Trade Me is no ordinary website. I cannot think of any other website that has such an impact on a country than Trade Me has had on New Zealand.
It's more than just an auction house. Trade Me lists property, jobs, everything that can be bought and sold, and, more recently, through Treat Me, it moved into those "daily deals" as well.
It is New Zealand's eBay and more, and because of the success of Trade Me, we Kiwis don't have eBay. Trade Me has frightened off the auction giant from our shores!
I remember six years ago when Fairfax bought Trade Me for NZ$700 million. We in the tech press were somewhat gobsmacked. It seemed a huge amount, something that put Trade Me up there with the big boys including established utilities, telcos, farming giants and so on.
Its founder, Sam Morgan, cemented his place as a national star, his NZ$200 million share made Morgan — still in his 20s at the time — one of the country's richest men. His rags-to-riches story became part of New Zealand folklore.
Now, Morgan is investing in tech businesses, including the Pacific Fibre cable, and his words are always listened to.
Trade Me has also gone on from strength to strength, making NZ$99.2 million last year, with revenues up 11.5 per cent. It now has 2.8 million registered users and employs nearly 200 staff, and shows no sign of slowing down.
Fairfax probably made its wisest ever investment in buying Trade Me in 2006, as it will have doubled within a few years, maybe even trebled its money! Current valuations range from NZ$1.3 billion to NZ$2 billion. Should Fairfax sell 35 per cent, as per its plans, it might well get all its investment money back, while still owning nearly two-thirds of the company. Didn't they do well!
But now what? Can Trade Me carry on growing, especially at the rates it has done? I somehow doubt it.
It is interesting to see a US$1.67 billion valuation of December 2010 is midway in the valuations of today, suggesting Trade Me's soaring value may even have peaked.
Trade Me is so dominant now, almost a natural monopoly. It is a by-word in market hegemony, with Sky TV saying it wants to be seen as the Trade Me of the pay television world.
It's part of Kiwi daily life, even down to people making a living through selling on its websites, to criminal elements also taking advantage. There's barely a day without some mention of Trade Me in the New Zealand media, not just in the Fairfax-owned titles either.
If ever something was part of the country's "family silver", Trade Me would be it. Had it been a government creation, I too would expect it to be one of those "assets" the New Zealand Labour Party would keep under state ownership.
Funny thing is, as Fairfax prepares for the IPO, it has been noted Trade Me will be the biggest new entrant to the NZX in years and as big as some of the National government's impending privatisations. It too will be aimed at the "Mum and Dad" investor as much as any power utility.
This is why Fairfax is planning to sell. There is less potential for growth now. We practically all have our laptops and PCs, with so many of us already buying online. There is also too much risk in case other rivals appear and muscle in. It cannot get much better than this, so why not take the money and run, especially if your other activities need the cash.
Of course, you cannot sell it all at once, for fear of frightening people, which would in turn reduce your return. So here is the first tranche, Trade Me 1.
Fairfax will still be left with around two-thirds of Trade Me and says it will remain business as usual. But all the same, while it doesn't necessarily mean it's all downhill from here, the mountain has been climbed and Trade Me has peaked.