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Idealog—in the ideas business

Starnow.com: The perfect business?

'Star turn' spread

Jamie Howell and Cameron Mehlhopt of Star Now: “Even we’re surprised how quickly we've grown.” Photographs by Mike Clare

Starnow.com could be the perfect business for New Zealand: global, fast growing, low cost, high value and very cool. So why have we never heard of these guys? And why aren’t there hundreds more like them? Idealog goes in search of the new New Thing 

Laura Carter wants to be a superstar. The 21-year-old from Yorkshire just might have the ingredients: she can sing, dance, model and act, and she’s young, ambitious and gorgeous.

Laura pursued her dream in the time-honoured manner of millions of other young hopefuls, pounding the pavement attending as many auditions and agency interviews as possible. But she remained undiscovered until a friend directed her to Starnow.com, a website with a talent directory and listings of TV, movie and modelling work.

Suddenly, things started to happen. She was asked to enter the Miss Bradford competition, won, and found herself competing for Miss England. She appeared in an MTV video. She won the lead role in an indie film, Dreams, due for release next year. She moved to London and starts each day by checking new jobs on the website.

She’s on her way and very happy about it. “It’s all thanks to Star Now!” she says.

Star Now has changed Laura’s life. The site is just two years old but already it has 350,000 wannabe stars and starlets on its books and on a typical day has 4,500 jobs on offer.

It’s an international business, introducing Bradford beauty queens to London casting agents, Melbourne drummers to Sydney guitarists and Miami swimsuit models to Hollywood reality TV producers. But Star Now isn’t headquartered in London or Silicon Valley; it’s run by a staff of seven from a corner office in downtown Wellington.

Star Now, like Trade Me, is a great example of the network effect. “To be honest, even we’ve been surprised how quickly we’ve grown,” says Cameron Mehlhopt, general manager of Star Now owner SMH Interactive and one of three co-founders. Every month, users place job offers and more listings in its talent directory. The more it grows, the more useful it becomes, and the more people join. Star Now staff keep a parental eye on the listings and keep the community humming. Most of their customers probably don’t know they’re using a website run by a small startup in Godzone.

For New Zealand, this might be the perfect business. Almost every cent is earned offshore. Startup and infrastructure costs are low, there are almost no transport costs, no expensive offshore offices to maintain, no worries about import duties, foreign exchange hedging or oddball tax regimes. No factories, no shelves to stock, no resource consents. Marketing is largely through word-of-mouth and the business scales beautifully. It’s proof that three guys with some brains, a great idea and a couple of hundred bucks for marketing can literally invent a business in a few weeks.

So why is Star Now so unusual? Where are the Kiwi websites soaking up clicks and cash from our online world?

The infamous dot-com ‘bubble’ burst just over six years ago—which in Internet years is as distant as the oil shocks of the 1970s. Since then, an entire generation has grown up to whom the web is as familiar as television and jandals. Website owners have worked out how to make money from subscriptions, referrals and targeted advertising. The tools to create, administer and deploy websites have improved enormously.

Web entrepreneurs are building businesses, rather than creating something to spin off, and investors have learned to be a bit savvier about picking the next big thing. The result is an explosion of well-designed, community-driven, business-minded websites.

It’s a great time to be a web entrepreneur. Consider that Trade Me is worth $700 million to Fairfax yet it’s only ranked around number 700 on the global list of popular websites produced by research firm Alexa. Star Now’s creators are doing very nicely, thank you, but their site barely squeaks into the top 100,000 on Alexa’s list.

Imagine if we could get a site into the top 100. Imagine if New Zealand had, say, 500 sites with offshore appeal in the top 100,000. After all, says Richard MacManus, we’ve got many advantages: a favourable exchange rate, we speak English and we have both the creative attitude and technical know-how. “We’ve got so many innovative people in New Zealand.”

