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 (left) and chairman
Greg Cross. Photo supplied.
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
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
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
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
"We want to stay focused on retail for now.''
Listing last year was an interesting chapter for SLI, he
Listing gave SLI the advantage to raise capital but it also
meant companies approaching Mr Ryan asking him to buy them
''Lots of companies are looking to get a return for
shareholders and selling to someone like us would do that.''
''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.''