On Thursday evening I had a phone hookup with Simon Baker, former Managing Director of Realestate.com.au. We spoke about a range of issues and I will place some excerpts from the interview here. Simon recently departed from Realestate.com.au in the typical pathetic fashion that large organisations feel necessary and from his blog My CEO Life Simon explained his departure.
“I was summonded to a hotel room in town, asked for my access pass and told not to go back to the office and that my desk would be packed up and couriered to me – 7.5 years over in a flash. I was not to say goodbye to the team.”
Since that date Simon has been inundated with offers and judging by the response was very popular amongst his team. Simon is still a large shareholder of realestate.com.au so I am sure he will want to see continued growth from this company. You have got to give credit where it is due, the company now has a market capitalisation of over 500 million and employs some 750 people.
Realestate.com.au has a number of challenges ahead of them, not only trying to keep growth running along nicely, but also making its international businesses profitable (nearly all the profit comes from Australia).
There was no malice in this interview towards REA and he answered all questions openly.
So here is the interview.
It has been a dramatic few weeks, can you share with us some of your thoughts over the past few weeks, what have you been up to?
“Well I have had over 20 opportunities present themselves over the since the announcement. Anything from board positions, investment opportunities and of course some serious offers which I am taking my time mulling over, it has to fit.” Simon is also involved in a number of early stage companies and has investments in a number of these, from real estate to arts. Simon is currently Chairman and CEO of Artshub, a Director of Redbubble and a Director of 3eep. Simon seems to have a passion for the arts and you can see this from his investments, ArtsBub looks like a little ripper.
Where do you see yourself working, do you think you will remain in the online space in real estate or just general technology?
“Well it will have to be on the Internet, I am not interested in anything non internet related, I couldn’t cope with it.” So I am weighing up some opportunities and will make a decision in due course, but I have had a plethora of interest both in and around the real estate space.”
Realestate.com.au saw incredible growth over the past few years. Is this going to continue, or do you think it will be tough to continue at around 40% growth? We all have been waiting for Google Classifieds (Google Real Estate) to come to Australia. Do you see this as a threat to current revenue models?
“No”. Simon recently had a chat with Abe Murray Product Manager at Google and pointed out that Google are not in the business of taking down markets, more so complimenting them.
“Only around 30% of traffic comes from Google, Realestate.com.au is now part of everyday life for consumers, the real challenge is for off-line print media, realestate.com.au drives leads for agents, this is what we do, currently in Australia around 15% of marketing is spent online compared with 85% in newspapers, yet newspapers struggle with around 20% of leads. Naturally agents will just get smarter where they spend there money.”
Will the Portals embrace Google?
“Portals will embrace Google, they will be crazy not to”. Simon also spoke of the challenge for Google if realestate.com.au, domain.com.au, realestateview.com.au, myhome.com.au all send the same properties and perhaps also agents sent feeds to Google as well. We did disagree on some aspects of this, as I did point out that Google will be smart enough to filter these or link to all sources. Simon does however feel that Google will not be a threat, he thinks they will compliment the portals.
Newspapers have been struggling with print property guides, seeing revenues fall over the past few years. Can you ever see them give up, like the LA Times has done recently?
“I don’t think they will give up, agents will use newspapers more for branding and perhaps only high quality properties will be featured in papers – maybe 1.5 million dollar properties.” I agreed with Simon on this. I mentioned that it may well start at around $600,000 but more and more consumers will not want advertising in newspapers and each year the benchmark will increase, lower priced properties, especially in times where many may be getting less than what they paid for properties and will not want to spend money in print.
Do you think print and online departments should merge?
“No”. Many have speculated that this is where Simon and the Board had the base of their disagreement. I think the ‘no’ was a great answer, short and sweet. It is also speculated that Fairfax Digital and Print are also having the same bunfight.
Where do you see real estate in 5 years? Do you think Mobile is the answer or do you think digital television is the next big area?
“I think it will be via the browser, whether it is video or not, the mobile market here in Australia is different to some countries where there are so many more options and everyday uses for mobile phones – maybe an integrated TV browser”.
If you had to name one thing you could be proud of in your time at REA what would it be?
“Created a household name”. Simon struggled to name just one. He also spoke of his time coming into a company on its knees and systematically building it up with a great passionate team and taking it international.
Simon was leaving on a flight overseas tomorrow, so I thanked him for his time and wished him luck. I think we will see him somewhere building a smallish company up, more than likely in the real estate space. He does have a passion outside of real estate, but real estate is where he has all of the connections and a great reputation, he understands the market internationally, so I think that will be where we see his more prominent roles.