469: How to Beat a Monopoly with James Chin Moody of Sendle

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2:42Hey, Founder fam. Welcome back to another episode of The Founder Podcast. Today, we're speaking with James Sin Moody, the co-founder and CEO of a company called Sendil. who are unlocking the power of big business delivery networks for small businesses. This is a company I've used in my e-commerce businesses, and Sendel was also Australia's first technology B Corp and first 100 % carbon neutral delivery service. And we're going to talk to him about disrupting the shipping industry, the importance of building company values from day one, and really building a business around an eco-friendly model and sustainability.

3:24Please welcome to the Founder Podcast, James Sin Moody. James, thanks so much for joining us in the studio. It's always great to do in-person interviews. Welcome. Thanks, great to be here. So the first question that I ask everyone that comes on is, how did you get your job, aka how did you find yourself doing the work you're doing today? Yeah, well, I sort of fell into it. I think quite a few founders do the same thing. I um my wife and I um had actually decided we were on sabbatical yes after some really big big roles for both of us and we decided it was was her turn to to pursue her career and so I signed up to be the primary carer of our two little boys for five years yeah wow and as part of that um uh really was like I had two young kids uh what do I do now I had a whole lot of baby clothes and so I started a little business where I could give those baby clothes away It was a giving marketplace.

4:20Yes. And, you know, in the early days it was, you know, okay, so I can give them away to people who want to pick it up. And then we realised we wanted to give it away to people who could live in different suburbs. And so we started to explore the real problem, which was how to make it really easy to ship something from anyone's home to anywhere in Australia. And what we found, we talked to Australia Post. They wanted everyone to line up at the post office and, you know, you don't want to do that. Yes. Talk to Point2Points, the Ubers and that sort of thing. Very expensive. Yes. Until suddenly we found that there was this infrastructure that's out there.

5:00There's so many trucks driving around, but those trucks are half empty half the time. And so he said, can we help you fill your trucks? And that turned into an entire logistics network. And that was how Sendall was born. Yeah, wow. And for the giving marketplace, can you talk us through, like, I want to kind of pull that back, like the giving marketplace, how long did it take to bring that to life? What did the model look like before you even pivoted to Sendall? Yeah. So that model was really like understanding friction. I think one of the interesting things around starting a company that's always about what is the problem you want to solve?

5:35And can you love that problem? And for us, the original problem was how do we facilitate reuse? Yes. How do we make it really easy to help people give things that they no longer need away? Because we knew that that would actually help extend the life of that item. It would help people who didn't have much money to get things they no longer needed. That was a really good problem. And so we got deep into that problem. We realized that liquidity was the biggest thing. If I've gone and tied up the house and I've got a bag of baby clothes or I've got a box of books or whatever it might be, how do I make it really easy to get that to somebody who needs it?

6:09And so then we started to dive into all the aspects of that. And we realized that, you know, there's actually a business model in here. I think the next thing is if you can find a really good problem, then what's the business model around that problem? And we realized that while you can give things away for free, maybe we can make money on the shipping. It was almost like taking the Amazon business model and turning it upside down where Amazon would, you know, sell you stuff and give you free shipping. Yes. We will give you the free stuff, but you just pay for the shipping. and so that's why that's really what got us delving into logistics.

6:45It was actually the business model for a free shipping network, but fast forward, it took two years, two years to build. We got about 50 ,000 people transacting on the two-sided marketplace, so we got liquid, which was great, but it was the end of 2014, and a whole lot of eBay sellers. It was Christmas, and all of a sudden, eBay sellers started to pile in, And what they were doing was they were actually hacking, because everything was free, they started hacking that for shipping. So it'd be almost like I will, you know, I will sell you this thing on eBay and now I will give it to you on this free shipping network.

7:23And it's like, why are they doing that? Because the other thing is, you know, we could have tried to stop it. It was actually interfering with the network, right? It's like, I've got a box, baby clothes, baby clothes, baby clothes, box that says, you know, for Marjorie. And, you know, only Marjorie could claim that box. And it was, so we said, do we stop them? But then we started to dig deeper. And what we realized was that not only were we the ones who needed a cheap, affordable, you know, minimum order quantity one. So you could have one thing door-to-door delivery service. But actually every other small business in Australia, that small business e-commerce provide in Australia, needed exactly the same thing.

