New Zealand’s pioneering online auction site and marketplace has just marked 20 years with a staff reunion. Rowan Simpson went along, and it sparked some fascinating memories and reflections.
I was irrationally tentative as I walked up the stairs to the mezzanine level at Whistling Sisters in Wellington, on one of those rare you-can’t-beat-Wellington evenings, to attend a reunion of the team who worked at Trade Me between 1999 and 2009.
I needn’t have been. On the wall a sign said “Good Times”, a throwback to sarcastically named team building events we used to run back in the day. The name tags of those who were even more fashionably late than me were left on the table at the entrance – just first names in a large clear font, and Kevin the now iconic blue kiwi. The drinks and finger food were circulating. And the room was already buzzing.
I started at Trade Me in 2000, as one of the first team members. The founder, Sam Morgan, had recently raised $100,000 from investors (they got 50% of the company in return!). He used that money to hire his sister, Jessi, to run the operations, and then me, to build the software. Soon after that we hired my old friend Nigel Stanford to help us with design.
From 2004 on I was responsible for building and growing the team of software engineers, designers, analysts and testers who together turned simple ideas into a website that anybody could use to buy and sell.
It can be uncomfortable to consider larger blocks of time. Ten years is an eternity, long enough for almost everything to change. And, at the same time, short enough to feel like it has entirely slipped through your fingers.
In the 10 years we all worked together, we took what was nothing in 1999 and created a thriving, profitable and still fast-growing business by 2009, one that had by then already been sold and earned-out. But more than that, it was a business that had become an icon and common noun that in some way “defined” the internet for many New Zealanders (we were careful to never say “dominated” at the time, for obvious regulatory reasons).
We were all twenty-or-thirty-somethings then, and so thirty-or-forty-somethings now (fifty-somethings for the genuine dinosaurs). And not a large group at all – only 53 people worked at Trade Me at the time of the sale to Fairfax in 2006. There was no room for passengers.
In the 10 years since we’ve all moved onto “what’s next?”
Many have gone on to create other successful businesses in their own right. In the room were the founders of Webstock, BeautyBliss, StarNow, Rubber Monkey Software and Timely. And other members of the original team, who couldn’t be there that night, would double the length of that list of second-generation companies.
But there were others too, who might not be so recognisable to the public, who nonetheless were a critical component of what we collectively achieved:
Erin, who must have still been a student when she joined the customer support team in the early years. Her face was instantly familiar, but to my embarrassment I couldn’t recall her name when she covered her name badge and called me on it. I could only remember the code name the team used when a difficult customer demanded to know who they were talking to.
Stoo, who I discovered was abusing various substances I still wouldn’t recognise at the same time as he was responsible for administering the servers that underpinned two-thirds of New Zealand’s domestic internet traffic. He seems to have landed squarely on his feet and assured me his time at Trade Me was the making of him.
Susan, who I’ve known since I was a little boy. She was half a lifetime again older than most of us at the time we worked together, but the rest of us have mostly caught up now. She didn’t initially recognise me with no hair. I was delighted to hear that she is still with the someone she found on Find Someone.
Christine, the first lawyer we hired. She came to Trade Me from Telecom and we reminisced about the original Trade Me dress policy (basically “we trust you to dress yourself but as always, don’t be a dick”), which was at the same time so obvious and unremarkable, and so unusual to those who had come from more corporate backgrounds.
And, perhaps most of all, Sarah, one of the important adhesive compounds that transformed a group of interesting people into a formidable team we were all so proud to be a part of. Here we were, 20 years later, and that was still true.
Trade Me grew up alongside the internet in New Zealand. Around the time we started, a modem was an optional component for your PC, and it made weird and wonderful noises as it strained to create a connection to the outside world. Today we’re nearly all constantly connected and we measure our broadband usage in gigabytes.
I think most people get the chicken and the egg around the wrong way. It’s intuitive, for example, to assume that you buy speakers to play your music. But actually it’s more often the opposite – you play the music that sounds best on whatever hardware you have. So, as stereos moved from your living room to your car to your pocket, the size and capability of the speakers changed and the music that was popular changed with it.
That’s obviously an over-simplification, but it’s a repeated pattern. In the early 2000s, it wasn’t so much that people were buying computers to use Trade Me, but more that for the first time they had a computer at home that could connect to the internet and the question was: what could they most usefully do with it? The competition wasn’t other websites – there really weren’t that many, and even fewer that were any good. It was television. I recall the visible dip in traffic to Trade Me the night that the finale of Desperate Housewives was broadcast. It seems quaint, looking back, to realise that once upon a time the whole country would stop to watch the same shows at exactly the same time.
Later we’d talk about the latent demand we experienced. That is, whenever we made the site faster and easier to use, people would use it more. It was as if they had a fixed budget for time and patience for using the internet, and the question was just how much of Trade Me we would allow them to consume before that ran out.