MacManus is wired into the web economy. His weblog about next-generation web technology, readwriteweb.com, is one of the 200 most popular blogs in the world, according to Technorati. (By comparison, Public Address comes in around 10,000 and Kiwiblog at 11,000-odd.) He also writes for the popular tech website ZDNet. MacManus threw in the day job last year and now is one of a small elite who earn a living from blogging.

But sadly, he isn’t finding much evidence of innovative web businesses in Godzone. He is currently running a series of blog posts looking at interesting web applications around the world, but assembling a New Zealand list has been a real struggle. “I haven’t seen a lot of innovative stuff, which is kind of surprising.” (MacManus’ list should appear on his website, readwriteweb.com, by the time Idealog hits newsstands.)

So why aren’t tech-savvy, creative and skilful Kiwis creating more web businesses?

Nathan Torkington lists three problem areas: ambition, education and examples. Torkington recently returned to New Zealand from the US where he experienced the web economy at first hand with O’Reilly Media, an IT publisher that published the first book about the web and has thrived with the growth of the Internet and open-source software. It’s a business that Kiwis have been slow to pick up on, he says.

“New Zealanders don’t seem to have the ambition. They don’t think of themselves as able to compete on a global stage.

“The great American dream is to work your tits off and get rich, and the Kiwi dream is to have a bach and a boat and a beer. Well, increasingly you need to be incredibly rich to have a bach. But Kiwis are about enjoying the ride and I think the Americans keep themselves focussed on the destination.

“I wouldn’t want to see New Zealand become America, because so many of them are miserable, driven creatures. What I want to see is New Zealanders accept that it’s possible to have a great lifestyle and a great job.”

But first, he says, we need to change the way we think about technology. “Kiwis, if you look around in high school, are mostly being taught to use a computer as a word processor or as a spreadsheet,” he says. “When I was a nerd going through school, we were doing BASIC programming on an Apple II. I don’t see a whole lot of that going on [now]. It’s quite difficult to find people who will think out of the tool-using box and into the creativity box.”

Young Kiwis haven’t been attracted to IT, he says, because they haven’t had a lot of great role models. “The knowledge economy has always been more talk than reality. For some reason Kiwis aren’t thinking of computing as a profession. And I think that’s because they saw the huge layoffs in 2001 and there just hasn’t been anything done to change their minds. Perhaps getting the startup success in Trade Me and things like that, kids will want to be the next Sam Morgan.”

Bootstrap it and they will come

Star Now lets the community do the work

Cameron Mehlhopt, Jamie Howell and Nigel Stanford know exactly how a community-based website works—the trio are all veterans of Trade Me. When they left Wellington in 2003 to travel in Europe they knew they’d launch a web business; they just needed an idea. They found it in the brave new world of reality TV.

“We got over there and it was a bit of a culture shock because, you know, in New Zealand no one is desperate to be famous,” says Mehlhopt. “But in the UK it was madness ... everyone was desperate to be on TV. Big Brother people were major celebrities. And we got talking one day in the pub, thinking where do they find these people?

“We thought cripes, perhaps we can build a website to help them. We thought if we were lucky we’d pay the rent in the UK but it just took off from day one.”

When the BBC wants to find some ‘real men’, Wife Swap needs some wives to swap or an American show wants to talk with couples in loveless marriages, they turn to Star Now. But the site was so successful that it quickly expanded its lineup and these days reality TV is just a small part of the jobs on offer.

Users visit because the jobs are on Star Now and casting jobs are posted because that’s where the users are. But this virtuous circle is also a chicken-and-egg problem; the Internet is littered with online marketplaces that nobody uses. How did Star Now convince people to sign up?

They did it the manual way. “Our first goal was to get casting calls, so we had a look around and approached companies like the BBC, or whoever had a little page hidden away on their website saying we need someone for this show. We rang everyone up and emailed them and said look, we’ll place this casting call for you for free. So that pretty quickly got us a bunch of casting calls on our site.”

