As the dotcom boom turned to bust, Nick Jenkins launched Moonpig. Now the online greetings card company is a £30m business prospering in uncertain times. What's his secret?

Nick Jenkins started Moonpig, his online personalised greeting cards business, four months after the dotcom crash. But while countless companies were folding—many victims of a rush-to-market mentality—Jenkins had spent a long time making sure his business model was correct.

"I knew I wanted to start an internet business," says Jenkins. "I went through a process of elimination, working out all the things I could do on the Web and what would work as a business model. I did think it through fairly well in terms of how do you make a product that is not going to be price-sensitive, involve lots of capital expenditure or lots of stock," he says.

Jenkins explored all the options from selling digital content and advertising space to physical products. "I didn't want to have a business that sold the same goods as you could buy in a shop, because I realised that the only reason for buying it online would be for convenience or price and eventually you would get to the point where your margins would be barely acceptable," he explains.

He had to find a product that he could improve through selling it on the internet. "That would solve the problem of price competition because it's not the same product that you can buy in the High Street and doesn't compare," he says.

Personalised greetings cards proved to be a profitable answer to this complex problem. Jenkins thinks being able to personalise a card online adds a valuable emotional dimension. Moonpig charges £2.99 for a card, which not personalised in a shop would cost £1.50 to £2. "We can charge more for the card because it's not the same product, and because you can only personalise and buy the product online," explains Jenkins.

"We manufacture greetings cards to demand, so we just start with a pile of paper in the warehouse. When a card gets bought it gets made, if it doesn't get bought it doesn't get made," he says.

Jenkins started the business with £2.5m of which £600,000 was his own money from the sale of a previous business. The rest was raised through angel funding. The company started turning a profit in 2005. And for 2008-09 Moonpig reported a profit of £6.7m on a £20m turnover. Turnover grew to £30m in the year to April 2010.

Moonpig has just 75 employees. "We probably make more money than Clintons and we have a fraction of the employees," says Jenkins. Staff are split roughly half and half between the head office in London and a factory in Guernsey.

Jenkins was not unduly worried when the recession hit. He reckons that at times like these people are looking to make the most of their money. More than 2.5 million customers have bought his cards in the past year. He believes that buying a personalised card costing £2.99 is far better value than spending £2 on a cheaper card that is not distinctly individual.

"If you turn up at the pub for a friend's birthday with a card that cost you £3 but you've put a photo of them on it and written some funny captions, the impact of that £3 is much greater than buying them a glass of wine for £3.75," says Jenkins. "The glass of wine will barely register, whereas if you make a bit of an effort with a card, in terms of bang for your buck it is incredibly good value. We haven't been affected by the recession."

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