Aviation, tourism and energy writer for the Business Herald

Big Read: The travel firm that made its NZ owners $85m

Left to right: Online Republic shareholders Matej Drobnic, Sue Neale, Dmitry Ruban, Rohan Marx, Online Republic co-founder Mike Ballantyne, Markus Von Nagy and Vaughan Magnusson. Photo / Jason Oxenham
Left to right: Online Republic shareholders Matej Drobnic, Sue Neale, Dmitry Ruban, Rohan Marx, Online Republic co-founder Mike Ballantyne, Markus Von Nagy and Vaughan Magnusson. Photo / Jason Oxenham

Mike Ballantyne looked around the advertising agency where he was working at a top level and realised it was time for a serious change.

"Here you are on $120,000 a year and kids were coming in working for their bus fares and they were really talented. They were a lot fresher than I was at that point so it was quite frightening."

It was 2003 and the big spending brand ad campaigns were starting to wind down and the industry was being shaken up.

"I could see the writing on the wall with what was happening with the online space and I thought although agencies are very good at reinventing themselves they had a fairly rocky future ahead," Ballantyne says.

"My wife (Jen) and I had had a child and I had that pressure as well. For the first time in my life I felt I have to go to work to pay the mortgage."

So he took a leap of faith and with his late brother, Paul, founded an online travel company that started as a car rental site and then added motorhome rental and cruise booking channels and most recently an e-commerce search business under the Online Republic umbrella.

That move has just had a gigantic pay-day after a sales process codenamed "Project Gold".

Ballantyne had 47.5 per cent of what became Online Republic, which has just been sold for $85 million to Australian booking site Webjet.

"It's a very satisfying feeling but there's also a tinge of sadness that Paul's not here to enjoy it but I'm delighted for our other shareholders."

On Queen's Birthday Monday the other shareholder staff who hold seven share parcels between them also became seriously wealthy when listed company Webjet signed the deal.

Among the shareholders is a website builder originally from Moscow, a Slovenian programmer and an old family friend who became the company's accountant.

"When Paul and I were selling the dream to them we were blindly optimistic that something like this would happen one day - we had nothing and we were just selling the vision," he says.

Mike Ballantyne was working at Whybin\TBWA when he felt the need to get out of advertising, an industry that he says took itself way too seriously.

His wife Jen was working at Colenso and also looking for a change.

It's a very satisfying feeling but there's also a tinge of sadness that Paul's not here to enjoy it but I'm delighted for our shareholders.

"We were looking at something we could both jump out of the industry into. I started talking to Paul who was reselling Yellow Pages ads and had seen the migration in numerical terms into the online space."

Car rental was a spectacular example of that. Ads were drying up in print while digital channels were booming.

"He was an entrepreneurial guy. We were good mates with complimentary strengths and we settled on this idea of an online travel agency," he says.

But it got off to spluttering start.

With his design flair Ballantyne put together a website called Fetch (playing on the the idea of a dog retrieving deals) but got an external company to build the search engine. It didn't go well as customers had to go through a user-unfriendly two-step process to book.

"It was a very poor experience for the customer - it was really clumsy."
The brothers made another mistake when they paid $9000 to a search engine optimisation company that "promised the world" with ad words and online rankings.

"Three weeks later we were sitting on our hands wondering what was going on."

An inspired move changed that.

Online Republic founders Mike Ballantyne (L) and Paul Ballantyne at Leeds Castle in 2009.
Online Republic founders Mike Ballantyne (L) and Paul Ballantyne at Leeds Castle in 2009.

Online Republic has proudly described itself as "under the radar" in this country but in the limited media coverage it has got during the last 12 years, a $39.95 book has been a big part of it.

Mike Ballantyne bought the book 'Google Adwords for Dummies' and learned how it was done.

"We put up an adwords campaign and in 20 minutes - 'bam' the first booking - we just started getting the bookings coming."

There were plenty of hiccups after that but the company got considerable early momentum and insight from the book - whose author has contacted the lanky 46-year-old since the sale to congratulate him.

The brothers also took an early decision to get inhouse experts and lock most of them in with equity stakes in the business which has 90 per cent of its sales overseas.

"What we realised pretty quickly is the need to get away from the ad business where you have a number of different experts sitting around a table - the analogy is making a tv ad - the director will think this a stepping stone to making a film, creatives will be wondering about awards and clients wondering, 'Will this work?'"

In came Mark von Nagy who rebuilt the site to be more search engine friendly. All development shifted in house with the addition of talented programmers including Dmitry Ruban who built the original booking engine and Matej Drobnic who developed a website templating system.

It makes you who you are - you just know the most important things in life aren't things. It's people, it's love, it's health, you cherish what you've got.

