I got the idea for Loot while passing through an Italian airport in 1983. I had been trained as a doctor in Milan, but was living in Britain as a research fellow in art history at Oxford. Returning from a visit to my mother near Lake Como, I picked up a paper called Secondamano, which I thought would contain ads for antiques, possibly the type of Renaissance prints I specialised in.
What I found was page after page of used refrigerators, armchairs and cars. I was completely taken by the idea that the adverts were free. When I got to Heathrow I took a cab into London and told the driver to stop at every newsagent we passed. None of them had anything like it. I got very excited and decided to try it.
When I got home, I immediately went next door to my sister, Elizabeth, and her husband, Dominic Gill, the Financial Times' music critic. We practically made the decision there and then. We made up a business plan with a budget of pounds 146,000 - pounds 20,000 of my savings, pounds 20,000 from them, and the rest from two friends who became silent partners. It was a wild underestimate. What it actually cost in the end was closer to pounds 1m.
The next step was to make up a dummy of the paper, showing what it would look like. We were terrified that the minute we talked to anyone else they would take our idea. But the first distributor we took our dummies to wasn't interested at all. He said: "Kids, it's a very nice product, but I've been in this business 35 years and it's not going to work." It was a bit discouraging, but our experience with the second distributor was quite the opposite. She took us straight in to talk to the board of directors and they approved it right away.
Dominic wrote the software, with the help of some professional programmers, which allowed us to process the ads, my sister came up with the name, and a year after I first saw Secondamano, we were ready to launch.
We misunderstood the reaction of our customers, however. Our radio and television campaign, with a budget of pounds 30,000, concentrated on selling the paper. In the first week we sold 24,000 copies across London. It only had 900 ads, however, which we had creatively stretched to fill 16 pages. The product was so bad that sales started falling right away - 18,000 the second week, 14,000 the third, and then free fall.
Our mistake was that we thought that as soon as we told 10 people that the ads were free we'd get 10 ads. But nobody believed the ads really were free. For years people called us and sceptically demanded to know if we could guarantee that they wouldn't get a bill. We were in deep despair, but we had the faith of neophytes. We thought the customers were being stupid, and didn't see that it was us who were being stupid.
At first we didn't realise how serious the problem was. The distributors paid us for half the copies we sent out, but reports of how many we actually sold didn't come in until three months later. By the time we got our first figure, 24,000, sales were actually bottoming out at 2,845. It was like the Titanic: a fantastically beautiful idea that five minutes later was at the bottom of the sea.
After four or five months, the distributors told us we should give up because we were losing our shirts. But we were so utterly convinced that we persevered. We never called advertisers to persuade them to place ads with us - which in hindsight was a mistake. But we did approach clubs, associations and organisations. Eventually, though, it was word of mouth that brought the advertisers in.
The silent partners put in more money, and our second promotional campaign was aimed at convincing people that our ads really were free. But even their money eventually ran out, and I had to sell my collection of Renaissance prints to a private collector, raising pounds 150,000 for the company. At one point we approached banks for a pounds 30,000 overdraft and eventually got one from Barclays. As luck would have it, we didn't need it.
We broke even three years and four months after the launch, when we had 6,000 ads and were selling 18,000 copies a week. Today, we get 28,000 ads a day in London alone, 45,000 across the group. We publish 24 editions in the UK and Ireland, and are looking at international opportunities, starting with a joint venture in Tokyo. Our original enthusiasm has been proved right, and I've even been able to rebuild my art collection.