Today we are talking with Ben Ashton, chief executive of fast-growing IT business Gizmo, which provides technology installation and repair services to households. The company more than doubled revenue to $7.5 million last year and has just introduced a new internet filter service that allows parents to control what their kids see online.
Ashton talks about the company’s new direction, why a Government-mandated filter won’t work and why simplicity is what users really want from technology.
Parental internet controls has been a perennially hot topic, particualry in Australia where we have had a lot of public debate about a mandatory internet filter. What was behind the decision to create and sell your own filter product?
We were aware that parents were concerned about the internet, but what we wanted to do was to commission some research that I guess highlighted the issue. What the research has identified is parents are concerned but the particular issue is the kids aren’t concerned. Only 13% of children view the use of the internet as dangerous and at the same time they are sharing a whole lot of personal information and not necessarily appreciating where it is ending up.
Also, parents are aware of how kids are using the internet for homework, research and social networking and so on, yet 40% of kids are hiding their internet use from their parents. You’ve got 20% of kids who are actually giving full addresses and contact details online, ordinarily probably in the social networking context but equally they are not necessarily aware of fraud or some of the issues that can sit behind that.
From our perspective, the key solution to this is around educating parents and empowering them as to what they can do about it and that’s why we’ve launched this service Kids Safe Online.
So what has been the response to your product?
It’s been very good. Our key issue from a business perspective is making sure parents are aware that this is available. The basic way it works is we ensure parents have basic security set up. That they set up user accounts for their kids, they then use the parental controls and then we recommend the use of a web filter as well. But for instance the research highlighted that 22% of parents have never used the parental controls that are inbuilt into the PCs and laptops at home.
So where does Gizmo stand as a company on the idea of a government-mandated internet filter? I guess in some ways the introduction of an official filter might reduce demand for your product. Or do you take the view that a mandatory filter is more of an individual issue for people?
No, we’re not a supporter of a mandated government filter and we’re basically an advocate that parents need to take personal responsibility for providing a safe environment in the home. Because it’s horses for courses – even if you’ve got two or three children, the way in which you might regulate the use of the internet by those three children will be different depending on their ages and it will also be different from home to home. A government enforced filter has all the issues attached in terms of how people get around it and then it also creates a false sense of security that there’s a single, easy solution. And of course it has all the issues around whether it slows down access to content or whether it interferes with content that it shouldn’t interfere with.
Do you think it will ever get up?
No, I don’t, but I think the Government’s going to continue to be pressured in this area to do something about it and certainly we want to ensure that government and parents are aware that there are services like ours available. And at the end of the day if you go through these four or five basic steps, there is quite an adequate solution to the problem which is superior to a government initiated solution.
Looking at this from a Gizmo point of view, is it fair to say that this is a bit of a different direction for you guys, given the business has been built around PC repair?
Not such a new direction I guess, but there’s a new profile we’re giving to this service. As you point out our high level services around setting up, repairing, fixing and networking computers, that would be sort of the key areas in which we work. We do have a range of sort of if you like consulting services, there’s a “shop-with-me” service where we take people shopping with us and show them what to buy, and the Kids Safe Online is a service that we want to grow, given the current environment.
Where’s the growth in the business coming from, is it that traditional area or are there more opportunities to add these new divisions?
Look, we set up the business around some core relationships with the likes of Microsoft, Apple, Telstra and Dell and we’ve sort of supplemented that with core retail partnerships with Harvey Norman and JB Hi-Fi. That acts as if you like a channel for customers to come in and experience Gizmo for the first time and then once they are in here, they come back and repeat with us and they refer us to friends. So the phase of business growth now is very much more focused around the existing database of customers we’ve got and the ability for us to attract new customers directly through our own marketing initiatives.
So leaning on those channels is becoming less of a necessity.
That’s right. So we’re probably around 60% channel and 40% direct now and we expect that to be 50/50 by the end of this next financial year. Over time the channel partnerships becomes really a form of acquisition. We’re very much going to be around setting up a customer annuity stream, really.
Has marketing your own services required any change in the sort of skills within the business? I guess you’d have lots of skilled technicians and that sort of thing but have you had to beef up areas like marketing and customer service?
Look the actual service we provide is still the same service so there’s no change there, but certainly the way we market will change and there’s sort of a couple of tacts there. I mean one is again as the internet becomes more prevalent in people’s lives, there’s more of a focus on digital marketing and the use of whether it’s Google AdWords or different internet media properties for our advertising, that’s where we’ll focus the majority of our marketing spend. At the same time we’ll have a sharper focus around our EDM (Electronic Direct Mail) to our existing customer base, providing a range of offers to encourage them to repeat with us, to refer us to friends and for us to stay in touch and in contact with that customer base.
How has the customer profile in the business changed? I’m just thinking that four or five years ago you might have still been getting a few people who were first time computer owners, but are there many of those left now?
It’s interesting the sort of the profile of customers. We have a range of different sorts of customer sets. You’ve got your time poor professionals, you do have your first time users, you have your sort of retirees who are exploring it for the first time and are interested in getting some advice and then I guess you’ve got that group in between who are in need of a service due to some sort of emergency, because they’ve got a virus or some issue that’s just come up with their computer. Or they are at the point of purchase where they need some help in setting something up. And I guess what we’re seeing is there’s more and more technology in the home and people are now going now through a phase of buying their second or third laptop and at that point, trying to work out how all the technology connects. Often that does require an expert such as ourselves.
So that idea of the network is coming a bit closer to reality.
Completely. What we see in terms of the future for Gizmo is we become, if you like, the gateway into the home. We’re in their speaking to the occupiers of the home around exactly their technology needs. While Telstra might have a particular view around what broadband or telephone connection, or Sony will have a view as to what laptop or television they have, or Netgear will have a view around what networking device they’ve got, we end up with the whole-of-home technology experience. Over time we anticipate our customers will start looking for advice as to where they should go to purchase new technology.
And how networked do you think a home can get? I guess we’ve all got this idea of turning the lights off and turning the oven on from the comfort of our own phone.
That’s available now and has been for a period of time. I think actually what people are looking for is simplicity. The problem is we keep piling more technology, it’s getting more complex. So if you like the cut through message for me is what we do is we simplify it all for you again. So we’ll come and network your home, make all the devices talk to each other and make it all work effectively and then teach you how to use it. It’s like a sort of tutorial.
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.
