We invest in Internet businesses that are generally in the classifieds or editorial segments, are in their early stages (but not at pure start up phase) and are in emerging countries.

Some when we invest, what do we look for?

First and foremost the business has to be in our sweet spot. I need to feel comfortable when I invest and to do that I need to know the type of business I am investing in. When people bring business ideas to me for investment in areas that I have no idea about, we tend to say no. The quickest way to lose money is to invest in something you are don’t really understand.

When investing, we like to invest once the business has been around a little while and have demonstrated progress. This usually means revenues (of some sort) backed by a realistic business model.

We also like to invest in realistic business plans. Too often we see the worlds biggest hockey sticks and just laugh (and cry). Management has be realistic about growth and what they can do. Too often they have their head in the clouds but their feet aren’t on the ground.

Another important criteria is the management and how they approach the business. They need to be enthusiastic, realistic, open to working with outsiders, and focused on the task at hand. In fact focus is critical. Too often start ups / early star businesses get distracted.

Finally, in looking for businesses to invest in we like fair valuations. So often I see some small company is a couple of years under its belt valuing themselves the same way as a Rigtmove, Seloger or REA Group. They have to be realistic and realise that there is significant risk in their businesses and that investors want to be rewarded for investing in the risk.

When we do invest like to work closely with management. Often we take a seat in the board, not to monitor our investments, but to help drive the business forward.  Working with management extends beyond the Board related functions – capital raising and strategy – to working on hard core operational issues.

It is by taking this approach to selecting companies to invest in and then working with them on an ongoing basis that we have managed to achieve better than average returns for the funds we look after.

Just over a month ago we launched a new business from our incubator, Classified Ad Ventures, called ListGlobally.  ListGlobally allows any realtor, agent, broker or developer around the world to advertise their listings to a global audience. All they do is upload the listing to www.listglobally.com and we then syndicate that listing to the market leading sites in 23 countries. We make money by charging US$90 to advertise the listing for 90 days and then pay our distribution network a percentage of what we charge. Overall a simple, but effective, model.

We were fortunate to have a great write up of the business in The Australian newspaper last week. Here is the article.

Nerd goes global in real estate listings: Simon Baker’s attraction to the net has paid off

FORMER REA Group chief executive Simon Baker is a self-confessed “closet nerd”.

From a young age, the 43-year-old says, he has been fascinated with computers.

Baker previously ran REA Group, the owner of realestate. com.au, before starting his latest venture, Classified ADventures.

He studied computer science at Monash University, and his first job was a “tour of duty” at IBM in the sales division.

“I started off life as a programmer in sales and marketing,” Baker says.

“As such, you can’t help but get attracted to the internet and the opportunities it provides.”

He loves the fact that the online real estate market is not fully defined yet, and that new products and possibilities are arising on a daily basis.

That fascination has brought him to where he is today — running his own show as founder of online classifieds company Classified ADventures.

The company provides operators of online classifieds sites with consulting services and helps them get the most out of the internet to advertise their listings.

Among the websites in the stable are smartagentsites; Sobox (Social Media in a Box) and listglobally.

The last, launched a couple of months ago, aims to help real estate agents get global advertising exposure for their listings.

After talking to real estate agents around the world, Baker discovered there were people buying properties across borders.

When you look at the way the online advertising space is set up, he says, each country has its own realestate.com.au, but no one is seriously asking how to market a property across a number of countries to attract an overseas buyer.

Out of that idea, listglobally was born.

From there, Baker says, his team approached the real estate.com.au equivalents in 20 markets around the world to see if they could put listings on their sites.

In each market, the website has become one of the most popular.

For example, if you are in Britain and want to buy property in Australia, he says, your first port of call may be rightmove.co.uk (the equivalent of realestate.com.au).

Each month, 1.6 million searches are carried out on that site’s international section, he says.

“What’s funny is that the fifth most searched country is Australia and there are only 200 listings there,” he says.

“It’s all about saying how do I put Australian listings in front of English buyers or South African buyers or Hong Kong buyers.”

Essentially, with one click and a fee of $90, a real estate agent can put their listing on the equivalent of realestate.com.au in 20 markets.

By the end of the year, he hopes to be in 23 countries.

If all goes to plan, listglobally will be a $10-20 million-a-year business.

