is the biggest shareholder in the Irish aviation group AerFi. TPG also has investments in a range of companies in the entertainment and e-commerce sectors with shareholdings in groups such as Virgin Entertainment.

Mr Bonderman’s introduction to BlackStar was undoubtedly through his Ryanair boardroom colleague, James Osborne, who is chairman of the Belfast-based group. His involvement is a boost for BlackStar which is rapidly becoming one of the biggest Internet retailers of videos and digital video disks in Britain.

Bonderman Part Of £3.8m Funding Package For BlackStar

Thursday, August 19th, 1999

The Belfast-based internet video retailer, BlackStar, has secured a $6 million (£3.8 million sterling) investment from the US investment group Atlas Venture and a consortium of investors lead by Ryanair chairman, Mr David Bonderman.

BlackStar, which sells videos and digital video discs (DVDs) over the internet to customers in 95 countries, plans to use the funds to invest in further infrastructure and marketing initiatives.

The company is also considering going public over the next 12 to 18 months and may seek a listing on the London Stock Exchange or NASDAQ.

One of the three founders, Mr Daryl Collins, said the company is growing at a rapid rate and is well positioned to benefit from the huge growth in online video purchases. It currently employs 36 people in Belfast and expects to employ a further 75 within the next six months.

Atlas Venture and Mr Bonderman’s consortium have acquired about a third of BlackStar’s total shareholding through its investment. Atlas Venture is a technology and e-commerce venture capital firm which has invested in companies such as Confetti, Moreover and EGroups. Announcing the investment yesterday, Mr Vic Morris of Atlas Venture said BlackStar was one of the very few Internet start-ups in the US or Europe that is generating real income. ‘Its balance sheet looks more like that of a traditional retailer than an Internet startup.’

Mr Bonderman is joined by two of the founding partners of his investment vehicle Texas Pacific Group (TPG), Mr James Coulter and Mr William Price. TPG, which has substantial investments in Ryanair and the former GPA which now trades as Aerfi, also holds investments in Virgin Entertainment.

Mr Bonderman’s board room colleague at Ryanair, Mr James Osborne, is chairman of BlackStar. Following the investment Atlas has appointed Mr Morris to join its board as a non-executive director while TPG has appointed Mr Dipanjan Deb as its representative on the board also as a non-executive director. BlackStar was founded last year by Mr Collins and fellow directors, Mr Tony Bowden and Mr Jeremy Glover. The three directors own around 66 per cent of the company.

BlackStar offers more than 50,000 videos and DVDs at its online store selling to customers all over the world. The market in the UK is currently estimated to be worth around £1 billion sterling annually with growth in western Europe predicted to rise to more than £11 billion sterling by 2004. ‘BlackStar has captured a clear lead in the UK market in 18 months, selling videos and DVDs over the Internet. The new finance recognises the success of our business model, brings heavyweight investors to our board and positions us for aggressive growth,’ Mr Collins said.

Online Video Store Fast Forwards

Friday, April 16th, 1999

A Belfast-based online service offers a selection of 50,000 videos posted free to anywhere in the world.

Imagine having a video shop nearby with 50,000 titles in stock. It’ll track down the videos you want to buy and deliver them direct to your home at no extra charge.

That, more or less, is the service on offer from an upstart and fast-growing online video store in Belfast ( Except, of course, its marketplace is not the greater Belfast area, but ranges far afield from its street address at the Ravenhill Road, taking in Australia, America, New Zealand, Asia, Africa, all of Europe and just about anywhere else between.

Black Star video, which launched in March 1998 bills itself as “the UK’s biggest video store” and claims to have customers in 76 countries and a British customer base of 20,000 registered users. This accounts for about half its total customer base. Another 18 per cent or so are in North America, 25 per cent in Europe and 10 per cent elsewhere. With the average high-street video shop carrying 2,000 to 3,000 titles, it’s not hard to see where online video retailers find an audience. Add free postage to anywhere in the world – a feature few online video stores offer – and Black Star becomes a very attractive source for videos indeed, says co-founder Mr Jeremy Glover, one of the firm’s three co-founders who serves as marketing and publicity contact.

