Timing is everything in comedy. And some would argue the same is true for business. Michael Dawson, founder and chief executive of the Gift Voucher Shop, the company behind the popular One4All brand, is one of them.
As someone whose firm initiated a funding round just days before the 9/11 attacks and also kick-started a management buyout shortly ahead of the collapse of Lehman Brothers, he knows how important it is to choose the right moment to make a move.
Luckily for him, everything worked out well for the company, which right now is on a high. Business is booming as the Irish economy rebounds and following a change in the benefit-in-kind scheme in budget 2015 that doubled the amount employers can gift to their staff.
Gift Voucher Shop reported a 21 per cent increase in turnover last year. Sales of One4All prepaid gift cards, which can be redeemed in thousands of retailers, surpassed €96 million in Ireland and £37 million in Britain in the fourth quarter. On the other side of the equation, redemption levels reached a record high in 2016, with more than €114 million in vouchers redeemed. That compares with €85.8 million a year earlier.
Gift Voucher Shop recorded profits of €7.9 million on revenues of €23.2 million last year. Company turnover is determined by the redemption of the One4All vouchers, on which Gift Voucher Shop takes a cut.
The firm employs 72 people in Ireland and a further 16 in Britain, with staff numbers doubling during the holiday season.
It is now a subsidiary of An Post, after the latter took a majority stake in the company for €9 million back in 2009. It is embarking on what Dawson describes as a "radical" digitalisation project and is also looking to expand beyond the markets where it currently operates (Ireland, Britain and Malta, the last of which is under licence).
“There are a number of European countries where there are possibilities for us, including France and Italy. In many of these places, attempts were made to copy us, but there was a realisation that they didn’t have the magic formula so they’ve now come to us about partnering,” said Dawson.
“We are also weighing up options from other parts of the world, too, including South America, where there are a number of countries very anxious to develop One4All and where we’re looking at forming strategic partnerships,” he adds.
I’m speaking to the Baldoyle-born businessman in San Francisco, where he is participating in a week-long chief executive retreat organised for EY Entrepreneur of the Year Awards finalists and alumni.
Dawson says he was born to be an entrepreneur. Early ventures included running the school shop at the age of eight.
“I’d go into town on my own and buy stock that we hadn’t had before, such as rulers, and then sell them back to the shop for a profit,” Dawson says.
“My next big move was taking advantage of the oil crisis. I’d get up at 4am and sell tea, coffee and sandwiches to the motorists queuing up early for petrol. I made great money out of it,” he adds.
His first adult job was firstly as a youth worker before he moved on to politics, where he became Fianna Fáil’s national organiser and also, briefly, served as a senator.
He also spent some time on a lottery card-related business that failed to take off. His first real business success came when he cashed in on the euphoria surrounding Italia 90 by hosting a World Cup extravaganza at the RDS in Dublin, which drew more than 7,000 football fans.
The Jurys spark
The idea for the gift voucher business came when his wife asked him to buy a gift card for his mother for Jurys hotel at Christmas. After putting off the journey across town and eventually settling for a voucher for a local restaurant instead, the businessman started to wonder why it wasn’t possible to just buy a gift card anywhere.
He convinced top retailers, such as Brown Thomas and Arnotts, to come on board and also persuaded An Post and other distributors to sell the One4All cards.
“Our initial goal was to have 500 retailers: now there are over 50,000, “ says Dawson, noting that choice was always central to the concept, as was convenience. However, he admits it took some time to encourage consumers to embrace the concept.
“It wasn’t until the third Christmas that people really understood what we were doing. We realised early on that part of the problem was that we weren’t selling a new product so much as encouraging a change in people’s shopping habits, which up to that point was to buy vouchers at individual stores,” Dawson says.
Some business people might have been put off by the early struggles, but it did little to upset Dawson, who had already experienced some setbacks in business. Not only had an earlier outdoor cinema venture been washed out, he had also tried to raise €1 million in financing for the business just days before the attack on the Twin Towers.
“We’d sent out prospectuses and expected to have the funding all wrapped up by the end of September 2001 but, of course, we heard nothing. We limped on for eight months. By then we had secured €500,000 but we had also burnt through €200,000 so things were very tight.
“Ironically, this probably was to our benefit when the downturn happened because we started out lean and stayed that way so we didn’t have so much to trim back when the recession hit,” he says.
