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The road to Rubber Monkey

Nigel Stanford tried his hand at music and design but made his fortune on the web, creating social sites and running Trade Me when Sam Morgan left town. Now he’s moving into movies with his own studio. Peter Griffin tracks his strange journey. Plus Trade Me’s fab four and trading places
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Photographs by Mike Heydon

Nigel Stanford tried his hand at music and design but made his fortune on the web, creating social sites and running Trade Me when Sam Morgan left town. Now he’s moving into movies with his own studio. Peter Griffin tracks his strange journey

For a study in how to deal with wealth and success, take a look at Nigel Stanford. First, leave the fame to someone else. Second, pick a new career in your dream industry. And third, just in case it all becomes a bit much, fall in love with a psychoanalyst. She’ll be there when you need her.

Once a musician, then a wildly successful IT entrepreneur, Stanford is now a budding filmmaker. He used some of his millions from his stake in Trade Me to put himself through film school in New York. Two years ago he set up his own studio in Wellington, Rubber Monkey, and bought one of the most sophisticated and expensive digital cameras in the world—the Thomson Viper.

Rubber Monkey resides in an unassuming building on Adelaide Road, a light industrial strip in the Wellington suburb of Newtown. Sitting in a plush post-production studio, which looks like a mini-version of the edit suite at Peter Jackson’s Park Road Post facility across town, Stanford looks relaxed. He should be feeling nervous—his first movie, Second-Hand Wedding, is about to open in theatres. Stanford is co-producer of the light-hearted family drama that plays on the Kiwi fascination with garage sales, and was shot on a modest budget of $700,000.

It may not have been made at all if not for Stanford, who provided the Viper free of use for the four-week shoot.

Second-Hand Wedding is one of three feature films shot on Rubber Monkey’s cameras so far. The others are Acolytes, an as-yet-unreleased Aussie drama, and the upcoming Show of Hands, starring Kiwi actor Melanie Lynskey in only her second film role back home since Peter Jackson cast her alongside Kate Winslet in 1994’s Heavenly Creatures.

“If those cameras weren’t here, I don’t think either of those two New Zealand movies would have been made,” says Stanford. “Show of Hands would have used three quarters of a million dollars of film stock. That’s a $2 million movie.”

Still, he’s happy to help out fledgling filmmakers by giving them access to camera gear at cut-price rates. It’s not often that a director gets to shoot a low-budget music video using one of the most sophisticated cameras in the world. But the Viper has been used on such jobs.

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Second-Hand Wedding may be Stanford’s first movie, but the 34-year-old has already enjoyed phenomenal success as an Internet entrepreneur responsible for some of the country’s best-known websites. He’s finding his IT experience useful when making movies.

“I have a mathematical brain,” says Stanford, “so I was good at sourcing suppliers and the money side of this production.” He’s also using the logic he applied to software development to make movies more cheaply and easily by embracing digital filmmaking.

“Now I understand the film process, it is very primitive. You’ve still got these big expensive machines costing half a million dollars to do jobs and even now there are software packages that cost $1,000 and do the same thing,” he says.

The Viper, which gained traction after it was used with impressive results to shoot movies like Miami Vice, Collateral and Zodiac, records to a hard drive instead of film. That means high-definition footage is instantly available for review or editing—the director can just erase a scene and start again. “The goal is to convince the director, cinematographer and producer that if you have a $2 million budget, you’d be crazy to spend $300,000 to $400,000 on film stock,” says Stanford. “Why not put that money in front of the camera in better sets or costumes or actors?

“We’ve had years of video camera technology and it has always looked like rubbish. These are the first cameras that don’t look like rubbish—they look great. People have such a huge bias against shooting electronically because we’ve had 20 years of it being cheap and nasty.

“These cameras are shooting 300 megabytes a second,” he adds. “You have a 400 gigabyte cartridge and you’re filling that up every 24 minutes. Having that uncompressed frame to come back to with really solid colour depth is amazing. You can really see the difference between that and the algorithms that end up on tape.”

Enough with the film geekery. Is Rubber Monkey making any money?

