Thursday 19 July 2018

Picture perfect: What Jerry Kennelly did with all that Stockbyte money

Jerry Kennelly built a family business into an empire that spanned the globe - and then got out at the right time. He told Donal Lynch about his new venture

Jerry Kennelly
Jerry Kennelly
Donal Lynch

Donal Lynch

As you might expect from the owner of a design business, it's the visuals that really grab you when Jerry Kennelly starts to tell his story.

There he is as a child - standing on the sepia-coloured frozen lakes of Killarney, hoping the ice doesn't break. In another photo, he is flanked by his brother and what was thought to be an unexploded bomb - both shots taken by his father who, along with his mother, ran Ireland's first photo agency. The two boys were "props" Kennelly laughs, "and there was another 'spare son' just in case".

By the time we move into colour, the pictures tell the tale of how far and fast Kennelly's own ambition brought him - there is his work is on the covers of Time magazine and Newsweek, which were amongst the global publications that used photos from Kennelly's picture company Stockbyte throughout the '90s and 2000s. It all seemed a quantum leap from his humble beginnings, especially in terms of the money on offer. Getty Images paid €110m for the company in 2006, making Kennelly a very rich man.

For Kennelly, who is married to Johanna with two sons in their 20s, it was enough money to retire for several lifetimes - but his entrepreneurial instincts wouldn't let him off that easily.

Two years later, he got back in the game with - a web-based design platform which brings the services of professional designers to the desktops of business owners, aiming to give them a cost saving of almost 80pc compared to traditional suppliers. The years since have been a moderate struggle, Kennelly says, more for the difficult technical and IP journey the company went on than for the effects of the recession (Tweak has clients as far afield as Brazil and Australia, helping it to transcend regional market problems). The word 'tweak', as Kennelly himself points out, has "a number of meanings".

A large part of its business involves allowing firms avail of design templates and technical support, which drastically reduce the overall cost of the process.

"The traditional design process is very slow and expensive, and under the existing models the likes of McDonald's and Starbucks were at such a huge advantage, as compared to a local business," Kennelly explains.

"Our technology helps to bridge that gap. For most things - houses, cars and so on - the product you buy comes off the shelf. But design mostly has to be custom. We sought to change that. We were the first people to bring high-quality design to the online market.

"There is a huge amount of IP built into it. It has to work every time because these people have to believe in what they do every day."

The firm, which Kennelly owns entirely (he ploughed €30m of his own money into it), has been loss-making until now, but he expects it to turn a profit for the first time this year.

He tells me that he subscribes to Malcolm Gladwell's maxim, which says that you need to have put 10,000 hours of labour into an endeavour to become a real expert at it. Kennelly had an enormous advantage in this regard: he was immersed in the business of photography, design and publishing from childhood.

His father, Padraig, had been brought up in a family pharmacy but had decided to leave that business and set up a photographic business in Tralee, from where he provided picture services for the national newspapers, the BBC and Pathe News. He also became the first RTE stringer cameraman.

"Himself and my mother Joan travelled in their two Volkswagon Beetles the length and breadth of Ireland in the 1960s to make back and white postcards," Kennelly recalls. "About 20 people worked in the developing room."

In a move that would leave a great impression on Kennelly, his father ruthlessly discarded outmoded practices of production. He realised that print was going to change and invested massively in printing equipment.

"We had a telex in our kitchen. We were brought up in that environment. The parents weren't very financially motivated. Other families might have focused on a bigger house, but for our family, it was always about having the best equipment."

As a child, Kennelly and his brothers would regularly work until 4am.

"And we thought it was a good day if we got into the tech at 11am. I left school after the inter and, under an NUJ scheme, got an apprenticeship from my father to be a photojournalist. He was the harshest, and probably the best, teacher you could have found."

In the '60s, the family business on Ashe Street, Tralee, was almost destroyed several times by flooding. His father understood the pressure that could be brought to bear on the county council through media - and one day, the young Jerry arrived home to the announcement that the family would be launching a newspaper. The following week.

