The founders of fast growth online car hire business Vroom Vroom Vroom, Peter Thornhill and Richard Eastes, tell JACQUI WALKER how they built traffic with search engine marketing, created an innovative culture, and are planning global expansion.
By Jacqui Walker
Three years ago ex-NASA scientist Peter Thornton (left in picture) bought the small but profitable car hire website Vroom Vroom Vroom.
Soon afterwards he enticed young IT wiz Richard Eastes (pictured right) and his brother David to join him. The three redeveloped the site, changed its market position and used search engine marketing to build traffic and earn revenue of $31 million in 2006-07. Now they are pushing into the USA.
Thornton and Eastes share their tips on building traffic online, creating an innovative culture, search engine marketing and global expansion.
To listen to the interview with Peter Thornton and Richard Eastes,
Jacqui Walker: You bought the business in 2005. What was it like then and how have you changed it?
Peter Thornton: Well when I bought it (with another partner), the website offered car rental deals like “Get a weekend, get an extra day free” or “$50 off or 5% off”. It was based in Australia and it mainly catered to leisure domestic in Australia and it was doing OK. When I say OK, I mean for a very very small company with two employees.
When Richard came on board just after I started up with this one partner, we went the way of XML, which is just interfacing directly into the reservation systems of each of the different global suppliers like Hertz and Avis and Budget and creating a comparison of the prices real time.
These prices fluctuate sometimes from minute to minute based on availability. All of the global brands have a yield management system and now car rental is a commodity just like bacon is or frozen concentrated orange juice. Prices do fluctuate and if you have to go to each of the different websites you might miss a deal.
So Peter you rebuilt the website because it had to do something more complicated than you were asking it to do before. Did you have technical skills? How did you go about that?
Yeah, well Richard has a lot of the technical skills in terms of the architecture.
Richard: Yeah, that’s where I kind of jumped in and thought “Geez, we need to be doing a lot more than that or we’re going to be dead soon.” So similar to what Wotif does for hotels, we brought a comparison engine that shows prices side by side and people can easily see which car they want because they can see the prices all at once.
So you bought off-the-shelf IT software?
I have a Bachelor of IT and so from a bedroom at my parents’ house day and night that’s where I spent a few months building it, and that’s what’s now used as a foundation for the search on our site.
Peter: And I used to work at NASA. I used to build satellites and I was a project manager and so I had project management skills and some technical skills that I brought to the table, but I saw us as a nice complement. We complement each other’s strengths really really well over the years and it really helped us.
And Richard your brother David is also involved in the business. What’s his role?
His role was starting off doing IT work, helping maintain the website, improving it, but I’ll be moving to another country soon and so he’ll be looking after the headquarters in Brisbane.
So how much did it cost to buy the company and then how much did you have to invest in the technology to get it up to scratch?
Peter: Well the company was bought for about £120,000 so I suppose that translates into about $A300,000, but the good thing about it was it was a going concern when we bought it and it was already profitable, so we used the money that we earned to roll back into the company to make it work.
We did have to have courage to completely change something that was already making money, but both Richard and I saw the writing on the wall and we saw that it had to actually go in a completely different direction.
But the changes we made really paid off. At one point it looked like “gosh, this is going to be a big change, a big challenge to get this completely redirected” because our marketing strategy actually also changed along with the architecture of the website, but it did pay off in the end.
Getting the right car companies on board would have been critical to your success. How did you do that?
Well originally all of the global car companies, global brands like Hertz and Avis and Budget, they were already signed on and liked the Vroom idea.
They liked our brash branding that was trying to cater to the leisure market and they really loved the enthusiasm that we brought to the table.
When I took over the company we went on a kind of fact finding mission to see how things would stand if the reins were handed over to somebody else and whether they would support us.
They didn’t go with the old partners. They were really happy to see the company continuing to grow steadily so those relationships were already secured but they were strengthened by our continued growth.
They’re important, but you’ve got to have people on the website searching for cars. How did you build the traffic?
Richard: Yeah, from day one we were getting a little bit of traffic from here and there but nothing very serious.
The previous owners spent a lot of money on pay per click advertising which works really well – and especially about three years ago pay per click advertising on Google and AdSense was cheap.
But I could see that that wasn’t going to be forever and nowadays the cost of that is at least five times what it was back then, and it’s a lot harder to get a return on investment of online advertising.
