Zoopla's Alex Chesterman: battle on the home front

Alex Chesterman unexpectedly has a battle on his hands. In 2011 he made mil­lions by selling Lovefilm, the DVD rental website he started in 2003, to Amazon for £200m. Last year he looked on track for a similarly profitable triumph at Zoopla, the house-hunting portal he set up in 2008, when its £919m initial public offering capitalised on Britain's renewed property market boom.

But at the start of this year a group of disgruntled estate agents tried to knock him off his perch by launching a rival, OnTheMarket - and they are having some effect. A week after the launch, Zoopla said it had lost 11 per cent of the approximately 19,000 estate agency ad­vertisers who make up its customer base; since then "dozens" have re­turned, according to the company.

Zoopla and market leader Rightmove are the UK's leading property portals, on which estate agents can advertise properties for sale and rent. To a large degree they have supplanted print ads, the previous staple in property marketing.

Mr Chesterman is now battling to prevent further inroads into his customer base. "I'm always looking over my shoulder, looking for the next me," he says. "But in this case their very clearly stated aim is not to innovate."

Although the 45-year-old entrepreneur is determinedly chipper, speaking in Zoopla's glossy purple-and-white London head office near the Tate Modern, some who know him say this was not the triumphal outcome he hoped for when he took the company public.

Some in the property market speculated that he would sell off his remaining 4.2 per cent Zoopla stake and move on to a new business idea, as with Lovefilm.

But if it has hurt him to be forced to dig in and launch a defence, he does not show it. Always bullishly positive about Zoopla, which is Britain's second-largest portal, he now becomes strident. He launches into monologues about the iniquities of OntheMarket - "the wrong type of competition" - and why Zoopla will win out in the end. "We are a force for good for consumers," he proclaims, with a touch of pomposity. "Digital marketing has changed the property landscape for ever, as it has changed many industries. This small group [of agents] would like to return to the way things were and pretend this little thing called the internet never happened."

Certainly, prospective housebuyers like Zoopla's rich data sets, which show everything from local tradespeople to what newspapers are most popular in the area. But some agents object to the power the two portals wield, which enables them to impose double-digit annual fee increases on advertisers. This is possible because of their vast audience: Zoopla receives 50m visits a month, while Rightmove averages 90m.

Mr Chesterman retorts that portals are more cost-effective for agents than ads in newspapers. Agents pay an average of £10 a property a month under Zoopla's fees system, he says, compared with the thousands of pounds a single-page ad in a newspaper can cost - and the £5,000 average fee an agent receives for selling a home. Portals also help agents become more efficient, he argues, by giving them lots of data on buyers' search behaviour.

His trenchant attitude provokes irritation among opponents, but they ac­knowledge his business acumen. "Clear­ly he's a very bright man," says a senior estate agent at a leading chain, who dec­lines to be named. "But I don't think he understands that buying a property is not like buying a VW Golf, it's an emotional process and people still want to deal face-to-face."

A Londoner whose father owned a property portfolio and restaurants, Mr Chesterman always knew he wanted to be an entrepreneur but lacked a big idea. He moved to the US in the 1990s and became an executive at Planet Hollywood, the restaurant chain. In 1999 he returned to London and started a food business called Bagelmania.

Then his attention was caught by the phenomenon of the internet - and a parking ticket, when he was fined after popping into a video store to return a tape. Rental stores made film-watching a hassle, he decided, so why not receive and return videos by mail?

The bagel outlets were sold off. In 2003 he launched ScreenSelect, Lovefilm's predecessor. After a series of mer­gers it reached £92m in annual revenues and was the biggest DVD rental service in Europe by the time it was sold to Amazon in 2011.

He had already begun work on Zoopla. While house-hunting in 2007 he grappled with spreadsheets documenting commute time, local crime and school performance to try to make an informed decision. As with video rental, he wondered: "Surely it can't just be me who is frustrated by this?"

Zoopla, launched in 2008, has scaled up - again after a series of mergers - to annual revenues of £80m in the year to end September.

Neither Lovefilm nor Zoopla was truly original: online film rental services already existed in the US when Lovefilm launched; US realtors were already using websites such as Trulia and Zillow, and in the UK a host of property portals had launched when Zoopla hit the web.

Mr Chesterman's success in both his ventures came from a series of acquisitions that ramped up revenue growth quickly, and canny fundraising - he secured early venture capital and brought in the big guns later.

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"It's hard to raise money," says Mr Chesterman and credits bullheaded persistence for his success at it. Entrepreneurs are "like actors - most people never make it past the 10th rejection so they end up as a waiter", he says. "The people I know who've built great businesses have conviction in their idea, are thick-skinned and willing to be told 'no' 20 times by prospective funders."

For the technical work at Zoopla he relies on "a great team", some of whom moved with him from Lovefilm.

He says "I'm sure I've made a lot of mistakes", but declines to name any. It is typical of his relentlessly positive, always-on-message attitude.

But more recently, as the threat of OntheMarket dawned on analysts and investors, a note of tetchiness has crept in. Some observers of the business suggest he should regret not floating Zoopla earlier. By the time of the IPO, the London stock market had begun to tire of new issuance. Zoopla's float was priced in the lower half of its target range.

The timing left it with just over six months to consolidate its position be­fore OnTheMarket launched, not long enough for Mr Chesterman to cash out, though he denies any intention of doing so: "I'm not thinking about that yet." For now, his attention is fully focus­ed on the fight to retain Zoopla's position.

And the house he was hunting for at the time he had the inspiration for the site? He was so busy setting up the business that he did not have time to buy it.

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