The offices of the internet dating firm Cupid occupy a corner site in Edinburgh’s Princes Street and look out over the city’s famous skyline. It is, says chief executive Phil Gripton, one the best views in Europe.
Appropriately for a firm in the business of match-making, it is also one of the most romantic. The balcony not only faces the Castle, it provides the perfect pitch for the firework celebrations and a panoramic view that money just cannot buy.
Fairytale images aside, Gripton has a serious business to run and the hard facts are that Cupid was left feeling unloved last year after making a loss in what proved to be 12 difficult months.
He was promoted in December to replace founder Bill Dobbie, who stepped back from running the business but remains on the board as a non-executive director.
Gripton, who managed the dating services business, was forced to move quickly to recover ground lost when the company was accused of using fake profiles and messages to entice people to subscribe to the service. There was a BBC investigation and inquiries led to the firm’s office in Ukraine where the business had been jointly set up by the other co-founder Max Polyakov. He left to set up his own operation.
A subsequent report by accountancy firm KPMG did not find any evidence to support the allegations, but it did say that Cupid’s staff were not clearly identified, leading to confusion for customers.
Gripton and the board were relieved that the firm had been cleared but set about transforming the business, its structure and its culture. New measures were installed to block scammers and to verify users in order to make doubly sure its systems were more robust.
“We were exonerated by an independent piece of work. However, the markets reacted, shares fell and we had a lot of work to do,” he says. “I came in to make the business more consumer-centric.”
Restructuring also meant offloading the “casual” dating sites for £45.1 million to Polyakov’s Grendall Investment Limited in order to focus on its niche and mainstream sites. The deal included sites such as Benaughty.com and Flirt.com and a separate software licensing agreement with Grendall, worth £2m. Selling the casual sites was a big decision as they accounted for 70 per cent of the business. Gripton argues it was the right thing to do. “It was about the way we were being perceived. In terms of where we wanted to take the business the casual sites didn’t fit,” he says.
It was not just the media which responded negatively to the fake user allegations. Investors were becoming twitchy, too. From flotation on the Alternative Investment Market in June 2010, shares in the company soared from 60p to just under 250p by September 2011, enabling Dobbie and Polyakov to make one of the quickest fortunes in Scottish corporate history. But they have since plunged below 50p and last week traded at 43p.
Gripton admits the bad publicity around the business had been a big problem. “One of the contributory reasons was that there was some confusion about what ‘casual’ meant and the investment community were not enamoured with it,” he admits.
While the casual business was attracting most of the company’s capital, the “traditional” sites were not getting much investment because the former was an easier way to drive revenues.
He has briefed investors on his plans and says they are backing the board, although Toscafund, chaired by former Royal Bank of Scotland chairman Sir George Mathewson, last week sold its entire 16 per cent stake, without explanation. Gripton admits he was forewarned but has no idea who bought the shares.
“Martin Hughes [Toscafund chief executive] has his own agenda and it’s for him to decide what he wants to do.”
He says he was “not particularly” concerned by the sale and that he spent three days briefing investors who were supportive.
Gripton, who says he has never used an internet dating site, is now developing a number of mainstream and niche products, including Cupid.com, Amour.com, UniformDating.com and Canoodle.com, as well as a number of international sites. He wants the company to focus on a dating market that embraces social events such as wine tasting and cookery sessions.
Splitting up the company has taken some time but he is evolving his plans, including the launch of Lovebegins.com which targets the 45-plus age group, now accounting for half the British population. He is also developing plans which build on the database it has accumulated and which can be used for marketing.
“We have to change from being a dating only business to being a scaleable technology play. The dating business is in turnaround but we have a unique opportunity in having a lot of data we can use,” he says.
More attention is being given to driving businesses from those countries and to building those events businesses. It staged 85 last year.
He admits that internet dating was once seen as a taboo activity, but younger people in particular are now so used to communicating virtually that it is changing opinions.
“Young people can spend all evening contacting their friends on their mobile phones and laptops and think they have been out seeing them,” he says.
Job: Chief executive, Cupid.
Born: Whitley Bay.
Education: Computing science and business, Huddersfield University.
Career: ICL Fujitsu, Cable & Wireless, Bigmouthmedia.
Ambition while at school: Pilot.
Car: Audi A3, but often use the bus in Edinburgh.
Kindle or book? Kindle.
Favourite place: Edinburgh and Spain for the heat.
What makes you angry? Intolerance.
Best advice you have been given: John Pluthero [ex-Cable & Wireless] told me that leadership was about giving people the leadership they need and not necessarily the leadership you want to give them.