the back room

I've been meaning to write this post for a few months. Now that Stuart Nixon has ceased to be a substantial holder and I haven't worked at Nearmap for a number of years I feel like the time is right. I'm a former Nearmap software engineer and would like to share my knowledge of the company. In future posts I'm hoping to give my analysis on the current state of Nearmap and express why I'm still a believer and holder.

I'd like to start by mentioning that I've been a shareholder for the last few years and will continue to hold for the foreseeable future. Do not take the following as financial advice and make your own investment decisions.

------------------------------------------------------------------------

I joined Nearmap shortly after they were acquired by Ipernica and remained an employee for a couple of years. I left the company after Simon Crowther became the CEO and before Simon Cope left as CTO. Upon joining I was soon struck by how intelligent the technical team were. I would say they were some of the smartest scientific programmers I had come across. However on the process side of building software I always felt we were lacking. Judging by the current state of infrequent releases but without internal knowledge I still feel the same way. The world has moved on from using agile software development on its own. It is widely accepted that you need to use agile software development in conjunction with lean methodologies to prove your business hypothesis are correct whilst building the minimal amount of working product. Nearmap likes to call themselves agile but I felt they never went far enough.

I also felt the internal mandate that storage and hosting had to be built and maintained in house was a massive waste of resources. The cloud had just started to take off and made complete sense for product that had wildly varying resource consumption. For example we always had a lengthy queue when processing surveys because we didn't have enough servers available. To get around this we would shift surveys around in order depending on how important we deemed them. The fix for these problems were simple but unfortunately time consuming and expensive.

Eventually the call was made to switch to Amazon Web Services which afforded the business much greater flexibility and performance around survey delivery. It was as simple as spinning up a few more Amazon EC2 instances to churn through the backlog and bam you've suddenly got enough servers to process that survey today that will help you sign that client tomorrow. I see the work put into transferring Nearmap to AWS as one of our strongest assets going forward. Nearmap was never going to be able to hire the best datacenter and server engineers. Make this tough but already solved problem an issue for someone else and focus on the unique things you do best. It was Stuart's tightly held belief that controlling the entire stack was essential to the success of Nearmap however this was clearly not shared amongst the company.

Stuart Nixon. Boy is he one enigmatic guy. Incredibly brilliant when it comes to building ground breaking product but IMO not realistic in terms of future company vision. I have a lot to thank him for. He was a harsh critic but ultimately brought out some of my best work at the time. He certainly knew his stuff and inspired me dive to a technical level I didn't know I was capable of. My key gripe was that Stuart would regularly compare Nearmap to Google and say we were competing directly against them.

Stuart Nixon, April 2010
"We have no intention of being bought by Microsoft or Google. They are our competitors"

This is partially true. Nearmap is competing against Google and Bing Maps. But these are utility applications provided for the greater good of humanity as well as a must have app to sell more Android and Windows phones. Yes Google does charge some map developers for heavy use or serve up ads on their consumer product. It is however common knowledge that Google maps revenue is insignificant on its own. Now this is not to say that maps are not valuable to Google. Just not on their own. The revenue figures Stuart likes to quote are for all of Googles operations in Australia.

Stuart Nixon, April 2010
"Obviously as I said earlier, Google makes perhaps 700 million (dollars) a year in Australia alone and that represents the size of the media market that we are playing in"

Fortune, July 2010
"Yet analysts estimate that 91% of Google's revenue still comes from the AdWords and AdSense business model that Google built around Page and Brin's breakthrough PageRank algorithm. Even more telling, an estimated 99% of its profit does too"

Google makes the lions share of it's revenue via search. Search combined with an adwords like platform is the greatest business model created in internet history. This provides Google with a very nice operating margin to play around in other fields such as video, phones, mapping and self driving cars to name a few. The premise is simple serve up snippets of relatively cheap textual content with highly contextual ads. Maps on the other hand are very expensive to serve up due to storage and bandwidth costs for images that are much greater in size than text. Personally I found this very frustrating as it is next to impossible to enforce terms and conditions of usage on anonymous users. If the T's & C's can't be enforced it gives businesses which would find clear money saving value an easy way out not to pay. And so they did. One example was the WA police force. Many times the police were warned that they would need to pay a licence fee for the service. On nearly every occasion they would come up with an excuse and try to delay whilst continuing to use the service for free. The police were so stupid they announced they used Nearmap to locate marijuana plants in Lake Gwelup, Perth. In the end an agreement was made to purchase a licence before CHOGM 2011.

From my understanding most of the resistance against putting up a paywall came from Stuart. Simon Cope had put together a cost/benefit analysis and it had shown that most users were costing us a ridiculous amount of money. I think the main reason for this was that Stuart was still attached to his idea of a "media business" to rival Google. I certaintly didn't agree with everything Simon Crowther was doing as CEO but proposing and fighting for the paywall was worth bringing him on board. With this as the building block I believe Nearmap can build a sustainable and defensible business.

The murmurs around the office were that Stuart and Simon were not the best of mates. Amongst the office chatter we couldn't wait to hear about the latest blow up from the last board meeting. From the sounds of it they were at each others throats. This lead to decision paralysis and almost crippled the company. I believe the boardroom animosity was the reason for Stuart stepping down from the company entirely. After Nearmap launched it barely changed in the following year and a half. Yes we made the site faster, fine tuned the existing features and added a few small but helpful changes like the measuring tool. But it was not the big bang that Stuart wanted. From my conversations with Stuart I'm fairly sure he hadn't fleshed out his media strategy. This was clear by his inability to express and document what he wanted us to build. We ended up spending about 3-4 months designing and building a user generated content portion of the app that was bland and barely useful. It was scraped very shortly after Simon Crowther took over. The inability to get a clear direction for the company and my work was the reason for my leaving. It just wasn't fun to work at a place where I couldn't see progress being made.

I think that's enough for you guys to digest for now. Hopefully I haven't ruffled too many feathers. This is my first post so feedback both and good and bad would be greatly appreciated.