Dave Slutzkin

I guess that speaks to the constant grab for traffic?

That’s exactly right and I think in some ways the marketplace is the microcosm of the internet as a whole in that there are hundreds of people, thousands of people, millions of people out there who are creating websites everyday who are looking to get involved in an internet business, whether they’re creating it themselves or buying it from somewhere else. Sometimes it goes over the line a bit by potentially profiting from the Japan tsunami but that’s the nature of the market.

Now you mentioned 99designs and the investment there. What’s the reaction been around the office and among your team? Is everybody thinking that Flippa is next?

I’ve spoken to my guys about that, because we aren’t next anytime soon. I mean 99designs was at least a couple years ahead of us and to be honest they probably play in a broader market, they have a more sort of general-access product. So in many ways they were always going to grow but faster than us, so if something was going to happen it was going to be them.

But it’s really exciting for everyone. I mean, we’re really close as companies, we’re all in the same buildings, we all go to the same social functions, we all go to the same Christmas party and we share services, we share our finance and admin functions. So it’s just been a really exciting thing to happen for everyone. On the Monday night when we all found out about it we had drinks at the office and there was a real buzz around the place, because in many ways it’s a vindication of what everyone in the building but especially the founders have been working really hard for the best part of 12 years. It’s really nice I suppose to see that we can get a bit of recognition over here.

99designs has a little bit of a San Francisco presence and has more and more stuff going on in San Francisco, because it’s really hard to come to the attention of where the money really is. There is a bit in Melbourne but not a huge amount. There’s a huge amount of money, VC funding and stuff flying around in San Francisco and it’s really hard to come to their attention if you don’t actually have a presence there.

But at the same time there’s still a significant part of 99designs which is Melbourne and will be Melbourne for the foreseeable future. So it’s really nice to know that we can play on the world stage.

But we were surprised by the lack of media coverage. I mean you guys and savvy outlets covered it but there was very little mainstream media. We were kind of surprised about because $35 million coming into the country is probably something that is fairly notable.

And there were some big names associated with the deal, led by Acel Partners.

That’s absolutely true and the people there I mean Accel are probably as good as our founders could have possible hoped for. So I reckon it’s going to be really exciting to see what they bring to the table.

Will there be some crumbs falling your way, not in terms of money but perhaps in terms of just the extra knowledge and advice and even trends getting down to Melbourne quicker?

It’s quite possible. It’s probably too soon to know exactly how it’s going to work to be completely honest, but I know that the guys from Accel are coming out here soon. So I’ll have a chat to them and I’ll probably end up back in San Francisco at some point in the next six months, just seeing how things are going over there with 99designs and meeting some people as you have to do. As I said, at some level you just need to have a presence over there.

Your revenue has grown very strongly, but what do you focus on internally? Obviously the top line’s important, but is it profit, it is the number of actions. What’s really driving things at the present?

This is something that over the last couple of days that we’ve really been focusing on. I’m certainly in a good place right now to talk about it. Look it’s revenue, it’s the number of listings into the site but in many ways we see the value of Flippa as being the buyers that we have, that we draw to the site because they trust Flippa. If we didn’t have any buyers at Flippa, any people who had cash to spend on websites, then we wouldn’t have any listings, it’s pretty straight forward from that point of view. Whereas if we have the best buyers – and we think we do at the moment – then we know that the sellers will find us. So we look at how many buyers we have who are actually active in any given week and how many are receiving our email. Those are the metrics which are most important partly because they are easiest to overlook. It’s really easy just to focus on revenue and to focus on the number of listings but then the less financial ones I think are almost as, if not more, important.

So can you give us a feel for how big is the community at present?

We have tens of thousands of buyers who are actively participating with listings on Flippa in a given month. We have many more than that on our email list because obviously some won’t be participating all the time. Most of them end up being in the US which is another interesting part of being based in Melbourne I suppose. We 5-8% of our customers are in Australia. Most of our revenue, most of our customers we deal with are in the US or elsewhere in the world and all the prices we charge are in US dollars. I’d be lying if I said that I wouldn’t prefer the Australian dollar to be a bit lower. Most of our revenue comes in US dollars and most of our expenses are in Australian dollars. Most of our expenses are staff basically.

Is that something that could change that the spread of the business over time? Would you get a bit of a natural hedge there if you had a couple of people in San Francisco?

It’s probably the natural way that things move eventually – we end up with a business development person in San Francisco or a sales person in San Francisco or some combination of that because we will need at some point in our life to have a presence there. That said, even at the current level of the Australian dollar I reckon the team I’ve got here is as good as I could get anywhere in the world,  it’s more than price competitive. So there’s certainly no immediate move to start pushing development offshore in the same way that I don’t think 99designs intends to do that. But look when the Australian dollar hits $2.50 there will be some questions we will have to answer by then.

Just talking about overseas, are there competitors in the US playing in your space?

The competitive landscape is really interesting and we’re by far the biggest player in buying and selling websites and web businesses. As I just said before, if you look at domains there are certainly people who do that better and bigger than us but we don’t count them really as competitors because that’s not the space that we do so well. But there a number of smaller competitors out there, mostly US based who do this stuff. It might sound immodest but none of them do it as well as us and for that reason I think we are comfortably number one and we definitely intend to maintain that strength.

I think there is so much more we can do to improve our product and improve our marketing, getting our product to the people who we know would use it if they just knew that we existed. That’s something that historically companies in our group actually haven’t been that good at. A lot of us have come out of development backgrounds, I know I certainly have and Mark has and quite a few of the early employees who are still here are developers. We’re really good at being developers in this building and in this group but maybe not quite as good at marketing. We like to think that we’re improving all the time but we know that’s something we really have to focus on.

Does that loom as the biggest challenge for the next 12 months, getting the word out?

Yes definitely. We’ve identified in the last couple of days of planning that there’s still a fair bit we can do with the product, but one of our really big challenges is to get out to the right people. I know I’ve got plenty of users, plenty of buyers and sellers out there who are maybe stay at home mums who’ve had a baby and are now buying and selling websites to make themselves a living on the side.  But I know there are so many more out there. I haven’t touched more than one one-hundredth of 1% of that demographic, if that. So getting to those is just an example of a market where there’s a huge amount of scope to get to these people and really help them make a bit of money on the internet.