I guess what you’re talking about with mobile gets into that area of providing really localised, personalised content. Is that an area where the classifieds market can improve and expand?
Yes, and I think localised and personalised is going to be good, but it’s just modification of the existing interface rather than a brand new way of doing something. If you think about real estate, it’s already localised and to a degree is personalised anyway because everyone does a different search. The only difference is that understanding that earlier, so with a mobile handset it can say, well I know where you are now, I will now localise this content for you. Or on a laptop it’s easier to personalise because it knows who you are, it may not know what you’re looking for but at least it knows who you are.
So any of those things come together to do that, but once again I wouldn’t expect earth shattering changes out there. REA is going to launch a new look and feel next week or so but the bottom line is they’ve already got five million people looking at the website each month. I don’t think you’re going to suddenly see that jump to seven million. There are only so many Australians out there that can realistically be looking at real estate online. So it’s about enhancing the user’s experience and probably being seen as being innovative. Because the advertisers always want to see something new and different, they tend to forget that it’s about the outcome and a lot of them get caught up in the way, the look and the feel as such.
That’s very true, I mean as you say, a lot of these sites have been working so efficiently for awhile and it’s hard to see how you’d tweak it too much.
The danger is that you tweak it in the wrong direction and that would be dangerous for anyone, but I can’t see that actually happening. You look at big traffic sites in the US like Craigslist, it is the world’s worst user experience but boy, it works. And you never underestimate the fact that users are highly adaptive to the environment. If you’ve got something they want, like content, they’ll get there as long as you’re not too stupid and hiding it from them.
I know you spend a lot of time on the road Simon and I think a lot of time in the US.
Yes.
Can you give us a bit of a sense of how things are outside of our little miracle economy here?
The US is far more doom and gloom for sure. I think the unemployment rate is approaching 10%, there’s still a housing crisis, there’s still a lot to play out in that environment. So I think the trends you see in the US are very much as expected. There’s a lot of unemployment, far more doom and gloom in the business environment, but what’s interesting is there’s still quite innovative ideas coming out. I spent some time with this guy that runs his incubator in San Francisco the other day and he’s very enthusiastic about some of the products he’s building and he’s in the gaming world. So I think innovation is still chugging away, but there’s probably not as much money being invested from a VC perspective – but the spirit of innovation is still there. The economy is just so different and then Europe’s the same, it’s a bit doom and gloom. So if you take those into account and understand where those markets are, we’re pretty lucky and we should be enjoying our luck while it keeps going.
In terms of looking for further investment this year is the portfolio pretty much where you want it at the moment?
We continue to look for opportunities but we’re not running at a million miles an hour to make sure that we make 10 new investments in the next 30 seconds. We’re very keen to make sure that our incubator products are working, only because we own most of them, if not all of them, 100%. So it just takes one to take off and the return will be great, but then I guess the other thing that we’ll be doing is we’ll be looking at our current portfolio and we’re probably going to increase our stakes in a couple of companies, ones that are going well and that we like. If we can do that I think we’ll be in a good position.
Just on the incubation side of things, are the people within your organisation looking harder at R&D concessions or Commercialisation Australia grants? I know it’s become more difficult for software companies for example to get the R&D tax credit, is that a concern?
No. I just work on what I can impact myself and if the only thing that’s going to make a difference between survival and death is going to be R&D grants, then I’m in the wrong business. I’ve been very keen to say ‘look let’s just get on with it’ and we’ve got some internal guys that are thinking about how we maybe get something, but it’s a low priority for us. I think if you’ve got a great idea, we’re happy to pay our taxes and away we go, and if we can get some breaks along the way, that’s great. But I don’t want people, especially people running these businesses, distracted going “oh my god we’ve got to get this R&D” and spend the next 25 days writing up some document that at the end of the day doesn’t actually deliver or doesn’t deliver enough.
And just a last one, on the incubation process – and I don’t know if you’ve had to do this yet – but when do you know it’s time to let something go quietly into the wide blue yonder?
Well, we have milestones that we want to reach and if we don’t hit those milestones, or even if we did come close to those milestones but the upside is not there, then we’ll bail, get out, walk away and go do something else in respect to that business. But we’re not at that point yet with any of them. What we’re not going to do is pour good money out after bad.
That sounds like the key; there is a measurable process rather than an emotional decision I guess.
Absolutely and there’s always a degree of emotion in everything you do, but our objective is to try and make it as organised and as structured as we possibly can. The good news for us is that they’re all broadly ticking the boxes we set to have ticked by the dates. As long as they keep running at the rate they’re going, I’ll be very happy.
And hopefully you’ll have five success stories on your hands rather than one.
I’d be happy with one and if you do the maths around it, one pays off all the investments across the rest. But five would be fantastic. So I can acquire News Corp eventually. Okay I’m joking, I’ve got no desire to acquire News Corp!
Maybe you could turn MySpace around for Rupert?
I’ve got no desire to go near that. No, I’m very happy working on the things that I own, I don’t have to do anything more than sit and work with the people who co-own equity in them and work through how we make those bigger and better and we can literally make a decision in hours or days or minutes and start executing it.
That’s the joy of small business.
It is.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
