Nick Jenkins on building Moonpig and selling it for £120m

You may know Nick Jenkins from his time on the BBC smash hit show Dragons’ Den. You may know Moonpig from the funny cards or its seemingly ubiquitous advertising campaigns. But Jenkins’s fascinating story involves studying Russian in Ukraine, taking a pricing gamble his own investors thought would sink him and a TV advertising bet that multiplied his marketing spend 24 times over in under a year.

Having spent a decade working as a commodities trader in Russia, Jenkins returned to the UK and enrolled to do an MBA, which he describes as a year spent dreaming up cunning business plans. He founded Moonpig in 2000 and for the first few years it nearly went bust more than once. It survived four rounds of funding without ever showing a positive bank balance and took four years just to break even.

Jenkins spoke to Sir Richard Harpin on the Business Leader podcast about the pricing decision that turned the business around overnight, why he has never once set a marketing budget and how he handed the company over to a successor a few years before selling it to Photobox for £120m. Moonpig floated on the London Stock Exchange a decade later at a £1.2bn valuation.

In our interview, you will learn about:

• Why it didn’t make sense for Moonpig to have its own physical stores
• How to measure the impact of marketing and the importance of repeat custom
• The impact of non-exec directors
• Moonpig’s experiments with national TV advertising
• Advice on how to exit your business successfully

Why £1.99 was the wrong price for a greetings card

When Jenkins launched Moonpig, he priced a personalised card to match the £1.99 he'd pay in a shop. The business struggled for two or three years, never once showing a positive bank balance. One of his investor directors, exasperated, told him bluntly that the company was heading for collapse and asked why he didn't simply put the price up to £2.99.

“It had never occurred to me,” Jenkins says. “Pricing is one of those things where you get locked into a mentality. But I thought, 'Well, if we don't do it, we'll probably go bust and if we do it, we might go bust.' Either way, let's give it a go.”

Unit sales stayed exactly the same. Margin jumped to the point where the business became survivable.

He points to a Dutch rival that later ended up being bought by Moonpig as the cautionary tale in reverse. It launched at €1.99 and then competitors piled in at the same price. The whole market got stuck selling lots of cards at no profit.

“It's easier to start high and come down than start low and go up,” he says.

When a later competitor undercut Moonpig at £1.99, his own marketing team wanted to match it. Jenkins refused: “I said, 'No, we should only react to price competition when we can see our own sales falling as a result. If no one knows that someone out there is selling at £1.99 or they don't like what they're selling, why react to it?”

The TV bet that turned £50,000 into a £45m business

For the first four years, Jenkins had no channel he could put serious money behind. That changed in 2005, when the business had just broken even and made roughly £80,000 profit. Testing television advertising nationally cost about £100,000, a sum he judged the business could afford to lose if the experiment failed.

It worked immediately, funded out of the returns from the first advert. “We spent £50,000 that month and then the next month, we thought: let's double it,” he says. Spend rose from £50,000 a month to £100,000, then £200,000, £400,000, £800,000 and eventually £1.2m, entirely paid for by the customers each round of ad spend brought in.

“That is what really transformed the business from turning over £3m in 2005,” Jenkins says, “to turning over £45m three years later." He eventually found the ceiling: at £1.2m a month, the cost of acquiring a customer rose to about £11, so the business scaled back to £800,000 and stayed there.

“I would say never have a marketing budget, just have a target cost of customer acquisition,” he says, “because if the money is coming back, why would you stop? If you're making money by marketing, why would you stop spending money or have a finite budget for that year?”

Repeat business is everything

Jenkins is sceptical of lifetime value as a measure, preferring payback time: how many months before a new customer has repaid what it cost to acquire them. The clearest signal the business was working, he says, was that Moonpig kept growing even when marketing spend was switched off, through word of mouth alone, at 30 to 40 per cent a year.

The economics and customer loyalty were measurable. Of every 100 customers recruited, around 40 would try the product once and never return. The remaining 60 would stay for years, buying roughly six times a year. Some of Moonpig's earliest customers are still buying nearly three decades on. “You can sell something once,” he says, “but when they come back and they buy again, that's when you know that you have something which is worth investing in.” It's a principle he now applies directly when deciding what to back as an investor.

Hiring your replacement and the ultimate test

Iain Martin was brought into Moonpig initially as commercial director. He had served time at Hallmark Cards and its subsidiary Tigerprint, which worked closely with Marks & Spencer. When Martin joined, Jenkins had a plan already in mind: to hand over the chief executive role in stages rather than all at once.

Over two years, Martin took on the business department by department, until Jenkins finally told him he was going away for three months and whatever happened in his absence was Martin's problem to solve — and a problem indeed arose.

"Iain called and said, 'We've had a denial-of-service attack.' I said, 'That's dreadful. Let me know how it goes...' He dealt with it and that was that. I find people step up when they know that you're not marking their homework, you're not standing over their shoulder; people will step up."

From Dragons' Den to 38 investments

After selling the company to Photobox for £120m, Jenkins spent two seasons as an investor on Dragons' Den, where he says roughly half of the deals struck on camera went on to become real investments. He has since built a portfolio of 38 investments, with what he estimates as a 70 per cent failure rate among the smallest, earliest-stage bets, offset by the occasional large outlier.

His advice to founders raising money now centres on proof rather than ambition: a founder who can show a tested cost of customer acquisition and a modelled payback period, he says, has a far stronger pitch than one simply asking for a marketing budget to spend on hope. He also wants to see that the founder, not an outside consultant, understands their own numbers.

His one piece of advice for anyone scaling a business today is unambiguous: treat AI as unavoidable rather than optional. “It's a threat and it's a massive opportunity, but it's not going away,” he says. “It isn't about getting an advantage, it's about not being at a disadvantage.”

What can leaders learn?

Price on value, not habit. Jenkins matched a shop price out of instinct and nearly went bust because of it. Question any price you've never actually tested.

Replace a marketing budget with a target cost of acquisition. A fixed annual budget stops you scaling into what's working. A cost-per-customer ceiling doesn't.

Know your numbers, don't outsource them. Jenkins treats management accounts like a car dashboard, not paperwork for the accountant. If you can't explain your own growth model, you don't really own it.

Sell when there's still growth left in the business, not after you've taken it all. Too early and you leave value on the table. Too late and the buyer sees no upside.

Listen to the full conversation with Nick Jenkins on the Business Leader podcast.