By Mike Preston
The debate about how to earn money from Web 2.0 must seem a bit stale to Sydney entrepreneur Robert Beerworth – his web design company, Wiliam, has been making millions out of it for years.
Robert Beerworth has built his company Wiliam’s success on always being slightly ahead of the curve – most recently through being the first Australian web company to develop applications for booming online social network Facebook.
In May this year, Facebook opened its social network platform to external developers, triggering a rush of activity as the global web development industry clambered to create applications that would seize the attention of the more than 50 million people who visit Facebook each month.
Wiliam first hit Facebook several months ago with its blog RSS feeder application, a program that allows people to put their blog into their Facebook profile. It is now in the process of developing several other Facebook applications for clients, including one for the Fox TV program Gossip Girl that allows users to insert their own images and title text into a digital magazine cover mock-up.
Beerworth, Wiliam’s managing director, says at this stage the apps are not big money spinners compared to the business’s bread and butter development work – because they are relatively simple to create, clients are generally only charged a few thousand for them. But the marketing value that comes from being associated with one of the web’s hottest phenomena has already added value to the business.
“We are getting a Facebook inquiry every day now, often from very substantial firms like Foxtel that want an app, and as yet it’s not something most of our competitors are offering,” Beerworth says.
And, of course, there is no telling how valuable a customer base in Facebook development will be worth down the track. After all, back when Beerworth founded Wiliam in 1997, terms such as Facebook, Web 2.0 and online networking either hadn’t been invented or were not widely used.
At that time Beerworth was an 18-year-old student with a bit of creative flair and more time for the internet than his studies. As interest in the web took off, the odd bit of website development work on the side became a steady flow, until the arrival of a couple of big jobs – including one $90,000 job to develop an online restaurant booking portal – made Beerworth decide to go professional.
From there, the business grew quickly – the growing dot-com bubble loosened corporate purse strings and sent a steady stream of work to the few local web developers with any kind of reputation.
In 1999, Wiliam achieved revenue of $700,000 and its first annual profit. Then, in 2000, the dot-com bubble burst, halving revenue and raising serious question marks over the business’s viability.
“When the crash hit it was a double whammy – IT spending stopped, and then not long after the advertising spend dried up. So both hands that had been feeding the web stopped, and it was just appalling,” Beerworth says.
The sudden drop in revenue left Wiliam struggling to remain solvent and forced Beerworth to seek out an emergency funds injection to keep the business afloat.
“The hardest thing I ever had to do was ask the accountant to admit to me we were probably close to insolvent – it was a very hard time. I had two days to go and raise money or we would have been liquidated,” he says.
Beerworth got backing from two senior corporate figures he knew. They each agreed to inject funds into the company in exchange for a 5% share each – shares they continue to hold today.
From 2001 to 2003 Wiliam lost money and staff, but unlike many of its competitors, it survived. Beerworth refocused the business from flashier, expensive products to a more modest range of fixed price products that could find a market despite the depressed conditions.
But after three years of just hanging on, the rise of Web 2.0 and of online giants such as Google and Yahoo saw companies starting to beef up their online spending budgets, triggering a rapid upswing in the flow of work to companies like Wiliam.
The diverse online opportunities that Web 2.0 presents were a perfect fit for Wiliam which, unlike many web companies at the time, was able to offer creative nous as well as strong technological skills to the market.
The recovery began in 2004, when Wiliam exceeded $1 million in revenue and returned to profit. This year the company will turnover between $8 million and $9 million and it has just opened a second office in Melbourne.
The challenge the business now faces is to continue to find opportunities for growth in a market that is becoming increasingly crowded – and to find the staff it needs to continue to grow in the face of a worldwide shortage of skilled IT staff.
Beerworth says that in addition to initiatives like its Facebook move, Wiliam will seek growth through expansion within Australia and by pushing the newer consultancy side of its business.
On the staffing front, Beerworth believes the firm’s high-profile position within the Australian industry will help it stay ahead of the pack – although paying his 65 staff competitively remains important.
“Pay has gone up noticeably – everyone blames Gen-Y and that may be apart of it; they just expect you should get paid $100,000 at the age of 22. It is very hard to keep a handle on wage costs in this environment. We are paying twice the average wage we were paying three years ago, and I would say at least once a week we have someone suggesting the time has come for an increase,” he says.
Beerworth says he doesn’t believe in losing good staff for the sake of a few thousand dollars a year – especially when finding a replacement is likely to take six months and cost twice as much.
“We try and use pay rises to incentivise people, so we’ll put them on to a personal and business goals agreement and if they reach them, whether they are learning a new skill or a higher revenue goal, then the pay rise goes through,” Beerworth says.
For Beerworth himself, the incentives for doing what he does are clear. He clearly enjoys work and takes great pride in his business, a fact that seems to underlie his disinclination to accept any one of the offers to sell or merge that he receives on a regular basis. Even so, Beerworth admits he has a plan to exit the business within three to five years.
“I’m only 28, my wife is having a baby in six weeks, and we’re getting to the point where we’d like to try something else, perhaps living in America for a couple of years. In terms of the business there are a lot of things we’d look at – perhaps like selling to staff or a float – but the point has never been to make money, so the basis of selling is to try something else, not to buy a yacht or something,” Beerworth says.
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