Tech entrepreneur Luke Metcalfe on when to build a product not a company

Luke Metcalfe has sold Netcomber to Profound Networks for an undisclosed sum.

In Silicon Valley it is fashionable to challenge technology entrepreneurs to identify whether they are building a feature, a product or a company.

The answer is never “feature” and rarely “product” – until they successfully sell the technology to the likes of Google, Facebook or Apple.

The truth is that building a company is hard and sometimes creating a piece of technology and selling it is the best use of the entrepreneur’s time.

That is true for Sydney-based Luke Metcalfe, whose company Rapid Intelligence has just completed the sale of Netcomber to US-based Profound Networks. Netcomber is a tool to identify the true owners of domain names.

“I am very good on the technical side, so to be able to build out complicated technology and then have that acquired by someone with much better enterprise links is a good fit,” Metcalfe says. “If I had a business co-founder we could have turned Netcomber into a company and built it out with more features, but as a technologist it is better for me to build something that can be a quarter of another company. Often we Australians do not have the connection to the larger world so it is very important for us to have the avenues to sell what we make if we don’t turn it into a company.”

Profound Networks bought Netcomber on Thursday last week for an undisclosed sum. “I’m very happy with the result but I’m not retiring,” Metcalfe says.

Metcalfe says Sydney is becoming known as a data hub, citing Brandscreen as another example. Brandscreen, a demand-side platform, was bought out of administration by US-based exchange Zenovia in an eight-figure deal.

The accounting software ecosystem is another sector where Australian developers exploiting opportunities by building products that are then acquired by bigger companies such as MYOB, Intuit and Xero.

Metcalfe says Netcomber was a subscription site, with a paid API (application programming interface). His technology was able to cluster domain names together to show, for example when companies are working on side projects or doing dubious marketing activity but not under the main brand. It was also used by law enforcement agencies for investigating paedophilia rings, organised crime, terrorism and tax avoidance.

This was the first product that Metcalfe has sold but he hopes it won’t be the last. His previous products have been advertising-based. For example, NationMaster is a site that lets people compare countries on a range of statistics.

At its peak, NationMaster attracted 250,000 visitors a day and generated income of $70,000 a month through Google Adsense and other advertising networks, according to Metcalfe. However, he says this business model is harder than it used to be.

“Attracting eyeballs is harder than it used to be – it’s the death of the home page,” Metcalfe says. “People say it’s so much easier to do a start-up because the technology is more accessible and that’s true, but the real economy is attention and that’s harder, so overall it’s no easier than before.”

Metcalfe outsources a lot of the development work to eastern Europe, managing the technical teams directly but sometimes using the Elance and oDesk networks to find staff. “It’s a bit like dating sites – the average person is either not that good or has trouble with commitment,” he says.

Rapid Intelligence is operating as a data mining agency, with Metcalfe accepting a backlog of jobs. However, he has another proprietary project in the pipeline as well, this time a writing tool using computational linguistics.

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