Category Archives: Reynolds

Hindsight to be the next carsales

We’ve all talked with friends about super powers and asked each other which one you’d want. Mine would be the power of hindsight.

In my post The Hard Decision carsales had to Make, I talked about the leaders of Reynolds & Reynolds Australia using sound business acumen to make the right decision in persevering with carsales as a startup (it is now an ASX Top100 company with a market cap of ~$2.5b).

One of the learnings they used was the decision of Reynolds & Reynolds Inc out of Dayton, Ohio, to sell in favour of being a business partner to Microsoft’s

Reynolds acquired in 1995, the same year Autobytel was founded, and was one of the first online automotive classified sites in the US to list used cars. It was described as a “pioneer” in bring dealers to the Internet.

An article in Automotive News (26 June 1995) said ” DealerNet allows a computer user to hook on to the World Wide Web to get information on current car and truck models…..a consumer can get further information and even negotiate a deal via E-Mail – without ever stepping foot into a showroom”.

Reynolds was ahead of the curve with with current day online heavyweights and starting in 1997. Today each of them are worth billions of dollars as a couple of the leading online automotive classified sites in the world.

In the same year that these two now internet giants started, Reynolds sold to The Cobalt Group so that it could focus on it’s non-equity strategic partnership with Microsoft’s which was launched the previous year (1996).

When you look back now, this was a pretty big mistake no matter which way you look at it and would have been realized early.

So why did they make the decision to sell

Automotive News at the time said that Reynolds wanted to sell it to focus on its relationship with its new partner, Microsoft CarPoint.

They quoted the Reynolds director of online services saying “With CarPoint, we’re better able to fulfill our mission of linking dealers to buyers”.

The irony with this comment is that, Reynolds had exactly the same assets as what Reynolds Australia had with carsales – they were the number 1 dealer management system provider to franchised new and used car dealers in the US.

What they didn’t have was the foresight that Reynolds Australia had – they couldn’t see that Microsoft had started CarPoint because it saw something big. Had Reynolds realized at the time that if this was a big enough opportunity for Microsoft to invest in then instead of taking a back seat and helping them try to build something big, they would have committed to DealerNet themselves.

The other irony is that CarPoint ultimately failed because it concentrated on new cars as opposed to used cars, using Reynolds as the link to the new car dealers instead of using Reynolds for integrating used cars online which is the path Reynolds Australia took to make carsales so successful in Australia.

Microsoft found that it was bloody hard building a profitable online automotive portal. They bet on the wrong horse (new cars).

If Reynolds were able to use hindsight they would have realized that if it was hard for them to build, imagine how hard it will be for someone outside of the dealer eco system?

We’re never wrong hindsight, I know that but I wonder if there is anyone still at Reynolds who thinks “what if”.

6 moves that drove carsales

With carsales turning 20 this year, everyone seems to forget or fail to realise that for the first 5 or so years, carsales was not profitable and was fighting for the number 1 position with a number of (much bigger) players.

carsales had a (seemingly) unique advantage from the outset in terms of access to dealer inventory by virture of starting out of the number 1 dealer management system provider, Reynolds & Reynolds.

This is a snippet from the carsales’ website in February 1998 when there were just 9 dealers online (1 from South Australia, 4 from Western Australia, 4 from New South Wales):

But this wasn’t the silver bullet everything thought it was (some still think it is today funnily enough), things didn’t just happen for carsales though – they happened as a series of good, calculated business decisions that weren’t necessarily popular or seen as the best way forward at the time but each of them were winners.

Who have thought the “I’m Interested” Form would have been so influential:

Here’s 6 influential moves that drove carsales to where it is today:

Private Listings (2000): Despite having a seemingly huge advantage with unparelleled access to dealer inventory, carsales needed to find a way to drive traffic to the dealer’s cars especially since it didn’t have the seemingly huge advantage it’s competitors had – offline marketing presence. It’s leaders understood that “buyers are sellers and sellers are buyers” so if they could attract private listings on carsales these sellers would also be buyers (of dealer cars). Of course the dealers did not agree with this thinking as they were worried that nobody would look at dealer cars if cheaper private cars were also available for sale. We know who was right.

carsales September 2000:

Sell Your Car Until Sold (2002): Most automotive websites around the world are products of media groups, usually newspapers migrating online. Their model for selling was/is “pay me now for this edition, if it doesn’t sell pay me again to advertise again…and so on”. Translated, this means if I do a bad job helping you sell your car, pay me again. This makes sense for a newspaper as there are costs associated with re-publishing each edition but there is no (cost) reason for this model online. When carsales introduced a flat fee to sell your car until it was sold, private sellers lapped it up. It now made sense to sell your car where you are looking to buy.

