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Last month, Gumtree invited its entire workforce to its London HQ to commemorate independence day. The event had nothing to do with the US and its founding fathers. It was held to mark 18 months since the classified ads business completed its complex and difficult secession from previous owners eBay and Adevinta ASA.
The celebration was well earned, according to Gumtree’s CEO, Hugh Hurley. It signalled the end of a tumultuous period for the business, during which it went through two sales, overcame a regulatory challenge and formed several new departments from scratch.
“We had 18 months to build all these functions, while continuing to serve our customers and evolve the business,” he recalls. “It was an incredibly challenging time, but it’s something I’m so proud of.”
Gumtree’s awkward acquisition
Gumtree found itself facing this tricky situation after the breakdown of its acquisition by Norwegian classifieds ads group Adevinta ASA in 2020. Gumtree had been part of the eBay group since being acquired by the US ecommerce giant in 2005 when Adevinta submitted its $9.2bn (£6.5bn) bid for eBay’s classifieds businesses, including Gumtree.
But the Competition and Markets Authority (CMA) vetoed the purchase, saying that the deal would limit consumer choice because Adevinta already owned Shpock, another online classifieds marketplace in the UK. With the structure of the transaction also giving eBay a 33% voting stake in Adevinta, the CMA determined that eBay’s only main rival in the country would be Facebook Marketplace.
The regulator ordered that Shpock and eBay’s UK Gumtree business (including Motors.co.uk) be divested before the acquisition could be approved. Adevinta agreed to the terms but, while Shpock soon found a buyer, Gumtree did not. In effect, it was left in limbo for six months, uncertain who its new owner would be and subject to so-called hold-separate orders – meaning that, while it was owned by Adevinta, it had to be run independently until it could be divested.
“It was a difficult time,” Hurley admits. “As a leadership team, we were going through a pretty aggressive sales process and continuing to deal with the impacts of Covid, so there were quite a few challenges to handle.”
Controlling your own destiny
Despite all this, Hurley remained optimistic about Gumtree’s future.
“Although we weren’t sure who our new owner would be, we actually saw this as a positive,” he explains. “The priority from the CMA was to find an owner that would invest and give us the scope to evolve as an independent business.”
This regulatory diktat enabled Gumtree to redefine its purpose, mission and strategic goals free from any parental interference.
“Being a small part of a big corporation meant that Gumtree had often felt that its true potential wasn’t fully recognised,” Hurley says. “The opportunity to be independent was liberating for us. It put us in control of our own destiny and gave us the excitement and energy to work through that taxing transition period.”
The opportunity to be independent was liberating for us. It put us in control of our own destiny
Separating from eBay was no easy task. Gumtree was subject to 60 transition service agreements (used to ensure a smooth divestment and meaning that the seller has to provide continuing support) and, having been part of a large group for 15-plus years, much of its tech stack and several functions were centralised. Gumtree’s data needs were handled by an eBay team based in Shanghai; the firm relied on information supplied by eBay’s central analytics department; and its finance, HR and building management work was all done by eBay teams.
“Having worked as part of larger corporations, you realise how heavily they rely on these central teams,” Hurley says. “It’s one thing to turn off your dependencies from a technical perspective, but to build a fully functioning business from a standing start is another matter entirely.”
How to rebuild a business
The first step, Hurley jokes, was to recruit the recruitment team. It relied heavily on contractors initially because time was of the essence, with 70 people brought in over the transition period. Gumtree’s LinkedIn presence, intranet and employee branding also had to be recreated to give the firm its own identity back.
The workload during these months was “incredibly heavy”, he recalls. And one of the most stressful moments came when the website had to be moved to the firm’s own cloud environment.
The entire organisation was working through the night and during the weekends
“We’re one of the highest-traffic websites in the UK and we literally had to lift our site and move it to Google Cloud,” Hurley explains. “This involved taking the site down for the first time in two years as we literally switched it off, started the transfer and turned on the applications in the new environment.”
The business stayed offline for two hours longer than planned, he says, adding that “the entire organisation was working through the night and during the weekends on bug-checking. That was a particularly tense period, but it was an incredible way for us to come together as a business.”
Keeping staff motivated
He acknowledges that all the extra work required by the transition asked a lot of the firm’s employees, adding: “We were incredibly lucky with the teams, the passion they showed and the willingness they had to rise to the challenge.”
At the regular all-staff meetings it held to keep everyone updated on progress, the leadership team repeatedly assured employees that this level of stress would not be the norm under its new way of doing business.
“We leaned into the idea of the light at the end of the tunnel and focused on the opportunities that would come once we were through this,” says Hurley, who had to adapt his own leadership style to meet the CMA’s tight deadlines.
“In general, leading a business involves setting goals, drawing up guidelines and empowering teams. When you face extremely technical projects that need to be delivered, you must become far more direct and task-focused,” he explains.
Now that Gumtree has been spun out successfully, having been bought by a consortium comprising Novum Capital and O3 Industries at the end of 2021, Hurley has been able to refocus the business.
“One thing we lost under eBay was our connection to communities,” he says. “At its core, I want Gumtree to support local trading by making the process simple, safe and more enjoyable. This next phase is the exciting part.”
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