Pear-shaped buyout
Dawson laughs at the many close shaves the business has had and an attempted management buyout was yet another move that very nearly went pear-shaped.
“Our timing once again was phenomenally bad,” he recalls. “Some shareholders were exiting and so we were looking to do an MBO. We told An Post about it because they were our strategic partner. Luckily they talked us into doing a share swap with them instead because Lehman Brothers collapsed a week after the deal was agreed,” he says.
As if these near-misses weren’t enough, a badly judged move into the British market temporarily put a halt to the company’s plans for world domination.
“We’re in a great situation in the UK now with sales that are double what we have in Ireland and still plenty of potential there,” says Dawson. “But we learnt the hard way how to operate there. While they are our nearest neighbour and we thought we knew everything about them, we were completely wrong.
“We went in there with a battle fund of €5 million, thinking we’d get revenge for Skibbereen and all that: in the end, it cost us €20 million to get the UK operations into profit,” he says.
“We would have based sales projections on good-quality information from the Irish market when we launched in the UK in 2006. At that time, the average value of a voucher in Ireland was €68 so we assumed that, give or take 10 per cent, it would be roughly the same there. However, the culture of gift-giving over there is completely different and so the average value of a voucher was only about £25,” he said.
Rumour has it
More devastating for the company was the spread of a rumour four years ago that it was in financial trouble, which nearly grounded the business for good.
“We have a risk register internally that we thought covered everything, including the possibility of planes falling out of the sky. But even we hadn’t anticipated an assassination bid on our business,” he says, referring to the rumours, which spread like wildfire across social media in January 2013.
The rumours warned that the company was at risk of collapse and urged anyone with One4All cards to spend them as quickly as possible before they became invalid.
“It was a very serious scare for us,” Dawson says. “You couldn’t really blame anyone for sharing the rumour, but it spread so quickly that we were literally working 24 hour days to address it and put people’s minds at ease.
"It was a very difficult time for us, but it had its amusing moments as well. For example, I was told of school principals around the country announcing the news over tannoy systems and urging students to tell their parents about it. There were memos from our own regulator, the Central Bank, to their staff and from our former auditor KPMG, advising employees to spend the vouchers quickly rather than thinking to pick up the phone to check in with us," he adds.
In the end, it was never established who started the rumour, although it was traced back to India.
The digital world
Looking ahead, Dawson is excited about the company’s digitalisation programme, which he admits has been a long time coming.
“We’ve always prided ourselves on being a consumer-led business and this project will offer plenty of new things for them. We’ve basically had to wait to introduce some tools because many retailers still aren’t ready for a digital world. Some are only just beginning to discover things such as near-field technology,” says Dawson.
Company revenues, which are expected to rise by about 25 per cent this year, are split three ways, with corporate sales accounting for half of all turnover, an additional 42 per cent coming via the post office network and just 8 per cent currently from online.
While looking to grow online, Dawson says he is happy with the current distribution of revenues, even with An Post experiencing its fair share of difficulties in recent years.
“When we started out partnering with An Post, there were 2.7 million people visiting a post office on a weekly basis in Ireland. Obviously, the situation has changed in the years since, and it would seem inevitable that there will be rationalisation in the sector, but we still think the network is still an extremely convenient place for people to buy cards, and it taps into an audience that may not necessarily be online much,” he says.
Given that Dawson is in the rewards business, it’s not surprising to hear him express excitement over the fact that more companies are beginning to realise the wisdom of rewarding their employees.
“We grew right through the downturn and continue to do so because more companies realised the need to reward staff. Our online business is developing really well and, while we’re seeing slightly lower sales in post offices, we’re are still in double digits in terms of growth so things look good for the future,” he says.
CURRICULUM VITAE
Name: Michael Dawson.
Position: Founder and chief executive of the Gift Voucher Shop, the company behind One4All brand.
Age: 58.
Family: His wife, Pauline, died five years ago. He is now in a relationship with Maria. He has three sons aged 27,19 and 18.
What he is most proud of: He was a leading proponent of the Bikes to Work scheme.
Something you might expect: He believes companies should show their appreciation of their staff more.
Something that might surprise: He appeared onstage with U2 during an encore at a gig they played in Rotterdam.