Lead Model (2002): Like the previous point, the media groups and their online automotive off-shoots were all about sellers advertising their cars “for sale”. If carsales followed this lead, it would be tough to compete as there was no differentiation to its competitors who being propped up by their offline assets. The carsales leaders decided to change the paradigm by moving from “fee per listing” to a “fee per lead” model. Almost instantly carsales changed the currency of online automotive to leads and created a differentiation that helped propel the business. For dealers, the proposition was now not about “advertising” online but it was all about “selling” – the better they worked the leads they were paying for, the better their closing ratio and more cost effective their online “advertising” would be. It was a true win-win-win for dealers, consumers and carsales.

Acquired Trader Assets (2005): For a number of years there was speculation about “who was going to buy carsales”. Yahoo was the first to take a small stake in carsales in late 2000 which they on-sold to Fairfax in early 2005 but for the carsales’ leaders, each inquiry for acquisition was a takeover bid, something they did not want. The approach from PBL and the end result was different as it was about merging the complimentary assets for both sides to get a win-win (one plus one equals three…or ten as the saying goes). carsales acquired the Trader online assets in the deal in return for 41% of the business giving it the number 2 online auto player as well as number 1 online assets in bikes, boats, trucks, machinery, etc. adding an unparalleled depth to the business.

Mediamotive (2009): The move by carsales to create its own direct corporate sales presence was pivotal in the growth of the business around this time. By taking control of the display sales and recruiting seasoned experts, carsales was able to take its product directly to the buyers using analytical data to ensure a premium marketplace. The Mediamotive business has been a show point for carsales to all automotive classified marketplaces around the world such has been its effectiveness in delivering in a results driven environment.

carsales May 2009:

All Car Search (2009): This may not seen significant to some but by including all cars in the one user search was a great success for carsales. Once again they were ahead of curve in understanding that “all car buyers are new car buyers, it’s just some of them are used” (credit to Greg Roebuck for that quote). For the first time a user could search dealer used, private used, new cars in stock and new cars available in the one search meaning consumers who thought they couldn’t afford a new car, were presented with new cars directly comparable to used cars. There was a fear by some that leads on dealer cars would go down if a consumer could directly compare dealer and private seller cars in the one search given dealer cars are usually a little more expensive (to cover warranties, overheads, etc). Well the opposite was true, interest on dealer cars (new & used) increased and a whole new consumer experience was the result, another win-win-win.

Running an online business like carsales doesn’t just happen, it takes hundreds if not thousands of constant decision making moments (big and small) to ensure it first of all gets ahead of the curve and then stay there.

The Hard Decision carsales had to Make

Very early in in the founding of, it’s founders had a pretty big business decision to make which had an easy option and a hard option; the answer would have a material effect on its life span.

Here’s a little snippet that I believe is a great example of sound business decision making.

The rise of was no accident and showed how the leaders at Dealer Management System provider Reynolds & Reynolds (R&R and now Pentana Solutions) were/are extremely astute business people who used business nous and previous learnings to make the right decision to forge what has turned out to be an incredible journey.

carsales grew out of R&R back in the late 90’s leveraging the DealerLink network between it’s dealers to seamlessly collect used car information.

R&R had a choice to make between two alternatives very early in the life of carsales:

The Easy Decision
Was to partner with one (or more) of the biggest media players in Australia to supply inventory as the infrastructure was already in place to collect the inventory and it really was just incremental revenue for not doing a real lot as well working with some of Australia’s largest and most well known brands, which could have been attractive to a small(ish) software house in Mt Waverley.

The Hard Decision
Was to go hard with which was going into the unknown of competing against these media giants (at what they considered was their “bread & butter”) as a small software services provider.