So back then we made a decision to commit a lot of resources to making sure we ranked number one on Google for all types of car rental related search terms.
So search engine optimisation. Can you give us some of your best tips?
I have one tip that will beat all tips and that is, that there are no tips. There’s no secret. You just have to keep doing the best you can at making the best possible – both sites and giving as much information to people.
There’s hundreds of different things you can do to help do that, and if you do them all you will rank number one.
Peter: If you’re relevant and you actually have a passion for what you do and it shows in your website and it shows in the content that you provide as a resource to the people that are looking at your website, you shouldn’t have any problem being discovered by Google. They’ll come after you.
But there’s a whole industry built on second guessing Google.
There is.
Richard: And we do that a lot. There are things you can do to help that, but that’s the key secret. There’s no single tip. I guess the tip would be to read up on it as much as possible.
So is it really important for your business to have that knowledge in-house about search engine optimisation?
Richard: Absolutely, and there’s a good reason if you want to hear why that is. My opinion of that is, anyone who was good enough to do the search engine optimisation for us shouldn’t be employable, because they’ll be out there making millions of dollars.
If they know how to do it, they’re not going to do it for you for $1000 a week or whatever salary you can afford to pay them, because if they’re good enough they’re out there making millions of dollars so the only option is to learn yourself and do it in-house.
Another tip is try to think what would you do if you were Google. What would you do to make a website and you write down some things, you’ll come up with some answers.
Like putting the key words in the titles and…
Absolutely. Getting other people to link to you.
And how have you gone about that?
I don’t want to give away all our secrets.
Just give one.
Forming partnerships with people. We hire a travel writer who will write articles about other websites and informative things for our site, for our customers. Other travel businesses love it and they’re likely to publish it on their website.
And link back to you…
That’s one of thousands of different ways.
Peter: And keep in mind, that goes back to what I said. If you actually are out there providing something that’s useful to other people then you shouldn’t have any trouble…
That’s right.
…and you’ll be rewarded. Google actually has in their algorithm a reward for relevancy.
So the business is based in Brisbane but you have an international presence in the sense that you offer services to people in countries other than Australia. How have you managed that?
Richard: Well luckily Peter the American who decided the UK was more his style, he helps run the European and UK side of things. Australia is a shoo-in; we take calls constantly during the day to help people that can’t seem to yet grasp using a website.
And I have an assistant in the UK.
And we do have, well he’s nearly a volunteer, in the US who helps some customers in the US, but that’s just growing too much for them to do that now which is why we’re setting up an office there as well.
So all you’ve really needed, or all you need to be an international player in this business, is to have someone to take phone calls to offer support if they’re having a problem using the website?
Peter: Actually that’s an interesting question. When we were doing deals the whole idea was to have a local presence in each different country that you wanted to do because local presence could actually get the deals from the local people. You have a local relationship.
New Zealand for instance, we had a representative there but when you went XML and you tied into the reservation systems of a global brand, it’s a central reservation system so when you finally can make this connection. You have access to the 5000 locations worldwide that they have, and what you end up doing is worrying about the commercial side of things and the customer side of things.
You don’t have to worry about soliciting deals and that part of the business. It’s a scaleable enterprise.
So you had to be international really with those big car companies.
You didn’t have to necessarily be… it was always there.
Richard: We didn’t go global heavily from the start. I think one of the things that attributed to us being where we are now was that we focused only on Australia for most of the time.
If we split our resources like some competitors did to the USA and the entire world, we wouldn’t be able to have what we are in Australia. We would have been split up way too much, but now that we have built up a lot of momentum in Australia we can afford to properly take other regions more seriously.
So what proportion of your revenue is coming from Australia now?
It would be around 80%.
What are your big markets overseas?
The US, but merely because the culture in the US is similar to that in Australia.
In the UK you have a situation where they don’t mind brokers, they don’t mind prepaying for a car rental. In Australia you have people who want to reserve a car rental and it’s the same in the US.
Back when they first started it, they thought that if they had vroomvroomvroom.com.au, .co.nz, .co.uk, .de, dot-whatever, they would basically have a franchise system looking for local special deals to put on to the site, advertising for free.
But when you actually hook up to XML you’re immediately hooked up to the global world and you can go off as Richard was saying, go off and do all of a sudden “worldwide” and try your luck at that, but you don’t have the relationships, and the commercial relationships have been key in Australia and they will be in the United States and Europe.
