Tag Archives: dmi

Which carsales moves were most critical?


After an article I wrote a little while ago (6 moves that drove carsales) I was asked by a number of people “were there any one of these moves that if not made, could have been terminal for carsales?”.

The 6 moves I talked about were introducing Private Sellers, adopting the Sell Your Car Until Sold model for Privates, moving to the Lead Model for Dealers, Acquired Trader Assets (cars, bikes, boats, etc), creation of Mediamotive and the implementation of an All Car Search, all in chronological order.

It’s a really interesting question and really who knows; I’ll have an educated guess nonetheless remembering I was not in the carsales business for ANY of the 6 moves I talked about although I was very close in running DMi, an independent technology/data services provider working with carsales’ competitors.

I can safely say that if carsales hadn’t have introduced the Lead Model in 2002 they would have been in a lot of trouble and most probably terminal.

At the time they were one of 3-4 auto vertical sites with the same business model trying to make a dollar; none were profitable and carsales was the only business whose sole focus was the online auto vertical space.

Almost immediately the currency for ALL websites listing dealer cars online was the number of leads they delivered and because of this model and the actions around it (like the mandated use of Autogate Lead Management), carsales were delivering a minimum of 4-5 times the leads of their competitors.

They had differentiated themselves from their competitors with a profitable business model and had created the ultimate barrier to exit for dealers – they become an integral part of the process for dealers to sell cars.

carsales made the car buying process all about the car and not about who was selling it. This flew in the face of virtually every dealer at the time who were convinced it was their brand, the dealership, that drove the sale.

Do people really care who they buy a used car from? No, they care about getting the right car at a fair price. This was true then and holds true today.

So what about the other points? Well, there could be an argument mounted that if they hadn’t have introduced private sellers in 2000 they may not have made it to 2002 for the next two important moves.

When they introduced Sell Your Car Until Sold (also in 2002), there is no doubt that this pushed their private seller business to relative levels no other auto classified vertical site in the world has reached.

But the fact that this was done in the same year as the Lead Model makes it hard to say that if they hadn’t had made the move it could have been terminal. In isolation, yes.

As for the last 3 moves, no they would NOT have made carsales terminal had they not been made. These moves just helped to accelerate the business.

Acquiring the Trader assets was very nice, gave the company added breadth and strengthened their offering but if it wasn’t done, carsales was going nowhere.

Establishing Mediamotive has been fantastic for the business in terms of diversifying and maximising revenue but again, the business wouldn’t have been terminal.

Same with All Car Search; excellent differentiator and driver of sustained growth but not terminal if not done but did have high risk in terms of potentially reducing dealer leads in favour or private leads (this did not happen).

All 6 moves weren’t without a high degree of calculated risk even if they all wouldn’t have risked the company.

To reiterate, I wasn’t working with carsales for any of these moves but I was working with carsales’ competitors at the time and saw first hand the impact each move had on them.


carsales – if it was easy, everyone would do it


The carsales story is a tale of many things coming together to create the business it is today.

One of those things is foresight; fundamental to building a successful dot com into an ASX Top100 company.

I have watched the business start and grow from near and at times little further away. Right at the very start my first business trip overseas was July 1997 to the US to review two new technology products with a view to make a recommendation on which path to take.

I was working with Reynolds & Reynolds Pty Ltd (R&R) and had just been giving the job of getting their E-Commerce business going.

Over the previous 3-4 years I had been designing and developing software to that utilizes the new DealerLink private network that would revolutionize the dealer management software services in Australia.

The software products I were to review were touch screen kiosks; a new technology showcased by a few vendors at the NADA convention earlier that year in San Francisco.

A dealer had seen the technology at NADA, immediately saw some benefit in helping his dealership and grabbed the CEO of R&R to show him.

The value he saw was the ability to have his inventory from all three locations available to be viewed at each location complete with photos. At the time, this was ground breaking.

The first place I had to visit was the Reynolds & Reynolds Inc head office in Dayton, Ohio. As they still had a small strategic stake in R&R and had a kiosk solution, it seemed prudent that we considered their software.

