Fred Schebesta

Fred Schebesta is well known to SmartCompany readers as an online traffic guru and the former owner of digital agency Freestyle Media. He sold that business in 2007 for $1.3 million and remained working there until October 2009 when his earn out clause ended and he went back into business for himself with a suite of financial product comparison sites including creditcardfinder.com.au, homeloanfinder.com.au and savingsaccountfinder.com.au.

Today he talks about building a business the second time round, how internet businesses are changing and why SMEs need to be very careful about using aggressive SEO strategies if they don’t want to avoid the wrath of Google.

Let’s start with a bit of a run down of what you’ve been up to in the last little while. When did you depart Freestyle Media?

I left in October 2009.

And was that sort of a planned departure or were you ready to do something new?

I guess I had sort of done my tenure myself and I had hit the end of my usefulness with those guys and I just felt it was a good time to leave. That’s the political correct answer. Did you want a bit of controversy James?

Well, is there a bit of controversy?

There’s always a bit of controversy when it comes to myself.

Right. So did you have an entrepreneurial itch to scratch or did you already have a big business idea brewing?

In all my travels over the seven years which I was working on client stuff I had seen many, many business models. What I essentially figured out was that providing services to people, I was never going to make as much money as they were going to earn, because obviously by simple mathematics if you pay someone for a service, you’re trying to make more money than you pay them for the actual service. So by that rationale I’d essentially figured out that instead of me telling them what to do with their business and how to make money out of it, I was just going to go and make my own.

So had you spotted an opportunity or did you cast about for the right thing to get into?

Well, when I sold Freestyle it was actually made up of three companies. I sold two of them but the third one I didn’t sell. So what happened was I just kept it on ice and then I went back and started it up again and basically went from there really.

If I was going to look back and give some advice it is that I’d be very, very wary and careful about when you’re selling your business, what you’re signing yourself up for. Because when you get those earn outs, you’re basically bound to them. Every single one of your ideas, anything you come up with, is going to be theirs. And so obviously you have to be prepared to sacrifice anything that you’ve come up with before and put it on ice. And that was fine, I learnt a lot working for a publicly listed company but I’m not really a company man, if you know what I mean James.

Yes, it’s quite a different mindset from the entrepreneurial mindset, isn’t it?

It’s very, very different. I felt like I was back at school.

Well, you’ve left school now, so tell us about your new businesses.

Basically what I decided to do was combine my internet marketing skills with the fundamental challenge I think a lot of Australians have, which is what financial product do you go with? So I set up this consumer advocacy website where we educate and help people by publishing the rates and telling them what the actual deal is in terms of, if I go with a St. George card I’m going to pay 6% less than if I had a Com Bank card. The average Australian has $3,500 worth of credit card debt which is actually quite serious.

The main way that we get our customers is obviously as you could imagine through the internet. We’ve had some success actually through some press and things like that. You might have seen us on TodayTonight and things like that, and essentially what I’ve found is the second time around you learn a lot. It’s good to be coming around the second lap if you know what I mean. I took a lot of hits on the first lap.

So just quickly explain the business model.

Very simple. We compare the cards, people come to our site and if they apply, we get a commission. The key to it is that we essentially tell the banks “if you want a customer, you can pay us and you’ll only ever pay us when you get an approved, activated customer”. And that is very different from my previous business where I said “we’ll market your products and we’ll do our very best to make sales for you”. This is just the simplest sales process that I’ve ever had my entire life.

I know some of these sorts of comparison sites have gone down the route of providing completely independent comparisons and others have featured products that are sponsored. What side of the street have you gone down?

We do a bit of a mish-mash of everything. We obviously provide tables which compare the products but then we will have a feature product if there is a special or a limited time offer.

There’s a lot of competition in the credit card space and there should be because there’s a lot of profit in it, so essentially what happens is that the banks come in and they try offers. So what consumers can do if they are smart is they watch our site and that’s what people who use our site and newsletter do, they watch our site and sign up to our newsletter and they just jump on these test deal.

The banks will give these little special deals, they’re not available in other places and they won’t put it on the TV because they don’t want to broadcast it, they try it in these smaller channels. So they come to us and say “guys we’re thinking of running this card with no annual fee” and we go, “that’s interesting let’s give it a try” and we suggest to them some spots to put it up and then the consumers obviously vote with their clicks. It works really well for the banks, it’s a great channel.

So I guess you’re about eight months in, how’s the business tracking from a financial point of view?

Mate, to be honest I didn’t think it was going to go this well.

Can you give us a bit of a clue as to some of the metrics?

Let’s say what we’d be doing six figures rather than five a month.

That’s a healthy start. So second time around, what are a few of the traps you might have avoided or lessons you might have put into practice this time?

There’s quite a few actually and I’ve been thinking through this. I think one thing I learnt a lot about, and this is something which kills every business, is about staff. I’ve put a much more rigorous process of hiring and performance and also incentivisation. I just really found that because I’ve got the model a lot more on target, everyone has their natural incentive to work because there are more rewards to easily get – that’s obviously more of an advanced HR thing which I never really got right the first time.

The other thing is that anytime we get a problem, so say there’s a legal problem or there’s a big IT problem or someone gets really annoyed, this time around I don’t get flustered. I mean, I just don’t freak out, I’m just calm about it. Bigger problems happen than ever before, and I’m just like “well we’ll just approach it the same way as we approached the other one and we’ll just work through it” and I think that confidence brings confidence to everyone else. The first time around, anything would happen I’d freak out, I wouldn’t freak out, I’d just go quiet as opposed to talking it through and having a plan.

And that actually allows me to sleep at night a lot better. Last time I used to be worrying and be anxious continuously and get that entrepreneur’s thing where you don’t sleep but when you sleep you’re actually thinking about the business but you don’t know if you are sleeping! You’re still thinking about the business all the time but the difference is you don’t waste time thinking about things that you don’t need to. You get to focus on the main business driving it forward. I know that’s sort of clichéd but literally I think it’s just a clarity thing.