New internet millionaire shares his secrets

What works online? Ask David Eedle. He just sold his young internet site for more than $3 million. He made plenty of mistakes building the site and learnt from all of them. By AMANDA GOME.

David Eedle of Arts Hub tells Amanda Gome about his strategy, his exit, and why all companies should use the internet to improve communications with customers.

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Amanda Gome: Tell us how you grew Arts Hub.

David Eedle: In 2000 (with partner Fiona Boyd) we launched Arts Hub. It essentially started as an adjunct to an existing consultancy business. But we were interested in the internet – I was a bit of a computer geek, loved playing with online.

So one weekend I cut about 17 jobs out of the newspapers all focusing on the arts industry because that was our background, popped them into an email and sent them out to everyone in my address book, and said, ‘Look, if you’d like me to keep sending jobs to you – for the arts – please say so’.

Within a couple of months we had literally thousands of people signing up, so we had to go and buy an email server, email/mailing list software, and we embarked on a pretty big, steep learning curve. This was the time when everyone was saying that everything on the internet should be free. After a few months we started to wonder about that notion. My background was originally in performing arts and I used to sell a lot of theatre subscriptions, for example. Why should the internet be different?

People are happy to subscribe to magazines; people are happy to take out a subscription to a theatre season. A recurrent payment model is perfectly sound – it’s just that there was this notion that the internet was free. So we decided to ignore all the advice that people gave us and we turned what we had started as a free service into a paid subscription service. We now have over 10,000 subscribers in Australia and websites in the UK and the US. And has led, as you say, finally into us reaching an exit.

You make it sound easy but at that time the art industry, a cottage industry, was very fragmented. I imagine you would have had enormous difficulty in getting the arts community particularly to put their hand in their pocket.

It’s funny because every artist you ever talk to is starving, which is why Arts Hub for six years has never had a concession price because we’d have to give it to everybody anyway. We just fixed one price and while the price has gone up over the years we have, honestly, tried to keep the rises minimal while still remaining viable as a business. That fragmentation that you talk about is actually one of the secrets of the success of Arts Hub.

Yes, the arts industry is enormously fragmented, there are lots of different bits to it, there’s no overarching thread that holds it all together – other than the fact that it’s the arts industry. So Arts Hub stepped into the breach and by default became the de facto information source. We’re now the one thing that all of those people read. We’re the one constant across the arts industry.

So are there other industries to which this model could apply?

It’s a really good question, because if we have a secret of success with Arts Hub, then it’s logical to think where else could we apply that model. We keep joking about lettuce farmers. There must be some other industry segments that are unified through their involvement in a particular industry but who through dint of fragmentation or breakdown aren’t actually tied together.

One of the easy indications is industry associations; for example there in no industry association for the arts. There are ones for individual art forms. Whereas for car salesmen, there are things like the motor traders association, that’s a national association. There’s even an association for newsagents; they’re already unified through an existing industry network, whereas the arts just did not have that. That’s quite clearly one of the things that underpinned Arts Hub’s success.

We know, as entrepreneurs, there’s a lot of hiccups along the way. What really surprised you? What were the mistakes you made that you really learnt from?

We learnt very early on a couple of secrets about the communication we had with our people. We learnt that the internet is immediate. If somebody doesn’t like something, they don’t write a letter to the editor, they ring you up within minutes.

For example, one of the things we changed: we used to do our summary of jobs as an email that used to go out on a Sunday night. Our idea was that it would be ready Monday morning when people got to work so it went out without fail on a Sunday afternoon because I wrote it. I basically didn’t have a Sunday for two years and we were feeling a bit richer so we decided to hire somebody to do it and just arbitrarily decided that we’d do the jobs email on a Monday.

Three years later we are still getting mail and phone calls and emails about changing the publishing time from Sunday afternoon to Monday afternoon and I still, once in a while, get a comment. In fact we had some market research done recently – just looking at customer feedback – and there was a comment in the customer feedback, that said “it was so much better when the jobs bulletin went out on a Sunday”.

One of the points is discovering the necessity for real reliability and consistency, particularly with technology. People are still struggling to come to grips with it. They still find it new. They find it inconsistent, or things don’t work and they get worried so our emails need to turn up at exactly the same time on exactly the same day; day in day out, month after month and year after year. I think that’s been a big winner. We needed to learn that one.

What happens when your server goes down?

We’ve learnt from them and we now have systems in place to make sure we get around that. We had a major disaster: our database corrupted three months after we launched.

With no backup?

We thought we had a back up, but it had not worked properly. I had one of those absolute heart-in-your-stomach moments. Three o’clock on a Sunday afternoon, looking at this database thinking ‘we are completely and utterly stuffed’ three months after we’ve launched this business. We were lucky. We went hunting on the internet, I found a firm in the US who repaired corrupted databases. It cost us several thousand dollars to get it fixed, but the guys turned it around in 24 hours – complete legends – and saved us.