Their kiosk software was slick and worked well with the only downside being that each kiosk was standalone meaning the only way to update each kiosk was to load the inventory by disc each time.

The second stop was to Austin, Texas where Digital Motorworks Inc (DMi) had built the kiosk software our Australian dealer had been wowed by earlier in the year.

Whereas the Reynolds kiosk solution was standalone, the DMi solution utilized the Internet to update its inventory automatically.

Remember this was 1997; using the Internet to drive your business solution was somewhat new and deemed to be somewhat risky.

What this did was not only fed the kiosk solution, it also immediately enabled an internet strategy for the dealer – their inventory could be searched online within the dealer web site and it enabled individual dealer inventory to be aggregated together.

This was groundbreaking stuff back in 1997, especially in Australia and my mind was made up so I started preparing my recommendation paper.

The one hurdle was the cost of each – the DMi solution was over 4x the Reynolds solution up front and considerably more ongoing. I didn’t know how this would work as I put together my findings and recommendation.

Well on my return the decision ended up being clear cut – the Internet driven DMi solution, despite the relative cost, was chosen very quickly without too much debate – The leaders at R&R had bigger plans.

The last software piece I had developed before heading over to look at the kiosk software was the automated aggregation of dealer inventory direct form their dealer management system to a centralized database with a view to creating a wholesale vehicle sourcing system we called StockLink.

We used this software to populate the kiosk inventory database automatically and within months had kiosk systems running in each of the dealer’s three locations and searchable on the dealer’s new website.

Little did we know (or maybe we did) what this was the start of what would become carsales.

We thought touch screen kiosks would be a big hit, be in every dealership, shopping centers, airports, etc so people could find the car they were after, wherever they were at the touch of their fingertips.

Well the touch screen kiosks didn’t last but the Internet did, carsales was born through this technology and we are where we are today.

So, who had the greater foresight here?

Was it me for creating the software to automatically aggregate inventory and recommend the internet based solution? Hell no, I was merely following directions from my esteemed leaders at the time although I can take solace in that I didn’t hesitate in recommending the Internet based DMi solution.

Was it the car dealer who had the foresight to see the value of a networked solution? Yes he has to have some of the credit as he had a vision and whilst it ended up a little different to what was originally envisaged, he saw some value at the start.

Was it the leaders of R&R? Yes most definitely. They saw the vision of what this could bring to R&R, dealers and consumers.

It would have been much easier taking the Reynolds solution to fill a need. It was far cheaper and developed by trusted partners but it didn’t provide a platform for the future.

The fact that they took the harder, more expensive option was not the first time they would a similar road. They had the foresight to be brave in their business decision making.

If it was easy, everyone would do it. Amen.


2 “same same but different” philosophies I use in business & sport


Employing people means you must treat everyone the same but everyone differently.

Ask anyone in business and they’ll tell you employing people is great if you didn’t have to deal with people.

It can be hard work because we are all different with different views, wants, needs and goals.

Ask anyone who has coached junior sport a similar question and you’d get a similar response except that the “different” can be two or three (or more) fold (I’m talking parents, divorcees, grand parents, etc).

Both can be rewarding though and one of the great joys I have is watching the growth in people you coach or employee (yes employing people can be like coaching) over the long term.

In the case of business I’ve been fortunate enough to be in a few companies where I/we have employed people at their start of their career or ready for their next professional challenge.

I’ve always had the philosophy of employing people being a win-win-win (link to post) for the employee-manager-employer where one of the techniques I like is helping to build their resume (link to post) as a way of growing them professionally by seeing it visually.

At DMi we employed quite a few young people who didn’t have much experience but certainly had good attitudes to want to have a go and learn.

I loved coaching them in a way of bring them along the journey and giving them the opportunity to swing high or hang themselves. I challenged them to always improve their resume; that is, improve their value and their resume was a tangible way they could see it.