“It’s already profitable, but it will take a bit of time to pay off all the capital,” says Stanford.

When he talks about paying off the capital, he means paying back himself. Few know it, but Stanford was the largest shareholder of Trade Me after Sam Morgan—which means that he cashed in to the tune of $70 million when the company was sold to Fairfax in March 2006 for $700 million.

As Morgan fronted for press interviews alongside Fairfax chief executive David Kirk to talk incredulous journalists through details of the record-breaking sale, one of the biggest for any New Zealand company, Stanford fended off reporters with a polite “No comment”. He kept well away from the media frenzy that made Morgan the best-known entrepreneur in the country.

“Sam is recognised as he walks down the street,” says Stanford of his old friend and partner. “I didn’t have to deal with that, and I don’t think I’d have liked that. By the same token I was anonymous and the public perception is that Sam was the entire company.” The upside is that Stanford says the sale didn’t radically change his life. “No one freaked out. I had a couple of peripheral people I hadn’t heard from for years approach me for money.”

Still, his mathematician’s brain can’t help but do the sizeable calculations. “You think about the kind of interest your money could earn. Obviously this has been a reasonably big expenditure,” he says gesturing at the darkened editing suite, which smells of expensive leather, “but I’m still a pretty frugal person. I’ve always had huge freedom. I had ten years as a musician where I was technically unemployed. I had everything I needed: a guitar, a synthesiser and a computer. If I wanted to go to the movies I could. If I wanted to buy a six-pack of beer I could.”

Those six-pack days of the mid-to-late 90s were a blur of musical and technical experimentation for Stanford, who largely taught himself how to both play music and build websites. He grew up in Seatoun and attended Rongotai College, two years ahead of Morgan. He took a six-month design course at Wellington Polytechnic; later he’d attempt a computer science degree at Victoria University but pull out after completing the introductory programming course because, he says, he didn’t learn anything.

Music took over. Stanford had played in rock bands at school, but the rise of electronic music meshed with his musical tastes and his natural knack for finding his way around computer software. To get by he took a series of part-time jobs, at one stage programming backing music for karaoke songs. But in 1999 Deep Space, an album of “ambient dub stuff” he composed and recorded (as John Stanford) scored him a record deal with White Cloud, a small label that dealt mainly in classical music but had worldwide distribution to music stores.

It sounds terrible but the gift I have is the ability to think like a stupid person. I don’t think people are stupid, but they don’t want to use a piece of computer software that they have to read the manual for first

The music can still be heard on Stanford’s MySpace page—songs with titles like ‘Far Centaurus’ and ‘Aurora’. It’s spacious, melodic trance music that has aged reasonably well. Deep Space sold around 10,000 copies and generated some welcome, if irregular royalty cheques for Stanford. But it would do much more than that.

To promote his record, Stanford needed a website and taught himself HTML so he could build it. That led to freelance web and graphic design jobs as the buzz around Deep Space faded out.

One day in 2000, Stanford found himself working for a design company in Anvil House in central Wellington, on the same floor as Sam Morgan, who was building a free online auction website called Trade Me. It was early days: Trade Me was still free to use. It had managed to attract “a couple of thousand members”, Stanford recalls, but it wasn’t making any money.

It also didn’t have a logo—and so began a fruitful partnership. Morgan hired Stanford to create a logo for Trade Me, the familiar blue kiwi that still graces the website.

While freelancing for Morgan, Stanford started his own side project, a dating website. He’d come up with the idea after seeing his older sister Susan emerge from a failed marriage and deciding there must be others like her looking for new love. Over the Christmas holidays of 2000, armed with a programming manual called ASP.Net for Dummies, Stanford built a dating website to go up against existing leader NZdating.co.nz.

His girlfriend at the time, Morgan’s sister and colleague Jessi—who still works at Trade Me—was not impressed, Stanford says. “She was highly annoyed that I would spend 12 hours a day on it over the Christmas break, knee deep in ASP.” Nevertheless, in four weeks Stanford had a functioning website and a name—Findsomeone.co.nz. “I sent an email out to everyone I knew, about 50 people. In the first week I had 200 members.” Within three months, 3,000 had signed up. “Sam took notice, because it grew faster than Trade Me had,” Stanford says.

