Focusing on retail works for SLI

SLI Systems chief executive Shaun Ryan (left) and chairman Greg Cross. Photo supplied.
SLI Systems chief executive Shaun Ryan (left) and chairman Greg Cross. Photo supplied.
As far as good ideas go, coming up with a way for retailers to get better results for customers searching their websites is up with the best. Business editor Dene Mackenzie talks to SLI Systems chief executive Shaun Ryan about how the company started and where it is going.

SLI Systems chief executive Shaun Ryan was just back from San Jose when he caught up with the Otago Daily Times for an interview on the company which had just celebrated its first anniversary as a listed entity.

The San Jose meeting was about getting the ever-expanding team together for some training and a bit of ''ra-ra'' to celebrate the first birthday.

''Amazing how many people we have now. I can't exactly remember who was there.''

The idea for forming the original company came one Sunday morning in 1998 from Shaun Ryan's brother Grant, who was lying on the couch nursing a hangover.

Search giant Google was not yet around and search sites back in 1998 were full of spam.

Grant Ryan asked why not bring the most popular site to the top of the searches by internet users.

On the strength of the hazy Sunday morning idea, the brothers formed Global Brain.

Grant had a background in mechanical engineering and Shaun had software expertise.

The idea proved to be enormously successful for the brothers, who went on to sell the company to NBC Internet (NBCI) for $32 million in 2001, right at the top of the dot.com boom.

''This went from an idea to selling the whole company in a few years. Unfortunately, we didn't sell for cash. We sold for shares and the value of the shares plummeted from $US106 [$NZ120] to $US2.19.

"The NBCI arm was closed and 30 people lost their jobs. Grant got some money out as he was the major shareholder - enough to go his own way.''

Others, including Shaun Ryan, decided to form their own company, SLI Systems, and bought technology back from NBC.

Mr Ryan said SLI was used to improve searching on websites.

The company has been building in every sense since it started.

In 2003, the company made a strong argument to retailers for improving searches on websites.

If consumers could find the product they were seeking, they were more likely to make a purchase.

SLI started selling in the United States and its first customer came from there, he said.

''We don't have a sales force in New Zealand. We have 30 or 40 sales and marketing staff in the US, an office in London with 20 people and a presence in Melbourne, Japan and Brazil.''

However, SLI was based in Christchurch, where Mr Ryan lived. But he was quick to point out he was born in Invercargill and, on average, he could claim he was from Dunedin.

The main team of developers was in Christchurch with a small group in London. SLI had a relationship with the University of Otago and employed graduates where it could, he said.

Asked how the SLI software worked, Mr Ryan said searches on The Warehouse websites were powered by SLI.

As an example, if someone had typed ''laptop'' into the Dick Smith website a few years ago, the first item shown was a pink laptop bag. There was ''laptop'' in the name, but it was not what most people were searching for.

Now, typing in laptop meant the most popular laptop was shown at the top of the search. Every person's search improved the experience for others, he said.

SLI also ran site navigation. On the Dick Smith website, a customer could click on category, refine the search to electronic, laptop, Apple, and they would be directed to the product most likely to meet their search requirements.

''A study shows there is a 50-50 split between someone typing in laptop or going to the category search, with the latter moving to direct search if they don't find what they like in the first instance.''

Selling SLI software meant getting in front of customers who could see value in what the company was offering, Mr Ryan said.

The challenge was for SLI to ''get its head above the crowd'', show it can quickly get profitability for customers.

''There are a lot of companies in the US selling a lot of things to retailers. E-commerce is a fast-developing industry. If we show them we can make them money with a fast return, the e-commerce manager looks good.''

Working with large retailers helped build credibility for SLI, he said. The pitch could be along of the lines of ''we are working with retailers like you''.

Asked about the potential for the company, Mr Ryan said every website needed a good search function.

In earlier days, the company had a wide range of customers, including city councils.

The SLI software helped ratepayers navigate around the council websites for information.

But councils found it hard to justify paying for the service.

SLI had publishers as customers and the Dilbert cartoon site was powered by the company.

''We have no real need to look elsewhere from what we are doing.E-commerce is a fast-growing area as more people buy online.

"We want to stay focused on retail for now.''

Listing last year was an interesting chapter for SLI, he said.

Listing gave SLI the advantage to raise capital but it also meant companies approaching Mr Ryan asking him to buy them out.

''Lots of companies are looking to get a return for shareholders and selling to someone like us would do that.''

dene.mackenzie@odt.co.nz

 


Edison Research

''SLI's first results since its initial public offering show revenue and annualised recurring revenue growth in line with management's expectations, despite lower-than-forecast customer sign-ups, thanks to an increased focus on larger customers. This focus on larger customers could lead to improved medium-term margins, so lower customer growth is not a concern as long as larger customers are being signed up.''


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