I love even more to see, over 10 years on, where they are now and it gives me satisfaction knowing that I may have played a part in the base skillset they are using that makes them a valuable commodity to the current business they are working for.

Same deal since I’ve been at carsales; I love seeing those who I have worked with or mentored kicking some goals years after coming into the business.

My philosophy for coaching junior football over many years was to give kids the skills and passion for the game to keep involved over the long term (senior football) as opposed to teaching them skills that a kid can/should practice on their own if they have the desire – this is not too dissimilar to business.

For instance, in my opinion, a more important skill to teach to juniors is not to fall over in a competitive situation rather than kicking on their opposite foot (which they can practice themselves).

Seems pretty simple but go to a junior game of football and hear the parents clap the kids who make an unrealistic attempt to get the ball falling over in the process – “Good effort Johnny” and then “C’mon boys, all try harder like Johnny” – when in fact once they fall over they are out of the contest and can’t win the ball.

These efforts are not good enough as they get older and play higher level football or just senior football no matter what level.

If junior players can grasp this concept early they are not only ahead of the curve they have developed a skill that a) they can’t learn/practice on their own and b) will take them through as senior players, my ultimate goal.

The goal is necessarily not to produce players that will be AFL stars as that is a possible by-product but rather the skills and understanding of the game that will stand up as the competition gets bigger, quicker and better.

So my measure of success and satisfaction out of my junior coaching is to see how many are still playing football beyond the junior years as this is usually a drop off point.

This is a similar measure of success for business.

Yes employing people or coaching kids can be tough but it is the rewarding parts that keeps us doing it.


7 vital things that made my startup successful


What makes a successful startup?

There aren’t too many startups like Google and Facebook or even carsales, Seek and REA and the stats tells us that 9 / 10 startups fail (remember 90% of statistics are made up) so my definition of a “successful startup” is growing into a profitable, sustainable business and/or having a successful exit.


I’m sure every one is different in terms of the steps they took, road they traveled and end result so here’s 7 vital things that I found were fundamental to Digital Motorworks Pty Ltd (DMi) being a “successful startup” in 1999:

Identify the market opportunity.
As this will be your focus. This seems simple and it is more than wanting to do something because it’s what you know or to be your own boss. There has to be a gap in the market that you can fill or simply do it better and most importantly, it has to make commercial sense. The market opportunity for DMi was the gap of an independent inventory aggregation and dealer web services player for the big media players wanting to propel their online automotive sites, especially once Reynolds had made the decision to keep their inventory capabilities in order to push carsales (remember the quote “If it is this f&@king hard for us imagine how f&@king hard it is for them” in my post The Hard Decision carsales Had to Make).

Develop (and live by) the Business Plan.
My business partner is a finance guy and started us off straight away with the discipline of creating a financial business plan. I found that by thinking about and collating all the costs upfront and ongoing that we would incur, forced us to articulate a plan for getting money through the door (i.e. revenue). We went hard on the costs and realistic on the revenue because the costs were always going to be incurred but the revenue had to be earned! The importance of this step and ongoing revisiting of it cannot be underestimated.

3 Securing finance.
Most companies need to raise some money to get properly going, be it from family, friends, VC’s or the bank. Most certainly with the latter two and most probably with the former two, the before mentioned business plan is imperative. My business partner and I each secured finance to be used as working capital through the bank as second mortgages on our houses and the business plan was critical to making this process as straight forward as it could be.

Getting out of your comfort zone.
This is stating the obvious because you literally have to do everything no matter what your previous experience or expertise. Almost as soon as we started we were served legally by our former employer. Now this threw me straight out of my comfort zone and made me confront it head on which we did and got through, growing me enormously. My business partner took up a short term contract to get some money through the door with Esanda as they were trying to build Eauto.com.au while I pulled together our technology infrastructure and worked the sales process to secure our first client. This was again jumping out of my comfort zone as my background had only ever been technical. With the help and guidance of my business partner, I made it through the other all the better for the experience and most importantly, it secured the immediate future of our startup business.