Who were they?

I can’t remember. Although I do remember that the guy rang me at four o’clock in the morning to tell me that he’d fixed the database and it turned out to be a Melbourne guy that lived in the States. We started talking about football or cricket.

But we didn’t think about technology early enough. What happens when your database corrupts? Are your backups working? If your server is down, how are you going to send the bulletin out?

These days we’re lucky, we’ve spent the money to work through all of those things and we’ve got some very good technical support.

You are now one of Australia’s online experts now. There’s not many of them. It’s still a very young industry – online communications. What are the different ways that people communicate online, compared to print?

It’s really interesting watching all the newspapers, traditional media, struggle with what it means. Obviously, some do it better than others. Some of the key items for us remain the issues such as it being immediate: it’s in your face, it can change at any time. If something happens you can tell people about it straight away, you don’t need to wait until the press rolls at four in the morning. You can update information very quickly. But it works the other way around as well: it’s incredibly demanding of content.

Readers want it in the right way, right time and the right format, in their language. You cannot get away with expecting to get away with one information product to an entire marketplace thinking that that’s going to suit all of the people there. So things like the ability to personalise content on the website is incredibly important. There isn’t one marketplace; there are millions of marketplaces.

If you’ve got a company, for example, how would you personalise your communication to particular customer segments?

A basic example: you’re an Australian company; you’ve got customers in NSW, Victoria, Tasmania and South Australia, Well, how about you recognise that in your emails. I get emails from companies in Sydney telling me about some promotion or launch in Sydney – and I’m really not that interested; I live in Melbourne and I’m not going to go to Sydney for it. Why bother sending it to me? How incredibly easy is it to go through your database and say, “5000 people live in Victoria – let’s email them about things in Victoria”.

Arts Hub does this. We have customers in 60-something countries around the world; why on earth would we tell an arts manager in Singapore about a job that’s available in Dorset in the south of England? Having said that there’s an argument that says they might be interested in moving to Dorset, but the point is to try to make it relevant. So on Arts Hub we do a lot of work to customise and personalise the information.

Any other ways?

You can slice it and dice it. You can probably break our subscribers into nine to 10 different ways. That’s geographic; art form (for us, for example, performing arts or visual arts); are they full-time employees? Contractors? Freelance? Casuals? Volunteers? Do they work directly in the business? Or are they in an associated business? Are they in a service provision business? It doesn’t really matter …

Do they then get a completely different product than the others?

They may from time to time. Some of the content they receive will be. We have our standard pieces of content that everybody gets – there still needs to be something that ties everybody together. Most of this is Marketing 101. The first thing you do is try to understand who your customer is, who your audience are, and try to break them down. The joy on online and using a database is that you can do that much more quickly and effectively.

And where’s it all going? What do you see as the changes with increased online communications?

Look, we’ll just cease to exist physically. We have had 10 years of incredible change on the internet. Are we going to get another 10 years of incredible change?

The obvious answer is: I have absolutely no idea. My fervent hope is that absolutely we do. I’m one of the people who really enjoy it. You’ve got to be careful because there are a lot of people who get marginalised by that fast change. One of the tricks to try to develop ways to be as inclusive as possible so that people aren’t excluded from it. I do hope that it continues that way.

I have a daughter who’s nine and spends an enormous amount of time online. She interacts with her friends online through instant messaging programs, she’s a big email user; and she’s built her own website, her own domain name. She’s a big fan of Neopets, a big online social community site for kids. So she set up her own website, which is a gathering place for people who use Neopets. And she came up with a cool domain name that I thought was fabulous. I bought it for her as a present.

Will she watch TV when she’s 20?

Probably not. She watches a lot of stuff online. She does watch TV but it’s in a very tightly defined period of time. It’s mornings; it’s breakfast. She doesn’t watch a lot of TV after school. Half the time her homework is done online. She might use Google for research. Or she uses PowerPoint for presentations for school. She’ll be on messenger talking to her friends next door, or across the world. Or participating in online games.

So what about the 18 to 25 year old group? Where are they at?

They’re the ones who don’t consume media at all. I’ve cast my eye over some of the research. You’ll discover that there are people in that age group that don’t pick up a newspaper; they don’t watch the news.

So where are they getting their information?

Online, or through their peer group. They’re incredibly hard to reach, which is why I laugh when I see media companies or organisations trumpeting their new youth incentives, youth communication and so on. A glossy brochure with fabulously funky graphics: that doesn’t mean a thing to me, they think that this is going to attract attention. I find that really hard to reconcile with reading about media consumption habits. The 18-30s, the 18-25s, they don’t respond to that.

So how do companies reach them?

That’s a really good question. A MySpace page? Do you have a MySpace page, Amanda Gome?

I’m not the demographic! Do you?

Yes, but only because I’ve played with it. I’m 40, I’m over the hill

So how do companies reach them?

