by Charles Orton-Jones - Thursday, 30th August 2007

This is the page

Like Madonna or Pele or Sting, Stelios only needs one name. He’s a star entrepreneur, worth over £700m and, with his publicity stunts and constant new launches, the closest thing Branson has to a rival.

He’s also one of business’s more colourful and complicated characters. If he wasn’t so rich, you’d probably wonder whether he had a full set of marbles.

Take the barmy publicity stunts. When British Airways launched the low-cost airline Go, Stelios turned up in a bright orange jumpsuit adorned with EasyJet’s number. He also dressed up as a giant can of shaving cream.

His money-saving scams are pretty crazed too, such as not serving free coffee on flights so he can install one fewer lavatory. Or popcorn-free cinemas to save on cleaners. Or windowless EasyCruise cabins.

And then there are his recent start-ups. Easy4Men is his cheapo aftershave and deodorant brand. Even impecunious adolescents save up for pricey aftershave. So who on earth are these unguents marketed at? And EasyBus. Nice idea… but at the moment the service is nothing more than a few minibuses shuttling tight-fisted travellers from London to Luton Airport. National Express can rest easy.

A lot of these start-ups have gone nowhere. EasyCinema, which opened its sole venue in Milton Keynes, quietly disappeared. The internet cafes have survived, but they’re hardly the new Starbucks. And despite the low, low prices, EasyMobile has similarly failed to set the world alight. In fact, since he floated EasyJet in October 2000 for £546m, Stelios has accumulated 14 odd-ball ventures under the EasyGroup umbrella, and frankly, none of them has exactly taken off.

And that’s the oddest thing of all. Shares in EasyJet continue to climb, valuing the airline at £1.9bn, with Stelios retaining a 16 per cent stake. And as his recent knighthood shows, Sir Stelios is a hugely popular business figure, unafraid to make a fool of himself as a champion of low prices. But to a lot of ordinary business folk the eccentric multi-millionaire is a one-hit wonder, a rich kid who dabbles in business and struck lucky thanks only to his money.

Daddy’s boy

As I enter the open-plan office at his Camden headquarters, Stelios waves hello. We slip into a side room. I begin with the old Freudian gambit of asking about his father, the shipping tycoon Loucas Haji-Ioannou. In discussing his dad, he is frank and at times endearingly self-deprecating. “In my early twenties I had one motivation, which was to shake off my daddy’s boy image. I wanted to make a name for myself rather than just being my father’s son.”

So it probably wasn’t a great idea to shake off his daddy’s boy image by starting a, er, shipping business. And with a few million in funding thrown in by, er, his dad.

“Not every 25-year-old gets the money I got to start Stelmar,” he concedes. “Without that money I’d probably be running a kebab shop! But if you want to start an oil tanker business you need to be able to buy oil tankers.”

In fairness he put Loucas’s money to good use. Stelmar was sold last year for £1.3bn, Stelios personally netting £94m and proving that he is far from a onehit wonder. “People don’t talk about Stelmar, because it wasn’t a consumer facing business,” he moans.

It’s a fair point. How many entrepreneurs have built two, billion-pound companies from scratch in the past 20 years? And how many are still subject to so much public scrutiny and private carping?

The question is, where will the next billion-pound company come from? It’s surely not going to be EasyWatch. These plastic strapped timepieces retail for a tenner a piece. Not exactly a billion pound business in the making is it? “Have you seen the market value of Swatch?” he asks. “And it depends on how you measure financial success. The real objective is to get a good return on equity.

“With EasyWatches we have put very little capital into the business. And therefore it doesn’t take very long before we become profitable.”

Logical portfolio

This interest in the innate profitability of a venture, rather than its size, is surprising given the vast scale of his most successful operations. Why bother with EasyWatch? Why bother with white-label deals where the returns may be shared with others? But it’s a vital insight into Stelios’ simple, entrepreneurial mindset. And there’s a logic to his portfolio that outsiders don’t grasp, he says. “People get overwhelmed by the number of my businesses. They say it looks like a random selection. There is actually a theme. Because the brand was built by the airline it is natural that the brand extends into travel companies. Other than the airline there are four other travel companies. They are going to become substantial businesses in due time. ”

Indeed, EasyCruise has already shrugged off press criticism at its launch to report bumper bookings, and he closed a franchise deal that will put eight ships afloat by 2011, while his fledgling hotel chain sealed a deal in Dubai to open 38 hotels across the Middle East. But what about the non-travel businesses? They are all chosen for their ability to promote the Easy brand, Stelios explains. “I believe that branding has a lot to do with objects. I mean why is the cruise line such a high-profile business? It is because it has these great big assets that you can look at. Floating billboards. Like the idea of having an advertisement on your wrist or bathroom shelf, or whatever. I have tried to create an extension into products, with Easy4Men and EasyWatch. EasyInternetcafé is essentially a physical space company. You can see the logo on the high street.”

