Find out how young entrepreneur, Clay Cook, changed his 80 hour working week to three hours a month leaving him free to develop new online businesses. By AMANDA GOME
By Amanda Gome
Find out how young entrepreneur, Clay Cook, changed his 80 hour working week to three hours a month leaving him free to develop new online businesses.
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Perth-based entrepreneur Clay Cook, 32, can teach all entrepreneurs a thing or two. He was in his late 20s when when he heeded entrepreneurial advice that he should not merely live to work.
Initially changing the business model was hard and the business suffered. But now his work hours have been reduced from 80 hours a week to three hours a month.
He tells Amanda Gome how after two years off, he has headed off in a totally new direction. Clay is happy to answer your questions. Email [email protected]
Amanda Gome: What was your background?
Clay Cook: I completed a bachelor degree of economics and marketing before I started ineedhits.com.au at 20. That actually worked well given that the internet is an interesting mix of marketing and economics.
What opportunity could you see?
The opportunity to not work for anyone else. Also I could see that no one was servicing small to medium business. They were getting websites created but knew nothing about how to promote them. I could see that search engines would be the Yellow Pages of the internet.
So you started ineedhits back in 1996?
Yes. At that time there were lots of search engines – 10 decent ones and 50 that were good – and you had to develop search engine submissions to be included. So we offered guaranteed inclusion into certain search engines and we did pay-per-click advertising for small and medium businesses.
By about 2000, you had 50 staff and about $7 million in revenue… that was a lot for a 24 year old.
Yes. My partner (Rachael Cook, 32) and I went to entrepreneur-type seminars and conferences and got sold on the idea that you work to fund a lifestyle, not live to work and get tied to running the business every day.
At that time we were totally dedicated, working 70-80 hours a week. We didn’t have kids back them but we had visions of creating a family and being financially free. We also did not know what to do about the HR component. We just hoped the business would run itself. It didn’t. So we decided to change the model. We put in a CEO four years ago.
That sounded easy. Usually finding the right general manager or CEO can be a nightmare.
It wasn’t. We hired an HR person first and then we interviewed lots of people before finding a great fit. We were looking for someone with a strong focus on creating processes around what we expected. We also wanted to develop a senior management team with key people in all the positions like sales, HR, accounting. We had to hire people in for those positions, but in the past we had always escalated people up through the company from starting positions.
Did some people get annoyed and leave?
Yes. It was a lot harder than I ever imagined it would be. We had a couple of hard years.
How did you find the CEOs that had the same goals and values that you did?
We tried some that didn’t work. We persisted with someone who was a very nice guy but while he was good at making staff happy he had little strategic or business development skills, especially on the internet.
Why is the internet a different playing field than general business?
The internet is technically different. Everyone understands the normal world but the internet relies heavily on servers, codes and little buttons.
How did you find the right CEO in the end?
She was a consultant (strategic marketing) to the business. She got heavily involved in marketing, then HR and administration, and then we transitioned her to CEO. Rachael transitioned out of the business a year ahead of me. I stayed on for six months shadowing and helping out.
So when you finally found the right CEO, what happened then?
We were already scaling back, automating a lot of things and outsourced others. Full time staff fell to low 20s and revenue to $4 million. But while we decreased revenue we upped profit.
We also changed strategy. We had been in the area of paid submissions (to search engines) but that market disappeared. We had neglected to build our own products so we began to focus on that and now we have very strong products and we have a strong subscriber base that pay monthly subscriptions.
There are a lot of competitors, but our technology is now so strong, we can do things far cheaper than the opposition and charge less for pay-per-click.
So how much time do you now spend with ineedhits?
My interaction is in a board meeting so I have gone from working in that business 80 hours a week to three hours a month.
What do you look for in that board meeting?
It is not a typical board and I am not too heavily involved. I incentivise the CEO to hit revenues and be profitable, so if that’s all fine the owners (the Cooks) are happy.
Did you find it difficult letting go of the company?
We had the birth of our child, but even so it was hard to cut the stings. But we had someone as a CEO who had a strong personality and is passionate about the business, so it’s in good hands. I then took a couple of years off.
Did you get bored?
Yes. Then we started to get involved with social media. At the end of 2005, Rachael started another business, Vibe Capital. She was looking for parenting advice and wanted to find it from other mums. I started to write a business plan and then it grew on me as well. We wanted to develop software that lets start ups and established companies build new user-generated content capabilities.
Wasn’t there already a lot of software in that space?
Yes, but it could be done much better. Sites were using discussion forums where the pages weren’t search engine optimised, and things fall off pages and you have to ask it again.
So we wanted to turn discussion forums into social networking. We developed parenting site minti.com, which was the first of the vibe engine verticals, and refurber, a home renovation site, and we own a large stake in Gooruze, an online marketing advice site.
We set up Vibe Capital which basically holds the IP for the community software solutions. In 2006 Vibe raised $1.2 million and took a strategic shareholding in digital marketing agency Market United. We also took a $1 million shareholder loan out as well. Prior to that we raised $1.6 million from private wealthy investors in Perth.
How much did it cost to develop the technology?
We spent more than $1.5 million to date on developing the technology for companies that want to get into the user generated content space and we license it out for $100,000.
So it is really aimed at large businesses.
Yes. Licensing generates most of our revenue. We have licensed our technology to greatschools.net, a not-for-profit, that gets 30 million uniques a month, and also to BuildinginLondon.
Are you building any new sites?
No. We’re looking at monetising minti through various methods including advertising. We also have a strong survey ability; people can pay to survey our member base. We have also developed sponsorship pages and newsletter advertising.
How big is Minti?
Minti has about 20,000 members – half the users are Australian, 30% are from the US.
What else are you doing?
We are also doing some angel investing and helping out other businesses. They are all tech businesses and web 2. Everything will one day be a lot more community focused, so we are very interested in this space.
So you are back working long hours?
Not at all! I put in a minimum 20 hour week and Rachael is a full time mum to our two active boys.