Ken Westlake became one of the first New Zealanders to go into professional Web development when he and Bob Grey left Air New Zealand's IT department to set up Clearview Communications in 1995. Since then, Clearview has helped build the online ventures of National Business Review and the New Zealand Herald, constructed corporate Websites for the likes of Lion Nathan and begun the push into e-commerce. Along the way, its staff has swelled to nearly 60. Now, Clearview has gone early into what may well be the next wave for the local industry - acquisition. The company, formerly 80% owned by Westlake and Grey, has been bought by LibertyOne, the rapidly expanding listed new media company backed by Australia's Fairfax newspaper group. In this week's @IDG Friday Fry-Up, Westlake talks about why he sold and where it's all heading. Why did you go looking for a buyer? We looked at ourselves and asked what we were trying to achieve. And what it came down to is that if you look at the drivers of all these things, the first driver was the change in the New Zealand marketplace. It's changing and it's changing permanently. It's not longer the province of some smart early-entrant niche players, and the technology is now mainstream. You can't build an application these days without taking the Internet into account. Therefore, we're now treading on some very large toes. So the pond is going to get bigger in terms of opportunity but so are the fish in it. So we had to consider our position. Then we had to consider our staff. This a service-based business and without people in a service based business, you're stuffed. We had to consider how we could keep Clearview attractive as a place to join and stay. The fun factor and all that is fine, but we were facing questions about career development and opportunities. All of a sudden we'd found ourselves going from a 15-20 person organisation, having a lot of fun and being very successful, to having nearly 60 people. How do you organise and provide career opportunities for some very talented people, some of whom have never actually been in and environment that requires a bit of discipline and process? An association with a multinational was very much our target because that enabled us to address that career development opportunity. The next driver we looked at was marketplace muscle. We've done very well and we have a blue-chip client base. That's been driven in the main through relationships that we've had with a number of key people. Those clients now want us to go to Australia, because they want trans-Tasman consistency in relationships, quality, standards and so forth. Setting up in Australia was very much part of our planning - but how were we going to enter? Did we pack a rucksack and a Kiwi flag and plonk it in the sand at Bondi Beach and say 'we're here'? Or do it in a more strategic, commercial manner? We had to do something. The final driver was financial muscle. Clearview is a private company. It has no debts, no bank. So it's been the shareholders themselves putting their hands in their pockets whenever things got tight or we had to buy more gear. If anybody had said four years ago when we started that we'd have an asset base in this business like we have now, we wouldn't have started. The actual amount of money we've poured into this business has been extraordinary. No one could have forecast it. So that's why we started looking for a partner. And those are also some of the reasons why people were starting to look at Clearview as a partner and saying, we want to enter the Webspace in New Zealand, but growing it organically is the long road and realistically this industry, time is not on your side. So we were approached by five organisations, all of them international, over the last six months. Will your experience by repeated by other Internet-based companies? Netlink is on the market, Glazier has been bought … Yes, I think so. I think the days of New Zealand's homegrown industry staying homegrown are limited. We've seen Glazier go to Adavntage Group, which is homegrown, but I'd be surprised if they didn't consider a wider vision than just New Zealand. You're seeing Terabyte up for sale, as I understand it. Netlink is up for sale - and I'd guess that Telstra would be the favoured partner there because of their current relationship. That would give Telstra a very strong entry point into the New Zealand market. Then you've got Webmasters, who I'm sure have had approaches, and companies like WebMedia, who I know have had approaches. So I see the landscape changing and changing permanently. And being driven by these big new media companies - eCorp, LibertyOne and so on? Yep. Murdoch's going to be doing something too. I think the media companies are going to drive this change in the landscape. They're entering a pond that has previously been dominated by organisations such as IBM, Unisys and EDS - mainstream application developers and systems integrators. That world is changing through the technology. New Zealand has caught up - if it was ever behind - and they're putting in full e-commerce solutions, using this technology, which completely integrates with their back end. We're building one at the moment which will transform distribution for one of New Zealand's industry sectors. That's what happens. Look at the travel industry - that's been changed and I