Here’s my take on two important decision points that drove R&R to making the Hard Decision to turn their back on the media giants and compete against them with

1. “If it is this f&@king hard for us imagine how f&@king hard it is for them.”
This quote has stayed with me for nearly 20 years now. R&R had been trying to get dealers to list their cars on for a little while and the process was a difficult sell even though there was a seamless, automated inventory feed from the dealer’s computer system to So when the big media players and newspapers came looking for (exclusive) inventory data deals, the leaders at R&R realised that if it is so hard for us to get inventory with our setup and relationship with the dealers, just imagine how hard it is going to be for them. They realised they had something of real value to build on.

2. They were quick learners.
R&R US acquired in 1995 and was one of the first automotive sites in the US list used cars ( and started in 1997). In 1997 R&R sold to The Cobalt Group so that it could focus on it’s non-equity strategic partnership with Microsoft’s which was launched in 1996 (an excerpt from Automotive News, 1 December 1997DealerNet was a pioneer in providing dealers with Web pages in the early 1990s. But Reynolds wanted to sell it to focus on its relationship with its new partner, Microsoft CarPoint. ‘With CarPoint, we’re better able to fulfill our mission of linking dealers to buyers,’ said Kevin Distelhorst, Reynolds director of online services).

Fast forward a year to 1998, R&R US knew they had given up something that was potentially huge and missed their first mover opportunity (imagine their grief now, 20 years on when they see valued at ~$2.6b). Generally speaking the US market is 2-3 years ahead on the take-up of new technology and/or processes which gives us in Australia an opportunity to learn.

Hindsight is a wonderful thing and it’s easy to say now that the right reign was pulled when the wrong one could have been so easy had the media companies in Australia actually got their act together.

I take my hat off to the leaders of R&R who made it happen.

Note: All views are my own and not those of Limited or Reynolds & Reynolds (now called Pentana Solutions)

Careers – Why did you leave?

9 January 1986 marked an important day for me – it was my first day of my working life after leaving school.

Just recently I “relived” my journey from that day and the decisions I made along the way; holidays are good for that (sometimes). More on these decisions further on.

It just happened to be exactly 31 years later on 9 January 2017 when I was sitting in a restaurant with friends including three 17 year old boys (including one of my own) while on holiday in Broadbeach on the Gold Coast when talk turned to what these kids were going to do in life.

With the three of them heading into their final year of high school this year, the discussion turned to how big a year it is for them, that they get a decent VCE score that will enable to have more choices in what they can do at university and/or in the work force, etc.

They asked me how my final year in high school was, what I studied at university, what my first job was and finally how did I get to where I am today.

Immediately I didn’t want to talk about it. I didn’t want them to know that I didn’t do my final year in high school and didn’t go to university (until much later anyway). Why? Simply for me, I believe the professional world has changed and finishing high school with an eye to further education is much more important for these kids; I didn’t want to give them an out.

I didn’t want them thinking “if you didn’t do it and have done ok then it can’t be that important”. So what did I do? I preceded to tell them the whole story – why I left school, why it was different then, what I did, what steps I took and what chances I took.

Did it help them? I hope so. Did it help me? Yep. I actually found it very therapeutic to trace back my steps from my last days in high school, exactly 31 years to the day.

Today with LinkedIn it’s pretty easy to get a quick overview of someone’s work experience path but what we don’t always see and appreciate is the decisions or reasons each takes in each “fork in the road”.

Here’s a quick snippet of some of my big decision points:

Leaving school
I didn’t mind school, my marks were good and wasn’t looking to leave after Year 11 but dad thought that since he left aft Year 11 and had done ok then maybe I should. A job as a trainee computer operator was up at a company a friend of his was at and he “strongly” encouraged me to apply.

I got the job at Idaps Australia and started 9 January 1986 when I was 17 years 42 days old. As a comparison, my son was 17 years 75 days old for the chat described earlier (my older boy was 20 years 44 days old on this day, has completed high school and two years at university).

I must point out that although I started as a trainee computer operator my interest level and/proficiency in computers and technology was very close to zero.