"He sketched it all out on two pages," Kennelly recalls. "It was going to be full colour, delivered to every home in Tralee. It was going to have cartoons and, first and foremost, it was going to be a campaigning newspaper - to force the urban council to deal with the flooding problem in Tralee. He understood a lot about the law and the legislation behind local authorities. He called the new county council offices the People's Palace.''

While still in his teens, Kennelly took over his father's news and picture business and transformed it into an outfit which transmitted colour pictures around the world.

"By the time I was in my 20s, I already had enormous confidence in terms of building something. I was doing radio broadcasting for RTE.

"During the Air India crash, for instance, you were faced with piles of bodies and you just dealt with that. My father had always said, 'You'll be judged by how you behave on big news events.'"

The Apple Mac came out in 1984 -and Kennelly was one of the first Irish owners of the machine.

"People thought I was insane but I was making decent money in those years," he recalls.

He still felt motivated to shoot for the next goal, however, and in the mid-1990s, he founded Stockbyte, which sold photos to publications around the world. They launched in San Francisco in January 1997, with Kennelly investing about £100,000 of his own money. "It was scary and exciting and pretty nuts."

Interest was enormous from the publishing industry - two similar companies had just been snapped up by Bill Gates and Getty respectively - but accessing credit proved difficult.

"I told the bank I needed £500,000 and they said I was out of my mind. I'd dealt with them for 15 years - and I said to them, 'You're financing all these crappy apartments, which there was way more risk in, and you're passing on our product, which people are already buying every month?'

"It just seemed crazy to me. And at that point, I wouldn't have known VC funding if it bit me in the arse. I fucked up the first few presentations. But between investment and loans, we got £1m in the end. We produced 40 more discs and had the largest stock catalogue in the world."

In the 2000s, he was described as an "internet visionary" - but he's honest enough to admit that during those years "we knew only that it was a mechanism for people to find you - nobody understood the impact it would have on the world."

He was determined to set new standards in the industry.

"We based it all on craft; we'd hire yachts and helicopters for locations, we had the best stylists, models and photographers. The industry had started out basically as a kind of a clip art game. We really drove the standards up from there. I was physically in a technology park in Tralee - but in my head I was in New York, Paris, LA, wherever..."

In fact he was in Milan in March, 2005 when he first saw the cover of Time magazine, for which he had produced the imagery, on a news stand.

"We'd worked so hard to make the edition on time. I was coming back through the airport and that just knocked my socks off. It had taken such a huge collaborative effort; in terms of production it was more like cinema than photography, to be honest."

By 2006 the firm was making €2m in profit per month and was the largest supplier of stock photography in the world. In a reversal of his childhood labours, he even roped his father into starring in some of the images.

He says that if he'd had his way, he wouldn't have sold - but while at the Harvard Business School he received an unsolicited copy of the broker's report for Getty Images, sent to him by businessman Denis O'Brien.

The point of the figures was clear. Getty, at that point, looked very overvalued to the tune of some 48 times their earnings.

"Even knowing the little I did about finance, I came around to the conclusion that if they were on a very big multiple, it seemed likely that we were too", Kennelly recalls. "I wondered if we busted our asses for another three years would we have more or less at that point. I knew we were near the top. That fuelled the decision."

Within 18 months, the bottom fell out of the market - and Kennelly laughed all the way to the bank. He also negotiated a generous package for his 28 staff.

He thinks there is a "really poor" understanding in government of the mentality needed for entrepreneurship.

"There's no conception of the value that entrepreneurs bring and the world of difference in difficulty between running a pre-existing company and getting something off the ground.

"The support structures aren't there. I lived a lot of my life up to my neck in debt - and if it had gone wrong things would have gotten very messy.

"It's always a gamble, you just have to hope you can pivot enough times to survive. I've never seen someone who built something substantial who hasn't been through the wars. The rate of failure is about 95pc and it's poorly understood what makes those few successes."

He says the next big thing in his industry is 'scale'.

"We've about to release a tablet experience of Tweak that will launch its first iteration in October and after that it's territory by territory. It's all going to become more and more localised to the market. There is no end to the design content we can produce.

"Like my Dad all those years ago, we're always drilling down into the hotspots."


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