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Wheedle is closing, NBR Rich Lister Neil Graham said in a statement last night.
When the auction site launched in October 2012, the Mainfreight founder told NBR he was putting more than $10 million into his project to take on Trade Me.
He was the largest of three shareholders in the Christchurch-based company, and the only one with the wherewithal to tip in major funding (the 2013 NBR Rich List put his wealth at $75 million).
Last night he said the closure was because he did not want to invest any more money in the venture, plus health reasons. 17 staff had been given notice. 80,000 registered users were claimed, but I suspect far fewer were active.
It's an orderly wind-down, being managed by Ocean Partners. There are said to be two possible buyers for e-commerce technology developed by Wheedle. Traders with money still in their accounts will be refunded. There are no creditors.
What went wrong?
Nearly everything. And more than you're aware.
Wheedle launched with high-rotate TV advertising (the first of what would be at least three prime time campaigns).
But as software developer and commentator Ben Gracewood quickly alerted the world, it had gaping security holes. A buyer could change the reserve price on a seller's auction, among other problems.
The original site, developed in India (and, it seems, tested nowhere) had to be taken offline within 24 hours. It wouldn't reopen until April 2013.
In truth, the bungled October 2012 launch alone was probably enough to stuff Wheedle.
But there were two other factors that pushed it onto the back foot.
No public face
In a cruel blow of fate, Mr Graham was diagnosed with a brain tumour in the run-up to Wheedle's launch.
It required brain surgery, and thankfully turned out to be benign.
But late 2013 saw him back in hospital, this time for spinal surgery. His main life project was trying to learn to walk all over again.
Mr Graham, whose Hoon Hay Valley home was destroyed in the 2011 Christchurch quake, won't look back on it as the best two years of his life.
Last night, he said ongoing health issues had contributed to his decision to pull the plug on Wheedle.
In any event, Wheedle never had a public face.
I only ever got to speak to Mr Graham a couple of times, briefly, by phone. He showed promise as a populist pitchman, calling Sam Morgan a "bully." But then he disappeared off the radar (with health complications of course looming large).
There might have been public rumblings over Trade Me fees, but there was no lightening rod to capture the popular discontent with the incumbent, as Sir Peter Leitch did with The Mad Butcher. And just no human face at all, as plucky Sam Morgan was for Trade Me in the early days (I asked Wheedle's managing director and day-to-day boss for a photo of him and his team in the office a couple of times, which I thought would humanise things, and give people something to identify with rather than knock. But nothing emerged).
Trade Me legal threat
Trade Me founder Sam Morgan took exception to Mr Graham's jabs about his site's fees. He took several shots at him on Twitter after Wheedle had problems at launch, including: "Being rich clearly does not give you skills transferable to areas outside your domain of competence." (Tech bosses sometimes accuse media of focussing on the negative, but that rule seems to go out the window when they comment on competitors.)
But Trade Me's main role in Wheedle's demise was its implied threat to go legal if the newcomer attempted to link to its user profiles and feedback.
A central issue for Wheedle was, of course, the critical mass problem.
The newcomer might have lower fees, but the incumbent had practically everyone in the country on its books. And paying a $7.90 sale fee to Trade Me on a $100 second hand bike sale bet no bids on Wheedle (and I'm not being flip, lots of auctions did close with zero bids).
Another budding Trade Me rival of the time, Geta, struck on a way to help jump-start momentum: allowing its members to link to their Trade Me profiles, including buyer feedback. Community ratings are so crucial to auction sites, and this gambit would have been a way to effectively gain access to more than 3 million profiles at once.
Gerard Peters, who was behind Geta, told NBR that his members had a right to prove their legitimacy as traders by linking to their Trade Me profiles. Doing so would be legal, he had been advise, and to block it would be an unfair restraint of trade on a competitor.
Trade Me's then head of marketplace Craig Jordan disagreed, hinting strongly his company was willing to go to court over the issue.
"People work hard for their Trade Me feedback and there’s nothing to stop a person telling others what their Trade Me feedback rating is," Mr Jordan told NBR.
"It is a violation of our terms and conditions to have other websites link to Trade Me feedback.
"We don’t want to get silly about it, but would remind other website operators that inducing people to breach a contract is a tort and probably not a great idea. We’d suggest any website considering this sort of thing takes good legal advice before proceeding."
Wheedle never said if it was considering this front-foot move. It would have made an intriguing test case. Public sentiment would have been on Wheedle's side, and it would have put the Trade Me competitor onto the front pages for months. Would it have won? Now we'll never know.
Other routes went unexplored. Wheedle made no major social media push. It failed to exploit unrest in real estate and other segments over Trade Me's increasing dominance in classifieds. And while Mr Graham's Mainfreight background hinted at some kind of logistics play (free delivery, same day delivery?), nothing emerged on that front either.
A personal crusade
Through a rep, Mr Graham declined NBR's request for an interview this morning.
In a statement, he said: “I continue to believe that New Zealand should have a choice when it comes to online trading and that listing fees should be fair and reasonable. We also think the Wheedle business model of a paid membership and set fees has potential, but we’ve been unable to make it work within a realistic time frame.
“This has been a bit of a personal crusade for me – the name Wheedle comes from a phrase my grandmother used all the time and I’ve invested millions into the venture.
"There were doubters from the start. But we’ve given it our best shot, created a large group of satisfied customers and built some very interesting technology. But I’m afraid the business has run its course in its present form."