Leaving Idaps
Life as a trainee computer operator (on IBM mainframes) at Idaps was great – 3 weeks of shift work, 2×12 hour shifts every 4th weekend and then 7 days off, again every 4th week. It was during 1986 however, that I found myself at Richmond Football Club at about Round 9 playing in the U19s which then led to me being appointed Captain in 1987. Juggling shift work with U19’s football was ok but as I entered the Richmond senior pre-season I had to make a decision.

I left Idaps (or more to the point I left shift work) after nearly 2 years so I could train properly for football and during 1988 I undertook a Diploma in Computer Programming at the Control Data Institute. This was a 6 month “intensive” course which I finished in August 1988.

On 10 October 1988 I started life as a computer programmer with Reynolds & Reynolds under the tutelage of Greg Roebuck. I was still only 19 years 316 days of age.

Leaving Reynolds
I spent over 10 1/2 years at Reynolds helping to develop, support and grow the best Dealer Management System in Asia Pacific. I got to spearhead some of defining products for the company including parts priority orders which became the building block for us to build CLERA, real time automated parts ordering between dealers. The technology used here then led to real time automated vehicle uploading and not long after that, carsales.

This was around me turning 30 though (this was significant to me for whatever reason) and I was fighting with two lessons from my dad – 1) keep loyal and you will get looked after and 2) if you want get anywhere do it yourself.

It was at this time that a colleague probably saw that our skills matched to do something ourselves. He didn’t talk me into leaving but I highly doubt I would have left without his influence. During May 1999 we started Digital Motorworks in Australia (DMi as it was known) and left Reynolds.

Leaving DMi
Like Reynolds I learnt an enormous amount running DMi from startup. The first 4 years saw me looking primarily after the technology side but with high interaction in deal making. We were acquired by ADP and then my partner left the business meaning I was CEO from July 2003 through May 2009.

DMi grew top and bottom line healthily each year but investment was drying up and we were servicing primarily a legacy environment so I completed a Masters in Business Systems as “personal insurance”. During 2008 I started talking with Greg Roebuck about a range of opportunities at carsales including partnerships, JV’s, etc and finally he said “come and work for carsales”.

I started at carsales on 9 June 2009. Greg Roebuck has announced his retirement this week and Cam McIntyre steps into the chair. I’ve worked directly for Greg for over 18 years so it feels like the start of a new journey and I have lots of unfinished business with carsales under Cam.

In reality, the decisions I’ve had to make in relation to may career have been pretty straight forward compared to many. I’ve never jumped around for more money, there’s always been much more to it. I like it that way.

NB Please don’t associate this post as anything predicating me leaving carsales.

Don’t Burn Bridges

In my blog post “2 Pieces Of Career Advice“, I talked about my father giving me two pieces of advice as I started my working career which I believe have held me in good stead.

There is actually a third one that wasn’t as implicitly said as the first two were but nonetheless was something that has stuck with me – “Don’t Burn Bridges”.

I have a lived through a couple of great examples where I have benefited from not burning bridges where I very easily could have.

Example 1 – Leaving an Employer

I started with Reynolds & Reynolds just before my 20th birthday as a software developer, working hard and gaining trust over 10.5 years to be driving and building some projects in the company’s history that have truly been game changers (ie CLERA for Parts and their Internet strategy incl carsales).

When I decided to leave Reynolds with a colleague to do our own thing, we weren’t popular with the owners, board, executive, etc and then the fact that we ended up working with practically all of carsales competitors heightened any tension that was there (as carsales was born out of the Reynolds business).

Fast forward another 10 years and I found myself with the opportunity of re-joining that same ownership, board, executive, etc at carsales which I ultimately did and now feel once again part of the “inner sanctum” helping them build and run great businesses.

I could have quite easily behaved in a manner in my exit from Reynolds and even further in my competition with carsales that would have “burnt the bridge”. The fact that I (sub)consciously didn’t and acted in respect of this is something I am happy about and has proven to be the right action.

Example 2 – Re-engaging a Client

When I left the employ of Reynolds and started Digital Motorworks (DMi) as described in example 1, the first client we captured was Pacific Access who through their Yellow Pages field force, had visions of an auto classifieds vertical.

Just under a year into a 3 year contract DMi worked with Pacific Access to execute their plan which at that point they concluded it was harder than they anticipated and made the decision to close.

