Moonfruit’s brand may be built on ease and simplicity, but its rise to the top of the online world has been anything but straightforward. The self-build web company almost went bust during the dot com crash while it was still taking baby steps, and only survived after a fast and deep programme of cutbacks.
Yet survive the company did, and 10 years on from the crash it is now turning over more than $4m a year – not bad for a business based on a free-to-use service. Over 3.5 million websites have been built using Moonfruit’s point-and-click interface and drag-and-drop templates, and the company is currently the no.1-ranked hosted web builder in the UK.
Origins
Before starting Moonfruit, Wendy Tan White worked on the development of Egg, the UK’s first online-only bank, in the late nineties. Her time at Egg gave her an understanding of what impact a disruptive idea could have, even in an industry as established as financial services; she also witnessed the growing trend towards personalised web development.
“We looked at the idea of people personalising for themselves online. The whole idea behind Egg was people wanted to customise and control their finances; we saw this was a moving trend,” Wendy says.
Using this trend as a template, Wendy began working on the idea for her new business – a user-friendly web development tool which would allow anyone, no matter how much web experience they had, to build a good-looking website in minutes, without having to pay for it. Driven by advertising revenues, the business would also take on the responsibility of hosting its sites, taking much of the hassle of web management away from its customers.
Wendy originally wanted to call the business Passionfruit, but switched to Moonfruit after discovering her preferred domain name wasn’t available (and friends told her Passionfruit sounded a bit risqué ). Name aside, the new idea turned heads straightaway. It soon caught the attention of her mentor at Egg, Richard Duvall, who loved the idea so much he even provided seed capital, and allowed her to work part-time while she built the business.
Further investment was provided by friends and family, and, once Wendy had begun work on the company in 1999, management consultants Bain agreed to incubate the company. Wendy says that Bain “were looking to seed small firms and found us in an attic,” and provided vital support in creating a business plan which offered realistic projections and catered for all scenarios.
Venture capital was also provided by Macromedia, and Wendy was even able to entice investment from LVMH, the company behind luxury giants Louis Vuitton and Moet Hennessey.
The prototype for the self-build toolkit was constructed in a matter of weeks by a boutique web developer called Sixzeds, and Wendy began to grow her staff base. Meanwhile, the marketing team were doing a sterling job; although Moonfruit’s advertising budget was only £2m, a pittance compared to the amounts being thrown around by many other dot com start-ups, it was able to generate huge publicity from a crazy ad campaign, featuring everything from guys with freaky moustaches to weirdos painting with their bums.
The convenience of the Sixzed technology, and the appeal of the ad campaign got people talking – and clicking. At one stage in 2000, Moonfruit ranked among the top 12 visited sites in the UK, and within six months of its launch in January 2000, the business had built up 40,000 users.
The crisis
But collecting eyeballs was one thing, making money from it was another. Because Moonfruit was free, it was hard to commercialise the venture, and overheads were starting to mount – particularly following the company’s move from its original attic into plush Soho offices.
Then the crash came, and Moonfruit’s main investor pulled their funding. Losses began to mount, and the management team were forced into a two-year period of brutal bootstrapping. The company retreated to its original attic, and the staff roster was cut from 60 people to two. Wendy’s future husband and business partner, Joe White, was among those who had to leave.
At one stage she even had to fill out insolvency files at Companies House; however, her faith in Moonfruit survived. She began to develop a new business model, doing away with the old free model in favour of a subscription-based service. The strategy worked; by 2001, Moonfruit was profitable again.
Yet the lessons of the crash left a lasting impression. Realising that the company “grew too fast” before the dot com crash, Wendy kept a tight leash on growth – staff numbers did not return to double figures until 2004. The founder also knew that Moonfruit’s service could never again be completely free.
Growth
The stability provided by a tiered subscription package service enabled Moonfruit to grow steadily, before really taking off at the end of the last decade. In 2009, turnover shot to $1.9m dollars; last year, it increased more than 100% to $3.9m.
Moonfruit looks set to expand even further this year, having secured funding last September, and further capital from Silicon Valley veteran Dave McClure, whose contacts will help the company expand its presence in America - which now accounts for around 30% of the company’s total business.
Growth has been fuelled by some very clever marketing. In 2009 Moonfruit launched a Twitter campaign, giving away a free MacBook Pro every day for 10 days – the only catch was that followers had to send a creative tweet to enter the drawer. This brought a deluge of poems, jokes and cartoons; the campaign was one of the top discussions on the social networking site for three whole days.
Despite the staggering rate of recent expansion, Wendy has no intention of slowing down:
“We’re in a high-growth phase, but we want to make that curve steeper; since the time I started Moonfruit, web development has gone from being about formal project management to a much more agile, flexible process - and we’re right at the forefront.”
Web: www.moonfruit.com