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.

Firstly, not every integration is the same.  You need to think about the requirements of each business and then tailor the integration to the business requirements. 

Next we separated the integration tasks into 3 phases.  The first phase, which was done as quickly as possible and was deisgned to make sure that we could track and monitor the financial performance of the acquisition.  We therefore focused in the first phase on financial integration – especially moving the new company to the REA Group financial platform.  During phase one we would also look for quick wins in cost reduction especially if the acquired company was paying for a service (e.g. ComScore) that we already had access too. 

The second phase of integration went deeper in the business takes a little longer and goes deeper within the business.  In this phase we would integrate the new site into the overall group of sites and ensure that there is linking between the sites as this helps SEO and cross site traffic.  We would also look at HR integration through the implementation of common systems and processes so that we could assess the people in the acquired business.  During this phase we would also send in the Group Performance Team that can be thought of as an internal consulting team that brings best practice into the acquired company.  This team would primarily look for ways in which the acquired company’s sales and marketing team could benefit from the knowledge and experience of the REA Group as a whole.

Finally, phase three is all about technology integration and this would take a much longer time.  When technology is integrated, it is about three things – internal technology (tools used for running the business), the products themselves (in this case the websites) and finally the hosting of the sites.  The underlying philosophy is that there are cost savings and efficiency gains from having a common set of internal tools, having a minimum number of data centres for hosting and finally having a common technology platform so that products could be launched faster and the overall cost of development could be reduced.  Full technology integration tended to take 6 – 12 months depending on other projects that were running in parallel.

The last and most important aspect of integration is cultural integration.  This is really a part of each phase and is something has to be driven by the CEO.  The onjective of cultural integration is to introduce the REA Group’s culture to the target company and then to align the company’s culture to the Groups’ culture.  This takes a while but is very important for the long term growth of the Group.

The last part of integration is leadership.  The approach we took was to assign a full time integration manager to lead all phases.  The integration manager was carefully selected as it is important that they are a great representative of the Group, have the implied authority of the CEO, and are able to truly lead the integration effort.

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. 

Each country had a similar organisation structure and therefore the GPT structure mirrored the country structures.  Now the consumer marketing people in each country reported into the local CEO and not into the GPT and the role of the GPT was to work with the appropriate roles in each country to help solve problems and to help improve the overall performance.

A good example of this is how the GPT worked closely with th Italian business, casa.it, to increase the overall number of UB’s to the site and to also restructure the sales team to drive greater productivity.

However, there are always challenges with having an internal consulting team and a reader, Alain, has raised the following questions.

1) How do you effectively prioritize the consultant’s work? What missions/countries does he treat first?

2) How do you adjust prioritization in a rapidly changing environment?

3) Does it make sense to have an australian centric consultant when his mission is to take care of everything but australia? Wouldn’t a team of local consultants be better ?

These are good questions and not simply answered.  Firstly, prioritisation is always hard as either many people want the help of the consultant and sometimes those that need the most help dont want it.  The reality in prioritisation was that overall each country had a priority in the Group with Australia, the UK and Italy being at the top purely because of size of the business and the size of the opportunity.  Then within each of those, we looked at how far of best practice they were operating and then allocated the time accordingly.

Prioritisation can always be adjusted in a rapidly moving environment and that works best when everyone knows the role of the internal consultants and values their efforts.  We always worked on the theory that we would not impose the internal consulting team on a business that didnt value the consultant’s time. 

I think the quesiton about where the consultants reside is a very important one.  I am less concerned about where a consultant lives and more focused on having the best people in the role.  Sometimes this means that the consultants have to travel.  Having a team of local consultants only works if those consultants have the greatest knowledge and experience in delivering the results.  In practice, this is rarely the case as a country needing the help of internal consultants is often one that is not the best performing or is one that is at an early stage of development. 

Overall having an internal consulting team like the GPT enabled the Group to acheive a better balance between local operations and being part of an overall Group.

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.

The first step we took was to separate the Australian business from the overseas businesses so that we could maintain the strong profitable growth of the local operations.  This was achieved by appointing Shaun Di Gregorio to be the General Manager of the Australian operations and at the same time, we created a corporate team that was responsible for driving the growth of the complete company. 

This separation of Australia from the corporate team allowed the corporate team to focus on putting in place common reporting and finance structures, driving the overall growth (organic and acquisition) of the business, and finally establishing a consistent approach across the company to sales, marketing, and technology so that experience and knowledge are shared across the Group.

We then looked at how the countries reported into the corporate structure.  What was clear is that the larger countries (Australia, the UK and Italy) all had the capacity to survive and drive their own growth.  They had internal finance and HR teams as well as enough staff to be self sufficient.  These 3 countries reported into me as CEO.  The other countries (New Zealand, the UAE, Hong Kong and the Greater Luxembourg Region) were all smaller countries and didnt have the infrastructure to be totally self sufficient.  It was therefore decided that these countries would report into the GM of Emerging Countries and therefore would have a strong leader representing them and their different needs.  It was important that they were not lost in the overall Group.