Pacific Access had signed DMi to an exclusive deal over this 3 years and considering we had forgone other opportunities even the short period of the contract, we were not in a position to not exercise our rights of the contract and therefore had to ensure the contractual commitments were met.

Fast forward 8 years and Trading Post (now owned by Sensis, formally Pacific Access) approached DMi to re-engage for our inventory services. The result was a very satisfactory 3 year agreement to provide these inventory services for the Trading Post brand.

Again, the manner in which we handled the contract exit the first time around could have been terminal for our relationship with the business. The fact that it was not is testament to being aware of not “burning bridges” and acting with integrity.

Moving Forward

In reality not burning bridges is not and should not be a conscious decision; you can’t agree or please everyone but the way in which you conduct yourself should be enough that repeat business not be an issue and if it is an issue, it’s probably not your problem!

Football v Career – Actions Defined by Subconscious Thinking

Have you ever thought about your subconscious actions and how they affect the course of your life?

I am amazed at how our subconscious thinking defines our actions; when I think back now to the late 80’s, early 90’s it was my subconscious thinking that drove actions that set the shape of my professional life.
This was when I commenced my employment with Reynolds & Reynolds in the automotive technology space (the space I am still around today) and played my first AFL Senior season in that same year (VFL back then).

Now looking back, the path that both of those took is a lesson in itself. This is not about me looking back thinking “what if” (maybe a little, sometimes) but more a real lesson in what shapes our beliefs and ultimate actions.

I loved football and still do but it has never been my life nor did I ever set out for it to be my life. I didn’t work hard to play AFL, it just “happened”. One week I was playing local U18 football (no training, out on Friday nights before a game) and the next week I was playing with Richmond U19s, appointed Captain the following season and played my first senior AFL game the year. Yes I did all the hard training including the long pre-season but nothing extra or out of the ordinary (unfortunately). Football was just meant to be fun.
Now I compare that with my software development career which kicked off in the same year. Almost from the start I was driven to do more and be better than the other programmers. I quickly got a reputation for not letting something go before it was done. That meant late nights, weekends, etc, going above and beyond, doing the extra work.

Dad always said to me about working to “work hard, be loyal and you’ll get looked after”. Football to me was always short term thinking. Work, my profession, has always been thinking about the long term.

What if I worked my butt off in football to get every bit I could out of myself? What would I be doing now? It might be exactly the same. It might be different. I don’t really care and don’t dwell on it because I made that choice many years ago subconsciously and divided by effort/time accordingly (or maybe I subconsciously knew where my talents really were….).

I still love football and I am still involved today as a Board member of the EFL and through my kids playing. It is and always has been an outlet for me. Would I have loved to have played more senior AFL football? Definitely but not necessarily at the cost of what I’m doing today. Remember too, it wasn’t fully professional back then either and let’s face it, I was never going to be in the elite bracket!

I like to think I’ve “worked hard, been loyal and been looked after” to get to where I am today so I’m pretty happy with my lot and it was my subconscious thinking that defined it for me.

Have you thought about your journey and how you made it to where you are today?

Why Australia was different to the US, UK & Canada


In automotive online classifieds I find it fascinating that the US, UK, Canada and Australia have very similar market characteristics and are all what we would consider developed from an online perspective yet there is one glaring anomaly – only in Australia has print not won online in this space.

I have a theory as to why and it is two pronged but first let’s look at the dynamics of each country.

US leads the way with a very credible and successful number two. Both have grown from print origins being the Autotrader magazine and Classified Ventures, a joint venture of five newspapers, respectively.
Canada is the auto vertical leader only recently shedding (finally) it’s print reliance from the Autotrader branded magazines.
UK is the clear leader growing once again from Autotrader branded magazines.
Australia is the clear leader having grown out of leading Dealer Management System (DMS) supplier, Reynolds & Reynolds (R&R, now called Pentana Solutions).
In my opinion a leading DMS supplier is in the best position to own the online automotive vertical space like what happened in Australia. This is because they have a natural advantage of understanding dealers, rely on technology and are able to integrate the day to day operations of a dealer into the online world.

So why did this happen in Australia and not in the other countries?