On the other hand, the Black Star website lists Mr Glover’s job title as “creator”, while co-founders Tony Bowden and Darryl Collins go, respectively, by “destroyer” and “preserver”.

It may sound a bit like Zen and the Art of Video Selling but actually, the quirkiness is part of what sets Black Star apart from online conglomerates like Virgin. com. For example, all 20 employees get a Web page on which they can give their own mini-biography and each then lists his or her 10 favourite films (Mr Glover’s include LA Confidential, Pulp Fiction, Diva, Hear My Song and The Graduate). Mr Bowden eschews any personal information for a snippet of anonymous verse.

“We put that human touch in because at the end of the day, you buy from humans, not from a computer,” says Mr Glover. Nonetheless, the data-crunching power of computers give Black Star the edge on bricks-and-mortar stores that keep customers coming back. Some regular buyers pick up several videos a week have spent more than £1,500 he says. And although one of the co-founders has a background in film – Mr Collins has directed many television adverts and produced the award-winning film Korea – Black Star could just as easily be an online bookstore or music store, or even, Mr Glover admits sheepishly, an online wedding services site.

The three, with combined backgrounds in marketing, film and technology, had already decided in 1997 that the Web was the place to start a new business.

Video won out for a range of reasons – besides Mr Collins background. First, the company needed to finance itself as it was built, so an online retail site fitted the bill. In addition, the extensive British databases on film and video already existed, so Black Star could get plenty of ready-made content for the site, everything from the cover shot of the video to reviewers’ comments and list prices. “With music and books, those databases don’t exist in the UK,” notes Mr Glover. And, he says, “to a large extent, videos are presold” – customers come to the site knowing what they want. For example, video buyers can search not just by title but by director, actor, distributor, catalogue number, genre, price or language. However, if they know what they want – and most come for the massive back catalogue or for more obscure films, not current hit releases like Titanic, which Black Star offers for £9.99 – buyers then tend to browse and pick up another title or two on a visit. The average purchase is £30, says Mr Glover, or about 2 and a half videos. The special Titanic offer has helped the company draw new customers, it has nearly doubled its registered customer base, and has also got some industry notice. “It was a loss leader at £9.99, but over 50 per cent who bought it got something else as well, and 70 per cent came back for additional purchases,” he says.

In addition, after they put the title on sale the marketing director of Titanic’s distribution company contacted them, asking who Black Star was and what it did. Apparently, says Mr Glover, he’d been besieged by calls from other traditional video retailers demanding to know if the company had cut a special distribution deal with Black Star. “Certainly, traditional high street retailers are waking up to the threat that online retailers are going to present,” says Mr Glover.

But if Black Star offers free postage woldwide – and that’s for airmail – and also offers regular discounts on titles, doesn’t that make its profit margins painfully tight? “It was squeezing us a lot harder at the beginning,” he admits. “But it was a decision we made based on customer desires.”

He notes that the typical shopping experience for an online shopper goes pear-shaped at the point the purchase cost is totalled and postage and handling has to be calculated. “They’ve gone through the buying process and suddenly their hit with all these extra charges,” he says. “Now you’ve totally mislead a customer.” He figures they lose 13 to 15 per cent of the cost sale by paying for the postage but says the effect of doing so has been enormous, generating repeat customers from all over the world for whom Black Star becomes a cheaper source of videos than the neighbourhood shop.

While growth initially ran at a very healthy 40 per cent a month, it has settled now into a comfortable 25 per cent month-on-month. Mr Glover realises he is sitting on a company which will likely prove an attractive acquisition as the European Internet market develops. “I have no doubt the offers will come,” he says. But for now he is more interested in running and building the company.