December 2021 marks the 15th anniversary of the nadir in Steve Oliver’s professional career and the memory still hurts.
Oliver is best known as the jocular face of musicMagpie, which was set up in a Stockport garage in 2007 by him and his co-founder, Walter Gleeson, and floated on London Stock Exchange’s AIM in April 2021.
With revenues to the end of November 2021 of £145.2 million, adjusted EBITDA of £12.2m, and becoming the world’s first eBay seller to hit the 10 million feedback milestone, Oliver has a lot to smile about.
It’s a far cry from Christmas 2006 when The Bank of Ireland effectively pulled the plug on Music Zone by calling its debts in without notice.
By way of background Music Zone was founded by Russ Grainger and Oliver joined as the finance director in 2000, before becoming managing director a year later. Following an MBO in 2005 he continued to grow the business with his team to just over 100 stores.
“It was an amazing business with amazing people,” he recalls to TechBlast. “We were close to 1,000 people, over £100m turnover and profitable with cash in the bank. Then the Bank of Ireland took the decision that they did and it was all over very quickly.”
Oliver isn’t the type of person to duck a question but the memory still hurts.
“When I look back at that, my key learning was to choose your financing partners carefully,” he says.
“15 years later I can reflect on what happened at Music Zone like this. Do I have a problem with the decision that they took? I do, but I kind of understand it. The market was changing very quickly. Supermarkets were selling top line DVDs and CDs at a loss. They were selling them cheaper than we were buying them and we were competing against VAT-free websites based in the Channel Islands, so the market was tough and getting tougher.
“But it was the way that they implemented the decision that rankles. They didn’t give us a chance. They did what they did and then literally hid from us. That was cowardly. That was my big reflection about the integrity of our financing partner.
“At musicMagpie I think we’ve strived to adapt to these market dynamic changes rather than accepting them.
“It was professional and personal heartbreak. I went home and sulked badly. My wife Cath gave me the most incredible support, along with my parents, my sister and her family and my close friends.
“What it did was make me even more determined and it gave me an even bigger appetite to succeed. I was not going to let it beat me. I knew I wanted to continue to do something for myself.
“As you know, I’m a huge fan of Man City and it intensified my desire to put a professional trophy in my cabinet as the Blues have theirs. That’s always been more important to me than any financial aspect.
“We knuckled down and started again. Any money we had left after Music Zone we put into musicMagpie.”
Our interview takes place in musicMagpie’s ‘Judy Braithwaite Boardroom’, named after their former company accountant who died of cancer in 2016.
“That was an absolutely heart-breaking moment but this is our tribute to her as we wouldn’t have got where we have without her,” explains Oliver.
Oliver is certainly a people person. Two of the meeting rooms – Nick Wilson and Alex Ball – in their offices at Stockport Exchange are named after two of the company’s early investors.
“Nick is my brother-in-law and I’ve known Alex since I was at school and both supported us hugely in those early days,” explains Oliver.
Family and friends are important to Oliver, whether it’s his wife, their three daughters or his parents. He’s also passionate about his home town of Stockport.
“I’m proud to be a Stopfordian like my Dad,” he said. “He was a sub-postmaster locally. He was kind of the head of the community. He believed in helping people, giving back and making a difference.
“There’s a lot I like to contribute towards in Stockport. I chair the Stockport Economic Alliance. I sit on the Stockport BID committee. I care passionately about Stockport and the community.”
It was no surprise that Oliver and his co-founder Gleeson chose a garage in Hazel Grove to operationally launch musicMagpie in back in 2007.
Difficult though the Music Zone experience was, it identified a market in used products.
“There were cash for mobile phones websites and cash for gold websites but there was no cash for CD, DVD and games websites.”
So musicMagpie was born. “From day one, we set it up to be a ‘lazy man’s eBay’ type of service,” says Oliver.
Launched at the start of the global recession, the timing was perfect – but then came their second break.
“MoneySavingExpert.com’s Martin Lewis covered us in those very early days as a fantastic consumer service as a way for the public to raise cash and save money,” he recalls.
“It was a real proof-of-concept moment. We went from buying a few hundred units a day to 17,000. It could have broken us but it made us.”
The growth was incredible. Between 2008 and 2012 the company’s turnover grew from £500,000 to £2.5m then £11m, £34m and £63m.
The company built a retail chain of 30 stores but another key learning from the Music Zone experience was that musicMagpie should become an online-first business.
“We made the decision early on to sell on both Amazon and eBay to basically bring the world’s eyeballs to our inventory,” says Oliver. “That was a big moment and it’s incredible to think that we are now the world’s biggest seller in the history of both of those global platforms.
“We were also very averse to debt. The challenge was keeping up with the runaway horse as we scaled the business.
“It was enormous fun but it was incredibly hard work. We moved warehouse three times in five years. We were scaling up operations and the head office team. We were bringing in the first director in addition to Walter and myself. It was all about scaling the business.”
Despite the multi-million revenue, Oliver says the company remains a ‘penny business’ at its heart, especially at the beginning.
“We were buying 2-2.5 million units a month,” he says. “If we could save a penny buying them or make an extra penny selling them all those pennies racked up. It was worth £25k a month and much of the same principles apply today.”
Oliver has a reputation for being a nice guy but he’s never been afraid to make a tough decision, evidenced by the closure in 2018 of the by-then 30 retail stores with the loss of more than 200 jobs.
The entrepreneur loves numbers and the numbers in the retail stores weren’t adding up.
“In business, one of my key learnings is the devil is always in the detail,” he says. “Every morning now at Magpie (which is how Oliver refers to the company) I get my daily KPI report. I get one page for the UK business and one page for the US and I study them intensely. I have an annoying knack of pulling out the wrong number from a page full of right numbers.
“We looked at our numbers for Christmas trading in 2017 and we looked at the details of the numbers and the trajectory of where it was going.
“Revenue was going down and costs were going up. That’s not a good equation in any business.
“The challenge of the high street was already being well-documented. Our online business accounted for 90% of our turnover but our retail side represented 30% of our cost base.”
“When you looked at the numbers it had gone from being a profitable division to loss-making and it was only going in one direction.
“We then took what I will forever call the easiest commercial decision we’ve ever made but the hardest emotional one. It was over 200 colleagues and some very dear friends, with one in particular being our head of retail. It was very painful but it made us a stronger business.
“I have a mantra and ‘it’s nice to be important but it’s more important to be nice’. What some people do is mistake the word ‘nice’ for ‘soft’ and business isn’t about being soft.
“It’s about treating people with respect but you can’t mistake that with an ability to make tough decisions when needed. Music Zone should have pivoted earlier than it did and fought the market challenges that it did.
“Magpie did that. When we had hard decisions to make I hope every individual would say we did it as well as we could, with as much respect as we could and treated people well.”
- In the second part of the interview, to be published on Monday, Steve Oliver talks IPO, sustainability and why he’s never been more excited for the future.