I put it down to two reasons:

1. R&R was a clear leader. This was especially so with the large franchise dealers which brought the bulk of the inventory, so vital to bringing consumers to the website. So when R&R set carsales up with a seamless, automated link to update inventory directly from the DMS, a great part of the early challenges for the competitors (i.e. Newspapers & Media groups) was solved.

2. The leaders of R&R. This is undoubtedly the key reason as these guys just made the right decisions from setting up a network to the dealers was before its time, recognising its key differentiators early against the newspapers/media players, learning from the US market and defining a business model that blew away the competition. Oh and let’s not forget, they took the risk to have a go against much bigger competition who had a lot more to lose.
In the US the DMS market was a little more fragmented with Reynolds & Reynolds (R&R US) and ADP each having around 40% of the market each. But even then R&R US was perfectly poised to have a real crack at winning online as they had one of the first automotive classifieds sites called

R&R US didn’t realize what they potentially had and decided to sell and sign on as a strategic partner with Microsoft and their Carpoint brand. This was a decision they quickly regretted and one that wasn’t lost on R&R Australia. As it turned out, Carpoint hasn’t won and it has been and who have successfully migrated from print to online to win the market.

carsales has really been a remarkable story because make no mistake, the likes of News Limited, Fairfax, Pacific Access (Sensis), Ninemsn and Trader – much bigger companies than R&R with much deeper pockets – spent millions of dollars and leveraged all of their existing media assets to compete against carsales.

We know that competition will never just go away. We also know it takes more than deep pockets to win.

I Think I Was Bullied

Last Friday morning I walked past a building site around the corner from the carsales office where a young guy was loading “boulders” onto the back of a truck.

Another guy was saying to him as I walked past “I’m going to make you cry every day, how does that make you feel? You are going to cry every day until you show me you won’t”. Really?

I wanted to step in but didn’t. Should I have? It wasn’t any of my business and it could/would have been ugly, especially with nice shirt and shoes in. After all they may have been joking. What it did is remind me of an incident when I started out (not that I am comparing the two though).

This hasn’t scarred me (really, it hasn’t) but thinking back through my business journey, I actually think there was a time where I was bullied and I think it actually helped me in the way I deal with people today. Let me explain.

“Then one of them started laughing…”

I started my first software development job at Reynolds & Reynolds just shy of my 20th birthday when they hired two of us straight out of a 6 month computer programming diploma. It really was learning on the job and very early in the piece my manager grabbed the two of us saying he had a great project for us to really get our teeth into.
The project was very simple (in hindsight) – it was a parts inventory input screen that worked off a template to hide fields that weren’t required. One of us had to write the program for setting up the template and the other had to write the inventory input program that read the template.
“…embarrassing and certainly belittled the two of us…”

The problem was that neither of us had a clue what he was talking about. We were lost. As our manager tried to walk us through the requirements, a few of the more senior developers stood behind our back to watch and listen.

Then one of them started laughing. Not just a little giggle, a big boisterous laugh while spluttering out “that’s easy, that’s easy, too easy, let me do it, I can do it”. It was embarrassing and certainly belittled the two of us. Is this what is considered bullying today?
That was 27 years ago now and I can still see him laughing and hear what he said. I can also still see “the laugher” heading out the door with his head down when he was caught up in a round of redundancies a couple of years later. As I said though, it didn’t scar me. I wonder what he is doing now?

I think they call this “passive bullying” now and in the scheme of things it wasn’t too bad for me, in fact I like to think that it helped me in my attitude to the way that I treat people, especially in the office environment. That is “do unto others” and one of my favourite sayings is “people do business with people they like (and respect)”.

I never did see or hear of him after he was made redundant.

There is no place for bullying anywhere. It is weak and a cover for another’s insecurities.

An Exit Strategy Isn’t Bad For A Start-Up


Mark Cuban’s “12 Rules for Startups” has number 1 as “Don’t start a company unless it’s an obsession” and number 2 as “If you have an exit strategy, it’s not an obsession“.

I get his point but I think it is directly related to “cashing in” as opposed to protecting your interests, especially when you have partners involved.

