The next wave: Potent mix of talents steers eCargo ahead

By PAULA OLIVER

Phil McCaw politely describes his job as partnering money with talented people.

Beneath the simple explanation is a potent mix of young software builders and experienced IT consultants, whose work in designing an internet freight hub is considered so good that Carter Holt Harvey has poured $660,000 into it.

Known as eCargo, the website allows companies to post their freight requirements on an e-board and have them bid for by member transport companies.

Mr McCaw's spotlight-shy team entered the news a month ago, when Carter Holt chief executive Chris Liddell announced eCargo as the first destination for part of his company's venture capital fund.

With a 49 per cent stake, Carter Holt is clearly in for the long haul, but Mr McCaw is keen to make sure eCargo remains independent.

"Marketplaces are popular at the moment, and they are popping up all over the place," Mr McCaw said. "We can see the others as an opportunity or competition, but either way it's critical for any marketplace to be independent."

In the short-term, Mr McCaw plans to further dilute eCargo's ownership by taking on more investors, so that a large group can get the benefit of transaction fees.

Gaining outside investment for e-Cargo has been no accident. Instead, it has been the result of two-and-a-half years of planning by Mr McCaw and his associates.

Leading the charge is his company Abbott McCaw Richter and Associates, a Wellington-based IT consultancy that channels its cash into Ecentric Ventures, which Mr McCaw describes as a technology incubator. "We always intended to channel the cash (from the consulting business into Ecentric) from day one, because we love creating new things," Mr McCaw said. "We had the goals of innovation, freedom to act, and sustainability."

Ecentric now employs 10 people, including software developers with an average age of 26. The closely knit blend of youthful enthusiasm and experienced consultants hold regular "innovation sessions" to come up with ideas for new businesses.

Their first two creations were Trade Me, an internet-based auction site, and Safetrader, a security package for online transactions.

With both of them up and running, the team's attention moved on to the idea of a freight website.

"The idea came from within, and at the same time a guy from the rural sector approached us and helped us to define the business," Mr McCaw said. "We then heard through a press release that Carter Holt had launched a venture capital fund, and I decided to make an approach."

Mr McCaw describes what followed as bizarre.

"Everything was strangely aligned," he said. "They were keen to invest in e-commerce, and freight was something that they were heavily involved in, so it all just fell into place. It was the right time for everyone."

The modest explanation again belies the work Mr McCaw and his team put into the product.

Attracted to freight because it is a cross-industry marketplace, Ecentric worked on making it easier for customers to deal with the fragmented industry. With electronic matching technology picked up from its Trade Me site, Ecentric made a few changes and looked for investment.

Once Carter Holt came aboard, the site gained guaranteed volume that demanded the involvement of large freight operators.

eCargo has now been up and running for four weeks, and Mr McCaw is embarking on a mission to secure the services of the country's three largest transport operators, who account for up to 60 per cent of freight movement.

"Our strategy is to promote within Carter Holt, and now we're trying to win over operators," Mr McCaw said. "We'll focus on large traffic routes first, and roll out others later."

A potential market exists overseas for the eCargo format, but Mr McCaw is aware of a company in Australia with a similar product.

To combat the competition, he plans to target particular industries and keep his market tightly defined.

Customers using eCargo will notice it is an evolving website, because Mr McCaw believes it is best to get the product out there, and then adjust it as feedback comes in.

"We are not a business that stands still. We work hard, and adapt, which is a tremendous strength for us," he said. "You can't be all things to all people when you first go out there, so it's got to be about evolution rather than revolution."

A profitable spin-off of the business is the sale of its software overseas. Rather than be involved in a number of business to business marketplaces, which Mr McCaw admits do not make money for their first 12 months, the Ecentric team can make cash from its software sales, like the Safetrader sale just secured in Japan.

"The eCargo software is something that can be put in a box and sold worldwide," Mr McCaw said. "We see a big market for Safetrader overseas, and even as part of eCargo, because the freight industry is notorious for late payments."

The software sales should solve any short-term profit problem, and Mr McCaw said the IT consulting business would offer long-term value.

Kiwis will be glad to know that Ecentric's future lies within New Zealand. Mr McCaw encourages talented young staff to do their "OEs" just the same as he did, but he is also working hard to build enough overseas contacts to keep them within the company while they travel.

"We love New Zealand, and we want to make a successful business here in New Zealand," he said.

"For every five who leave, another five come in, so we have every reason to stay here."