8:06and Australia actually had a functional monopoly in place, which was Australia Post. And they had no other choice. And so we realised, well, maybe there's something here and we separated it out as a separate service. Yep. Really disservice all those initial eBay sellers. And when we did that within a month, we doubled our volume. Yep. Second month, we doubled again and we realised, you know, that's the rocket ship. And I think one of the things when you get product market fit, like deeply, deeply get it, you really know. And so we realized that, yeah, maybe our purpose was not to help things see their full lifespan, but actually maybe our purpose was to be the plumbing for all the giving networks, all the small business e-commerce folk out there.

8:47In fact, what we realized, our purpose was to level the playing field between the small businesses who, frankly, pay a lot more than they should for logistics and get a lot less between them and the really big ones. so you mentioned something interesting when you get product market fit you really really know can you describe that to us because i think it's an illustrious thing for many and it's something that people don't even focus on sometimes yeah there's a great book called traction by weinberg yeah i'm not sure and i think for me as an engineer that's actually the best way of describing and actually it's not product market fit it's product traction channel market fit yes and it's when those three things line up and i i always think about it like this slot machine where you know you've got a product and if you're you know sometimes you end up you've actually secretly got three or four products because they haven't been focused enough yes and you've got a market and i think about you know um even in those early days in fact we had you know our giving network we actually had three things that we were doing in there we had a couple of lots of different markers we had the the folk who were you know environmentally conscious we had folk who were uh didn't have you know you know i needed affordability we had all these things and then we had all these channels but really product market fit for me is like when you pull that slot machine you find there's actually one product and there's one market and you found that traction channel that really works and you know with sendle we were really lucky because we had one product where we can we can ship a parcel from anyone to anyone with a minimum of one right and we had one market which which is small business e-commerce.

10:26Yep. It was very, very clear. And funnily enough, the initial traction channel was just word of mouth because everyone, you know, we were half the price. We could send a parcel. We could send 10, 20 kilograms, like, you know, from Sydney to Perth for half the price of lining up at the post office and we'll pick it up from your door. And, yeah, that really, you know, you can just feel it when everything lines up and it's like, wow, this business is taking off and we don't seem to be, you know, it seems really, really easy. Doesn't that make sense? Yes, it does. So was this your first business, the two-sided marketplace, was that your first business?

11:07Yeah, it was. Until then, I'd had a career in, firstly, as an engineer. So I was a satellite engineer, helped build Australia's first satellite in 30 years. And then I worked for the CSIRO for seven years looking at international engagement business development. So talk me through, I guess, bringing Sendal to life. Did you raise outside money? Did you code up this logistics network? How did that work? Because I think outside looking in to create effectively your first business, a logistics network, taking on Australia Post, they have a massive monopoly, that seems quite intimidating. Yeah, I think I'd actually talk to a lot of other founders and listening to stories.

11:50And I think one of the big things I remember there was some really great advice I got in the early days, which is particularly if you're going to, you know, you can either bootstrap. Yes. And that's tough, particularly if you, as you mentioned, have got a giant competitor with huge amounts of resources, or you're going to have to make the decision at some point that you will take on capital. And if you're going to take on capital, the best way, the thing you need to realize is your business doesn't fly like this. It really is steps. And a great way of thinking about those steps is in terms of value creation milestones.

12:26What are the milestones that you're trying to reach to get from where you are today? And again, you've created a certain amount of – everyone who started a business has created a certain amount of value. Yes. It could be 20 customers or it could be 2 ,000 customers who love them and I've got the LF score of 50 of product market, whatever that value is. And I've got so much revenue, whatever. I could be pre-revenue, but I've got an idea. That's value. The real thing is, what milestone am I trying to get to? Yes. And that could be, okay, now I want to get to generating revenue and I want to get to$20 ,000.