And it certainly solved the problem that inspired it: Susan, who ran Findsomeone from home for a year, met her partner Zak through the website. They now have a three-year-old son.

Morgan, who says he initially thought a dating website was a “stupid idea”, now put a proposition to Stanford. “He said, ‘We’ll buy a quarter of your company and give you advertising on Trade Me in return. The two sites became closely affiliated,” recalls Stanford. Findsomeone branched out to Australia and Canada and still operates in both countries.

Then in 2001, Stanford was left holding the keys. Sam and Jessi Morgan and Rowan Simpson, who had founded the rental property website Flathunt.co.nz and come onboard at Trade Me in a technical capacity, had all decided to embark on their OEs. Still in Wellington with just one staff member at his side, Stanford became “obsessed” with Trade Me, which had only recently started charging for listing items for sale. Stanford knew he was in a caretaker role but, he says, Morgan initially had no real intention of returning.

Armed with screeds of data detailing the activity of Trade Me users, he set about making the website easier to use. “It sounds terrible but the gift I have is the ability to think like a stupid person,” he says. “I don’t think people are stupid, but they don’t want to use a piece of computer software that they have to read the manual for first.”

Trade Me continued to grow—fast. The number of members and listings multiplied and the all-important measure, revenue per active member, increased as well. Trade Me was one of the fastest-growing companies in the country. One year it grew 1,100 percent.

“There’s an eBay phrase they use—a monkey could drive this train,” says Stanford. “The online auction model is almost the perfect business model. You can’t really have competitors because your marketplace is bigger and more efficient. Even if a competitor comes along that is better, by that time you’re big enough, there’s no stopping you.”

By the time the Morgans and Simpson returned from their globe-trotting to rejoin Trade Me, it was on its way to becoming the biggest auction website in the country. Only one thing stood in the way—global auction behemoth eBay.

The American company had a New Zealand version of eBay that was operated out of the US and did not offer New Zealand dollar pricing on its website. Still, it was running neck and neck with Trade Me and had the potential to crush its rival.

“We were scared,” remembers Stanford. “Ebay did a deal with Telecom and they became the auctions link on Xtra. Xtra was with MSN and they had a million unique visitors. We were maybe 300,000. We were worried about what that level of advertising could do.”

But the web traffic started to go Trade Me’s way, something Stanford puts down to the lack of New Zealand pricing on eBay and the fact that Trade Me was more user-friendly.

With Morgan once again in the driver’s seat, Stanford concentrated on the technical aspects of Trade Me and his area of expertise—website usability. “Sam focused on the human resources side of it and expanding the company into automotive and real estate. I was used to having my way and Sam is exactly the same,” says Stanford, who describes Morgan as having an enviable breadth of skills, including an ability to design good websites. “We clashed a little. I thought I was better than him. But when he came back he’d really raised the bar.”

Stanford sold the remainder of Findsomeone to Morgan for a ten percent stake in Trade Me and they jointly started on a new project—Oldfriends.co.nz. It was inspired by British website FriendsReunited, which was grabbing headlines as Morgan visited Britain. The Trade Me crew thought they had the market to themselves but as the Oldfriends site was nearing completion, Findakiwi appeared, offering users the ability to search for old schoolmates and colleagues.

“They kicked our ass,” says Stanford, who rushed out Oldfriends to fight Findakiwi. “I was getting emails from my friends saying you should join this website. It was the first hugely viral thing here. They got 20,000 in the space of a few weeks. We put the might of Trade Me’s advertising behind it and we only got a couple of thousand members.”

With nothing to lose, Stanford made one simple change to the Oldfriends website. He required people to register on the site before carrying out searches. Membership skyrocketed. “Instead of getting 30 members a day, we started getting 200 a day,” he says. “We hit Findakiwi and kept going. Then they were purchased by Friends Reunited in England. It wasn’t a major success.”

Today, Oldfriends has over a million members but isn’t a big revenue spinner—banner adverts are its only income. “One of the lost opportunities for that is that it doesn’t do social networking,” says Stanford. “There were always 20 projects we knew were big money makers. Oldfriends would get prioritised down to 13th in the queue. That’s why it hasn’t changed in a long time.”

