My CEO Life

The company i run is called the REA Group.   The business was started in 1995 in the garage of one of the founders in the Melbourne suburb of Doncaster.  In 2000 it came within a few weeks of closing and since then has gone from strength to strength and is now operates 22 property portal sites in 10 countries.  It has 750 employees, does over $150m in revenues and is very profitable.

Now when i think about the growth of the business, i think about 4 era’s of growth.

Era 1 - Start Up (1995 - 2000)

The first era is all about the founders finding their voices.  The business started in a garage in Doncaster, Melbourne, Australia as a web hosting, ISP, and anything and everything to make money.  Somehow they secured the www.realestate.com.au URL and the rest they say is history.  They built a very basic site (click here) and went to agents to get them to advertise.  It took off slowly but over time they were one of the three leading sites in the country (with www.domain.com.au and www.property.com.au).  In 1998 Macquarie Bank purchased 51% of the business with the view of floating it the following year - and float it they did on a very weak business plan.  At the float in October 1999, they raised $7m and by mid-late 2000 they had spent it all.  The money disappeared on Italian furniture, questionable marketing (ie sponsoring a tennis tournament) and on a massive work force (they hit 60+ people in mid 2000).  As they ran out of money, they looked for investors and in late 2000, News Corp agreed to invest $2.25m in cash and $8m in marketing for 44% of the business.  I had the priviledge of doing the deal for News.

Era 2 - The Turn Around (2001 - 2002)

In 2001 i joined the business and immediately set about turning the business around.  It was clear from the beginning that the business was on a clear path to spending the $2.25m they had raised from News and that there was unlikely to be any more money invested.  The areas i focused on first were finance and sales.  I removed a few people from the business and set out simplifying the product set and focusing the sales team on selling one product.  These simple actions, common sense really, meant we were able to drive rapid growth in the business with the limited resources we had.  The key focus was on having a simple vision, building a great team and most importantly living within our means.  We slowly grew our way out of the shit!

Era 3 - Focused Local Growth (2003 - 2005)

Era 3 is all about acceleration.  By the time we entered this era someime during 2003 the business had turned around and was motoring forward.  The focus was on accelerating growth and signing up as much of the market as we could, as fast as we could.  We rapidly built out the team, improved systems and processes and rolled out new products and services.  The market clearly saw us as the leader and we purchased the #3 player, www.property.com.au, to ensure we solidifed our place as the market leader.  Our minds started to ask the question - what next?

Era 4 - Interational Expansion (2005 - today)

With leadership in the Australian market entrenched, the focus started on what next?  The answer was quite simple, we need to work on moving the business out of the Australian market (only 2% of the global GDP) to other markets and we therefore started on expansion with the launch of a site in New Zealand (www.allrealestate.co.nz) and the acquistion of a similar busines in the UK, www.propertyfinder.com.  Since then we have expanded into italy (www.casa.it), the greater luxembourg region (www.athome.lu), Hong Kong (www.squarefoot.com.hk) and Dubai (www.propertyfinder.ae).  The objective is to create options for future growth and hopefully to have another www.realestate.com.au.

I think we have created a great culture at the REA Group.  The question is, what makes this a great culture … what are the elements and how did we do it?

For me, a great culture has the following characteristics:

Candid

Being candid is very important to any organisation.  You need to be able to express your views in an open and trusted way.  It is by doing this you are able to understand what is really happening in a business and therefore get to the root cause of problems.  One of the best proponents of this was a guy who worked for me called Scott Holmes.  He is one of the founders of realestate.com.au Ltd and will openly and honestly tell you what he thinks - no matter who you are.

A-Political

Politics can kill an organisation.  I am not talking about diplomacy but real hard core politics.  People jockey for position by how they present themselves to the CEO in the hope that they get the nod over someone else for a role.  I cant stand this and honestly can see right through it.  Over the years i have had many people do this and eventually they are found out.  The secret is handling them carefully as they are the sort that will “white ant” you behind your back.

Fun

If you are working 10 hours a day you have to have fun.  Our team knows how to have fun.  We work hard and play just as hard.  The play can be anything from having a quite drink in the evening through all out warfare in the office using nerf balls.  It doesnt matter - it bonds people and helps them let off steam.  We have also installed TV’s in the office so that we can keep up to date with that is happening - especially the olympics!

Respectful

This is probably the most important thing in corporate life.   You have to have respect for others in the business and their circumstances.  Not everyone can work the same hours, not everyone has the same passion.  However by understanding this, you will get more out of people and therefore create a better culture for the business.  For example my PA lives in Sydney while i live in Melbourne.  We see each other once a month (maybe) but we are totally in sync and i trust her completely.  We just use the telephone / blackberry / email / messenger to keep in touch.

Power of the Thought

It is not about position, it is about thought.  It is so important in any culture that the best thoughts rise to the top and that no matter who has them, they are respected.  Too many businesses have the hierachy in place so if the top guy doesnt have a good thought, no one does.  This doesnt work and leads to long term cancer for a business unless you have a really smart person at the top of the business.

Passionate

You cant beat passion.  We have so many wonderfully passionate people in the business and it is this passion that allows us to reach new heights.  People just get the job done - they dont complain and often dont even need to be asked.  They just do it.  If there is one thing that is critical - it is passion.  You cant create it but you can destroy it.

Risk Taking

You need a culture that is more risk taking than not.  Why?  Well it is simple - without risk, there is no return and for many small and medium sized businesses, you need to create strong returns.  Therefore encouraging people to take risks will help you get there.  We have a saying in the business - beg forgiveness, don’t seek permission.  Embrace it and people will do amazing things.

Open

Being open in a business is critical.  If a CEO is open in what they do, then everyone will feel like they can be open too.  In the early days when the business was on its knees, we spent a long time educating people as the performance of the business including the cash flow position.  When they knew what this was they were able to understand why we were not doing things and they were also able to bring forward practical ideas to keep the costs down or to grow the business.

Honest

In a business as in life it is super important to be honest.  Too often people rely on either avoidance of bad news or on half truths to just get through the day.  Dont - be open and honest.  It doesnt matter if you have mad a mistake, we all do, just own up to it and learn from it and get on with life.

Integrity

This goes without saying.  You must have integrity in everything you do.  For a business, the CEO must lead with this from the top.  If they dont, then the rot sets in and it is hard to manage a business where there isnt integrity.

I hope these views on culture provide you with some insight into how i view what a great culture is.  Next time we will look at how you build and more importantly maintain this type of culture.