Next up: the users. On launch day the Star Now creators splashed out on some Google ads, switched off their computers and left for dinner and drinks with a friend. “We were at dinner saying well if no one clicks then there’s a month down the drain. But people were clicking and on the first night people were paying—on the first night we made £30 or something. We were very relieved to see that.”

Once the traffic arrives, it builds itself—if your website delivers. That’s the true secret to Star Now’s success: like Trade Me, it’s a world-class website. “We’re not too focussed on the technology,” says Mehlhopt. “It’s all about giving the actors, the models—the customer—the best service.

“What we learned from Trade Me is that you can have the best-looking website in the world, with all the bells and whistles, but it might not work for the user—they might not know what they’re there for. They may not know how to get around, they might not know how to do what they want.”

ProjectX staff

Ross Lin, Tomek Piatek and John Clegg of ProjectX. Their ZoomIn website lets users add their own notes to maps. “It’s a mashup between a Yellow Pages, a Lonely Planet and a map,” says Clegg

Star Now’s founders have run their website from London, Prague and now Wellington. The site was profitable within months of its launch and it’s growing all the time. “Having seen [a web business] done, and having done it myself, I know anyone can do it as long as they do some research and look at what makes a website work,” says Mehlhopt. “Find a market and then just give it a try.”

Mash it up

Project X has a global model

Today’s hottest web trick is the mashup: when two sources of content are mashed together to produce something more useful. Even Google staff were impressed last year when they heard about housingmaps.com, a US website that displays property listings from the Craigslist classified site on the city maps from Google.

This year everyone’s doing mashups. There are mashups to find New York pizza joints, local cinemas where a movie is playing, or track weather patterns. What most mashups have in common, however, is a map—matching Internet data with a geographical place.

This is all good news for ProjectX, a Wellington startup based just down the hall from Star Now in the Creative HQ incubator. The company develops online mapping tools. Add Geographic Information System (GIS) data and you have a mapping system. ProjectX’s own mapping site, zoomin.co.nz, lets users tag locations with their own notes or photographs or, potentially, videos or music, effectively creating a community-built online atlas. And recently ProjectX licensed their tools to Trade Me, which uses them for its Smaps maps.

ProjectX is the brainchild of Ben Nolan and John Clegg, who founded the company after discussing the commercial potential for Nolan’s mapping software. (Clegg had just left hospital: “I was actually still on my morphine. Ben didn’t know that at the time.”)

Zoomin is a showcase site for ProjectX software, but the bigger opportunity is licensing the technology to other companies to use with their data, here and abroad. Trade Me is the first licensee; expect to see Smaps mashed-up with other Trade Me sites like Trade Me Property.

They’re up against some stiff competition, like Google Maps. So when they were invited to speak at the Where 2.0 mapping conference in San Jose they approached the event with some trepidation. Clegg says they found that big companies like Google and Yahoo were facing exactly the same issues—and that the ProjectX software was much faster.

And they don’t need to compete directly with Google. “What we’re now doing is packaging up a mapping engine and looking to export that, because the reality is that we can hook into any data. Now we see mainstream companies following the early adopters, saying what can I do with this? Like real estate companies. But I see huge opportunities for companies wanting to do asset management, tracking, route optimisation. It even comes down to delivering pizza. The ability in real time to just overlay data onto a map and look at the statistical meshes and all the good stuff that’s there.”

Clegg has worked in web businesses in Australia, the UK and India. He thinks New Zealand is missing a huge opportunity. “If you look at e-commerce in New Zealand you’ve got Trade Me and then it’s just a complete wasteland. Trade Me is a world-class site, but everything else is old. Coming back from India, the technology that’s here, I was a bit disgusted really. We’ve got some nice-looking sites but there are no e-commerce sites.

“For New Zealand, what is its creative edge in the world marketplace? What is the edge, something different that can differentiate itself? It’s our creativity, it’s our innovation. It’s the entrepreneurial spirit that we have. We’ve got more small businesses than any other country per capita, so it’s that innovation and diversity that we should be pushing. But New Zealand has fewer e-commerce websites than Australia did in 1999.

