On being a most blessed geek

CATHERINE HARRIS

Call Rowan Simpson a geek and he won't be offended.

"I did a computer science degree so it's kind of hard to hide from that," he laughs.

But while his software development skills got him to where he is, it's what he's doing now – advising and often backing promising companies – that really gets him going.

Simpson was one of the original shareholders of Trade Me and became wealthy when Fairfax Media bought the online auction site in 2005 for $700 million.

Like most of those backers, he keeps a low profile but he's never stopped working. He and two fellow geeks have started Southgate Labs, a start-up consultancy in downtown Wellington which provides technical and business advice and sometimes capital to businesses that they think are on to something.

One of his latest projects, a company called Vend, provides cloud computing for retail sales and inventory – a sort of ethereal cash register. Other projects he can't talk about, and he wryly admits he only mentions the successes.

But the softly spoken 35-year-old has an eye for backing good horses. Companies Simpson has invested in or worked with include online book and toy retailer Fishpond; undersea internet cable company Pacific Fibre and accountancy software darling Xero.

He likes businesses where the founders have already gone out on a bit of a limb.

"What I mean by that is people who are doing stuff as opposed to talking about it or planning it, people who have made a start somehow.

"There's this dilemma about how entrepreneurs pay themselves and the vast majority of people I talk to are still in their day job and wondering how to make that initial leap.

"And yet occasionally you come across people who have somehow worked out a way to do that and make it work."

Simpson was a Wellington school friend of Trade Me founder Sam Morgan, who brought him on board as Trade Me's first official website developer. He was employee No3.

"I like to say I was the first person hired whose surname wasn't Morgan," he jokes.

Although he suspects he looks back at those days "through increasingly rose-tinted glasses," he remembers it as being a fun and exciting time.

"I suspect if you'd asked me at the time, it would have felt a lot more like hard work. I've never worked harder than we did in those first few years."

Morgan, he says, was smart enough to have built the first version of Trade Me himself but needed someone to take over the software while he focused more widely on the business.

And Simpson had shown entrepreneurial flair himself. While urban myth has Morgan starting Trade Me to buy a heater, Simpson started a website called Flathunt so he could find a flat on his return from working as a young consultant in Sydney.

"I used to come back most weekends and by the time I got here on Friday night and started looking, all the good places that had been advertised were toast.

"The Sydney Morning Herald at the time had a website called My Domain. It occurred to me that there was an opportunity to do something similar in New Zealand, so on my evenings and the weekends I got to building that and, yeah, for some crazy reason I decided to throw in the secure job and career that I had to give that a whirl."

Flathunt eventually morphed into Trade Me Property, and Simpson became a shareholder, although there was precious little money in Trade Me back then.

"We spent no money at all, we were very efficient in that respect," he recalls.

Morgan had secured $100,000 in seed money from a group of Wellington angel investors, now called Movac. It was enough to get started but not much to live on.

Simpson says it was good for focusing their minds on success but little did they dream of what Trade Me would become.

"For both of us, the very initial motivation was about building something, that creative process, learning the technology but also having something interesting to work on. "

The runaway growth of Trade Me also taught him a great deal technically. Membership flourished from 10,000 to 100,000 in its first year so the website had to be user-friendly.

"In those days, people were coming online for the first time and so often that was a steep learning curve for them and we had to try to do everything to make that as easy as possible.

" You didn't need a fast internet connection – in those days no one had a fast internet connection – so we put a lot of time into making sure it worked really well even on a slow connection."

As Trade Me matured, Simpson moved into product development, focusing on the sorts of things that made the business easier for consumers. He also began a blog on entrepreneurialism which he continues to write.

"I started it to tell the Trade Me story to hire more developers. [There was] a perception that we'd kind of finished and there were no more challenges there, so the blog was a way to tell the story of what we were doing within the technology side of Trade Me.

After the sale of Trade Me to Fairfax, Simpson and fellow shareholders earned millions. It seems too rude to ask how wealthy Simpson is but Sam Morgan took away $200m and is now worth $305m, according to the NBR Rich List. His father, Gareth, reaped $47m and pledged it all to charity. Both men are helping Simpson learn more about philanthropy.

Ask him how it changed his life and Simpson smiles quietly.

"I think the sale means I don't need to worry about money so much so I have more time to worry about everything else now."

Like Sam Morgan, Simpson is putting his money into backing start-ups. Entrepreneurialism, he says, is still not a natural skill to him but he's learning.

People often ask him about the principles of Trade Me's success so they can take the same approach.

"But you know, 10 years have passed and the way we did things back then are not necessarily the way that you'd approach those same challenges now.

"The way that Trade Me was successful is not the way the next big thing will be successful. It will be quite different."

Part of this, he says, is because Trade Me captured a local market, whereas most New Zealand technology businesses today are looking globally.

And although Trade Me broke new ground in terms of website usability and design, much of it has gone mainstream.

"They're kind of disciplines now. It's a long time ago, too ... This is 1999-2000 that we're talking about. It's half a lifetime in the IT world."

Having been part of a business which got started in the ashes of the dot-com boom, Simpson struggles with those who argue capital's a barrier to success in New Zealand.

"I suspect that it's not the main constraint, actually. Just to pick two of Rod [Drury's] ventures, Xero and Pacific Fibre, they've both been able to attract the capital that they need, which is not insignificant in either case.

"Where there's a good enough idea, and where there's good enough execution, the capital comes out one way or another."

- © Fairfax NZ News