Baker’s fascination with computers started early, but the property link was accidental, and only developed several years ago, while he was working at realestate.com.au.

Not long after joining News Limited (publisher of The Australian), Baker says, he was asked to undertake a review the realestate.com.au business.

Not long after that, he joined the board of realestate.com.au and asked for a shot at the top job.

In 2001, he got his shot.

For the next eight years, he says, he spent morning, noon and night turning the online property portal around from a loss-making business to what he describes as a very profitable, dominant market player. In 2008, he departed as chief executive of REA Group and a week later started his own venture with some of his former colleagues.

He had two aims. One was to invest in companies through an investment fund known as CAV Investment Holdings, and the other was to build companies.

With the money he earned from his shareholding in REA Group, Baker invested in a number of businesses. But the main focus for him is Classified ADventures.

He identified about four or five ideas and created an incubator in which those new businesses could be formed, he says.

Three of those ideas have become reality: Sobox, smartagent sites and listglobally.

Baker says his team has very clear goals it wants to achieve, given its financial projections.

With distribution partners lined up, he says, the next goal is to increase the number of listings going through the system. “Our first goal is to get to 1000 listings a month, then we want to get to 5000 listings a month,” he says.

“We are the only ones doing this,” Baker says of his new online property classified website.

“We are the first one to go out and line up all these market leaders, link them all together, and provide them with a feed of properties.

“Either it’s going to be an incredibly good idea or I just wasted two years of my life.”

The ideal candidate has probably worked for a seek.com.au, carsales.com.au, realestate.com.au or domain.com.au in a front line sales position. They would have experience as either a BDM (business development manager – ie new business) or account management (management of existing customers).

Classified Ad Ventures is building a series of new and innovative online products and services targeted at the real estate agency market. Recently we launched SOBOX and ListGlobally to the Australian market.

• SOBOX provides social media solutions for Australian and New Zealand real estate agents
• ListGlobally allows real estate agents to advertise their listings around the world

Classified Ad Ventures has more products in the pipeline and these will be launched in the coming months.

Our sales team will sell across the range of products to real estate agents in their territory.

Packages for sales people are competitive, weigheted towards uncapped commission, and include mobile and laptop.

In addition, you will get to work with many of the team the built realestate.com.au and the REA Group.

If you are interested in a position, know someone that is or just want more information, please send an email to sbaker@classifiedadventures.com.

Under the heading of Blog Reveals All, The Sydney Morning Herald decided to write up the existance of this blog and my departure from the REA Group in August last year. While a little late, it was flattering to know that they wanted to write this up as a story. The article focuses on the fact that this blog exists and openly discusses what it is like to be a CEO of a listed company and now a start up – Classified Ad Ventures. The article also talks about how i was summarily dismissed from the REA Group by the Board.

While it was fund to read about the past, it did get me thinking about blogging and why it is important – for the blogger and the reader.  In Australia, there are not that many blogs – especially compared to the US and to a lesser extent, the UK.  And those that are blogging are usually not writing about things that are that interesting. 

However, i do think that blogs play an important role.  When well written, they provide great insights into a specific topic – far more than you are likely to gain from traditional media.  They allow those that are interested in a particular topic to gain easy access to subject matter experts.  The challenge of course is wading through the mass of poorly written blogs to find those that can truly provide valuable insights.  That is where services such as <a href=”http://www.regator.com”>Regator</a> come into play.  They provide a sort of filtering mechanism, much the same as LookSmart did in the early days of the internet.  A blog is also important for the blogger.  It provides an outlet for them to share information (news and views) that they believe is important. 

It would be great to see more blogs being written by people in leadership positions.  I think that the transparency would go along way to providing a better insight into their day to day lives and the challenges they face.  Lets hope more leaders catch the blogging bug soon.

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

The first is from Global Edge based out of the UK …

http://www.globaledge.co.uk/news/details/global-property-chief-sacked/22821?code=700 

The second is from SmartCompany.com.au in Australia

http://www.smartcompany.com.au/Free-Articles/The-Briefing/20080805-Realestatecomau-sacks-chief-executive-Simon-Baker-.html

Finally, an article from Business 2 in Australia (always good for a read)

http://www.business2.com.au/2008/08/04/job-vacancy-realestatecomau-ceo/