How do we create an ecosystem? We plant a seed and let it grow!
Young companies call the first capital they raise the “seed round”. That makes sense. The goal is to grow a big strong tree. That starts with a seed. But where do seeds come from? 🤔
We often talk about incubating and accelerating startups. But, in my opinion, much better metaphors are planting and harvesting startups.
This is one of those rare situations where money does actually grow on trees!
Trade Me was founded by Sam in 1999. I joined the team in 2000 shortly after he had convinced some former colleagues of his to invest $100,000 (in return for that investment they got half the company!) That money was used to hire the original team: firstly Jessi, then me and shortly after that Nigel.
(The Trade Me seed round was funded from consulting profits. Our pile of turtles stands on a foundation of “time and materials”.)
Trade Me was sold to Fairfax in 2006 for $750 million. By then the team had grown to 53 people. Some of us received life changing amounts from that sale - e.g. both Nigel and myself were shareholders in addition to employees by virtue of our own startups which were acquired by Trade Me at the time we joined the team. Others received smaller but still material amounts. Everybody in that original team was part of an employee bonus scheme set up at the time of the sale.
What happened next?
Let’s list some of the ventures that have been started by that small group of people who worked at Trade Me in those early days:
Nigel, along with Cameron and Jamie, started StarNow. A number of the original team at Trade Me went on to work with them, including Sarah, Rowena, Tim, Amnon, Alan and Meghna.
Nigel also started Rubber Monkey and, with Phil and Craig, started Rubber Monkey Software (+ is hard at work on a new thing as I type).
Natasha started Webstock, which may have had a bigger second-order impact on the ecosystem than any of the other examples in this list. Natasha also started Lil Regie and Tim from the original Trade Me team also worked on this.
Liv, Toni and Phil started Little Black Frock.
Toni also started and still runs Beauty Bliss.
Richard started Trade Tested.
Alan started ImpelHR.
Amnon was a partner of mine at Southgate Labs, which was the seed investor in Vend and also helped to start ThisData and Atomic. And let’s not forget Triage!
Erin started Boho Pet.
Sarah started Sparkle.
Marshall started Very Good Security.
Lance started Punakaiki Fund.
The list goes on…
It’s not just businesses. There are a number of non-profit and community organisations that have employed and been funded by the original Trade Me team. For example, after a decade running operations at Trade Me, Jessi went on to be the CEO at Predator Free New Zealand.
We could also include things that were started and funded by former Trade Me investors:
Phil and many of the other original Trade Me investors started Movac, which has gone on to fund a number of successful ventures, including Power By Proxi and Aroa Biosurgery, and later Vend and Timely.
Colin started Parts Trader (again there are a few Trade Me alumni involved, including Carl).
Martin started Crema Capital and later Adminis.
This list would get stupidly long if we also included those things which were started by folks who joined the Trade Me team after the sale.
For example, just considering my own individual branch …
After Trade Me I was an early employee and pre-IPO investor at Xero. Rod was on the Trade Me board at the time of the sale. Sam was on the Xero board and many of the original Trade Me team invested in the Xero IPO. Some of them were also subsequently employees at Xero, including Rebecca and Robyn.
After Xero, I was one of the original investors in Vend. I had first worked with Vaughan, who started Vend, when I was still at Trade Me and he was at Vianet (which originally powered the Travel Bug site we built). Again, several original Trade Me team members worked at Vend, including Sophie and Alex (who took over from Vaughan as CEO)
After that, I was the original investor in Timely. Ryan, Andrew and Will who started Timely all worked together at Trade Me (their first venture, BookIt, was acquired by Trade Me). Over the years Timely has employed a long list of folks who had previously worked at Trade Me. MOD, who was part of the original Trade Me exec team, was subsequently Chair of the Timely Board of Directors.
Repeating this exercise for others from the original Trade Me team would reveal a dense tree of subsequent ventures.
Last but not least, we shouldn’t overlook those who stuck around and continued to work on Trade Me itself, such as Jon who took over from Sam as CEO and was in that role for many years, and Allister who is still Head of Infrastructure.
The sale to Fairfax wasn’t the end of the Trade Me story, and as it continued to grow it created huge opportunities for those who worked there to learn and take those lessons to many other places.
This is how we create an ecosystem. We plant a seed and let it grow!
PS This, by the way, is also why it’s such a silly idea to discourage local founders from selling their ventures to overseas buyers. The $750 million that Fairfax paid for Trade Me in 2006 has been multiplied many many times over in subsequent generations of ventures. Every new success is another pebble in the pond, creating a new set of ripples.
This list is based just on things I’m aware of and can recall of the top of my head and some lightweight LinkedIn stalking, so I’m sure it’s incomplete. Apologies to anybody that I’ve missed. Please help me correct the record and I’ll treat this essay as an open draft.
Building An Ecosystem
How can we build an ecosystem of innovative technology startups in New Zealand?
A startup that goes well can be very rewarding. How do we ensure that everybody involved gets their fair share?
When a startup is sold, in part or in full, it is just a trade. As a country that is entirely dependant on trade for our prosperity we should understand this better.
How do all of the programs designed to support startups actually help?