It was the Wild West. A land grab. There was a sense of adventure and of making it up as we went. And, because we were naive, a general disregard for the pre-existing rules.
Our scepticism was in some cases well justified. We didn’t think the Auctioneers Act 1928 provided much guidance to the regulators trying to get their heads around online trading, for example (it was subsequently updated, but not until 2013, no doubt skating confidently to where the puck was 10 years prior).
Most people didn’t seem to believe it could work. We certainly struggled to convince potential investors in the early days that what we were building had the potential to be a substantial business. It was, after all, buyers sending money to sellers they have never met for goods they’ve never seen. That sounded crazy. It was crazy! But it was also fine. It turns out that the vast majority of people are trustworthy and reputations are earned (and if you rip somebody off they are probably no more than a couple of degrees separated from you in New Zealand anyway, so expect to be tracked down).
However, we soon worked out that it was better to evolve the system than to fight it. We ended up working closely with Police, IRD, Customs, NZ Post, the banks, and others who were interested in exploring this territory. We all discovered the new rules together.
One day Sam Morgan called up the producers of Fair Go and asked if we could go on their show to talk about trust and safety when buying and selling online. They were gobsmacked – I’m not sure anybody had ever approached them asking to be featured before. They seemed disappointed that we welcomed them to the office when they came to film, rather than sticking our hands over their cameras and trying to punch them, as was more common.
Later we tracked some of the fraud that was happening on the site to “members” in Romania. So we banned every seller who wasn’t based in NZ or Australia. In direct contrast to eBay, which was at the time quickly expanding into every other country, including Australia, with that change we became the USSR of auction sites. That worked too.
By far and away the most common observation I’ve heard, over the years, from various Trade Me alumni is “Trade Me has changed”. I mostly smile and bite my tongue, especially if their experience of Trade Me completely post-dates mine.
I mean, it’s clearly true. It would actually be depressing if the company and the team was still, in any way, the same as I remember it. But, more importantly, it has only ever changed. That’s one of the reasons it’s survived.
Like a good Ira Glass podcast, there have been three distinct acts.
In the beginning we had no idea, to be honest. The site was very different – mostly geeks trading computer parts. Those of us lucky enough to be involved from the beginning just wanted something interesting to build and somewhere fun to work. It was a joy just not to have to wear a suit and tie.
Then followed the mostly undocumented dark years, before there was a business model (or at least when we incorrectly believed that “only turkeys pay for classifieds”). The only reason the company stayed afloat then was because of shareholder loans. At one point in 2001 three of the four of us from the original team were all gone – we were working and living in the UK, leaving Nigel back in New Zealand to run the site by himself. Luckily for those shareholders extending credit at that point, the story had a happy ending.
And then there was the period of shockingly rapid growth, when more and more of us squeezed into a too-small office on the top floor of Stalin-esque Anvil House on Wakefield Street in Wellington and tried to keep up. When it got really full there were two people to every desk.
That was where we announced to the team, in 2006, that we’d sold. David Kirk must have looked nervously at where we were and what we were and wondered what he’d actually bought.
The second act was the Fairfax years. Remarkably they handled the acquisition well and allowed the business and team to thrive. It was a reverse takeover of sorts as their legacy business model continued to wither. Trade Me accounted for a significant portion of the remaining Fairfax market capitalisation.
And the growth continued relentlessly, as new business lines were added to the site, more-or-less working backwards through the old classifieds sections of the newspaper: Motors. Property. Personals. Jobs. Travel.
Sam handed over the reins to Jon McDonald in 2008. It’s hard to think of anybody who would have done a better job of filling that seat.
Finally and more recently, the third act, post-IPO. By this time it felt like Trade Me was embedded as an institution, all the while continuing to pay healthy dividends. David Kirk was back, this time as chair of the board. The old guard mostly moved on, to be replaced by much more experienced and (at least in my case) capable executives. The team continued to grow, but for the first time in its history the business had to deal with static growth in the core marketplace business. It’s not quite yet “three lanes moving slow” but maybe the first hints of congestion. It’s difficult to continue to double in size when you already reach nearly every possible customer.
Today the big competitors are mostly offshore behemoths, such as Facebook and Amazon, rather than local media companies with rapidly-fading core business models.
Increasingly commentators are correctly asking if it is fair that those mega-sites should extract so much without paying tax locally (or anywhere, more or less); whether it’s actually healthy for large businesses to dominate in the way they can where winner-take-all network effects are at play; whether it’s correct that they act as platforms without any responsibility for the content they host.
It seems likely that the “lawyers and the rules” are going to have more influence in the future.
A couple of days after our reunion, the sale to Private Equity firm Apax Partners was approved by shareholders. This will see the company delisted from the NZX as new owners set the course. They have since announced a new CEO to replace Jon.
Who knows what this fourth act will bring? I hope it goes well for them. I’d like to continue to use the site, from time to time, and I’d be delighted to have the excuse, perhaps in 2029, to reconnect again with some great people and reminisce some more.