When you say commercial relationships do you mean with the companies like Hertz and Budget and so on?
That’s right. We only deal with the global brands and we feel that if we do a good job in Australia that will help us approach the people in the UK. And in the UK, if we do a good job there, they’ll help us approach the US. And we’ve moved around the globe just like that. Just having the business that we did previously as a business card for entering into a partnership or a relationship in the new country.
And so where does your revenue come from? Do you get a percentage of the car rental fees from the car rental company and on the travel taken by the people who come through your website?
That’s right. We get, on a travel booking, in other words a booking that actually goes and they come back and they drop off the car, we get a commission based on that.
Richard: The customer never pays for that and actually quite often the customer will pay a cheaper price through us than going through the supplier directly as a bit of an incentive…
Our money comes from a marketing budget with each of the global brands and it really doesn’t have to do as much with lowering or upping the price so we’re actually a marketing arm of the global brands helping them with an alternative distribution channel.
And do you have a niche that you’re targeting or is it just Australian leisure consumers?
We’re targeting people that are interested in having a global brand. They’re not looking for a friend’s car hire. They’re looking for a global brand but they’re not necessarily loyal to any particular global brand, so they want the reliability, the customer service and the credibility that goes along with a global brand but they’re willing to actually look for the best deal among those players.
So it’s not a particular age group or demographic in other ways?
Peter: 35 to 55 is probably our big target, but anybody can use it. It’s so easy to use, it’s one page.
Do you advertise in the real world?
We do some print advertising and we’ve done some radio commercials.
Richard: We’ve done some radio. A bit on Getaway and Great Outdoors television shows. We’ve done a few publicity stunts and we’re going to do a publicity stunt in Sydney this weekend handing out some t-shirts. It’s a bit controversial. It says “give me a try, I’m fast and easy” on the back and our logo is on the front, so we think that will go down well.
And has that real world advertising or marketing been successful for you?
It’s been fantastic for brand awareness.
Which element’s the best, the most successful of those that you mentioned?
Peter: I can answer that. We’ve seen marginal success with radio but I think that you really do have to invest quite a bit of time and energy and years in brand awareness in radio for it to be really really effective.
I think that we’ve had a really good public relations company that we work with and they’ve helped us get some media exposure and print and that’s been really helpful.
As Richard said, in terms of marketing, Google AdWords and search engine optimisation has been tremendous in terms of real revenue that we can actually see and measure, but in terms of brand awareness we’re still noticing that we’re relatively unknown and yet we’re doing so well which is a paradox.
And who are your competitors?
American Express…
Richard: We have a handful of competitors that we used to watch like a hawk.
Saying ‘oh God, what are they doing?’ and it’s funny that a lot of them now, every now and then we’ll have a look at them, and it’s amazing how many things they’re doing that we started doing and they’ve just copied it.
It’s like ‘ah, OK, that’s flattering’ because we know that they can’t copy everything so we don’t feel threatened by that. They’ll see a few things that we do and they can copy that but it’s impossible to find everything and so I guess the key is to be the most innovative and if you are the most innovative and are the one creating the innovation you can’t go wrong.
But getting back to your question, there are a number of websites but we’re definitely the leader in e-commerce. We’re the leading online car rental company.
When you say innovation Richard, what sort of innovation do you mean? Do you mean technical innovation? Do you mean product innovation? Service innovation?
A bit of everything. Our website is under constant improvement. So what I mean by innovation I mean service mostly, because we are a service company doing the current comparison, so innovation is a big part of our company culture.
Every week when we have a staff meeting, everyone is involved. Everyone’s required to come up with an idea to improve the company or improve the service that we provide and it’s become a big part of the culture and everyone really enjoys it.
How many people in the company?
There is currently 6½.
So you’re still small enough that you can have that kind of collaborative approach.
Absolutely. It was an experiment we started when we started employing people. Thought, oh we’ll start an ideas session I think we called it, and everyone started spinning ideas and they’re like gee, these ideas are really good and I wouldn’t have come up with these myself so let’s keep doing it and now everyone does it and I think that has been a big part of how our website is in constant improvement.
There’s also a thing with customer feedback. We take a lot of our customer comments to heart. A lot of people call us up with complications or something that happened and we feed that back into making the site more easy to use. So it’s that type of constant improvement as well. We actually take our customer comments really seriously and look at it and say is this a one-off or is this something that is chronic and something that we really need to change.
