Tracey Fellows on REA growth story
High Growth Focus
Tracey Fellows: Skills and staff retention a challenge in such a growth market. Photo: Bernard Oh*
Plot the share price for digital property business REA Group and it’s a little like the Himalayas – ups and downs, but the general trend is ever higher. So what will be CEO Tracey Fellows’ innovation Everest?
It could be international expansion (the company last year paid $761 million for iProperty giving it entre to online real estate advertising in Malaysia, Hong Kong, Indonesia and Thailand); it could be adjacent services – home loans or moving services; it could be in its ability to attract millennial talent (the company recently announced an innovative and flexible family leave policy); it could be a new class of technology platform with embedded virtual or augmented reality.
“We continue to reimagine the property search experience – we have teams of people always looking at what is new and coming over the horizon but is not here yet,” says Ms Fellows.
REA Group is an online business focused on advertising and services around real estate with operations in Australia, Europe and South East Asia. It also has a 20 per cent stake in the US based Realtor.com.
“We really are progressing down that path rapidly of being an Australian multinational,” Ms Fellows said.
In its most recent half-year, the company saw revenues rise 20 per cent to $314 million while net profit grew by an even faster 28 per cent to $121 million.
After stints with Microsoft (where she was the local MD and then Asia Pacific vice-president) and Australia Post, Ms Fellows took on the role as REA CEO in August 2014.
The company is one of the emerging class of platform businesses selling highly targeted services to returning users. Knowledge of the customer and reach are the secrets of scale and success.
Ms Fellows explains; “This is a very large consumer market. When you have a highly engaged consumer audience there becomes a multitude of opportunities to create experiences for those consumers; the more you are working with them, the more data and knowledge you have about them, so the more personalised the experience you can create for them.
“Our thinking is very much around the ecosystem – it’s why the adjacencies (home loans and moving services) are still very connected to property, rather than an extreme example in the other direction.”
Ms Fellows claims that around four million Australians visit the site each month (which she claims is four times as many as its nearest rival). Once they are there REA knows what device they are using, what time they visit, what they look at, what they don’t.
That insight shapes the services that REA develops and also informs its international expansion plans. Ms Fellows is keenly aware that there is still a global land grab going on among platform businesses, all of which are seeking sticky consumers. New consumers might come from a new home-grown service – or from the purchase of an established business and platform (with existing consumers) in an international market.
On the issue of whether growth should come from build or buy, Ms Fellows is clear; “If there are a lot of players, you very quickly come to the decision it is better to buy and improve the experience, rather than start from the beginning.”
It can also be more sensible to buy in rather than build technical nouse. REA for example was one of the investors in the Pozible crowd funding for Melbourne virtual reality gaming company Zero Latency.
“We partnered with them very early, provided them with seed capital to get off the ground and in doing so while they pursued their passion of VR gaming we also got some of their expertise in how we could use virtual reality in new and interesting ways,” says Ms Fellows.
The organisation benefits also from having a highly innovative chief information officer, Nigel Dalton, who has built a strong team around him and encourages hack days to keep the innovation spark alive.
Mr Dalton is also something of a poster boy for the Agile movement. Ms Fellows says that; “Agile has been very important for REA and our evolution – a way to continue to develop minimal viable product and build on that, and a way for cross-functional teams to come together very effectively to galvanise a group of people behind an opportunity. Agile is an important secret of success – it's a methodology, I don't think it's a silver bullet but yes, it is very well aligned with our culture.”
On the issue of innovation, Ms Fellows says; “The reality is when you have very smart motivated people they want to keep pushing the boundaries. We don't suffer from being risk averse. We have people who really do want to push the boundaries and bring new and innovative experiences for consumers and they are challenging themselves every day about a device, a way to see something, using new technology, using the data better.”
Finding and keeping those smart motivated people remains an ongoing challenge in Australia she acknowledges.
The company has its own development team, but also access to 100 Thoughtworks staff out of China.
“We have taken some of our development offshore out of necessity. Our business is entirely human capital,” she says.
While scarce local skills has not been “a real handbrake on our growth – but something we think about all the time.”
In March the company announced an innovative family leave package that provides six months’ paid parental leave for primary caregivers and three months’ paid leave for secondary carers along with all superannuation payments for both paid and unpaid leave periods.
Given that REA’s workforce is young and 10 per cent of its Australian workforce takes parental leave each year, it’s the sort of offer that could sway a smart operator to move to or stay with REA.
Ms Fellows sees her role with regard to ongoing enterprise innovation as setting the guard rails to run a successful listed business, and prioritising developments that will play to that success while fostering a culture that says “we want to continue to be the best, to create new experiences and new things and never be satisfied, and unbelievable consumer experiences - it's the culture and the hiring to that culture and the values that support them.”
And does Ms Fellows think that the Government has the settings right to ensure that Australia can truly be an innovation nation?
“I don't know if we have the settings entirely right yet – but it’s particularly encouraging to have a Prime Minister talking about us being an innovation nation. To have a PM who aspires to us being agile and innovative country and he doesn't just mean start ups he means all kinds of businesses and community and government.
“It’s particularly encouraging to have a prime minister who is digitally aware – I think that creates positivity for the future for sure.”
Photo Credit: by Bernard Oh via http://bit.ly/1VPi3pQ