I believe that when you start a company it invariably means at some point there will be an end; if it’s not the end of the company it may be the end of your involvement with the company which can take on a number of different possibilities and all necessitate an exit strategy to be considered from the start.

“We were building a technology company and had a choice to build (and own) the IP/technology ourselves with 100% of the business or license the technology…..”

In 1999 I was involved in my first start-up and quickly learnt about the importance of thinking ahead to all possibilities around an exit strategy. It was with a colleague from Reynolds at this time when we went to work on a plan to fill a niche not being filled in the market.

Being from a technical background I was all set to develop the required technology to get us going when a call out of the blue changed our direction and with time to market being defined as an important factor for us, we pivoted and went into partnership with a US company licensing their technology.

Herein started the lesson I learnt. We were building a technology company and had a choice to build (and own) the IP/technology ourselves with 100% of the business or license the technology along with giving up half the company. With a very large, multi million dollar deal at our fingertips, we chose the option that assured us the immediate contract by cutting our time to market and providing a comfort blanket to our prospective client.

“Fast forward two years and the business was traveling very well, growing, very profitable and serving some of Australia’s biggest media players…..”

Fast forward two years and the business was traveling very well, growing, very profitable and serving some of Australia’s biggest media players. We started to become an attractive acquisition target for a few companies in the midst of the dot-com boom but had one missing ingredient – our own IP driving the core of the business and this severely limited our options to be acquired. We did end up getting acquired at this time – by the US company who owned the IP and half of the company already.

What did we learn? You must always think of the exit strategy from the start. This includes IP, technology and a shareholders agreement. In this case it was the technology that drove the company. We had quickly built a business that was profitable and growing but was unattractive to an acquirer which limited our exit strategies. In retrospect we should have had the exit strategy defined in our agreements with the US company which would have removed all the angst about thinking we were getting done over; whether we were or weren’t was another matter.

Would we have made the same decision again? Most probably. Given the choice of time to market now with a near guaranteed contract immediately versus 6 months development before trying to secure business whilst having a second mortgage on my house and second child on the way with no money coming through the door……..

Barriers to exit


In retrospect, I learnt things very early in my professional career that I only now realise (and appreciate) what they are and the significance of each. Here is one example that I have been involved in that turned a compelling product into something a whole lot more – a barrier to exit.

In 1994 the Reynolds & Reynolds’ ERA product was compelling as it provided dealers with integration and features that other providers didn’t have and more importantly, made them money. It had been in the market for some 6 years at this point and was quickly making Reynolds the clear number 1 DMS provider in Australia. This was no time to be complacent though as a competitor could very easily come in with something that was also compelling and compete hard. The answer was not only to provide more compelling reasons for the ERA system but to start creating barriers to exit; that is to provide features that were intrinsic to the way clients did business.

Around this time a system called Priority Orders was created in ERA where a stock order for parts could be created ad hoc by the front counter team directly out of the invoicing product. This was another compelling feature for ERA as it made a seamless link between selling and ordering parts, another first for dealers.

The next step though was the concept of dealers linked together to facilitate real time parts locating, ordering and picking. The idea was for the ordering of ad hoc parts between the two businesses to be seamless and semi-automated. With the push of a button a dealer could theoretically (and practically) check dozens of dealers for available stock and with another push initiate the order at both ends. The first a distributing dealer would know about an order from another dealer was a picking slip printing for their pickets to pick. This had the potential of taking Priority Orders past compelling to being a barrier to exit if we could get it right.

Being 1994 and pre-Internet in Australia made this cutting edge stuff. All that was needed was the communication infrastructure to make this happen. To start with we used 2400/3600/4800 baud modems where a call would be made between the systems each time some data was required between two dealers. It was clunky. We needed a more seamless approach, we needed semi permanent lines with TCP/IP for real time access. After much work the DealerLink network was born where dealers could be linked together via Reynolds in a “hub and spoke” model.

The new parts product that ran over the DealerLink network was called CLERA (Completely Linked ERA). Before long, not only was CLERA a barrier to exit for the ERA product, it also became a selling tool for Reynolds. Dealers who were distributor dealers would offer dealers who bought off them better pricing if they order through CLERA as it cut double handling, picking up phones, etc. For a dealer to order through CLERA they first of all had to have the ERA DMS and second of all had to be connected to the DealerLink network; a brilliant model and barrier to exit.

