I remember first meeting and writing about Sam Morgan back in about 2000. Trade Me, the incipient eBay of New Zealand, seemed like a cool but essentially flawed idea.
Selling it to Fairfax today for $700 million makes it a fantastic failure!
I’m talking about my failure of course—my failure to predict the success that Morgan had created. I consider myself an intelligent and reasonably savvy market watcher. I’m not stupid at least. Back then I wondered aloud how long a Kiwi start up could resist the global logic of an E-Bay or some giant Aussie competitor like Solution 6 or, ha ha, Fairfax.
But the incredible sale today, which is 15.6 times EBITDA (the same as Google), just reinforces that success is not predictable, is not guaranteed, and is certainly not a right.
The next question, of course, is what next? Fairfax is no dummy—is it? That amount of money must buy a massive expansion plan. You'd hope. It does seem incredibly stupid to spend that much. We fell off our chairs this morning when we heard about it. Not that Trade Me is a bad business. But New Zealand is much too small to justify that amount of money. And then expand it where—Aussie? Trade Me doesn't really exist there. So you're up against E-Bay again.
Fairfax’s interest confirms the importance that the digital butlers or “infomediaries” are increasingly having in real commerce. As I wrote in a previous blog the idea that we are overwhelmed with choice and competition for our attention makes it imperative that some kind of butler works on our behalf to narrow down options and search out best deals. The power has fully shifted to the consumer. That’s what Trade Me is all about.
Look to Fairfax to leverage its purchase:
- in Australia
- through all its media channels
- by linking advertising to purchasing
- building a complete online shopping and searching tool
In an age of mega-competition it’s the infomediaries who hold all the power.
Not that I appreciated that back in 2000. And I'm still flummoxed by that amount. I’m thrilled that Morgan has proved me wrong in the meantime.
(By the way, I know an excellent little media company that is very well worth investing in).
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