To help drive consistent performance across the Group, we established the Group Performance Team.  This team had specialist skills including consumer marketing and industry sales and marketing and these skills were avaiable to country in the Group to help them address issues that they were facing in their local markets by bring external knowledge and consulting to bear on the problem.  This approach worked extremely well and helped a number of countries rapidly address issues that would have taken months of trial and error to resolve.

We also took that approach of centralising (were appropriate) the technology of the business.  The key areas that were rapidly centralised were internal tools including finance, CRM, HR systems etc.  It was important to ensure that no matter what office you were in, we were able to have a similar way of doing business.  The next step in the centralisation of technology was to look at how we moved all countries to a common platform (the REA Group platform) and how we reduced the number of data centres.  The reason for this was to improve reliability, increase speed to market and to reduce the cost of technology management.  (I will talk about this more in a future post).

The last challenge in leading a global business was how do you drive a consistent culture across the group.  This is definitely worth a separate post.

The net result of this approach was that we put in place a structure that allowed us to grow and manage a global business and as a result, the REA Group was a leading global player in the online real estate industry.

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.

In early 2005, it was becoming clear that realestate.com.au would be the dominant residential player in the Australian online property market and that its commercial site, realcommercial.com.au would also be the leading commercial portal site.  The question then became “what do we do next”? 

Early on we clearly knew that online real estate was the core business of the company and that moving into other classified segments was not what we would do.  Therefore, following a discussion with the head of sales for Australia, Shaun Di Gregorio, we decided that we would look at New Zealand to test our ability to start up and operate in a new market. 

We selected New Zealand as it has a similar real estate market, many of the companies that operate in Australia also operate in New Zealand, there was demand from expat New Zealander’s to search for listings in New Zealand, the New Zealand market was “hot” and it was roughly the same time zone.  The objective was to reduce the risks associated with starting a operations in a new country and at the same time to learn about how we can do it – and to really work out IF we can do it.

To further minimise risks, we took a slowly, slowly approach.  Instead of starting up a new site in New Zealand, we added a map of New Zealand to the realestate.com.au website – therefore focusing on driving people from the Australian site to look at the New Zealand site.  To build content  in the New Zealand section, we hired a team of New Zealand “back packers” in the Melbourne office and had them call agents in New Zealand to get them to sign up and also to upload their listing onto the site. 

This approach worked and relatively soon afterwards we had competitive content and a valid offering.  As we drove more and more traffic to the New Zealand section of the site, we became confident that we could launch a New Zealand only site and we launched allrealestate.co.nz.  (Unfortunately realestate.co.nz was owned by the main competitors in the New Zealand market.)    For a while we maintained the sale team in Australia however as momentum built, we put a team on the ground in New Zealand (made up of New Zealanders).

Today allrealestate.co.nz is a serious player in the New Zealand market.  It is used by around 50% of the NZ agents and has over 200,000 UB’s per month visiting the site – just behind realestate.co.nz (and a fair way behind trademe.co.nz/property - the real estate section of trade me).  However, what is more important then the absolute numbers is the fact that 50% of the traffic to the site comes from outside of New Zealand – bringing a whole new audience to New Zealand properties.

Lessons Learned:

• It is better to do than think too much – therefore once you have a reasonable idea of what you plan to do, put in place an organised experiment to test your hypothesis
• Keep your initial organic growth options simple and executable
• Try to reduce the risk of new market entry as much as possible by leveraging what you already have (e.g. sale team in Australia)
• Don’t strive for too much too early (e.g. starting up in Russia would have been a challenge)
• Reduce investment to the minimum to trial the concept
• Need a different proposition – we used the proposition “advertise on allrealestate.co.nz and reach a global audience looking at New Zealand listings”
• Once you are onto a good thing, accelerate

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.

A couple of big thank you’s.

Firstly to the propertyfinder.com team in the UK.  Gillian, Alison and the team – thank you for the wonderful map and amazing scapbook signed by so many of you. I noticed that there was something similar in all the pictures – alcohol … am i sensing a theme here?

Secondly to Patrick and the Luxembourg guys at atHome. Thanks for a wonderful evening of raclette and wine. You have a great team and a thriving business – well done.

Thirdly to the casa.it team in Milan. It was great seeing all of you. I wont forget (actually i cant really remember) the fun night at the Jazz Cafe / Restaurant in Milan and then some dodgy club that David Wickes talked our way into. (Anthony i am still blaming you!)

And lastly but certainly not least, the casait team in Treviso. It was so much fun seeing all the team and i wont forget the hair raising drive through the Treviso country side to a beautiful restaurant or being taught some decidedly dodgy Italian words. Thank you Alessandro!

For me the most amazing thing was seeing how the teams have really come together and are working as one. The European countries have developed amazing cultures are a clearly part of the REA Group. I wish you all the best for the future!

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.

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.