Learning Lessons from: Sir Stelios Haji-Ioannou

[Editor’s note: this is the first of a new series called Learning Lessons, detailing the author’s exploits on the London lecture circuit. For further details about the mailing list, contact arthurmauk@gmail.com]Last night Sir Stelios Haji-Ioannou returned to the stage of the LSE. The founder of easyJet (of which I’m sure you’ve all learnt plenty about in case studies about price competition in contestable markets!) is a world-renowned entrepreneur and received a knighthood at the tender age of 39. The title of his talk was “Brands, Serial Entrepreneurship, the Environment and Giving Something Back!”

He started off by explaining how he got to where he is today. He was unabashed of his privilege: hard work and an enterprising mind are prerequisites, but it always helps to have a sugar daddy! He introduced himself as a “serial entrepreneur” – too attention deficient to focus on one idea. He explained how important it was to build up a brand and maintain it – it was an intangible asset that people associated with and trusted, therefore generating revenue when utilised appropriately. easyGroup was built around one idea: low-budget goods and services, a perfect example of yield management. Sir Stelios saw a gap in the market and went for it. He then kept that same brand and used it for his other ventures too, picking up economies of scope along the way.

However, he readily admitted that the easyGroup brand values don’t work with all industries. Unlike easyJet, easyCruise has been slow to succeed because the target clientele is different – cruises are seen to be more of a luxury good than a simple mode of transport so people don’t want to be sailing on a gigantic billboard. (Veblen good anyone?) Equally, easyCinema has not been such a hit but this time it’s due to limitations from the producer’s side: distributors don’t want their hyped-up, mega-million dollar movies to be worth 50p tickets. And during his explosive Q&A session, he recounted a hilarious anecdote when a group pitched the idea of budget funeral parlours: easyDeath.

On the environment, he complains about easyJet being unfairly targeted by environmentalist organisations because airline companies are easily recognised and blamed. But they fall prey to the same fallacy as food transport: there is a direct correlation between cheaper transport, higher efficiency and lower pollution. Budget airlines pack as many passengers as possible onto one plane to shave costs so that per passenger, easyJet pollutes a lot less than any other airline. Think about it this way: a private jet would pollute a plane’s amount to transport simply one person. So price is often a good indicator of environmental friendliness.

He sees carbon credits trading as a move towards the right direction: freeing up the Invisible Hand, but with some glaring problems such as grandfathering levels being set too high or needing to be extended beyond the EU. He said that things like this and CSRs need to move beyond fad status and dutifully pointed out that last year’s Davos Forum was all about climate change while this year it suddenly took a back seat to the world’s financial market turmoil.

There is so much more to say but I don’t want to make blog entries too long. The podcast will be up on the LSE’s website in a few days but in the meantime I urge you to attend these lectures for yourselves because seeing great men like Stelios live, it’s really quite something else.