Approaching 30 in 2003, it was Stanford’s turn take the big OE. Two Trade Me developers and fellow graduates of Rongotai College, Jamie Howell and Cameron Mehlhopt, went with him. They rented a flat in London and looked around for new ideas for web ventures.

The idea for Star Now was Mehlhopt’s. “He was reading a newspaper article about the BBC struggling to find people to fill their reality TV shows. They’d go to the pubs and look for people,” says Stanford. “Cameron had this idea where you would put up audition notices and people would pay to apply for them.”

The three developers put together a listings website and took equal ownership stakes in Star Now. “The first week we got a thousand members and we made £1,000,” he says. It was like Trade Me all over again: the bigger the network, the more listings, and the more useful Star Now became for TV producers looking for talent and wannabe TV stars alike.

The three moved to Prague for a while “just for fun”. Today Star Now is phenomenally successful in the UK talent-scouting scene but is run by Mehlhopt and Howell from Wellington.

Meanwhile, the Trade Me growth curve kept shooting for the sky. “You could extrapolate out and say, holy shit, in two years we’ll be making $50 million,” says Stanford. “It seemed unreal when you were making $5 million in profit to say you’d be making $50 million in two years. But that’s exactly how it turned out.”

In 2003, a Yale MBA graduate who had come onboard to work at Trade Me did some number crunching on the business. He estimated Trade Me would be worth between $500 million and $1 billion in two years if it kept up its rate of growth. “He was right as long as the curve kept going up,” says Stanford, “and it did. It didn’t deviate.”

I was used to having my way and Sam is exactly the same. We clashed a little. I thought I was better than him. But when he came back he’d really raised the bar

There were regular offers to buy Trade Me throughout its history, says Stanford. “Sam was trying to shop it around. There’s a famous story where Sam offered it to Trade & Exchange for a million dollars when it had no income. They said no,” says Stanford.

“In hindsight it is easy to laugh at it. People passed up eBay and Google as well.”

By the time potential local buyers began to realise just how good an earner Trade Me was, it was out of reach to most of them, available only to those with extremely deep pockets. By late 2005, when Stanford arrived back in Wellington, Fairfax had already made its approach and shown willingness to pay serious money for Trade Me.

“It was pretty unreal. We were expecting around $500 million,” says Stanford.

“The directors probably got the maximum out of it. Trade Me was starting to saturate. It was a shocking number for the public who probably thought Fairfax got ripped off and the wool pulled over their eyes. But it is worth a billion dollars now. They got a really good deal.”

After years of living and breathing the web, immersed in code, the last thing Stanford wanted to do was jump into a new Internet venture. “After Star Now I’d had enough,” he says. Rubber Monkey has allowed him to explore his interests in film and music. But there is another reason why he hasn’t gone about building another dot-com.

“The problem with being involved with something like Trade Me is that it is so successful that it’s really hard to follow up. In hindsight, Star Now has been ridiculously successful. There are 15 staff there and it’s a highly profitable business. It has half a million members in the UK,” he says. “Camera rental is a good business, but it’s not going to go crazy like Trade Me.”

Stanford wants to make more movies following Second-Hand Wedding, which was released here in May, and harbours ambitions beyond that of producer. He’s written a few screenplays and a series of arty if minimalist short films, the result of that stint at film school in New York, that hint at his directorial style.

He has “four or five” other ideas kicking around. The most ambitious project in the works is something Stanford refers to as the “music generator”. Again, it shows a precise, mathematical mind at work. “When I write music I have certain rules in my head I’ll follow. There’s always going to be a kick drum on the first beat of the bar and there’s always going to be a snare drum on beats two and four. I can programme rules to write a drum pattern that sounds like me,” he explains. “I like the idea of a piece of software where I can hit randomise and come up with options within my rules and do the same with the other instruments.

“What if it could create rules based on every artist? You feed it Coldplay songs. The drum pattern will be similar to Coldplay. Why don’t you take every number one song there’s ever been and dump it through this thing?”

