UK disruptor hopes to make Cazoo the vehicle to shake up used car sales

As his Zoopla website took off, Alex Chesterman vowed that there would be no more startups.

His wife had just said no to more children after their second – a move he vowed to match by calling it a day after two successful but time-consuming businesses that brought the entrepreneur several hundred million pounds in British.

But this commitment was quickly broken. This week, the 51-year-old Londoner revealed his intention to list his Cazoo, a two-year start-up in New York for a valuation of $ 7 billion, using the special purpose acquisition company of billionaire investor Daniel Och.

The deal is its largest to date – and the highest initial listing of any UK company on the New York Stock Exchange. But it will be a major test for Chesterman as he seeks to grow the business quickly to justify a valuation some in the UK tech market think is rather high.

“It certainly looks at the wrong value now,” said a large venture capitalist, “the question is whether it will be in the future.”

But its record gives hope to investors. For an avowed imitator of the ideas of others, Chesterman has managed to turn his own frustrations in markets that need a reshuffle into several fortunes and a lasting impact on the UK consumer.

Lovefilm, the DVD rental service which it sold for £ 200million in 2011 to Amazon as the UK’s response to Netflix, preceded the high street video store’s end.

Zoopla, the real estate portal he launched in 2014 and sold to Silver Lake for £ 2.2bn in 2018, earning him around £ 300million, tapped into the British obsession with the values ​​of other people’s homes, to the detriment of traditional estate agents.

He wants Cazoo to do the same for the used car sales forecourt – making the vehicle buying process faster, cheaper, and with your purchase delivered to your door.

The deal will bring in around £ 100million for Chesterman – who owns around a quarter of Cazoo – plus a similar amount last fall in the company’s last private fundraiser.

The three start-ups have come to spot the success of other companies in the United States – Cazoo from a television commercial for the American car salesman Carvana – but transplanted and modified for the European market.

He describes it as a “second mover advantage.” . . we are the first in our market, but after letting others find out what works and what does not ”.

Chesterman is often treated with suspicion by incumbent operators – some dealers are still skeptical about whether Cazoo will make a profit. He admits he’s unlikely to know more about these markets, but has found that ignorance can be an advantage.

“Fix broken things,” as he puts it. “I like to watch movies, I live in a house, I drive a car. If you think like a consumer and think there is a way to improve this market, chances are most consumers feel the same way. “

Chesterman, who was educated at St Paul’s School and then University College London, got an offer to work at Goldman Sachs when a family friend offered to place him in the management program instead. of the Hard Rock Cafe in Florida.

He intended to take a three-month sabbatical there, but ended up spending 10 years in the United States, first running a Hard Rock branch, and then, when the same friend started Planet Hollywood, as one of its first employees.

A family emergency brought him back to London, where he first sought to further his hospitality career with a chain of bagel stores in 1999. Realizing that it was worth more to his real estate, he spotted the opportunity. in the mid-2000s tech industry with home delivery DVDs.

Those who work with him say he can be emotionally detached and obsessed with details. Others describe him as a savvy negotiator – both looking to small rivals to start businesses and knowing the best time to sell.

“He’s not a flash guy,” said one person who has worked closely with him, “and he works every given hour; he could have retired years ago ”.

Chesterman drives a Range Rover – but says he would buy his next car from Cazoo when the time comes – and lives in a house in Highgate, London. His money is spent taking his family on vacation, although as an angel investor he has also bought stakes in start-ups such as Graze, CarWow and Farmdrop.

But his time is currently dominated by Cazoo, whom he sees as his greatest chance to date – predicting it will be a £ 20bn business. Floating in New York, he says he wants to introduce him to investors who best understand his business and that London doesn’t want fast-growing but loss-making startups. No reform of the list, as promised by the government, would have changed that.

“I think this is probably my last,” he said of his involvement with Cazoo, before adding, “But I was surprised having said that before.”

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