UK disrupter hopes to make Cazoo the vehicle to shake up used car sales

Just as his property website Zoopla was taking off, Alex Chesterman made a vow that there would be no more start-ups.

His wife had just said no to more children after their second — a decision he promised to match by calling it a day after two successful but time consuming businesses that yielded several hundred million pounds for the UK entrepreneur.

But that pledge was quickly broken. This week, the 51-year-old Londoner revealed plans to list his two-year-old start-up car retailer Cazoo in New York at a valuation of $7bn, using billionaire investor Daniel Och’s special purpose acquisition company.

The deal is his biggest yet — and the highest initial listing value of any UK company on the New York Stock Exchange. But it will be a major test for Chesterman as he seeks to scale up the business rapidly to justify a valuation that some in the UK tech market think rather high.

“Its certainly seems at the wrong value now,” said one prominent VC investor, “whether it will be in future is the question”.

But his record gives investors hope. For a self-confessed imitator of other people’s ideas, Chesterman has managed to turn his own frustrations over markets in need of a shake-up into several fortunes and a lasting impact on the UK consumer.

Lovefilm, the DVD rental service he sold for £200m in 2011 to Amazon as the UK’s answer to Netflix, preceded the end of the high street video store.

Zoopla, the property portal he floated in 2014 and sold to Silver Lake for £2.2bn in 2018, netting him about £300m, tapped into the British obsession with the values of other people’s houses, at a cost to traditional estate agents.

He wants Cazoo to do the same to the used car sales forecourt — making the process of buying a vehicle quicker, lower cost and with your purchase delivered to your door.

If you think like a consumer, and if you think that there’s a way to improve that market, then it’s likely that most consumers feel the same way

The deal will make about £100m for Chesterman — who owns about a quarter of Cazoo — on top of a similar amount last autumn at the company’s last private fundraising.

All three start-ups came from spotting the success of others in the US — Cazoo from a TV ad for US car seller Carvana — but transplanted and changed for the European market.

He describes it as “second mover advantage . . . we are the first in our market, but having let others figure out what works and doesn’t work”.

Chesterman is often treated with suspicion by incumbents — some dealers are still sceptical whether Cazoo will make a profit. He admits that he is unlikely to know more about these markets but has found that ignorance can be an advantage.

“Fixing stuff that’s broken,” as he puts it. “I like to watch films, I live in a house, I drive a car. If you think like a consumer, and if you think that there’s a way to improve that market, then it’s likely that most consumers feel the same way.”

Chesterman, who was educated at St Paul’s School and then University College London, had an offer to work at Goldman Sachs when a family friend offered instead to put him on the management programme for the Hard Rock Cafe in Florida.

He intended to take a three month sabbatical there but ended up spending 10 years in the US, first running a branch of Hard Rock and then, when the same friend started Planet Hollywood, joining as one of its first employees.

A family emergency brought him back to London, where he initially sought to continue his career in hospitality with a bagel shop chain in 1999. Realising it was worth more for its real estate, he spotted the opportunity in the mid-noughties tech sector with DVD home delivery.

Those who work with him say he can be emotionally detached and obsessive over details. Others describe him as a canny deal maker — both in bolting on smaller rivals to build businesses and knowing the best time to sell.

“He is not a flash guy,” said one person who has worked closely with him, “and he works all hours given; he could have retired years ago”.

Chesterman drives a Range Rover — though says he would buy his next car from Cazoo when the time comes — and lives in a house in Highgate in London. His money is spent on taking his family on holiday, although as an angel investor he has also bought stakes in start-ups such as Graze, CarWow and Farmdrop.

But his time at the moment is dominated by Cazoo, which he sees as his biggest chance yet — predicting it will be a £20bn business. In floating in New York, he says he wants to take it to investors that understand his business best and that London does not want fast growing but loss making start-ups. No amount of listing reforms as promised by the government would have changed that.

“I think this is probably my last one,” he says of his involvement with Cazoo, before adding: “But I have been caught having said that before.”