Entrepreneur rebounds from ‘Son of Ferrit’ receivership to head Telecom’s new Skinny Mobile brand
On Friday, NBR broke news that Telecom will launch Skinny – a new mobile brand that will complement XT - in the new year.
Skinny represents a strong come-back Paul O’Shannessey, who is leading efforts to create the new brand, and now heads unit of around 20 staff nested within Telecom.
Mr O’Shannessey was last seen in NBR pages with his e-tail company Hubsta.
In August 2009, Hubsta partnered with YahooXtra (at the time 49% owned by Telecom) on an online shopping portal. Hubsta also drew orders from TheDeal (a site co-owned by Mr O’Shannessey), and a shopping channel on the NZ Herald's site.
NBR was a little dubious at the time, labeling the venture “Son of Ferrit” - a reference to Telecom’s recently shuttered, $10 million experiment in online shopping.
Hubsta went into receivership in November 2010, owing more than $1 million.
The second receiver’s report, covering 16 November 2010 to 15 May 2011 and released in July, says $175,000 was paid out during the period.
Receiver Simon Dalton, of Gerry Rea Partners, confirmed to NBR this morning that the amount owed by Hubsta had ballooned to more than $5.6 million as more information had been gathered on creditors.
Mr Dalton did not anticipate any more money would be recovered.
A trade sale raised $50,000. The sale - to Buyzar, one of Hubsta's creditors - covered computer systems, intellectual property and office equipment.
That left the cupboard bare. "A lot of money was spent developing systems that were never finished, and on keeping the company running," Mr Dalton said.
The July 2011 second receiver's report notes an irregularity flagged in December last year had still to be resolved:
Questions still remain over the funds at hand on the date of our appointment. While the company’s records indicated that proceeds from sales were kept in Trust to be paid to suppliers (or refunded to customers), our investigations have suggested that this practice was not adhered to by either the directors or the former receiver. The relevant authorities are investigating.
Mr Dalton said this morning that he had closed his investigation and forwarded his findings to a solicitor with the MED.
A spokesman for the ministry told NBR the complaint currently under investigation related only to the former receiver, Lance Gilbertson. The MED was in the early stages of its inquiries.
Why did Hubsta fail?
“We just ran out of money at the end,” Mr O’Shannessey told NBR this morning. The service was growing at 24% a month, he said, but lacked capital to keep pace.
He demurred on why Yahoo did not put money into the partnership.
At the time, Yahoo NZ chief executive Kevin Bowler – sensitive to Ferrit comparisons – told NBR that his company provided Hubsta with a ready-made audience, and would clip the ticket on sales, but that all the risk lay with Hubsta. No Telecom investment was on the line.
“Telecom didn’t need to approve this deal as the investment case sits with Hubsta,” Mr Bowler told NBR.
This morning, Mr O’Shannessey said he got of “good learnings” from the Hubsta experience, and a lot of good contacts.
Mr O’Shannessey and his partner Kelly O'Shannessey were the largest shareholders in Hubsta.
Other shareholders included Donna Fyfe (wife of Air New Zealand chief executive Rob Fyfe) and Sir Stephen Tindall’s K One W One.