Some of these brands have been slow burners, but Stelios says he has to be patient. “The thing about a brand extension is that you don’t pull the plug. You can’t be like a private equity house that would invest in ten businesses and expect nine to go bust and rely on the one that made it to pay for all the others.”

New start-up

His latest exposure to risk – and the newest company in the EasyGroup stable – is EasyOffice. “We might as well create some news and announce EasyOffice,” he declares, without ceremony. “It will be the 16th Easy business. We are thinking how best to use some of the real estate with EasyInternetcafés. We will offer temporary short-term office space to small and medium-size enterprises. We will be taking on the Reguses of this world - with a simpler, lower-cost product.”

The new venture is classic Stelios. He will use yield management, or variable pricing, the same business model as the original EasyJet. “You can argue that the people who book early deserve a discount or you can argue that the people who stay longest deserve a discount. I think if someone can commit to 15 days they can afford to pay more per day than someone who commits to a year now.” So how does he assess the risk in a start-up like this? Incredibly, he admits that he hasn’t worked out the figures. “Yield management is mathematics and economics and it can get a bit complicated, especially when a company the size of EasyJet is doing it. So it is a waste of time to use the same analysis for a start-up opening its first office. At this stage it is gut feeling.”

Stelios has also learned, during the last, few heady years of trial and error with EasyGroup, that yield management doesn’t always work, even in bigger or more mature businesses. It happened in the case of EasyCinema, where 20p advance tickets failed to entice punters who preferred to turn up and buy on impulse – though Stelios blamed high rents.

“In some sectors it is very efficient, in others it is counter-productive. For example, we have discovered that renting a car for an hour for a pound has disproportionate risks. So we now insist on an amount of money per day to rent a car. You can’t give someone an entire car if he gives you a pound. They could write off that car and you would lose 14,000 times the amount you earn.”

He now believes yield management is “inappropriate” for services like EasyBus, too. “Customers use the service because they are at an airport and want to go to London. They are not price sensitive which is why the price is flat at £8. When a customer is standing at your counter what do you expect them to do? Wait two days until the price goes down?”

I’m seeing a shrink

Like a lot of entrepreneurs, Stelios has learned many of his best lessons through trial and error. And he also shares the common trait, among entrepreneurs, of making his own decisions. He employs ten staff at the EasyGroup headquarters – lawyers, PR guys, secretaries etc – but strategically he’s a lone operator. “Decisions are not delegated. I have to have the time to think about something and implement it. I can’t afford to let other people decide where to take the brand.”

So, is there no-one he can trust? “I might as well tell you,” he says, looking rather embarrassed. “I use an executive coach. His name is Ainslie Baker. He is not teaching me business. He is a sounding board to help me think things through. For example, what sort of person should I hire to run EasyGroup IP? Should it be an accountant or a lawyer? Ainslie and I looked at the tasks and skills needed for the job and we went for a lawyer.”

Please note, we’re not talking about a conventional coach: “He’s a psychiatrist. That’s what life coaches are. You can call them glorified shrinks if you like. We don’t sit there and talk about life, we talk about business.”

Their chats must be productive. Stelios seems sharper than ever. Though if Ainslie has a moment, perhaps he should mention those screwy publicity stunts to Stelios. After all, he wouldn’t want anyone to think he was crazy.

Tags: stelios, classic stelios, sir stelios, stelios explains, stelios simple, stelios turned, stelios waves, shipping business, billion pound business, business model, stelios retaining 16, high profile business, 16th easy business, oil tanker business, stelios blamed high rents, easygroup, ordinary business folk, start stelmar, stelios personally netting 94m, start ups, wasnt consumer facing business, billion pound company, brand extension, easy brand, easyjet, hugely popular business figure, travel businesses, billion pound companies, recent start ups, brand extends, deodorant brand, money id, ten businesses, yield management, low cost airline, put loucass money, ainslie, easygroup stable, easygroup umbrella, easywatch, hes, low prices, mature businesses, people dont talk, publicity stunts, stelmar, substantial businesses, travel companies, yield management doesnt, believes yield management, easygroup headquarters lawyers, money saving scams, wasnt great idea, dont pull, dont sit, easyjet continue, entire car, floated easyjet, newest company, original easyjet, rent car, renting car, barmy publicity stunts, daddys boy image, run easygroup ip, screwy publicity stunts, easycruise, british airways, easybus, easycinema, alight, orange jumpsuit, impecunious, luton airport, shuttling, starbucks, pele, knighthood, aftershave, airline go,