It sounds like Guitar Hero meets Pandora, the online music service that learns your listening preferences and serves up what you want to hear. Stanford sees it being used in everything from composing soundtracks for movies through to, yes—a game you can load up on your Xbox, like Guitar Hero.

“You’ll start to come up with rules for pop music. Then you get it to generate lyrics using rhyming structure rules,” says Stanford, airing an idea he’s obviously spent a lot of time mulling over. “I can’t help myself,” he explains. “It’s the idea and executing it. Once it is up and running, that’s when it stops being as fun.”

For now there’s more fun to be had in New York, where Stanford will spend the winter with his American girlfriend, a psychoanalyst. “I’ve done eight flights to New York in the last eight months. I used to hate flying and be scared of turbulence but now I’m used to it,” says Stanford, who plans to get back into music-making while based “somewhere in Soho”, Manhattan.

I ask Stanford again about the Trade Me legacy and the widely held perception among the public that Sam Morgan is Trade Me. Does it irk him?

“It was his baby,” Stanford concedes after some consideration. “He took it from nothing to 150 people. The things that are mine I’ll feel more pride for.”

Still, those in the know will recognise Stanford’s touch on the website, the look and feel of which have changed little over the years even as it has expanded massively.

“That’s right,” says Stanford with a wry smile. “It’s still yellow.”

Trading places

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He’s the man Kiwis automatically associate with Trade Me and its enormous success, but two years into his online auction venture, Sam Morgan decided he’d had enough.

“I was burned out,” Morgan reflects, sitting in Trade Me’s modern boardroom on the Wellington waterfront. “I’d spent a lot of time building Trade Me and looking for funding, which wasn’t a happening thing back then.” In September 2001, he left on what would be an 18-month OE that saw him travelling and working for a stint in London—in IT management.

Trade Me was left with Nigel Stanford. What did the caretaker CEO bring to the job? “Nigel was a bit of everything: a musician, good at math, good with numbers. It was an interesting brain type for us,” says Morgan. “He started on the graphical side but very quickly pushed into programming and the business decisions we were making.”

Morgan left Stanford with one employee, a spreadsheet outlining a budget for the fledgling company, and the goal of increasing the number of sellers on the website. “He did a lot of good work around making our selling processes as easy as possible. They could list lots of stuff easily,” says Morgan.

“Nigel’s a reasonably average manager but he’s a fantastic product person. He understands the science behind how people use things and how people make decisions.”

Trade Me’s impressive growth curve continued under Stanford’s management and when Morgan returned in early 2003, Stanford stayed on, focusing on building the website as Morgan restructured the business to cope with constant growth.

“Nigel’s a smaller-company guy. He had the tail of the tiger but the organisation had to scale a lot. I came back and grew it from four to 15 [staff] in six months,” says Morgan.

The early Trade Me team—Morgan, Stanford, Rowan Simpson and Morgan’s sister Jessi—have similar skills, says Morgan.

“None of us are hardcore business types. We know what’s going to work on the web and we know how to evolve that and make it better. All of us could go from a whiteboard down to coding and then out to a meeting. We’re generalists.”

He considered Stanford a “sparring partner” when it came to testing ideas for changing the website. As Trade Me battled eBay for dominance in online auctions, those design changes became ever more crucial.

Morgan says victory over eBay turned out to have widespread implications for the New Zealand e-commerce scene in general. “If we hadn’t been successful in auctions, we wouldn’t have been successful in motors, property wouldn’t have come to us, jobs wouldn’t be a category. The shape of the market would have been quite different if eBay had won,” he says.

“But we didn’t realise the extent that we would win.”

As Trade Me grew and became more of a structured business following Morgan’s return, Stanford’s interest waned. “Things move a lot slower when you’re a bigger company,” says Morgan. “Your ability to move those innovation cycles as fast is limited. I think Nige found that pretty frustrating.”

Their sparring days over, the pair remain friends and share a passion for website design that may see them work together again.

“I’m interested in business and investing, social ventures and philanthropy. He’s more into film and music,” says Morgan. “But if something came up I’d be very open to it.”

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