My CEO Life

Over the last month i have been writing a series of articles on how the REA Group went global.  To date these articles have covered organic entry to new markets, acquisition based entry into Europe, Asia and the Middle East, how we structured ourselves to lead a global business and how we used internal consultants.  This article looks at once we acquired a new business, how we integrated that business into the REA Group.

Integration planning started long before an acquisition was completed.  During the due diligence process, we would look at the business we were acquiring and then systematically work out what level of integraton we would need in the businesss and over what period of time would we need to execute the integration.  Now when we thought about integration, we looked at the obvious things like finance, HR, systems and processes, products, marketing, and technology.  We also looked at cultural integraton and how we can bring the acquired company into the Group as an equal member.

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Over the last little while i have written about how the REA Group expanded its business internationally in a series called Going Global.  I have so far explored organic and acquisition based growth as well as the structure we put in place to manage a global Group.  This posting looks at how we used an internal productivity team to help drive knowledge sharing across the Group and at the same time to operate as a hit team when issues arise.

The internal consulting team was called the GPT – Global Productivity Team and reported into the Corporate function.  The team consisted of around 6 people who, in general, had long experience with the company and had earned their stripes through having operated in the field. 
The types of roles we had were consumer marketing, agent sales and marketing (classified sales), developer and third party sales (display sales), and editorial skills. 

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The first two Going Global blog posts were around how the REA Group (realestate.com.au Ltd) oganically entered the New Zealand market and how we acquired new businesses to enter Europe, the Middle East and Asia.

Having acquired the businesses, the next challenge for any CEO is how do you manage a global business in such a way that you encourage the local team grow as fast as possible while ensuring that the overall requirements of the of the company are met.  In addition, as the overall growth of the REA Group was being fuelled and financed by the highly successful perforamnce of the Australian business, it was important to ensure that the ongoing growth and success of the Australian business was not impacted.

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During my time as CEO of the REA Group, we grew the business from a small operation based out of Melbourne, Australia with 25 people to a global business, operating in 11 countries and 720+ employess.  In the process we increased revenues from $4m p.a. to over $155m p.a. and went from a loss to a strong profit.

One of the most frequent questions i am asked is how did you take the business from a purely Australian operation to a global focus.  This is not a simple question to answer so i thought i would write a series of blogs on this topic.  The first blog is about organic growth and how the REA Group entered the New Zealand market.

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Over the last week I have had the pleasure of visiting the REA Group teams in the UK, Luxembourg and Italy. The purpose of these visits was to see the teams and properly say goodbye to them. When i left the REA Group a month or so ago (Click here for entry) i wasnt really given a chance to say goodbye to the teams in Australia or around the world. Therefore i took it upon myself to visit them, have a few drinks and to just chat with the teams.

So why so this? Well for many people it is about closure. I had spent alot of time with the teams around the world and my departure came as a huge suprise for many of them. Many of the team members asked me to come and say goodbye and i wanted to make sure i did this.

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A week ago i left the REA Group after 7.5 years leading the business.  I didnt get a chance to say goodbye to everyone so i thought i would write a note to the team at the REA Group to say thank you for an amazing ride.

So when i was thinking about what to say, i realised that my leaving was just another part of the REA Group story that started in 1995.  When i think about the history of the REA Group i think about the 4 era’s of growth that the business has gone through.  (See article on Eras of Growth>)  In many ways i think we are coming to the end of era 4 and where the business goes to next is up to the board and the new CEO.

When i think about these eras, i realise what links them together is the culture of the business and it is this culture that will drive the future growth of the business.  I recently wrote about the culture (Click here for the culture story) and would like to highlight some of the key elements i see in the REA Group culture.

Candor

Candor is vey important in any business.  It is through candor that the business can get to the real issues and focus on solving them.  Scott Holmes is the poster boy for candor in the business.  If you ever want a true, open, and honest view of what is happening, ask Scott.   I hope that the business continues to operate with candor. 

Respectful

Over the years the business has been very respectful of individual needs. Every one is different and it is important to remember that as you go about your daily tasks.  The business has always gone above and beyond when it comes to the indiviudal requirements of people. 

