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Localist: Christina strikes back

“People say ‘Isn’t Localist that raspberry-coloured directory? Didn’t that die?’,” CEO Christina Domecq says.

In way, it did.

In January last year Ms Domecq was parachuted in to oversee a restructure at the directory company, set up with $25.6 million loan from parent NZ Post.

A couple of managers at the time were quick to contact NBR about the brash American (the CEO is part of the Domecq family that founded a Spanish sherry dynasty and was part of Allied Domecq before its acquisition by Pernod Ricard in 2005. She holds US and UK citizenship but spent a lot of her childhood in Spain).

It's fair to say Ms Domecq is only brash by reserved Kiwi standards. But in business terms, she didn't mess around.

Within weeks most senior managers were gone.

Ms Domecq says she also decided immediately that Localist's print directory business had to go (although it took several months before the five print editions, all aimed at a different part of Auckland, were phased out; the directories launched in June 2011).

It wasn't an easy sell to the board, she says. Localist's whole business model was based around the print editions generating cash while the online business developed. 

NBR thought that not a bad business model.

The directory business is going online, of course, as it tries to adapt to the Google age.

But the print editions of Localist served as a blunt form of marketing for the website. And there were generational and psychological factors at play. Small business owners who expect free online listings will happily pay for a quarter page in print.

But Ms Domecq had no interest running an old fashioned directory company. There was no better way to focus on the online future than ditching print.

She told NBR earlier this week that Localist is now profitable.

It has listings for 33,000 businesses; 3000 of which are paid.

Most of those who pay are on a $1200 a year plan, which offers small businesses help jazz up their Localist listing, run deals, manage user reviews and feedback, and promote themselves through social media and Google's Ad Word programme (like rival Yellow, Localist has pragmatically accepted that people looking for a good or service start with Google. Both companies are among the biggest NZ Google Ad Words buyers, as they hoover up search terms on behalf of their clients and, along with the lower-profile Gopher, are the search giant's official SME resellers in this part of the world).

But one client - a flower company - is spending $200,000 a year.

Ms Domecq wasn't thrilled at her initial press, which focused on a BBC article noting controversy around her UK startup SpinVox (previously, NZ Post has turned down NBR requests for an interview with the CEO).

And she snorts at the "jetted in headline". She says she and her husband - a Kiwi who works as a director of photography - were on their way to San Francisco when the pair learned her father-in-law had had a stroke. They kept going to New Zealand and have been here ever since.

Ms Domecq says she didn't seek the Localist role.

Her plan had been to put money into local startups - which she still has, beyond Localist. Her investments include Stolen Rum, software development outfit Unlimited Realities and a Mexican food truck, MexiKai.

But when Localist chairman Sam Knowles approached her to help out in early 2012, the challenge appealed.

In March this year, she became Localist CEO. While she had never thought about a fulltime role when she arrived in NZ, she says, let alone one with a directory company, heading a turnaround story does hold allure. She also sees Localist as a platform for helping companies tell their story. She thinks its slick approach could work in offshore markets.

For now, Localist is concentrating on expanding in NZ. It now runs listings for businesses nationwide, and has people on the ground in several North Island towns; soon it will add bodies in the South Island.

There are around 100 staff, the company is in the black, and it has no need to ask NZ Post for further cash, Ms Domecq says; expansion is being funded organically.

Still, it's a tough game. Yellow spent millions on its spoiler Yellow Local project. And it has only got tougher since US company Yelp - often cited by Localist's founding CEO Blair Glubb a a role model - launched in NZ in May, hitting the ground running.

NZ Post hired Grant Samuel to look at options for Localist, including bringing in an outside investor in Localist. There was talk it could be sold altogether.

But in the end, the process petered out.

In June, NZ Post spokesman John Tulloch told NBR, "Several parties expressed interest during the capital raising process.  However, New Zealand Post and parties could not agree terms.  New Zealand Post remains open to offers in relation to capital partners."

Did Ms Domecq consider investing in Localist herself? (Industry scuttlebutt holds that NZ Post brought her in not just as an advisor, but potential buyer).

"They didn't ask," she tells NBR.

ckeall@nbr.co.nz

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Comments and questions
5

Localist is profitable ... that's great news! NZ Post has sunk in close to $20m on this investment / lemon and they will never get that money back. About time NZ Post realises this and walks away.
Who is being held accountable?

Surely that money has to be paid back??

Or is why they are profitable.....

There are people at the top of NZ Post that should have fallen on their swords for this appalling idea. So what if it makes money now. Will it ever recover what has been lost. Probably not likely. The taxpayer deserves better.

NZ Post have made a lot of similar errors, take a look at their foray into Australia with the Courier businesses. A major disaster. There have been others as well but they try and hide them, and of course being basically a Govt department they can.

Localist is what you get when you collect the usual suspects as executive staff without any board member having a clue about the target market or the way to approach it. Glubb repeated all his past mistakes and learn t nothing from the online market, but was still given a brief to proceed over the cliff, which any savvy online pundit could have told them was an old print media telemarketing idea posing as a whizzy online-switched-on business. It never was. So now to survive the business has to take the form it should have in the first instance. Countless people could have saved all of our money if only they had been asked. You look to the usual suspects this is what you get.