Seeking out the next big start-up opportunity
Tuesday, April 24, 2012/
If you spent 10 years of your life starting and building a market-leading business, few would begrudge you leaving, especially if you received a reported $40 million pay-out for your shares.
But Matt Rockman, who co-founded online recruitment giant Seek with brothers Paul and Andrew Bassat in 1997, didn’t opt for the easy life when he left the business in 2006.
While his work/life balance has improved, he has jumped straight back into the world of start-ups, becoming a leading investor and mentor to around a dozen businesses.
StartupSmart took a trip to Rockman’s cosy office in South Yarra, Melbourne, to get his tips for the next generation of pioneering entrepreneurs.
What inspired Seek?
Well, it seems so obvious now, to post jobs online. So obvious. I’m not sure there is a secret to how we got there.
What made us successful was that it was very hard for the incumbent recruitment classifieds. Fairfax and News Ltd faced very difficult challenges, with the old style mentality and culture of an offline newspaper.
We were a disruptive challenger brand. It’s hard to eat the lunch of the legacy companies, but we had the freedom to be disruptive.
We weren’t first to market, which is something a lot of people mistakenly think.
But we were first to do mass marketing and get scale. We out-executed everyone.
We ensured every core function of the business – whether that be product, distribution, alliances with NineMSN and Telstra, sales and marketing, customer support – was as good as it could possibly be.
We were acutely aware that we needed to build scale or die. Having the Fairfax and News organisations come after you when you are three blokes in a small office in St Kilda is pretty daunting. It certainly kept me awake at night.
We were very aware the job classifieds market works on scale, like any classifieds market. It works with the buyer and seller community coming together. We needed critical mass as quickly as possible.
So, how did you do it?
Unless you’ve got a quality team, you can’t execute.
So, first and foremost, you could say 50% of our success was attributable to the quality of our team and their ability to communicate, execute and deliver.
History records that our marketing was good, people liked the brand and the way we delivered it.
Andrew very quickly worked out that online distribution via the web portals was in vogue. Today it’s Facebook and Google, but back then it was the web portals, and we tapped into those guys for online traffic.
I was in charge of rapidly building a big sales force.
We gave our ads away initially, then monetised them by going to the IT community and saying “hey guys, why not try us?”
We were pretty aggressive both in pricing, and in pointing out the benefits of online versus print. We were able to grow our ad volumes and traffic pretty quickly.
When you’re in a start-up like that, you’ve got big, angry competitors. You also have shareholder money in a competitive market that you’ll live or die by.
You don’t stop to contemplate things, you have to just keep running.
While you do have to check to make sure you are running in the right direction, we spent more time moving forward than wondering where we were.
How did the three of you work together?
While it was unusual to partner with two brothers as the “third wheel” – or the “third Bassat” – it ended up working really well.
I compare us very humbly to Google, but if you look at a lot of successful online businesses, they are founded by more than one person. This allows for each person to focus on a core area without looking over their shoulder all the time.
We just got on with the job. Matt delivered ads and revenue, Andrew delivered some business from distribution, Paul held the operations and finances together.
What were the biggest challenges you faced?
We nearly listed in 2000 and then the tech crash hit us. That ran us pretty close to the wire in our finances.
We also had a couple of major outages, where the site went down for a period of 12 to 24 hours and we couldn’t work out what the issues were. I’ve tried to shut that out of my memory.
Stuff like that is pretty frightening, as is waking up and hearing that a rich and powerful competitor is coming into the market.
We found out one day the biggest recruitment company in Australia at the time, Morgan and Banks, had been acquired by TMP, which in turn was a division of Monster, which was then the number one player in the US.
We had just pitched to Morgan and Banks. So what was potentially our biggest client was becoming our biggest competitor.
We were like “okay, great”. You just have to stay loyal to your strategy and out-deliver and out-execute. You just keep going.
You have to respond to what the market is telling you. Customers have an interest in keeping competitors equal as it drives up services and, arguably, keeps the prices down.
You can’t ignore your customers – you’ve got to distil what’s happening and decide how to react.
Because we’d established a beachhead of market leadership, we tended to be followed rather than copying others.
One of the interesting things about the early internet back was that it confused a lot of business strategies.
We had a government department in Canberra saying that it had a website where all the government’s jobs would go. Effectively, they wanted to compete in the online jobs space, which was bizarre.