Working bloody hard.
Again, this is stating the obvious but until you are in the position where the business survival rests on what you are doing, you don’t really know what hard work is. We just didn’t have enough hours in the day to get through everything we needed to. While my business partner would travel backwards and forwards from Adelaide to Melbourne putting strain on his family life, I would be working on securing clients by day and through our technology requirements by night. Mouth ulcers were a common side effect for me; and those don’t kill you!

Having a passion for what you do.
This one cannot be underestimated. It’s one thing to work bloody hard and it’s another to work bloody hard on something that you have a real passion for and love. We both loved doing what we were doing and our passion for it shone out as I’m sure it helped us secure new clients. This was when I learnt that I could sell anything – if I was passionate about it.

Having the right business partner.
It is ok not to have a business partner, in fact some people believe that you have to have 100% control to make something work. For DMi I had 2 business partners – a former colleague and Digital Motorworks Inc out of Austin, Texas. Having the guys from the US was vital in our time to market and helping us to secure our first big client. They provided the technology platform which I then had to take on, setup, maintain and adapt to Australia and later transform from auto to jobs. This was a great leg up but everything else was on our shoulders in Australia as a startup.

For me getting a startup off the ground with the experience and confidence (or lack thereof) I had at the time, having a business partner on the ground with me was vital. I have referred to my business partner multiple times in the previous points because we really did work as a team. First thing was that I probably wouldn’t have gone into this on my own or been able to get through without his expertise, experience and being able to talk things through. His background was finance and sales in the automotive space. My background was technology in the automotive space and playing/coaching football. We made a good team because our skills complimented each other, we had the same goals and we actually had a good time doing it.

These 6 things were vital in making DMi a success. We were profitable within 6 months, grew to employ over 30 permanents and 60 casual employees and had a successful exit. We were no carsales or Seek or REA but then again they are no Google or Facebook either.

Nonetheless, we started a business from scratch and made it as one of the 1 out of 10 to succeed. For me, that was pretty successful.


Moving into Jobs Classifieds from Auto


When we started Digital Motorworks (DMi) in Australia in 1999, our total focus was the automotive industry.

This made sense since our experience was automotive and the DMi technology base out of Austin, Texas was developed for the automotive space aggregating inventory data from over 6,000 car dealers in the US at the time.

So how then was our revenue split 35% auto and 65% jobs classifieds just 3-4 years after starting?

It was about pivoting our niche core competency and getting out of our comfort zone, quickly.

Within 6 months of incorporating the company in Australia, we had signed a significant sized contract with a leading Australian media company giving them exclusivity over our data aggregation and normalization services in the automotive classifieds space for the next 3 years.

We were precluded from working with other major media players in the automotive space although there was still scope for more expansion in auto.

Pretty soon after this, we learned that News Limited’s new digital arm, News Interactive, was keen to get all the job ads advertised in all News newspapers around the country seamlessly into their Careerone.com.au website.

Could our data aggregation and normalization services be used outside of automotive? There was no reason why it couldn’t but it was big change to the business focus and to our head space.

We were given some sample job feeds to test and the results were encouraging but News threw another curve ball – the vast majority of ads are encapsulated in a pdf, image or an image in a pdf. Can we extract the jobs from these file types as opposed to a more logically formatted text file?

Long days and nights followed experimenting with OCR (optical character recognition) software to integrate into our systems and the results started to come slowly at first but the samples were encouraging.

Before we knew it, The Times of London newspaper group (a News International company) had heard about our technology and sent us samples to send back. It was starting to move.

Fast forward a couple of years, thousands of man hours, lots of perseverance and DMi was processing display and lineage job ads from every News Limited newspaper in Australia, The Times of London, the UL’s largest educational group TSL Education (UK) and Emap (UK) for display online in searchable formats.

Was this in our detailed business planning that we used to underpin financing and starting the company? Not even close.

It would have been very easy for us to not try our hand at this new business and stick with automotive, after all we were automotive people with automotive technology.