What was then known as iMall, it became a growing player in car rental in New Zealand, entered the motorhome category, and then embarked on global expansion under Rohan Marx, adding supply and sites in over 100 countries around the world.

Next came cruises which gained "incredible traction" in a few months as the Australasian cruise market was starting to boom. Then most recently it added a search marketing agency run by ex-Googler Brad Guthrie.

The Online Republic name came in 2010.

During its most recent 12-month period, the company generated total transaction value of $229 million, revenue of $40 million and pro-forma operating profit of $12 million. Its staff has grown to about 140, most in Auckland with branches in Melbourne, China and the Philippines.

Ballantyne says while the company has ended up with three successful travel categories under brands AirportRentals.com, MotorhomeRepublic.com, CruiseSaleFinder.co.nz and CruiseSaleFinder.com.au.

However, other ventures sailing charters, coach tours and hotel booking sites, were tried and failed.

Ballantyne was rocked in early 2011 when Paul died after a six-month battle with melanoma. The Ballantynes had grown up in Gisborne and Paul loved the sun and the outdoors.

 Mike Ballantyne and Jen Ballantyne at their Herne Bay home. Photo / Nick Reed
Mike Ballantyne and Jen Ballantyne at their Herne Bay home. Photo / Nick Reed

"After he died I really consolidated what we were doing. We didn't want any distractions - it was a really difficult time and we were in mourning for a couple of years. He was my best mate as well as my brother," he says.

Ballantyne and Jen are Christians. He says that helped during that time when he learned what was important.

"It makes you who you are - you just know the most important things in life aren't things. It's people, it's love, it's health, you cherish what you've got."

Business got tough around 2012 when Google changed its ranking system for niche sites.

"You sometimes wake up and you've lost a third of your bookings."

At one point Ballantyne and his wife contemplated selling the family house to help fund the business through a lean patch.

"We decided that if we drew down to $400,000 we'd sell our house. We got to $390,000 so we got a real estate agent around and to brief them to sell it. It was very stressful at the time."

But it turned the corner when the company developed a better understanding of adwords, hired content writers and built white label sites for other companies including motorhome bookings for Air New Zealand and, two years ago, cruises for Webjet. That launched the relationship with the Australian company.

As the business started to grow strongly Ballantyne in early 2014 hired chief executive Vaughan Magnusson a chartered accountant with an entrepreneurial background who had just sold daily deal site GrabOne.

Above all we want to enjoy the moment but we're not keen on getting too carried away - I'll buy a painting to celebrate.

"Managing people and running a big business is in the red zone for me," Ballantyne says.

Magnusson said he made sure the business had the right people in the right seats and made the call to turbo charge the business as well.

He also drove the sale process to Webjet as two other companies were also interested.

"We didn't have a very protracted negotiation. They came over for some high level due diligence and got them pretty enthused about our business."

Webjet - much smaller than big rivals Expedia and Priceline which are active in this region - matched Online Republic's renegade, underdog culture.

It is something of the Ballantyne way. While working with another brother Steve in Tauranga in an ad agency partnership they niggled big city rivals.

"We had that attitude of taking it to the Auckland agencies and we used to tell clients we wouldn't lunch on their budget - all those things that hit a raw nerve and we managed to build a good business out of that."

It took three and a half months for Project Gold to hit the jackpot.

Ballantyne said he went into the business knowing there would be an exit but with no idea when that would be.

"A couple of years ago I would say it's probably a long way off but we had a fantastic year and a half. The business conditions were right - low interest rates, and we had a lot of people circling around."

Ballantyne made over $40 million from the sale although around 20 per cent is held in Webjet shares (which spiked following the deal) and a portion is held in escrow to meet warranties. He's had calls from financial advisers during the past couple of weeks.

"It feels very satisfying but there's a responsibility that comes with that as well."

He's reluctant to talk much about his family - Jen and he have two children, a house in Herne Bay and a place on Waiheke Island. They actively support charities.

"Above all we want to enjoy the moment but we're not keen on getting too carried away - I'll buy a painting to celebrate."

Mike Ballantyne's startup tips:

• Do something - start walking down a path and other doors will open up. They may be different doors to what you thought they may be.

• Don't be overly worried about finding the big idea - too many people do nothing because they're waiting for the perfect idea. Get in and go for it.

• You're not going to do it alone. Do everything you can to find like-minded people and take them on a journiey. Make sure you lock them in so that you know you'll have allies for a decade or longer.

Biography:

• Age 46.

• Married to Jen with two children.

• Lives in Auckland.

• Went to school in Gisborne.

• Diploma in apparel design and administration at ATI.

• Extensive experience as a creative in the advertising in NZ, London and Melbourne.

• Co-founder of what became Online Republic.

• Now a cashed up adviser to the firm and shareholder in buyer, Webjet.

- NZ Herald

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