Because it can be a bit tricky can’t it, if you get customer feedback and the problem is a one-off and if you respond to every piece of feedback that you get by changing, you could potentially lose your way and waste a lot of time.
Customers aren’t always right because there are some dishonest people and… they might be disgruntled for whatever reason that is out of anyone’s control and they will try to blame that for a fault which isn’t there. That rarely happens of course.
Also they may not know how to use their computer.
The thing about online is that there are certain things that actually show well and there’s certain things that actually work well.
The fact of the matter is that you might have a concept about how a car rental site should actually work, but we get 500 bookings a day and we get customer feedback and this is rolled into what we know. Most people like something that’s really easy to use.
They get on, they get their information, they make their booking and they leave and get to the rest of their lives.
But if you have flashy bells and whistles on your website and someone suggests that you have more flashy bells and whistles on your website, it may not necessarily be productive. It might not be as workable, as user friendly as something that just gives you clean honest list of what’s available. Get in there, book and go.
How big can this company get? I mean you’ve gone very quickly to revenue of $31 million last financial year, up $19.5 million from the year before.
Now this is total travel revenue provided to the suppliers, so we’ve provided that much travel to Budget, Avis and whoever and we take a commission on that so…
The profit would be a fraction of that?
That’s correct. But yes, it’s nice. We’ve got an open frontier right now because it looks really good in the United States.
If you look at the United States where it is now, it’s about where Australia was about two years ago in terms of the website and the amount of bookings per day. The US grew 16% to 1200% last year. And if we can keep that up that would be fantastic.
Would Google search would be the way to reach the market in the US? Because going out and doing radio advertising or anything like that is a completely different ballgame, there’re a lot of people that you’re trying to reach.
Sure, but keep in mind, we’re a small company and a small fractional piece of the American pie is a very large piece of pie for us, so even reaching a fraction of the United States is actually a real beachhead and a real success for us.
So will you focus on some regions initially?
We have done. But no, I think that right now we understand the structure of the United States because I’m American and we know where to go and we have the idea.
So what’s your goal for revenue growth for this financial year?
Well I suppose what we want to do is we want to see the US grow similarly to what Australia did, so in 2½ years if the US is producing about 300 to 600 bookings a day, that’s a real trophy, a real success.
Ultimately would you list the business on the stock exchange? Have you thought that far ahead?
Peter and I are enjoying what we’re doing. We work really well together and we’re learning a lot on the way as well and whilst we’re growing twice per year, we’ll keep doing that as long as we can until it’s at a point where our combined efforts can’t really grow as fast as that anymore and yeah, we’ll be looking to sell. Absolutely.
So growth so far has been funded through earnings?
That’s right. We haven’t had any outside investment required. It’s all been from profit.
And that was day one. When we first bought the company.
So profitable from day one?
Yeah, and there were times when we were struggling but no, it was a really nice ride and now the UK is very profitable. I mean the UK is a harder market than the US. The US is actually a little bit easier.
Just a comment on that. After doing some research in the US and our competitors in the US, we kind of avoided the question before what are your competitors in Australia. There are so many it’s not worth mentioning any. In the United States there is none. There is none of those similar competitors.
It’s because those that were there were bought by larger companies and to combine with their package travel type systems like Expedia and things like that but they’re not fast enough and they’re not doing a specialist niche job enough and so the niche industry for us is still there.
…the opportunity is still there for us and the interesting part is one of the reasons we could think for that is with us just being here in Australia, it’s created copycats where people think oh that’s a great idea, I can do that, and so there are competitors just from the industry being there.
We’ve created an industry of [car] comparison and that’s kind of satisfying too.
Peter: We’ll go to the suppliers and they’ll say ‘we get a couple of people that come in every week that will say we’ve got a great website, great idea and we’re going to be better than Vroom in 12 months’. And he told us this. And whether they are or not that’s irrelevant.
The fact that they’re actually setting us as a benchmark is quite a nice pat on the back.
How are you going to make sure that they don’t catch up?
Keep on running. Just be more innovative than anyone else. We still have a fire in our belly. Yep.
Smart Company is the leading online publication in Australia for free news, information and resources catering to Australia’s entrepreneurs, small and medium business owners and business managers.
