Interview with Simon Baker

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Simon Baker former CEO Realestate.com.auOn 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.

If you get a chance take a look at his MyCEO Blog it has some great articles and insights into his life as a CEO and also some good commentary on his departure.

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28 Comments

  • Robert Simeon
    Posted August 22, 2008 at 12:02 pm 0Likes

    And the reason as to why he was sacked ?

  • Glenn
    Posted August 22, 2008 at 12:42 pm 0Likes

    I presume because the board thinks they can do better.
    Fools….

    The way he was removed is a damn disgrace, shows the people involved up for what they are of they are.

    I met Simon on several occasions , found him direct and driven, how anyone could do what they did to him is a mystery.

    I suspect REA will now suffer, no matter what you think of Simon he IS Realestate.com.au

  • SSSR
    Posted August 22, 2008 at 12:52 pm 0Likes

    Good for Simon. He will no doubt be successful with his wealth of experience. I agree with Robert, there is always a second side to a story, I wonder what demanded such a dramatic departure?

  • TomS
    Posted August 22, 2008 at 1:22 pm 0Likes

    Well done Peter. Great interview.

  • Glenn Batten
    Posted August 22, 2008 at 3:23 pm 0Likes

    Well done on the interview!!

    He has made REA to where it is today and although he he obviously got out of favour with the majority of the board he certainly deserved better that what he got on his last day at work for them.

    If he can bring to market another significant player in the space, then the industry will be better for the greater competition.

  • AJ
    Posted August 22, 2008 at 7:13 pm 0Likes

    Great Interview Peter.

    It will be very interesting to see what Simon does next. One to watch!

    Interesting to read your comment on Fairfax Digital and Print looking to merge. Haven’t Domain sacked their Sales/Operations manager, and also their Marketing Manager in recent months?

    Perhaps they are cleaning out positions to set up the merge?

  • Danny
    Posted August 23, 2008 at 8:54 am 0Likes

    What cannot be denied is the exponential growth of REA under his leadership.

    Notwithstanding a number of “run in’s” I have had over the years, he has always been unbelieveably accessible for somebody in his position.

    My first contact was many years ago when REA ran full page ads in the Sunday Telegraph promoting 16 supposedly “random” properties per page promoting and paid for by REA. I nearly choked on my corn flakes when of those 16 properties, 12 were from one individual agency – hardly representative of REA’s Sydney agent client base.

    At the time I had no idea who the chief was at REA but managed to identify Simon via their on-line annual reports and I had an email reply within 20 minutes on Sunday morning advising that this would not eventuate again.

    Don’t know that you would get that sort of response from many CEO’s in charge of a company the size of REA.

  • chris
    Posted August 23, 2008 at 12:53 pm 0Likes

    Different era’s of a business…different CEO’s.

    Pretty standard stuff.

    The more interesting question will be who they replace him with.

  • Charlie
    Posted August 23, 2008 at 6:37 pm 0Likes

    Back in 2000, just after the dotcom crash and ensuing tech wreck, Fin Review and others (print media!) enjoyed carving into companies like realestate.com.au (“which one will fail next?!”). Simon joined REA at about this time (they’d had 2 or 3 CEOs in the previous couple of years), and it is one of the great turn around and growth stories.

    Always approachable, hands on, fired up, combatitive and passionate – you have to admire what he did and how he did it. Not everyone loves REA, but you have to admire what was built here, from a position of extreme weakness.

    This and other blogs & online articles have succeeded in getting the real story out on how he was fired… but we’re still not sure why exactly. Apart from the ‘we need someone else now to take this great company onto the next level’ (which is PR speak)… or “it’s time”?

  • snoop
    Posted August 24, 2008 at 5:49 pm 0Likes

    Pretty standard really
    Even If you are a high flying CEO if you dont have the support of your major shareholder or board its smarter to go in a more graceful manner.

  • SB
    Posted August 24, 2008 at 9:45 pm 0Likes

    True management success involves increasing value for all stakeholders in a business. This includes the board, the shareholders, the employees, the suppliers AND the customers. Simon increased the share price, grew the company and built a team around him that admired him, but thats not the whole job. Whatever straw broke the camels back is not important, the era of growth at any cost is past. Lets hope his replacement understands customer service.