Risk Taking

The taking of measured risks is something that has become ingrained in the business.  By taking these risks, the business has been able to grow rapidly.  Now people will not feel comfortable with taking these risks but by living the mantra “seek forgiveness, dont beg permission”, the team has done amazing things.

I have to talk about Jacqui Voss at this point.  In early 2002 she decided that she wanted to join the business.  Her approach was to send me her resume, to leave me poems on my voice mail about why she should join, and finally she said that she had quit her previous job and was starting with us on Monday … all before i could actually offer her a job.  It was the right decision and her risk taking has paid off for both her and the busness.

Passion

This is something that you cant create in a person – you can just a great place for them to work and hope like hell that they fall in love with it.  I think the REA Group has been fortunate in having so many of you fall in love with it.  That is why the business has achieved amazing things.

Fun

This is one of the cultural elements that the business has excelled at.  I was writing down the fun times and realised that i had pages and pages of them.  I guess the way i think about it is fun nights spent with John Hart, Anthony Herman, and James Croy around the world.  It is over a quiet beer or two that you really get to know the people that you work with.

Over the last 2 weeks i have received heaps of emails, calls, sms’ and facebook / linkedin messages from folks around the business.  I plan to write back to each and every one of you and say thank you for taking the time to write to me.  However there are a few people of special interest that i want to thank.

The Original Eight

It is amazing to think that there are only 8 people who were in the business before i joined.  I want to thank them for sticking through the not so good times and for having the faith that we could really grow the business.  They are Dion, Barry, Kate, James, Scott, Zoe, Tony and Eric – thank you!

Marty and Karl

For those of you who dont know, Marty Howell and Karl Sabljak are the two founders of the business.  How could i not thank them … without them the crazy ride just wouldnt have been possible.

Bill Spring

For many of the people in the busness, they wont remember the amazing Bill Spring.  He was our last CFO and he passed away from cancer in 2005.  Bill had a great sense of humour and a wonderful heart.  We should never forget.

Three People Who Have Helped Make This All Possible

There are three people that have helped make it all possible – Chris Vulovic, Shaun Di Gregorio and Georg Chmiel.

When i first received the resume from Shaun Di Gregorio, i knocked him back.  It wasnt until the same resume was put forward by a recruiter that we met, interviewed and he joined the business.  Originally he joined in 2002 as sales manager, moved onto head of Australia and more recently onto GM Emerging Businesses.  It has been great to see Shaun grow over the years and he has really helped deliver wonderful results for the Australian business.  I am so glad that he didnt get knocked back twice - the business wouldnt be where it is today.

In late 2002 i remember chatting with Chris Vulovic in the US and i asked her if she would like to move to Australia to join the tech team.  She said yes, site unseen, and joined the business in early 2003.  Since then she has really helped drive the use of technology within the business and has grown the team from 5 or so to the 180+ it is today.  She has a clear vision of what needs to be done and has built a great team around her.  The business would definitely not be in the place it is today without her.

Finally, i cant go past Georg Chmiel.  In 2004 he told me that he was thinking of moving his famiy to Australia and i suggested he may want to join us as CFO.  While he was initially a little skeptical about the business and its potential, he joined and the rest, they say, is history.  Georg has helped revolutionise the business – from getting the financial processes right to delivering the most amazing financial presentations.  He too has been critical to the long term growth of the business.

Finally – Sarah Oakley

Ok … now many of you are saying, who is Sarah Oakley.  Well Sarah used to work for us until a couple of years ago.  In 2003 when my son was born, we didnt have a name for him so i sent an email to the team asking for ideas.  Karl came up with Studi … well i guess that didnt win.  Sarah came up with Liam – thank you.

I guess it was described to me the other day in a great way – it is not about the product, it is about the people.  The business has a great team – a team that can do anything if it puts its mind to it.

So Where To Next

I have been asked this question a hundred times and the answer hasnt really changed … i am just not sure.  I am looking at a heap of opportunities and will let everyone know when i know.

I wish you all the best of luck in the next era of the REA Group.  It has been both a pleasure and an honour working with everyone and it is great to call many of you friends.

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.