“I suppose the mission and vision of what we’re trying to do is to achieve something great for New Zealand, but on a world stage.”

Rowan Simpson of Trade Me

Trade Me development manager Rowan Simpson at the Cake Tin, which seats almost 35,000 visitors—just like a typical afternoon on Trade Me

Silicon Welly

Trade Me is a crucible of talent

Trade Me is a case study in how to handle explosive growth. In March 2000 the site had 6,000 listings, in March 2003 it had 270,000 and in March this year it ran over 2.5 million. In August it reached 3.5 million. Staff have coped with ridiculous growth and managed to add more features, improve its design and get it to punters even faster.

You can’t buy this type of experience. Trade Me will never become an export-led business but there’s no better place for web entrepreneurs to learn their craft. Together with Wingnut Interactive, the game development studio Peter Jackson and Microsoft have announced, Trade Me could be the centre of a new IT crucible in Silicon Welly.

“If Trade Me can fuel something like that, that’s awesome,” says Rowan Simpson, the auction site’s development manager. It’s just a few years ago that Trade Me was a ramshackle operation. “It was totally seat of the pants and that was the beauty of it,” he says. “I can’t help but have a big smile on my face thinking about it, because it was very exciting. We would have an idea at lunchtime and rush back to the office and be flat out coding all afternoon, release it that evening and go home.”

It’s a working style that suits Kiwis. Simpson, like Sam Morgan, left Trade Me for a while and worked in the UK where he discovered a different mindset. “I thought I’d be able to pick up work in London pretty easily, but actually I struggled a bit. Sam struggled even more I guess, because he didn’t have a degree to fall back on.

“Over there it’s just such a massive market that people become very, very specialised, in IT especially. I’d talk to someone and they’d say well, what do you do? I’d say a bit of UI design, a bit of application design, a bit of database tuning. What do you want?”

Like most New Zealanders, Simpson is adaptable and was willing to turn his talents to whatever was needed. “But they don’t see it that way. The people they hire are very deep, deep experts in SQL full text indexing or something like that, you know. And you ask them to tune a stored procedure and they say it’s not really my area—you want to talk to the man in 17, down the hall. When they see someone who claims to have broad skills they are a bit suspicious.

“In New Zealand, you have to become reasonably deeply skilled in quite a broad area. That’s a huge advantage.”

Originally published in Idealog #6, page 58

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Comments

If you are considering webmapping, you should also look at GeoSmart who provide the maps for sites such as the NZ Automobile Association at http://www.aasmartmap.co.nz Finda http://www.finda.co.nz or Bayleys Real Estate http://www.bayleys.co.nz or Ministry of Education at http://www.teamup.co.nz to name a few.

Not only do they provide web mapping API's, but they have a full turn restriction database and offer driving directions from anywhere in NZ to anywhere else in NZ. They drove all of New Zealand collecting attributes suc as angles of corners, no right turns, one-way streets etc and they won't send you along paper roads.

This is a NZ owned and NZ developed solution.

Quite right. I was particularly interested in web businesses that target a global market and of course there are more than just those mentioned in my article.

New Zealand actually seems to be something of a hothouse of geospatial technology. The Wises maps are very good, too, and of course Google recently improved markedly the quality of its NZ maps. There's Navman, Rakon, ProjectX, you guys at GeoSmart and I'm sure there are others. Nathan Torkington pointed out that the GIS data is readily available here, as it is in the US, which must be a huge boost to the local industry.

It's not just financial reinvestment that will keep driving our creative economy here in Wellington. We are now also seeing a return on the last four years of investment in social capital through the fostering of industry clusters, business networks and virtual communities.

The next round of venture creation is likely to be leveraged off these peer networks and that's a gratifying result for those of us who contributed to building them.

Appropriately, the next big technology hits to emerge will very likely spring from a social networking paradigm. Silicon Welly? Hell yes!


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