  • Glenn
    Posted August 25, 2008 at 1:33 pm 0Likes

    It’s not easy building a $500M company and keeping every whinging nitpicking customer completely happy. I’m sure they were happy with the results and that all that matters, thats all they joined for wasn’t it ?

  • Robert Simeon
    Posted August 25, 2008 at 2:41 pm 0Likes

    All interesting however, the decision to remove Simon rings of a REA – Fait accompli at Board level. Although the accompli for mine is the interesting part given that the new direction remains very much in the political haze behind their decision.

    Surely if a business is changing direction their must be a replacement in mind given you don’t sack their most successful CEO and take a gamble on a replacement. No Board would take such an enormous gamble especially in the present economic environment.

    Unless there are merger talks where it was established that for this to go ahead – Simon was not part of the new landscape as obviously they (REA Board) have somebody else in mind.

    I am now leaning towards a merger announcement 🙂

  • Glenn
    Posted August 25, 2008 at 2:56 pm 0Likes

    Either that (merge with who ?) or a full takeover by News Ltd

  • Robert Simeon
    Posted August 25, 2008 at 6:14 pm 0Likes

    If you apply the game – paper, rock and scissors and change scissors for electricity. You may well find that News Ltd want to wrap their paper with electricity. And prepared to throw a rock at anyone who stands in its way!

    Makes for compelling viewing 🙂

  • Glenn Batten
    Posted August 26, 2008 at 9:36 am 0Likes

    It certainly makes some sense of what seems like a crazy decision so far… lets just see if it turns out right now 🙂

  • Robert Simeon
    Posted August 26, 2008 at 3:22 pm 0Likes

    I understand that the replacement has already been found and is actually quite well known within News Digital. The formal announcement will be very soon 🙂

  • Glenn
    Posted August 26, 2008 at 3:46 pm 0Likes

    You mean a replacement was found prior to the removal of Baker.

    I smell a rat.

    Shareholders beware the discounted takeover in a depressed market.

  • Robert Simeon
    Posted August 26, 2008 at 3:57 pm 0Likes

    No – I didn’t say that! I said that I understand that the REA Board of Directors have found their man to take the recently vacated CEO position.

  • Glenn
    Posted August 26, 2008 at 6:38 pm 0Likes

    No, you didn’t say that – I did.

  • Glenn Batten
    Posted August 26, 2008 at 7:53 pm 0Likes

    You would have to believe that they had a candidate at least identified, if not finalised before they gave Simon his marching orders.

    They are pretty big shoes to fill ……and the name being offered around seems to have only small feet to slip in to place.. but with the board on your side and pulling the strings it will be a little bit easier… at least at the beginning.

  • Glenn
    Posted August 26, 2008 at 8:08 pm 0Likes

    Until they all realise what it takes to run a real estate site like REA, my guess is they won’t be able to do it, properly anyway.

    The only thing that might save them is the fact that the business now commands such a great lead it may keep going inder it’s own steam.

    But this now leaves REA open to competition like never before, now there is no Simon Baker there to fend them off and I think only he knows how.

  • Kim, Brisbane Real Estate Agent
    Posted August 26, 2008 at 8:42 pm 0Likes

    hey Peter Ricci. Good interview dude.

  • snoop
    Posted August 27, 2008 at 9:04 am 0Likes

    rea are so far in front ,i cant see any competition taking them on in any serious way.
    whos out there that could?
    they would need substantial funding and major distribution horsepower.
    Most of the portal players are small and undercapitalised.

  • Glenn
    Posted August 27, 2008 at 9:50 am 0Likes

    This is the Internet, you just have to be smart not cashed up.
    Look at MyHome, plenty of money but no smarts.

  • snoop
    Posted August 27, 2008 at 11:45 am 0Likes

    smart and cashed up better for sure!!!
    I just cant see any of the current internet plays even remotely denting REA.
    Most are just burning shareholders funds.

  • Nola Real Estate
    Posted September 8, 2008 at 12:50 pm 0Likes

    What if say RPdata and Renet merged and did something like REA?? Could that affect REA much??? Just throwing something out there. Companies merge all the time.

  • snoop
    Posted September 11, 2008 at 8:46 am 0Likes

    Odd but predictable that by his removal the shareprice has gone up substantialy and hes prob made another 3m!!
    Note the new ceos package is predominantly cash,none of these silly option deals in todays market.

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