Sometimes stretching your niche core competency is ok as long as you have a handle on the effort versus reward and more importantly, a handle on what it might do to your business good and bad.


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!


A Key Component of an Acquisition


I’m a firm believer that in general, “people do business with people they like“. I know there are exceptions but as a rule I stand by this.

In order to like someone in a business sense does not mean you need to be mates; there needs to be a mutual respect between each other that business will be conducted in a manner that you both expect.

When carsales looks at an international acquisition target, local management is a key component of the decision making process. Very early on in the process I like to understand what the local management structure is going to look like and ascertain if there will be issues from day 1 after closing.

People do business with people they like” takes on an extra meaning when the management you are relying on to run the day to day operations of a business you have invested in is on the other side of the world. A true mutual respect as people first is important in this.
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This is why dealing with and forging close relationships with local management is a key component as a strategic investor. The structure of our partners in our 4 international acquisitions (Webmotors.com.br in Brazil, Encar.com in South Korea, Soloautos.mx in Mexico & Chileautos.cl in Chile) are somewhat different but the relationships we have/are building are very similar. In each business we are very close to the executive management; talking on an almost daily basis and sharing more than just business.

When we started Digital Motorworks, very early on we did some business with News Limited’s then new digital arm called News Interactive (News Digital Media) for their online jobs platform Careerone. We saw our personal relationships (we didn’t know them beforehand) as important and worked hard on it. Our work with Careerone expanded (and then exploded) and before we knew we were performing the same services to The Times of London (News International) which then spread by recommendation to TES Education and Emap (also both in the UK). When News were looking at starting an online automotive platform they came to DMi first.
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Yes DMi had some nice technology that served their needs but I have no doubt the relationships we formed within News Interactive were the driving force behind establishing our brand within their business.

Even internally, it is hard having a workable business relationship with someone you simply do not like, trust and/or respect.

People do business with people they like” can take on a number of meanings. It may be “just business” but business involves people and where people are concerned, it is better to like people than not.


3 Lessons From Getting Served


When your former employer serves you with a legal notice there has to be a lesson or three in there. Here’s mine.

Let’s get this picture right. It is a typical Melbourne June night, dark and cold with my wife at home with our 2 year old son and 5 months pregnant with our second child while I am in the US on business with my business partner. There is a knock on the door and my wife answers it. A man in a motorcycle helmet asks for me and isn’t convinced and/or happy that I’m not there. No explanations, just annoyance. My wive is worried and scared. Who is this guy and why is he asking for me?

Eventually he hands something to my wife and says “make sure he gets this”. My wife calls me frantically and reads the letter to me. I was in the US with my business partner who had just received a similar phone call and story from his wife in Adelaide. We had just been served by our former employer.
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The previous two months had seen the two of us leave our jobs to start our own business. We had seen a gap in the market that we thought we could fill and one that our employer didn’t want to pursue. The long and short of was that we ended up starting Digital Motorworks (DMi) in Australia leveraging the DMi technology from Austin, Texas as the basis.

This didn’t go down well with our previous employer who were using some of the DMi technology (totally separate technology and goals to what we were planning) to kick start their Internet initiatives and hence the legal notice to “cease and desist”. When I arrived back in Australia I met a solicitor to draft a reply and a meeting was setup between myself and my previous employer “without prejudice” in a neutral location. There was a lot of “puff and wind” as I remember; it was a good experience.

The reality was that there no basis to the claims, it was designed to give us a scare and hopefully stop whatever we were trying to do. It was just business and another learning curve in my business journey. Well that was the way I looked at it. My business partner was a lot more prescriptive than I was and I would say held on to the experience in a different way.
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I learnt 3 lessons from getting served:

1) Keep your nose clean. I knew that what we were looking to do was a path my previous employer was not taking. I understood why they wanted to stop what we were doing which is why it was important that we stuck to the path and didn’t go near their direction.

2) Don’t burn bridges. Unfortunately in business you can’t please everyone all the time. You can, however, ensure that you conduct yourself in a way that keeps the door open to conduct business with everyone a second and third time (refer lesson 1).

