The idea for the ‘Zone of Possible Agreement’ (later shortened to ‘Zopa’), the world’s first online peer-to-peer lending and borrowing marketplace, came when a team which included Richard Duvall, a founding member of Egg, decided to start a new venture.
“It was like a co-operative, really,” says Giles Andrews, the website’s current UK managing director, who joined them a few months later.
“They split themselves into two groups, with one group going out and doing consultancy to bring in money, and the other sitting around dreaming up ideas about how to change financial services.”
It was during this phase that Dave Nicholson, the group’s youngest member, came up with the idea of an online marketplace where people can borrow money from each other.
The idea was immediately dismissed. “People kept saying, ‘if it’s so obvious, why has it never been done before?’,” says Giles.
In fact, Nicholson’s timing couldn’t have been better: the newly unfolding web 2.0 meant ‘people power’ was at the forefront of the public’s imagination.
“eBay provided a good point of reference,” says Giles. “There’s something about it which isn’t rationally explainable – it’s just people enjoying the fact that they’re buying and selling to and from other people.”
The group’s major challenge lay in convincing the Financial Services Authority (FSA) not only was the idea possible, but it was also regulatable.
“If I said, ‘right, tomorrow I’m going to set up a bank’, the major barrier to entry would be armfuls of regulatory capital to protect its investors, which we didn’t have.
“So we came up with a solution that enabled Zopa not to be regulated as a bank.”
By 2006, the regulators were convinced, and Zopa launched to huge press acclaim. The site’s unveiling was covered by every broadsheet, as well as all the major TV channels. “It was even on the BBC News homepage for an hour,” says Giles proudly.
He is convinced it was the ‘people’ aspect of the business that excited the media. “We had this idea of people helping people in competition with banks – which is always going to be appealing.”
However, after the success of the launch, 2006 ended in tragedy for the company. Richard Duvall, the company’s chief executive, was diagnosed with cancer in September and died just three weeks later.
Duvall, who was once described by Bill Gates as one of the most ‘dynamic’ people he had ever met, had, in many ways, been the glue that held the business together. “His passing leaves us all with a hole in our lives that is uniquely Richard. He’s irreplaceable,” wrote Dave in his blog later that week.
The company’s ethos and brand values came from Richard, says Giles. “He was a passionate believer that people are an amazingly powerful resource, both within the company and within the world. All you had to do to succeed was mobilise those talents and push them in a common direction.”
The search for a new chief executive lasted three months, and by the time Doug Dolton joined in March 2007, the company was ready to go in a new direction.
Doug’s more ‘pragmatic’ leadership style forced Zopa to face its shortcomings – and, having almost doubled its users in the last 12 months, unquestionably benefited the business.
“Having been through all the pain and come out the other side, we probably have a more functional team than we’ve ever had before,” says Giles.
Although, when it lost Duvall, it also lost his visionary leadership, Giles says the company gained strength.
“We’ve grown up,” he smiles.