December 2007 / January 2008

How Stephen graduated with honours to a glittering 30-year career

From one defining moment as a teenager to a life in estate agency including five more...

STEPHEN SHIPPERLEY turned down a place at Oxford University to join Connells straight from school — and has since graduated with honours to a 30-year career with the country’s second-biggest estate agency group, more that half of that time as chief executive.

STEPHEN SHIPPERLEY Career timeline: 1977 — Joined Connells Aylesbury branch as trainee negotiator; 1980 — Appointed manager of High Wycombe branch at age 21; 1983 — Promoted to area director covering Aylesbury, High Wycombe, Thame and Bicester; Mid-1980s — Expanded area, opening branches at Banbury, Headington, Cowley, Abingdon, Swindon 1987 — Appointed regional director; 1990 — Appointed chief executive; 2003 — Appointed group chief executive.

He joined the company at their Aylesbury office in 1977 straight from the town’s grammar school, although he had gained a place at Oriel College Oxford with three good A levels.

“My father was so angry that he nearly kicked me out of the house!” he said. “But 30 years ago you did not need a degree to be successful. It’s different nowadays — I want my three daughters to go to university, as it is difficult to progress without a degree.”

Mr Shipperley, who rose rapidly through the company ranks to be appointed Connells’ chief executive in 1990 and group chief executive in 2003, remembers the first house he sold — a Victorian semi in Bierton Road, Aylesbury, for £11,250.

In those days the biggest challenge facing first-time buyers was getting a mortgage. At the time the market was recovering from the post-1973 recession.

Connells was a privately owned company at the time with 25 branches. It had been founded as a partnership by Larry Connell in the 1930s but by the time Mr Shipperley joined it at the age of 18 in 1977, it was owned by the Constantine family, with the main office in Luton.

In 1980, at the age of 21, Mr Shipperley became manager of the High Wycombe office and he recalls it was a tough time.

“Mortgage rates were high and in High Wycombe the furniture market was collapsing,” he said. “Many of the disused factories and warehouses would eventually be turned into housing, or offices for high-tech businesses.”

The “New City” of Milton Keynes was to become an important source of business for Connells but at the time the local authority would not allow estate agency offices in the city centre.

“We did not get in until 1984 as did our competitor firms,” recalls Mr Shipperley. “Since then Milton Keynes has matured into a major commercial and residential centre.”

In 1983, he became an area director, and the following year came what he described as the first of five “defining moments” in the company’s development, when Connells floated on the Stock Exchange.

It was one of the first estate agency businesses to become a public company, along with, among others, Countrywide. Connells was highly profitable and was eyed by major financial institutions. The business was also expanding.

“From the mid to late 1980s, we went from 30 to 100 branches, and in 1990, Connells was acquired by Scottish Widows, and I became chief executive,” said Mr Shipperley. “In 1991 we took over the western region of Prudential, effectively increasing our branch count to 150.”

The second “defining moment” came in 1994, when Connells was the first major estate agency firm to stop selling endowment mortgages.

“At the time lots of people said we were mad but most of our competitors followed suit a few years later,” said Mr Shipperley.

“We could see that endowments were not good value for customers and anticipated that there would be a customer and regulatory backlash.

“Selling an investment product on the back of a mortgage just didn’t feel right so we reverted to simply providing the product and relevant insurance cover to protect our customers.”

Soon after came “defining moment” number three. “Most financial institutions were bailing out of the estate agency business and we tried to effect a management buyout from Scottish Widows,” recalled Mr Shipperley.

“However, because so many estate agencies were going through hard times, we were unable to get backing from any of the city financial institutions and so approached the Skipton Building Society.

“It was a very brave and far-sighted decision on the part of Skipton BS chief executive John Goodfellow to back us. The rest, as they say, is history.

“Our joint venture, formed in 1996, was a marriage made in heaven. From day one, the Skipton recognised that Connells was a great business managed by good people and the Skipton had no desire to get involved in the firm’s day-to-day running.”

The fourth “defining moment” as far as Mr Shipperley was concerned was the decision in 2000 to set up the property portal Rightmove.

