Sam Morgan

In business we are looking at different New zealand entrepreneurs. I have already looked at Peri Drysdale, now I looked at Sam Morgan. 

In early 1999, 23-year-old Sam Morgan was looking for a second-hand heater to help him survive a draughty Wellington flat.  Being computer-savvy, Morgan turned to the internet to help with his quest, but couldn't find what he wanted on any New Zealand websites.  That experience inspired him to create Trade Me. There was still plenty of room for an entrepreneur (even one on a Kiwi-sized budget). “I literally sat on the couch and built the site on a laptop over a five- or six-week period." Once the site was completed, Morgan scraped together $8000 through overdrafts, credit cards and savings and launched Trade Me into the wilds of cyberspace.  Success wasn't exactly instantaneous. 

Morgan persevered - but didn't give up his day job. After a few months, Trade Me started to gain a little bit of traction, signing 5000 members and attracting some 200,000 visitors. At that point, Morgan started getting offers for the fledgling business.  In typically cheeky Kiwi fashion, he listed Trade Me for sale on eBay, with a "buy now" price of about $1 million. He didn't attract any bids before eBay withdrew the auction.

With the company still only months old, he sold close to half the company to several former Deloittes colleagues for $75,000.  As a result he was able to start working on the business full-time. Morgan was working longer hours and earning a lot less than when he was a consultant, but there was always the hope that some day it would pay off.

Even with Morgan's full-time attention, the next year was a struggle.  Listings on Trade Me were originally free, and advertising was expected to pay the bills. It wasn't working.  We had to turn the charging model on. "We did it in a couple of stages: first we introduced premium fees, for bold print and other enhancements to the basic listings. And we had reasonable usage of that but certainly not enough to pay our bills.  "So in September 2000 we introduced success fees [a percentage of the final price for sold items] and that went pretty well. And so that basically saved us from the cliff."

So what does it take to run New Zealand's most popular website? A steadily expanding team of technical, customer service and administrative staff, now totalling 52. And they're not in it for the glamour.  The staff who inhabit this open plan environment don't take themselves very seriously but they are intensely passionate about their work. They're a close knit family but only one is a blood relation - Sam's sister, Jessi, was his first employee back in 2000.  Now she's head of operations for Trade Me - and emails have exploded to 1000 a day - and that's not counting the junk mail, a hefty 10 million pieces of spam every month. And amid of all this chaos - no private office, comrade - sits Sam Morgan, now a couple of hundred million dollars richer, but still the same fellow who used to answer customer service emails at three in the morning back in 1999.

So why sell Trade Me now? There are seven hundred million good reasons. Morgan would have been perfectly happy to stick with business as usual - Trade Me is very profitable, thank you, with projected earnings of $26 million in the 2006 financial year, $44.8 million in 2007. But even with those sorts of earnings, it would still take more than a decade to accumulate $700 million.

Much has been written about Morgan. Pocket snapshot:: born in 1975, left school after UE, spent his seventh form year in Germany, came back with no idea what to do next. The university dropout had three post-university jobs in quick succession, saw a gap in the market (and a chance to develop his web-building skills) and came up with Trade Me. Took on global giant eBay at its own game - and won. Why did Morgan set up Trade Me in the first place? To quote from an Unlimited magazine interview in February 2000: "I wanted something where I could be a high achiever."

Questions:

1. Where did Sam Morgan’s interest in buying and selling come from? He wanted to buy a second hand heater but couldn’t find a site in new zealand so he made one himself 
2. Describe the early days of Trade Me. bad, He didn’t make much money, people were listing things for free, expecting all money coming from ads.
3. How did Sam Morgan turn Trade Me into a multi-million dollar enterprise? “First we introduced premium fees, for bold print and other enhancements to the basic listings. And we had reasonable usage of that but certainly not enough to pay our bills.  "So in September 2000 we introduced success fees [a percentage of the final price for sold items] and that went pretty well. And so that basically saved us from the cliff."