don't see it going back. Where are they at in Australia with all this? I think Australia may actually be slightly behind New Zealand. I've only got anecdotal evidence of that, but I think that's why New Zealand is being seen as such an attractive market to get a position in. New Zealand well-regarded because of its workforce and its application technology. Sometimes I think that's because of geography - our thinness of population outside a couple of main centres tends to require us to adopt things quite quickly. Has there been some benefit for New Zealand Web developers in having to learn to operate in a smaller market - in being that much sharper? After all, compare what NineMSN have managed to do with a lot of money in several years to what the Herald has done with not much money in nine months. I think that's absolutely correct. I was thinking of my days when I first started programming in the IT industry in New Zealand, 20-odd years ago. And it was absolutely mandatory that you had to be able to squeeze a gallon into a pint pot, because of the sheer cost of importing equipment into New Zealand. These constraints on us meant you had to create talent to achieve an acceptable commercial result. What it means for Clearview at the end of all this is that we want to maintain our position as a market leader, we wanted to create opportunities for our staff. We wanted more robustness from a financial point of view. You can only go so long digging into your own pocket and mortgaging the house. We also wanted to add to our service offerings - things like media placement, marketing, promotion of Websites. To become strategic partner from a marketing as well as a technological point of view. This all sounds like Clearview is going to continue to act very much in its own right rather being just a centre of a particular competence for LibertyOne. Yes. We will be a centre of competence for LibertyOne, in the context of the type of solutions we develop - Cold Fusion, for example. Zivo is regarded as a centre of excellence for Microsoft technology. Clearview's known for both, but Cold Fusion is usually referred to first. LibertyOne will certainly expect us to continue to grow our market here - to carry on building the business, continuing to be profitable and giving good returns and being a centre of excellence in both people and technology. I think LibertyOne see New Zealand as very much a development ventre. And the reason for that is that our cost of development is very much lower than Australia or the US or Europe. That doesn't mean to say that we're peasants, but if you combine market salaries here with productivity and competence and experience, you end up with a very effective Web-based solution in commercial terms. We've already proven that we can develop for Australia from New Zealand. For us, the classic example of that was the Lion Nathan site. That is replicable. So if you can get the talent and organise it and focus is, the disciplines are here. The capabilities are here. Clearview has always had a policy of paying well and making it a fun place to work, so the rewards are here too. What about Web content in New Zealand? Are people beginning to think that that the population's so small it's not worth developing exclusive content for? If you're talking about a public site specifically for a New Zealand audience, there are very few New Zealand audiences that can possibly support that investment. You would need to have a very focused community. Take NBR, which was basicaly a New Zealand audience, although it did also have a very strong expatriate following. The next site that's coming into that category is FarmIndex, which is targeted specifically at the rural community. It's got a lot of investment capital in it, a lot of manufacturers whose livelihood is based around the rural community. It's very tightly defined. But a generalised public Website for New Zealand only? It would be hard to justify. So you really have to look beyond New Zealand's shores. We've had a lot of talk lately about what -if anything - the government should do about e-commerce. As a developer, who do you think? They should do something, that's for sure. I think there's no doubt that the government has an opportunity to apply the commercial benefits of e-commerce. E-commerce in that context is a combination of business-to-business, tax returns and so forth - but there's a whole area of compliance that as businesses and individuals we have to do, that can be done online. That would have to reduce government costs and therefore reduce the cost of compliance. They have the infrastructure there and it has to be the way they're going to go. But I think they've also got to learn about the user dimension of e-commerce. E-commerce as a solution push onto an unsuspecting audience is rarely accepted and successfully adopted. Involvement with the user community which gets translated back into the design and site navigation and technical architecture are essential prerequisites for the successful development of any site. The government has a great opportunity to lift its game. Inland Revenue was not a shining success story - because I think they forgot to involve their customers and find out what they had, what they needed and how they could use the solution - and then building it.
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