“It’s not very often I compliment a competitor but it was Countrywide’s Harry Hill who was the brains behind getting four major estate agencies (Halifax and the then Royal and Sun Alliance as well as Connells and Countrywide) to collaborate to create Rightmove,” said the Connells group chief executive.

“He got competitor firms to sit round the table and hammer out a deal — and what an inspired move that turned out to be!

“Back in 2000 there was no certainty that it would succeed. The internet was an unknown quantity, there were hundreds of property portals set up in competition, many giving shares to customers and all offering free listings. Ninety nine per cent of dot com companies set up at that time have since failed. ”

Mr Shipperley, now the longest serving director on Rightmove’s board, said he can pinpoint three distinct decisions which ensured that Rightmove grew to be the huge success it is today.

“First were the appointments of Ed Williams, now group managing director, Nick McKittrick, managing director of rightmove.co.uk and Miles Shipside. commercial director,” he said.

“Second was the agreement by shareholders to fund a TV advertising campaign featuring football celebrity Ian Wright which really got the name into the public psyche — and thirdly was the decision to charge all estate agents, including the four shareholders, to list on the site.”

The fifth, and most recent, defining moment was in 2003 when Connells, then a 150-branch estate agency, acquired Sequence, the loss-making Royal & Sun Alliance estate agency and a business twice its size.

“We knew it was basically a good company with good people and we were convinced that, by changing its business model and taking it back to the same basic estate agency principles as Connells, we could transform it,” said Mr Shipperley.

“Having made an £8 million loss the year before, in our first year of ownership it made a £4 million profit and last year that had risen to £32 million.

“The real credit for that transformation goes to Sequence chief executive David Livesey, group commercial director Adrian Gill and all the Sequence staff who trusted us, accepted the changes and have worked hard to make it the thriving business it is today.”

Mr Shipperley forecasts Connells group profits for 2007 will be about the same as the record £70 million of 2006, but expects a tail off in the final quarter.

“The estate agency industry is in for a pretty tough time this winter,” he said. “If the downturn continues for any length of time some firms will go out of business.

“Firms will have to cut costs. There will be branch closures, but there are other cost issues to face up to. A key one is advertising.

“Estate agents advertise in local papers as a matter of course and vendors expect their homes to appear in the papers. But you don’t make sales that way. Most of our enquiries are via the internet.

“On average, one of our branches spends £15,000 to £20,000 per year advertising in the local papers. It’s five times the spend with Rightmove but which is more cost effective?”

Mr Shipperley said that one reason why Connells has been resilient is that after the 1990s recession, the firm made a strategic decision to diversify the business.

“While our focus still remains on house sales, we now have lots of other related income streams such as surveying, relocations, overseas sales, mortgages, conveyancing, asset management and land and new homes,” he said.

“However, whether forming partnerships or acquiring businesses, there is one abiding principle, apart from the bottom line of course —we have to get on with the people involved!
“There has to be a commonality of outlook, a shared sense of humour and the knowledge that we can work well together. We have walked away from deals where this is not the case.”

Looking back, Mr Shipperley says he was fortunate to learn the trade from three people he terms “masters of the industry”.

“There was branch manager Quiller Taylor, local partner David White, the best estate agent I have ever known, and area director Eddie Moss, who all went on to play hugely important roles in the company,” he recalls.

“David becoming deputy senior partner and Eddie chief executive. Lots of the things that we now take for granted in Connells today, including the sale of mortgages, formal training and seven-day opening, were pioneered from the Aylesbury office and the culture developed there —to work hard, be successful but have fun —still runs through the company today.”

Asked what the ingredients are for success in the business, he replied: “It’s a long list , but there is one common factor behind successful estate agents — that is hard work.”

He adds one last observation. “One reason why Connells management stayed with the group was that they were well-paid incentivised employees.

“Financial institutions used to buy up estate agencies in the 1980s, pay the partners a bucketful of money, then tell them they were no longer needed so they retired, or moved elsewhere and took their knowledge and skills with them. That didn’t happen with Connells.”