When a Kiwi tech company is sold offshore, there are always promising noises about keeping local jobs.
But management and circumstances change, and the likes of The Hyperfactory, Endace and Next Window shut up shop in New Zealand post-trade sale.
Happily, there are exceptions. After buying Auckland startup PowerbyProxi for $100 million+, Apple is adding bodies in Auckland.
And after buying Wellington-based mobile marketing company Carnival two years ago, the US-based sales automation company Sailthru is still adding staff in New Zealand.
In Carnival’s case, it helps that co-founders Guy Horrocks and Cody Bunea have hung around and have senior roles in Sailthru. In fact, Mr Bunea has just been promoted to vice president, product, which saw the Wellingtonian move to New York in January.
Mr Horrocks says Carnival had a dozen staff in the capital when it sold to Sailthru. Now, the Wellington crew has just moved to a larger office, and by the end of this year it should have 20 or 25 staff – all of them in high-value software engineering jobs.
"I’ve had friends who have sold companies to the likes of Twitter and they’re out in the first year and disillusioned. They butt heads with the vision of the larger company," Mr Horrocks says.
"With us, we were lucky in the fact that there was a really good fit. We’ve spent the last year integrating the two products and the teams and they’ve expanded the New Zealand team as well."
The skills shortage being what it is, the Wellington crew started local but has become more international in character as staff have been recruited from Brazil, Russia, the UK, Hungary and Singapore.
But part of the expansion process has also involved bringing Kiwis back home. Simon Plant has just been lured back to manage the Wellington office, for example. Until recently, he was technical manager for the major travel site Skyscanner in Europe. Mr Plant replaced Mr Bunea, who has been promoted to New York.
Mr Horrocks is already working at Sailthru's Manhattan head office on the 48th floor of the Freedom Tower (the largest of the buildings that replaced the World Trade Centre).
He was already in the city before the sale, serving at Carnival's satellite office and punching above his weight to land mobile marketing deals with the likes of CNN and DreamWorks (read more about Carnival's colourful early days here).
The entrepreneur is coy about the price Sailthru paid for Carnival but he says it was half in cash and half in stock. In an interview before the April 2016 deal, he said Carnival had turned down a $US8.4m offer.
Despite his relative youth (he’s 34), Carnival was actually Mr Horrocks’ third company
He created his first company, Blood Spatter Analysis while still at Canterbury University studying law and commerce. The startup, which developed technology for analysing blood splatter patterns at crime scenes, won a $70,000 entrepreneurial award. He went on to cofound Polar Bear Farm in 2007 with Layton Duncan (later an early Xero employee), which was one of the first companies in the world to make iPhone apps. Their first-mover advantage won them a ton of business in the US.
Super networker
Mr Horrocks puts part of his success with Carnival down to happenstance.
"Looking back, it's amazing how many things were chance encounters or an intro that leads to an intro to an intro and it’s very hard at the time to know which door is going to lead to the right outcome," he says.
But you also get the sense that the prolific networker helped make his own luck. Certainly, he managed to meet and schmooze some of the big-name Kiwis in the Big Apple.
"As I’ve started over the past year or two helping startups, sometimes you forget that making an intro to a Google or an angel investor or to a client at CNN or Coke can make a big difference and that was the same for me when I first arrived in the US; a few people made a couple of intros; people like Mark D’Arcy and Craig Nevill-Manning and Jonty Kelt and they made a huge difference to the outcome of our company."
For those not in the Kiwi expatriates in New York loop, Mark D’Arcy is Facebook’s chief creative officer; Craig Nevill-Manning is one of Google’s first employees and, until 2015, its head of engineering while Jonty Kelt (of the real estate Kelts) is a successful entrepreneur and, these days, also a top executive at Peter Thiel’s Palantir, which is said to be lining up a $US20b IPO.
Maude co-founders Eva Goicochea (left) and Dina Epstein.
Paying it forward
Mr Horrocks says the trio, and others, helped to mentor him, and helped him navigate the stressful process and complicated process of negotiating the trade sale to Sailthru.
Now, he’s returning the favour – or paying it forward.
During a trip home last week, he spoke to startups at Auckland’s Icehouse, and he’s keeping his eyes for companies to advise or invest in.
In the US, he’s already put money into three early-stage startups.
One is Maude, a “sex essentials” company that pushes condoms and lube; another an outfit that sells high-end candles and a third is a coffeehouse chain that includes decent baked goods.
The first two, at face value, would appear to have nothing in common. But in both cases Mr Horrocks was impressed by the capability and tenacity of the founders. And he sees both as exploiting the internet’s potential to disrupt and reinvent business-to-consumer sales. The coffee shop chain investment was simply because the Kiwi had become frustrated there were some good coffee shops in New York and some bakeries but precious few places combining both in the traditional New Zealand fashion.
He says Maude also had the most impressive investment deck he had ever seen – thanks to co-founder Dina Epstein being a designer; fellow co-founder Eva Goicochea is a Harvard Business School graduate and alumnus of Everlane, an ultra-trendy online clothing retailer.
The two women epitomise their brand, he says. They’re classy, frank and not embarrassed about selling top-quality sex essentials. A commodity product (condoms) for decades mainly sold in sheepish checkout or pharmacy till transactions could be about to get a high-end makeover.
“If not, I’ll have a great story about two women with 100,000 condoms to get rid of,” Mr Horrocks says. (So far, that scenario seems unlikely; the media-friendly pair has immediately got good press, including from Vogue).
Flat White Meetups
Giving back doesn't just involve investing. Mr Horrocks is also helping up-and-comers to network via his series of Flat White Meetup events, which are held at the only New Zealand coffee shop in New York, Happy Bones, generally on the last Friday of every month.
So far, he's hosted 72 of these casual get-togethers.
"That’s one of the ways of paying it back. We try to just get people together and community-build. Any New Zealanders coming through who have aspirations of starting companies or working in tech can meet Kiwis who work for Con Edison, Nike, the BBC; amazing New Zealanders you don’t realise have got huge positions overseas," he says.
"Quite a lot of them will come in and be generous with their time and make an intro for an early-stage startup as well, which is pretty cool.
“I was the benefactor and now I’ve started to organise these things to help the next generation as they come through New York So it’s just returning the favour."
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Chris Keall
Mon, 23 Apr 2018