DealerLink and CLERA were both ahead of their time and another great example of leadership from Reynolds that set it apart from the rest.

All great software products that can stand the test of time are compelling to their users and have features that create barriers to exit by becoming an intrinsic way in which their clients do business.

Interesting to Compelling


I didn’t realize it at the time but from the moment I started as a trainee software developer with Reynolds & Reynolds (now Pentana Solutions) in October 1988, I was introduced to three very important concepts in business and in particular, creating software products to add value and make the business (and the businesses using them) money.

The first is the concept of defining the value you provide to your clients. It wasn’t until many years later that I learnt this as the process of taking something from “interesting to compelling” and once you could achieve this transformation, great things would follow. The second concept is finding the commercial point of a product in the development process because that is the point when it needs to be taken to your client base, not when the development is finished. The third concept was creating barriers to exit for your clients; products, processes or services within your offering that the client can’t do without (real or perceived).

Reynolds & Reynolds Australia (R&R) supplied dealer management systems (DMS) to car dealers and was a wholly owned subsidiary of The Reynolds & Reynolds Company (R&R US) based in Dayton, Ohio. It had been marketing/selling a solid, rudimentary DMS that was interesting for dealers as it offered value as a DMS but was one of a few in the market with similar capabilities and as such there was no clear leader at that time.

R&R knew that to dominate the market he had to move from having an interesting offering for dealers to a compelling one. Being interesting meant you would be shopped against other interesting offerings from your competitors and the best price would win. Being compelling meant your client just had to have what you have to offer; or accept something sub-standard and adapt. This then gave you something your clients would pay good money for and that something was value.

The ERA DMS was introduced to US dealers by R&R US in 1987 and promised to be a game changer as it was the first on the market to seamlessly integrate the various parts of a car dealership within the computer system: accounting, new vehicles, used vehicles, spare parts, service, aftermarket, etc. ERA had to be brought to Australia.

I was hired as a trainee computer programmer tasked with “Australianizing” ERA as fast as we could in a small team (change operating systems, convert dates, miles/kms, etc and change some dealers process within the DMS). The project was top secret within R&R and it had created a buzz around the office. R&R US sent out a couple of programmers to help us along early on. For six solid months we trawled through hundreds of thousands of lines of code making change after change, compiling the source code and making sure each program worked after the changes. For me it was a buzz learning a new programming language on the job, although at the time I didn’t realize exactly what we were working towards achieving. ERA was the product to take Dealer Management Systems in Australia from interesting to compelling. It was the product that would change the landscape for R&R.

Now that we had the first piece of the puzzle, unbeknownst to me, we needed to work out the second piece of the puzzle; finding the commercial point in the development process when ERA would be taken to the client base. I had no idea at the time that this was the process. Wouldn’t it be sold when everything was finished?

It was announced that the first dealer install of ERA would be in April 1989, a mere 6 months after the project began in earnest. I thought it was crazy as we still had so much to do (and we certainly did) but as I learnt later, the product was ready to create value for the client regardless of whether development was finished or not. A part of this lesson was that the development process is never finished so if we wait for that moment, we would never release anything to a client or we would release it too late. I think this is why so many technology minded programmers don’t understand the business side of technology and the ones that do prove to be very valuable.

There were many problems in the first installation. Software conversion issues, differences between Australia and US dealer process, operating system environment issues and so on but ultimately these were issues that we were going to have now or six months later when most thought we would be ready. Very quickly ERA starting providing value to the client and the right commercial point of the product had been found. Problems were being fixed on the fly both on site at the client and back in the R&R office. It was all hands on deck to make it right for the client.

ERA didn’t prove to be a very hard sell in a very competitive and tough environment of car dealers. Very quickly ERA helped R&R become the clear number one in Australia but really it wasn’t just the product that made this happen. Without the wisdom of the leaders at R&R in particular to make the investment to bring something compelling to Australia and the judgement to find its commercial point as early in the cycle as possible, a competitor might have stolen the march on R&R in releasing something more interesting that may have changed the landscape.

The third concept, creating barriers to exit, was the next step.