3) It is just business. Sometimes it is hard to understand or push through but sometimes to succeed where others haven’t is understanding that “it is just business” and move on. I have employed and been in business with family and friends for over 15 years now which for the most part has been a great experience but sometimes a “just business” decision is required.

This is not to be misconstrued with my belief that “people do business with people they like” as there is always the personal element to this but even at this level, business decisions need to be made.

I am confident that these three learnings are part of the reason I am once again working alongside the directors of my previous employer which I have done for 18 of the past 28 years – with the other 10 years being with DMi!


2 Pieces Of Career Advice


20160710_CareerAdvice

I found a great article recently through a LinkedIn post titled “Is My CareerOn Track At Age 30” which had some significance for me.

When I was in my 20’s the age 30 held something for me. My first goal was a financial one where I was determined to be earning a dollar amount as my base salary by the time I was 30. This was a benchmark for me for whatever reason (I have no idea or good reason for it other than that’s what it was). My second goal was to run my own business.

As I got closer to 30 and not closer to my goals I started to look at what I had to do to get there and beyond.

My father had given me a couple of pieces of advice when I started work:

1) be loyal, work hard and you will be looked after; and

2) if you want to get somewhere you need to do it yourself, take charge
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So it was with hitting 30 and the second piece of my father’s advice that I left my 10.5 year secure employment (where I believe I had been very loyal and hard working) to take the chance on a start-up even though I had to re-mortgage my house with our second child on the way. I am fairly risk adverse and to this day unsure how I managed to take the jump!

As it turned out, within 1 year of starting my business I had achieved the salary level I had set at age 30. I was happy with myself that I had taken affirmative action to achieve both goals.

Fast forward to when I was approaching 40. I had sold my shares in the business I had started and was running the same company for a US based company. Whilst the previous 6 years as CEO had seen good growth with CAGR for Revenue at 31% and EBITDA 24%, I could see the writing on the wall for a decline as our legacy services were being replaced and the investment started we required to reinvent ourselves was drying up.
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I didn’t want to be running a business that wasn’t growing so it was time to be in charge of my own destiny again and start the next chapter of my career. Was it coincidence that this was at 40 when I then joined carsales.com? I don’t think it is a coincidence either that my boss at carsales was my boss for the time I was with Reynolds & Reynolds (see the first piece of advice my father gave me).

Does this mean that over the next few years I need to start looking at my next career change? You never say never and I do have new goals and expectations but given the passion I have for role and the company and given the short, medium & long term goals we have in place, I don’t think so.

I think the two pieces of advice dad gave me are applicable to most; and they can be interpreted in different ways. At the end of the day attitude and aptitude overrides skills and for me, these two things are the essence of what the advice means.


Valuing Your Business


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Starting a business requires a lot of passion, hard work and sometimes capital.

In addition it also requires some sound advice in structuring the company right from the outset, especially when outside investment is required. I’ve learnt this in my own businesses.

When we were looking to start a data aggregation and web services company back in 1999 we had 2 choices:

1) Build the technology required which would mean a longer time to market, greater investment required and more equity kept; OR

2) License proven technology from the US which would mean instant credibility, short time to market, less investment and less equity
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We went with number 2 in starting Digital Motorworks in Australia in order to immediately grab business that moved us to almost instant profitability even though we gave up nearly half the company. Was it worth it? Yes, maybe.

I was watching a little bit of Shark Tank on tv the other night and a great idea came on that has merit but like most things requires a lot of things to fall into place (including the right funding).

They were asking for $500,000 for an 11% stake valuing the company at around $5m. This follows a previous investment round just 6 months earlier valuing the company at $1.5m.
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For a company like this to increase in value by over 3 times in just 6 months, one or more of three things had to have occurred:

1) Revenue has sky rocketed;

2) A massive, long term contract shoring up the company has been signed; AND/OR

3) The first investment was under valuing the company or the future investments required

Unfortunately in this case it was number 3 – in their keenness to secure funds to underpin the business they didn’t think about the next round of investment that would be required. Maybe they didn’t think they’d need more money.

