Basic business lessons learned in a 70-plus year-old family business in Galway City have helped play a pivotal role in the success of a young Irishman who can claim credit for having opened up the internet economy in the Middle East.
Fifteen years ago when he was just 13, Paul Kenny was paid a couple of bob a week during his summer holidays to transfer crates of books from one warehouse in the city to another. His uncle and aunt ran Kennys Bookshop in Galway and his dad ran the bookbinding part of the business.
Earlier this week, Paul Kenny’s daily deals site Cobone.com was bought by Tiger Global Management for an undisclosed sum. US tech blog TechCrunch estimates the sale was in the region of US$40m.
Cobone.com, which Kenny founded in 2010, counts more than 2m customers across six countries in the Middle East who have saved nearly US$100m through more than 1.5m coupons sold.
Kenny last year won the Ernst & Young Emerging Entrepreneur of the Year Award and was appointed by Enterprise Ireland as Ireland’s start-up ambassador to the Middle East.
In many ways the Kennys are a family noted for blazing a path when it comes to the internet. The bookshop, founded by Des and Maureen Kenny in 1940, was in the early 1990s the second bookshop in the world to have its own website.
Business street smarts
“I gleaned an awful lot of street smart business sense from my family,” says Kenny. “I didn’t always lift boxes. My next job in the family business was washing the windows and watering the plants every morning with my grandmother shouting at me to do it better. I was in there every morning at 6am. You’d think being in a family business there would be privileges. There weren’t any.”
Working in the family business Kenny was able to move through the various departments, where he learned core salesmanship and all about keeping customers happy and engaged.
“I was there during the point where the bookshop went online and I was hooked. I was also involved in bookkeeping, going on the road to sell books at book fairs and all the rest. I didn’t realise it at the time – I was too busy complaining about earning £50 a month – but I was actually listening and taking it all in. It was only later on when I found myself dropped in a place where I had to survive that I realised I was quite street smart when it came to business.”
A family holiday to Dubai in 2004 left an impression on Kenny because he got a sense of the massive expansion of the economy in the UAE but also the fact the internet economy at that stage was underdeveloped.
After graduating with a BComm from NUIG, Kenny began studying for a master’s degree but he had the itch to go back to Dubai. “In 2006, Ireland was in the midst of the good times and people were leaving college and expecting to be paid €50k salaries without any experience. Friends who had no money were buying and selling houses. I knew Ireland was getting too big for its boots.”
After a successful phone interview for an internship at the Jumeirah Group, which owns 7-star hotels all over the Middle East, Kenny dropped out of the master’s programme and took a plane to Dubai.
“I packed one suitcase and the only person I knew in Dubai was the person I did the interview with. I was 22 and up to that point I had been living with my parents. I was scared. Everybody at home seemed to be making tons of money and I had signed on for a job that paid US$250 a week at the lowest grade doing the kind of things that interns do, inputting data and colour-coding stuff.”
Kenny describes the move as a calculated risk because at the very least having the Jumeirah Group on his CV would be helpful in his future career. Within a year of Kenny arriving in Dubai, the Irish economic collapse had begun.
“I was three months in Dubai when the government there launched a programme seeking the Future Leaders of Dubai, the best and the brightest. For some reason I got selected and that got me a promotion at Jumeirah where I became assistant digital marketing manager.”
This was where Kenny believed the next step in his professional education began and he familiarised himself with all the technical elements of running websites and finding customers online. He bought a jeep but when his boss turned him down for a pay rise he quit his job and took up another role as head of digital at media company Top Right Group.
After six months with the media company, Kenny was hired by Emirates Airlines as a consultant and helped the airline to achieve US$500m worth of ticket sales online.
“It began to dawn on me that I was helping to make companies lots of money online but I wasn’t receiving any of it and that really got to me.”
Birth of Cobone.com
While at Emirates Airlines, Kenny made use of the working times – 7am to 3pm – to get to know venture capitalists in the afternoons and evenings and by the time he left Emirates Airlines after six months he had funding of around US$2m in the bank to kick start Cobone.com.
“I was 25, I had money but no idea how to set up a company and the venture capitalists who backed me told me to get moving.
“I realised they hadn’t actually invested in my business plan or model, but the person. They took a huge bet and it paid off. I learned to be quite aggressive when it comes to executing on a business plan and raising capital and now I definitely understand the value of money.”
Establishing an e-commerce business in the Middle East is not like establishing one in the US or Europe. “In Ireland, we have postboxes and I can deliver something physically to your house. In Dubai there are no postboxes or addresses. Also credit card penetration is very low in the Middle East, in most cases less than 10-15pc.
“So what we did in the beginning was we had a team of 100 guys on motorbikes. When somebody ordered something on our website we’d dispatch a rider to deliver the coupon and we’d collect the cash. At the start, 80pc of our business was done this way and we did this across six different countries in the Middle East.
“That’s how we won. We succeeded in getting people who never bought anything off the internet in their lives to buy from us. So a year and a half ago 80pc of our business was done through cash. Today, 80pc of our business is conducted through credit card and we would have one of the biggest volume internet businesses in the Middle East.”
Cobone.com employs 100 people across the region, including 50 in the head office in Dubai and the average age is 27. There are 26 different nationalities employed by the company and apart from Kenny, just one other Irish person. Kenny, an extreme prankster by nature, likes to play practical jokes on new hires to make sure they don’t take themselves too seriously.
“We’ve done it all, even hired actors to scare the hell out of them in some of our pranks. If you can’t laugh at yourself you can’t work here.”
However, running a business is no joke and Kenny ruefully admits his mistakes. “Don’t read into this as a total success. We’ve screwed up so many times and in so many ways. We launched so many categories that failed and launched into new regions that failed. We even tried to launch an online music platform.
“One of the things I live by is every day if I don’t execute, some one else is going to execute faster that me. So aggressive delivery on our action plans is the key. We don’t want to be thinking about something for two months before we do it.”
Kenny says the daily deals market in the Middle East is vastly different to that of Groupon or LivingSocial in the west, where people opt for discounts on spa treatments or meals out. “Three people recently paid US$25,000 by credit card to buy a Nissan Pathfinder on our site. Most people look for deals like eight hours out on a 70-foot yacht or to rent a Lamborghini for a day. We sell thousands of those deals.”
I ask Kenny about his plans after the acquisition of the company by Tiger Global Management.
“I have leverage here and I now fully understand the Middle East Market. Most of the verticals that exist in the US or Europe still don’t exist here and basically I would like to own a lot of the e-commerce that happens in the Middle East and North Africa,” he says.
“This market is going to be massive. The kind of e-commerce growth that you saw in India or China is eventually going to land here and I just want to make sure I am here when it does kick off.”
A version of this article appeared in The Sunday Times on 17 March