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Internet pioneer on new web trends

Last Updated: Sunday, 1 June 2008

By Amanda Gome

Lloyd Ernst, 42, was one of the very early pioneers of the internet, and launched WebCentral in 1998. He ended up selling out of WebCentral, making a small fortune of about $8 million, and has now gone on to start up and play a very key development role in a number of other entrepreneurial businesses. He talks to Amanda Gome about the lessons learnt and the challenges ahead.

 To listen to the lunch with Lloyd Ernst, click here. To download this mp3 file and listen to it later, right-click this link and "Save target as..." to your computer (Macs; option-click).

Amanda Gome: You’ve been involved in building a number of internet businesses. What do you think have been some of the key lessons you’ve learnt?

Lloyd Ernst: One key message is not purely internet related, but it came from the early days of Microsoft. There were presentations where Bill Gates would stand up and talk about partner channels and reseller channels and those sort of things, and the word that came out was “leverage”.

And that’s something that we applied in the WebCentral business where we developed strong partner programs. In any business that I’ve been involved with, you can have say X amount of sales people, but you need the ability to create channels that can in turn leverage your sales people on to more customers.

So how do you go about developing a channel?

It really depends upon the product and building relationships. It’s about how do I make the partner look better to his customer – “how do I build my products that he can sell and he can use, that make him look better”.

So it’s really about understanding the customer’s customer?

Absolutely.

Can you give us an example?

Well in the case of WebCentral we developed a whole range of products.

We allowed our partners to rebadge everything. We didn’t have a problem with it, and that was a case of making the partner look good in front of their customer.

Then what sort of deals did you do?

That was the lesson from WebCentral; the ongoing recurring revenue streams. It’s also the beauty of some of the other businesses we’ve been involved with – you don’t have to go and make a whole lot of money from one particular customer. If you can build up enough customers and just have this recurring revenue stream that flows through automatically each month, it’s really a great product model.

How do you sell that?

The model needs to make sense for the customer, and for a lot of cases instead of going through and charging them X thousand dollars up-front for a product, you can say “here’s a pay-as-you-go solution”. For a lot of customers that works in quite well. It helps them budget for it. If they don’t like your service they can always change and move.

Do you do a deal for a year?

Absolutely. If people are willing to pay up front for a year, if you’re a government department and those sort of things, then definitely we take the money.

What other lessons have you learnt from building your businesses?

What you really need to do is figure out how you can consistently deliver great service, which is by making sure that your people are dealing with customers have their systems. When customers phone up and they talk to you, you’ve got to make sure that there is a consistent message being delivered through to each one of your customers every time they call.

What else do you do? How do you know what they want?

That’s just a matter of getting out and talking to the customers. I tend to have a policy to try to get out at least once a week and meet a customer and have a few drinks and talk a little bit about what’s important to their business, and that’s when you come back and make the products. And I guess in the business I’ve always been involved with, I’ve been kind of a key product guy. I’ve always liked to have the product teams reporting directly through to me, so if I need to change something I can get out there and say hey guys, this is the direction we need to move and let’s move.

So even though you were the product guy you’d go out and catch up with the customer?

Look, the CEO is number one sales person in every single business, and you’ve just got to be there. Otherwise you lock yourself away in the back room. You get these filters that pop up inside any organisational structure.

How much time do you spend working on the business? You’re meant to be working on the business not in it?

I like to get to work fairly early and at least have a good three or four hours before the staff arrive.