At carsales we get presented with lots of opportunities to invest in businesses just like this. It is great to see and hear passionate people who have put all their efforts into a dream. More often than not though, passionate founders go the other way and over value their business making a deal hard to do.

While it is great (and a prerequisite) to be passionate about what you are doing, it is very important to be able to take the blinkers off to understand the risks and future requirements as much as you do the opportunity.

The risks need to be understood and help to shape the business decisions as much as the opportunities do.


The Outsourcing Dilemma


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When should an online publisher use a third party service? It’s a question that comes up a lot in our space. I’ve been on both sides of the fence so I’ll have a go.

When I co-started a web services company the business model was relatively simple – partner with large online media players and their sales force sells your service for a recurring monthly fee. As they grow, you grow with them, achieving economies of scale along the way and carving out a nice business.

“There was one notable exception from that list – carsales. We just couldn’t get business with carsales…”


Before too long, my company supplied web based services to the majority of the big players in the Australian market in all forms of classifieds – Pacific Access/Sensis (Cars), News Digital Media (Carsguide, Careerone, Homesite, Gofish), Ninemsn/Trader (Carpoint), Fairfax (Mycareer), Seek, REA – all of which gave access to thousands of SME’s.

There was one notable exception from that list – carsales. DMi just couldn’t get business with carsales in the 10 years I was there as carsales has always been different to all other publishers in the use of third party providers in that they didn’t use them; they have always had the technology (or built it) in-house be it to aggregate inventory, manage inventory, manage leads, inventory search engines, web sites, etc, all the usual third party offerings used by their competitors.
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Pros and Cons
Before I share a Case Study where carsales made the decision to outsource to a third party service provider, I want to share my Pros and Cons.

The Pros for outsourcing to a third party service provider:

  1. These services are usually not a publishers core business so it makes sense to have your people concentrating on getting your core as best it can be.
  2. Time to market should be quicker

The Cons against outsourcing to a third party service provider:

  1. Recurring cost that increases as your services increase.
  2. Not being in control of the whole ecosystem around your core service.

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Case Study
A few years ago a new feature to accompany listing vehicle inventory online took off in the US and made it’s way into Australia. carsales‘ competitors were starting to use this new feature so there was an opportunity for carsales to also add the feature to the website as well as provide it to dealers for their own websites. The question was to build or license a third party service.

“carsales sought to lock in a monthly fee for the service”


carsales had always been one to build but had reached a stage where there was so much happening in technology that it made sense to license a third party service to leave the tech teams to do more important developments and to get time to market efficiencies (the two Pros).

In order to offset the first argument against using third party service providers, carsales sought to lock in a monthly fee for the service to use it across the business. The downside to this is that if carsales fail to sell the service to its dealers, carsales loses as it still has to pay the monthly fee. The upside is that the more dealers carsales adds to the service, the cost of the third party service doesn’t just keep rising, it is capped. The challenge was to find a flat fee that suits carsales and the third party provider.
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Once a third party service provider was found and terms were agreed to, carsales very quickly was able to start selling the new service, giving the website a new feature and forming a new revenue line. Using a third party service provider had worked.

“In the end this has ended up being a positive move for carsales”


The service was working well until the third party service provider informed carsales that the terms of the agreement would change after the initial term. This wasn’t acceptable to carsales so it did what it had to; put together a tech team to build the technology to seamlessly replace the third party service when the term was up.

In the end this has ended up being a positive move for carsales. The service and its features remained pretty much the same yet the cost of supplying the service was reduced by over 50% (which includes amortising the development effort over a number of years) and hence, the two Cons were adequately covered off.

My View
I think there is a time when it makes sense to outsource to a third party service provider and a time when not to. The two Pros stand up; as do the Cons. It all comes down to a business decision at the time that fits the business in the best way.

The most important thing though is to not be afraid of changing that decision. It’s ok to change your mind to get the right outcome.