Inside: Run The Red

Inside: Run The Red
Ben Northrop, CEO of targeted text messaging company Run The Red (which he recently sold to newly-listed NZAX mobile payments company Pushpay), talks about getting into – and fairly smartly out of – Brazil (the Great Lesson Learned), the easiest way to lose money, and how the PC will go the way of the typewriter

Were you always entrepreneurial?

I always had jobs as a kid – my first was a paperboy, then takeaway bar junior, kitchen hand, crappy sales roles…. Our family grew up with not much money and I realised early that money was essential to having more choices in life.

My first business, in the early nineties, was importing street wear and running Jungle dance parties. They were the days. Jungle was the music that morphed into Drum and Bass. Business was about having fun.

Then I started my first tech business. It was a web development company called Veda. We had a 486 computer and we taught ourselves to make websites from a book on html. The smartest thing about that company was the name. Veda was rolled into Run the Red and we sold the domain name to Veda Advantage for $25,000.

Why “Run the Red”?

There may be some truth in the rumour that the name came to us while accidently driving through a red light in Wellington in the late 1990s. I was a passenger, and co-founder Justin Boersma was at the wheel.

The name represented the culture when we started the business. Fast moving, passionate, unique – possibly a little crazy.

That was 13 years ago. Any regrets?

No, but lots of lessons learnt. Hindsight would be a wonderful superpower. As we built up Run The Red we lost a lot of time and money by:

  • Underestimating our own skills and instincts and hiring the wrong people
  • Not letting go of the wrong people fast enough!
  • Not looking after the right people better
  • Focusing on services as opposed to products (its all about scale baby)
  • Underestimating the cost and complexities of entering non-English speaking markets (we had a difficult time doing business in Brazil)

Spill the beans. What happened in Brazil?

Brazil was our Great Lesson Learned. We opened an office in Brazil in the early noughties. NZTE was promoting Brazil as a destination for Kiwi business, and we went along for the ride. We had some successes – we started a joint venture with a Dutch company called TMG but in the end we underestimated how tough it was to do business through a language barrier and how much working offshore stretched your resources. We had business in New Zealand, Australia, the USA and Brazil – it was like we’d declared war on four fronts.

We burned through our cash reserves and after two years we decided that exit was the smartest move, so we sold to our JV partner. But it was a great learning experience. After we sold out of Brazil we started the process of concentrating our business and delivering fewer services but better quality. The world doesn’t need more generalists that are pretty good at a lot of things. It wants specialists that are amazing at a few things.

Can New Zealand tech companies take on bigger overseas markets from home? 

It’s possible – but it’s difficult. Of course cloud-based offerings make it much more feasible with the ability to sell to and service customers remotely, but nothing beats local feet on the ground. We learnt the hard way in Brazil and won’t make the same mistake twice. Pushpay’s growth push is into the US and that’s all about having a very strong local team on the ground.

Why sell Run The Red now?

The other founding partners were no longer active in the day-to-day business and were involved in other ventures overseas. Although the business was profitable and growing in annuity revenues, there are limitations to the growth of pure enterprise messaging.

I could see bigger opportunities in becoming part of a global mobile commerce offering with Pushpay. I want to be part of a billion dollar New Zealand-made business.

Any tips on creating a business culture that encourages innovation?

In the early days at Run The Red we had to be innovative to survive, so it just happened, but engraining innovation in your company culture requires commitment, not just fluffy mission statements. It’s vital that a business’ leader leads by example. You’ve got to be innovative in your own approach as a manager and be open and encouraging to ALL your team members’ ideas.

Important qualities for any CEO include passion, focus, determination and resilience. Personally I am still working on patience, empathy and time management. No one is perfect and everyone has a different style and approach. You never stop learning.

What’s the most important tech trend today?

E-commerce is going mobile. It won’t be long until almost all of our online shopping and paying our household bills is happening on a mobile phone. It’s a consequence of the proliferation of smartphones and mobile network bandwidth. In the future, sitting down and firing up a PC at home will feel as nostalgic as using a typewriter.

So you decided to move into the payments space?

Here’s a big opportunity in the next generation payment model. Hooking up with Pushpay means we can take mobile relationship we already have with consumers into this new space. We believe consumers already prefer text as a channel to get messages from businesses; it won’t be long until it becomes their preferred channel for making payments as well.

Spam killed email as a marketing channel. Why didn’t spam kill text messaging?

It wasn’t by chance. We saw how spam was killing email and the industry set about making sure text didn’t go the same way. It was a combination of stricter government regulation and a strict approach from mobile networks for Tier-1 partner requirements – basically that approach meant ‘mess up and you are out’.

The other big difference between text and email is cost. Text is faster, more direct and gets a better response rate. But unlike email the messages aren’t free.

Will cash survive?

Yes, in the same way that print and vinyl records will always survive. People like tangible objects. Cash will continue to massively decline in transaction volume, but it will never disappear completely. I hope not anyway, as I am one of the people that like tangible objects!

Who’s your hero?

My wife, for putting up with being married to an entrepreneur over the last 15 years. I still owe her a Fiji honeymoon, as ours was ruined due to work commitments.

What are you reading?

The hard thing about hard things by Ben Horowitz, founder of venture capital firm Andreessen Horowitz. It tells the dramatic story of how Loudcloud became Opsware and was ultimately acquired by Hewlett Packard. It’s an inspirational, educational and entertaining read about another CEO’s trials and tribulations, albeit on a much larger scale!

Which website/blog do you read most often?

I browse a number of sites and tweet streams – the three most common are TechCrunch, Stuff and Idealog.

Interest.co.nz interviews  Ben Northrop