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Cashed up and going for green pastures

posted Dec 21, 2008, 4:15 PM by Seeby W   [ updated Dec 21, 2008, 6:40 PM ]

Cashed up to the tune of $19 million following the sale of his internet business Orcon, entrepreneur Seeby Woodhouse is now studying opportunities in alternative energy sources.

The $24.3 million sale of Orcon to state-owned network operator Kordia will be completed by July 2, with former 80 per cent owner Woodhouse staying on as a consulting director for the next two years.

"I'm able to take my money off the table now, relax a little bit, but still have the upside of the business, the challenge and the things that I enjoy," he said.

While Woodhouse has not ruled out future technology investments, the sale gives the 30-year-old, who started Orcon in 1994 with $100, a chance to focus on his interest in global warming and business opportunities in technologies that could combat its effects.

"The thing I'm concerned about is, basically, if we're already past peak oil [production] and some of the wells start to dry up and the price goes to US$120 a barrel, then New Zealand is at serious risk of collapse," he said.

"We should be working on complete energy independence."

He would consider investments in everything from ethanol production, solar and wave energy generation to "green" housing technologies.

It's a bit of a departure for the telco operator who was a millionaire by the age of 25 and sponsored a V8 supercar racing team. Orcon has dropped sponsorship of the team.

While he has had plenty of offers for Orcon, about 50 over the last seven years, Woodhouse rejected them and never sought external funding.

"I didn't want to have the risk of bowing down to someone else and be depressed about it," he said.

"Whenever a proposal was presented to me, I was reluctant. I said to myself, 'I'll just try and grow the business as fast as I can, if it grows a bit slower, I don't care'."

But by last year, when the unbundling bombshell was dropped, Woodhouse had to decide whether to raise a lot of money independently to invest in local loop unbundling or sell.

"We were going to have to build the network and invest in media technologies. Kordia as a network and broadcast type company, had the two pieces of the puzzle that we lacked," he said.

He has no qualms about Orcon becoming part of a state-owned enterprise.

"It's certainly not the case that the Government wanted to do this to create a competitor to Telecom," he said.

"[Kordia] hasn't had a lot of interest from the ISPs in terms of taking some of their services up. They've some great products they want to sell like DVB-H [mobile TV]."

While Telecom and its rivals in the broadband market have traditionally had an acrimonious relationship, Woodhouse decided in 2004 to stand virtually alone and accept the products Telecom offered in lieu of unbundling.

"At that time it didn't look like we'd end up with local loop unbundling. Theresa [Gattung] didn't expect it was going to happen, let alone myself."

His approach was to make the most of a bad situation. "I don't think we got any concessions [from Telecom], but the working relationship was the most amicable and productive of any of the ISPs."

Woodhouse says internet industry players are under pressure as they lose profitable dial-up internet customers to broadband, where the margins are lower because most operators simply resell Telecom's services.

"The issue at the moment for ISPs is if a consumer spends $40 a month on a phone line, $20 on tolls and $40 on broadband, traditional ISPs don't get to attack much of that and even if they do, most of the money goes to Telecom in a wholesale arrangement."

That would change with unbundling and Woodhouse believes the opportunity will be "vast" for those prepared to invest in or to use Telecom's copper cables.

Woodhouse never had any particular mentor in business, but had drawn inspiration from ihug founders Nick and Tim Wood, who grew their business from similarly inauspicious beginnings. They sold to Australian internet provider iiNet in a deal worth around $108 million.

"The Wood brothers were an early inspiration, because they were in the game a year ahead of me. It was always a case of me having to catch up to Tim and Nick. They did really well exiting a few years ago and got more money than Ihug sold for [to Vodafone]."

Until he spots an attractive alternative energy investment opportunity, Woodhouse plans to travel, take some holidays and research further the effects of global warming.

"If a light bulb switches on in my head and I decide the best thing to do is buy a heap of land in the South Island and start growing sugar cane, that's what I'll do."

Whatever he now does, Woodhouse says it will have to consume him.

"I had a burning passion in the early days of Orcon for a good five years, working 16 hours a day solid," he said. "If I do anything in the future, I want something that's going to get me that excited."

Thursday Jun 14, 2007 By Peter Griffin sourced from NZ Herald
Picture is of Kordia CEO Geoff Hunt and Seeby Woodhouse after signing the sale and purchase agreement of Orcon to Kordia.