Small Business

10 cars-a-driving: carsales.com.au

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A bank predicably playing hardball might have been the kick in the butt that Greg Roebuck had to have. It certainly put him on the road to create a car business that not only attracted some of the country’s best connected equity partners, it created the opportunity for his business to reach what many entrepreneur’s dream of — a public listing. 

Roebuck is a paid-up Richmond supporter, which he says has been good for his inner strength.

“It has been such a great character building exercise that I’m considering making it a requirement for employment in the business,” he says. “Clearly paid-up supporters are prepared to tough out difficult challenges.”

Building a business

Building a business is easier said than done but at least Roebuck’s time in the centre has resulted in a lot more goals than his beloved Tigers.

His company is carsales.com.au – so is he a businessman, a rev-head or a geek?

He says his high school was the first to have its own computer – a Digital PDP 8F.

“That gave me the bug,” he reveals. “I started a science degree at RMIT before computer science as a degree even existed.”

He later switched to a formal computer science degree but after a couple of years of study, all his mates were out earning money, so he gave it up and started at a company called Hartley Computers.

He left Hartley after 18 months and joined a company started by six other ex-Hartley staff called Solution 6.

“I suggested they change the name to Solution 7, but it didn’t happen,” he recalls. “After leaving there I contracted as a developer for a while, earned some money but when I wanted to buy my first house the bank – back when you had to impress the bank manager – wanted a more regular income so I joined a business supplying computer systems and services to car dealers.”

That was 1983 and nine years later the CEO and the other senior executives including Roebuck, bought 86 per cent of the business from the US parent.

“I set up the carsales business alongside this business as we had a strong relationship with the people with the inventory – the dealers,” he explains. “I was in the perfect business – I could indulge my two passions of cars and technology.

“My daughters both tell me I’m a geek.”

Business and technology

The idea for carsales.com.au came from a lot of bad experiences buying and selling cars, Roebucks says.

“From typos in the Trading Post – I bought a car with my wife that was advertised as a Tryota Corona, and got a good deal because no one else found the ad! – to the hundred thousand ways people described their cars to enquiring on cars that were sold,” he says. “There had to be a better way and from day one, ads have to be current, and they have to be ‘purified’ so only valid cars with their complete specifications can be advertised.”

The company’s understanding of the car industry and knowing the car dealers were important to the success of the business. There are two imperatives in the car game – focus on what the customer wants, and what the dealer wants, which is to sell the car, not to advertise the car.

“I love our marketing message of ‘Stop advertising, start selling,’” he says. “Car dealers work on very low margins and are hard task masters, so you have to deliver results.

“The background of using technology to improve business processes was key in the carsales business – we have very comprehensive and powerful tools for both dealers and private sellers.”

Knowing the industry is one thing but competing against the biggest media outlets in the country was another. Roebuck didn’t worry about beating his rivals as much as building an offering that made sense to the customers.

“That said, a few years in I’d rev up the team by saying: ‘We compete against Australia’s richest man – Kerry Packer with carpoint.com.au; Australia’s oldest newspaper group – Fairfax; Australia’s richest expat – Rupert Murdoch with carsguide.com.au and Australia’s biggest company in Telstra – with Trading Post — and we’re kicking their butt!”

Given that, it must have been very satisfying when in 2005 the Packer empire took an equity position effectively marrying the ACP Magazine’s online classifieds businesses: carpoint; boatpoint; bikepoint; iHub etc. This also gave the business scale and access to ninemsn and Wheels/Motor content.

What was it like to start doing business with the big end of town?

“Very tough early on,” Roebuck admits. “We were quite an operational board and having James Packer and John Alexander on the board was daunting, but helped me shift gears – pardon the pun – in terms of ‘hey, we can be a big business, and we need to set ourselves up to get there’.”

And look at the results. The business started with one employee for the first few months and only grew quite slowly. In 2002 when Roebuck shifted from the board to CEO, there were 22 staff and now there are over 260 full-time employees.

Focus on the result

How did he fund the business until the big boys arrived?

“The partners in the other business and I funded it for the first few years, but it was a hard slog tipping money in with no return,” he says. “We parted ways in 1999 with carpoint, who we’d be working with, and realised to compete we’d need more funds.

“So we put together a prospectus and became an unlisted public company in March 2000 – just in time for the market to crash.”

The roadshow invited the industry to own the media of the future, which Roebuck argues was great in theory, but with the tech crash, they barely got the capital raising through. In fact, the original partners needed to put their hands in their pockets again to proceed.

While funding has been a challenge – the company has now had three shots at an IPO – carsales.com.au beat its rivals for the eyes of Aussie car buyers, so their marketing efforts must have been spot-on.

“I think the mistake that was made in the early days was too much ‘offline’ marketing,” Roebuck suggests. “In 2002 we pretty much cut all offline and only focused on online – I describe it as ‘fish where the fish are’.

“I love some of the ‘guerilla’ marketing we’ve done – putting a lemon inside a recyclable shopping bag and handing them out at markets saying ‘Don’t buy a lemon, come to carsales.com.au’ is one of my favourites.”

Nowadays, he admits they do a lot more offline to stay “front of mind”, but online is still the key.

Roebuck believes the model has been important to the success of the business.

“We focus on the result – our job isn’t done until the item has sold,” he explains. “For dealers, we bill on enquiry so we’re far, far more accountable to deliver sales. Lots of technology to support this model – which is unique in our market – has helped.”

First business

Hartley Computer in 1980 as a programmer

Career highlight

Doing a deal with James Packer and having him join the Board – although listing the business on the ASX probably outranks that now.

Best piece of business advice you got

Best time to plant a tree is 10 years ago, the second best time is today.

The worst

You don’t need lawyers when reviewing contracts…

Most frustrating part of doing business

Stupid competitors – I don’t mind competitors that make smart decisions, it’s the dumb decisions that are most frustrating!

Favourite marketing technique

Play on words: “Stop Advertising, Start Selling” and [when we put lemons in shopping bags and handed them out at Vic Market] “Don’t buy a lemon, come to carsales.com.au”

Business leader you admire

Andrew and Paul Bassat (Seek): they’ve lit the way for us and they run a great business.

If you’re looking to work on your business rather than being stuck in it, book in for a complimentary business assessment today with Switzer Business Coaching.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

Published on: Wednesday, December 21, 2011

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