When Creed Chris O'Hanlon says he borrowed $3000 from his wife to start what is now a multimillion-dollar company on the verge of public listing, you have to take it with a grain of salt. This is because, by his own admission, O'Hanlon is a great believer in the power of marketing. In fact, it would be safe to say it was his marketing genius that turned O'Hanlon's brainchild Spike into what it is today - one of the best-known and most talked-about local Internet companies around.
But even with "conservative" accounts such as Toyota, Hewlett-Packard, Greater Union and the Museum of Contemporary Art in Chicago under its belt, Spike is no stranger to controversy. Three weeks ago, a dozen former Spike employees left the company to join a US-owned competitor, Oven Digital, taking some of Spike's reputation with them. The drift has cast a shadow over the company's impending Initial Public Offering (IPO), but instead of dwelling on the past, O'Hanlon looks at Spike's future in a frank one-on-one with ARN's Tamara PlakaloARN: What makes Spike one of those companies people just love to hate?
O'Hanlon: If you ask anyone in the industry about Spike, the first thing they will comment on is our arrogance, our attitude, my ego, all the "good" attributes. A lot of that stems from the fact that we often argue with our clients if we think some things should be done in a certain way. In fact, we lost clients because we told them we thought they weren't right about something.
You see, we see customer relationships as a collaborative effort. After all, your clients come to you because they believe you have more imagination than them. Our best clients absolutely trust that. I mean, Toyota has been with us since the dawn of the Internet, really, and we deal with them worldwide. So it works. But, we're not an ideal solution for people who look for a brand exercise on the Web.
As I understand, originally, you were going to start a magazine, not an Internet company. So how did Spike end up being the Web-development wunderkind of Double Bay?
I was working as a kind of freelance Mr Fix-It when Honda wanted to create a luxury magazine for its users and came to me to design it. If a Hong Kong bank wanted a half-hour film on property prices in Shanghai, they would call me. So I assembled a team around me together with Ruby Blessing to do these projects. Now, these were the very early days of the Internet and we somehow "decided" the Internet was likely to become something, so Ruby went and learnt about the HTML and pitched the idea by building the Toyota site. We actually took a computer to Toyota's marketing manager at the time and showed him in Netscape what a Toyota site might look like.
Up until then, people like Satchi were pitching out here, but we were commissioned to do the site. We also had a really cool name for a magazine - Spike - but instead, we decided to form what we thought then was the first Australian Web-development company. In fact, there were other companies around, such as Radiant, but there weren't too many.
You mentioned that Spike started its Web-development business "at the dawn of the Internet". It must have been hard trying to convince people to buy something they didn't know much about.
We won a lot of clients very quickly because we realised that we should have a professional salesman to push the idea. So we employed Stephen Murphy, who was an insurance salesman before he joined Spike and really knew how to push, even though he didn't know anything about computers. We ended up having 10 clients and turned over $1.2 million by the end of the first year. At the end of the second year, we were doing $3.5 million and so on. Now we have clients worldwide with around 120 sites.
All of this sounds like a really smooth ride to me . . .
It was! First of all, the time was right. Second, we did the right thing by getting a salesperson; most other Web companies were made up of a bunch of technology guys so in love with what they were doing that they couldn't articulate it. We did some smart things early by figuring that there was no such thing as an Internet budget at the time.
Therefore, someone would have to create that budget and that someone was going to be high up the company food chain. So we only pitched at the CEO and board levels and we made sure that we pitched on paper, so that they could flick through the pages because they didn't have the Internet access back then.
We used to carry these 20 inch monitors into our pitches, so we really worked on it.
Now most of these people were technology guys, the geeks who could bring people to tears, so I knew I had to get them to buy my vision. To make matters worse, in order to get to these people, we had to get past personal assistants. So Stephen Murphy came up with this brilliant idea of sending a scratchy to every personal assistant every day for something like three months and that gave him a great opening line. He'd say: "Did you get lucky, love?"
Pretty soon, there was a group of around 200 people with whom he had this really great relationship. So, you had to get lucky.
Is this how you won the Toyota contract?
No, actually we were introduced to them by Toyota's PR company, but every other deal that we won was through personal introductions. You know, when people became interested in the Internet there weren't too many other choices, there was us and there was Radiant and Ether and maybe one or two other companies. Then they would ask which one was the biggest and we would of course say: "We are!"
We'd do a lot of hype - if we had three people working for us, we'd say we had 10 people working for us, if someone wanted to come to our office, we'd avoid that at all costs, because that was Ruby's front room and she had her young child running around in it. We didn't even have a proper office for the first year and a half, we worked out of our living rooms, so, it was a very virtual company. But then, when it did start growing, it grew really fast.
What is driving the Internet development market at the moment?
Content is back on the agenda with investors big time.
We always saw that content was important and that it was important in our services business. There are two models for Internet services businesses: the so-called interactive advertising/marketing model and the business enterprise.
Until very recently, enterprise was Spike's focus - back-end functionality, we'd give you a Web site for free if the back-end stuff was interesting enough.
I still think that is very important, but, what became apparent is that all of this was irrelevant, unless you had acquired an audience - and content acquires audience. And if this is an information economy, then you have to pay attention to your audience.
Even on our services side, we're driving a content-driven strategy that sits on top of business enterprise and marketing/advertising, none of that is relevant, unless there is someone out there to be impressed by it.
So, we see ourselves as being able to leverage the resources and the experience and hopefully this time around be successful in building the notion of online entertainment and, on the other side, being able to bring that back into our commercial base.
If we're able to constantly cross between these two crucial parts of the Web business - services and content - then we'll have a magnificent business.
So where is Spike heading?
We begin our day building sites and relational database management systems at the back end, but where Spike is heading is a process that changes what we do on a daily basis.
We are in the process of engineering the two Spike streams, one is our services business, which I believe will be increasingly commoditised and less important than it is now, and the other side is content. Now, that's been driven very much out of our Los Angeles operation.
I suppose what you're seeing is Spike in an evolutionary phase where we're moving from being a traditional strategic Internet services company to being a media company.
We're doing it differently to say LibertyOne, who did it through acquiring various assets giving them a profile.
We're doing it organically, we have the skills, resources, imaginative resources and now the financing, we also have the infrastructure through partnerships with people such as Hewlett-Packard and the Millennium Network.
Basically, we see ourselves as the Dreamworks of the Web, we are an imaginative partnership, yet at the same time we are like a Hollywood studio in that we can map out all the things that you could do with Spike, because we are a functioning resource.
Is this the way your story is being told or the way Spike really is?
There is a certain amount of self-realisation in all of this. One tells a compelling story and then if you live it out, it becomes real. The narrative of Spike binds us together.