They literally use things like MySpace although this audience has already moved on.

What is the psychology behind this. Why is there this ‘me generation’ – all about ‘me’?

I don’t know. I wish I understood more of it. Because it’s quite clear that if you can ‘touch the sweet spot’ with this demographic group – down to among the 14-15 year olds …

What about 30?

Mmm… 26… 27, maybe just 30s perhaps. That’s a big chunk of people.

And they go in flocks?

Yes, the flock. Bear in mind that one of the fundamentals of a social network is that you need a bunch of people to make a social network. One person doesn’t make a network, you need a group. There are going to be leaders within the pack who get bored quickly, they get bored quickly and they, of course like any peer group, drag their peers on.

What’s new online? What do you see happening in terms of technology? What should companies be doing with their websites? I mean is Flash still in?

Pretty moving pictures? Well there’s YouTube for you. There’s probably two parts. One is the business world. We keep talking about individuals and people forget that they’re only half the equation. We need to remember that there are an enormous amount of businesses out there who are not internet companies, yet who rely heavily on the internet to survive. Things like on-demand applications: just a brilliant idea.

For example one of the most successful companies is one called Salesforce.com – they produce a customer management relationship software tool. There are a lot of companies there in this market space, Oracle and SAP and a couple of others that have created big companies out of very excellent database software, essentially for large companies to track and manage customer records.

It costs millions of dollars for that company to set up and use that software. Salesforce turns up and creates and internet version of that software, that you can use via your web browser; that you can subscribe to for $49.95 a month.

Now if I’m a company and I’m given the choice between paying Oracle two, or three, or four million dollars to implement a database system for customer relationship management, or going to Salesforce and signing up 30 or 40 or 50 staff, at $50 each a month, I’m going to go with Salesforce. For a start, I don’t need to buy a web server, I don’t need an IT department, I don’t need IT tech support. Salesforce does all that for me.

There is a real growth in this application on demand. Essentially a little, tiny company like mine can access serious, heavy-duty technology systems. We use Salesforce – I can use it from home, from work, wherever. The internet is providing some really solid robust business generating tools. And you’re going to see many, many more.

The big companies know that, so Microsoft is constantly releasing new software to use online, things like online word processors, online spreadsheets. Google has spent a lot of money recently buying little companies that have business-focused tools. Those things are really changing the way some companies are able to work. These are things that you don’t often get to hear.

So products on demand… what else is going on in the internet space?

There are some other trends going on. Really focused, targeted information and content. I talk about Arts Hub and really segmenting our audience. But eventually it’s going to come down to an audience of one. That is, you may have a billion users on the internet and that equals one billion marketplaces. Every single person is able to have their own personal experience.

It’s getting better about that; every day you’re able to finesse and filter and shape your experience on line. But it’s still pretty rough. I think there’s going to be a lot more applications for people at home. I’ll give you an easy example: we’ve just bought a new house, we wanted to buy a new couch for our lounge room. So my immediate response as a geek was, ‘Let’s model the couch in 3D on the computer’.

I’m so glad I don’t live with you.

My partner says, ‘We saw the couch we wanted. How’s it going to work? where’s the light going to fall? What colour should the wall be?’, that kind of stuff. So I went hunting, and believe it or not I found online furniture companies in the US that have this groovy tool that let me model my lounge room in three dimensions in a web browser window and drop furniture in.

That would be good for offices.

Oh, they have one for offices too. Ikea does it for kitchens. If you’re buying a new kitchen from Ikea you can download a software application for the Ikea website and model your new kitchen in three dimensions in colour using all the Ikea kitchen modules. There’s going to be a lot more tools like that for people at home.

Don’t you see a divide between the older and the younger generations?

Yeah, but go back to the 1960s and chat. I mean I chat to my mum and dad, they’re in their 70s and they are internet users, but I do get the odd phone call for computer help. But ask them about what it was like in the 1950s … every generation will tell you there was a great big divide between the young people and the old people. The world progresses, there will always be a gap. To reinforce a point I was making earlier, I think it’s behoven on everybody to try to be as inclusive as possible. There’s no point leaving people behind, if you’re able to bring them into the loop.

What’s next for you?

I’m now doing more hours a day than before I sold the business, which I’m still trying to figure out. I was always building websites for people and I’m now taking a look at a couple of new businesses. We’re thinking very carefully about the opportunities, filtering them through the lens of our Arts Hub experience. Forget all of the stuff about the internet, it’s the basic formative experience of forming a small business – structuring it to grow and selling it.

We did lawyers at 10 paces for months. I now know that the next business we set up, be it dog shampooing or internet, will be set up very particularly and get organised in quite specific ways. We know that our end goal is to look for a sale or some kind of transition so we’ll try to organise things to be as smooth about that as possible, even if that’s in four years’ time.

This is an edited transcript of the interview which is available by podcast.