13:05Annual, you know, month, MRR, whatever it might be. Yes. And if you can think of your business in terms of those milestones and ideally go a few milestones, what happens is you start realizing, you know, raising capital, right? It's what it does is it basically aligns your capital strategy with your plan. Because raising capital for a startup is really about, my analogy is like you're on a boat, right? You're on a boat. And to begin with, it might be, you know, me and my co-founder. You know, one's rowing, the other one's navigating, then we take it in turns. And what you're really doing is you're trying to get to an island.

13:42And on that island, which is a value creation milestone, there's more provisions. There's more people. You can upgrade the boat. Right? And you're doing that in order to get to the next island. Yes. And those islands are seed. And then series A and then series B island and series C. And every time what you're doing is basically trying the waters get choppier. You know, the boat's getting bigger. But really, you're taking those steps and each one of those is a value creation milestone. I found that really useful as a construct, as a way of thinking about, okay, we're going to go from here to, okay, we're going to demonstrate we can be a career.

14:24And then we're going to say, we need to get really significant traction in the Australian market. And then our Series B was about moving to the US. Yes. And then get to Series C. now we sent a parcel from every single three digits in America to every other three digits in America. Okay, now let's see if we can lean into, you know, being a full service carrier. Okay, now let's go to Canada. Like all these are different milestones that you basically do and the process of raising is about really understanding what resources you'll need to get from here to there. Hey, Founder Fam, I want to talk to you about something super exciting.

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15:44All right, now let's jump back into the show. Yeah, I really like that analogy. So for your two-sided marketplace with the gifting of the baby wear, I mean, like you use baby wear, Did you raise money for that? Yeah, we did. We actually raised some very initial, and it was funny, it was a different sort of raise. But yeah, we raised some money. NRMA backed us in the very early days. And we were very fortunate that it was much more of a community-based investment thesis at that point, a social venture. But when we realized that, hey, we're a potential competitor post and actually then started to prove that out.

16:30Yes. They backed us again, which was fantastic. And they basically let us see around. Yep. Got you. And so for Sendil, how long after you kind of gone, okay, well, we got traction here. We got product market fit. how long did it take you to raise your, was that your seed or your Series A? Yeah, that was our seed. Yeah. About six months. Yeah. Okay. When they're pretty fast. Yeah. Yep. You know, back to the whole rocket ship when you're doubling. In that point, we were doubling every month. Yep. In those early days, you start going. And I think the other thing that's really interesting is there's one thing which is about the product.

17:13Yes. We really see. Yes. Again, you know, it's a bit magical. Yes. You know, when you press a button, you book a parcel, it's 30 seconds and the parcel disappears in one part of the country and reappears the following day in the other part. Like that's a magical experience. Yeah. And we realized at that point that, yeah, we actually had something that was, you know, cheaper, faster, 100 % carbon neutral. We've offset every parcel. So more sustainable and more convenient door to door. than basically a monopoly that had been in place for 100 years. And we were basically finding an alternative solution by using infrastructure more cleverly and more efficiently.

17:57Yeah, no, look, it's a great service. And like this water bottle in the early days when my ex, when she started this little e-commerce business, she didn't have enough volume to have a 3PL, right? Because you have to do at least 500 orders a month, 1 ,000 orders a month. But you can set up your Shopify store and you can be selling maybe 100 a month or 200 a month and you're doing your own picking and packing. You produce a product in China or wherever, you ship it to your house, but then you've got two options. You either go to Australia Post, which is more expensive, or you can use your guy's service and then you guys come every morning, pick up everything and then scan them and then off you go.

18:46And that's effectively how she kind of got that business up and going until it was ready for 3PL and then set up 3PL in China, then eventually set up 3PL in America and Australia, but still use a sender for some random kind of, you know, if you want to get it faster to the customer, all sorts of things. So very familiar with the service. To be honest, I thought you guys were a division of Australia Post or something. It's interesting. I think this is the thing, you know, a monopoly wrapped in a habit is invisible. And a lot of folk, until we came along, didn't even think that there could be an alternative.

19:27And this is what we see all around the world, right? Like whether it's Australia Post or Canada Post or, you know, there's more of an oligopoly in the US. But it's like really understanding that, you know, frankly, things don't have to be this way. And you're absolutely right for the small, the really small seller who's just getting started. Everything, there's lots of things stacked against them. Yes. And one of the big things is actually the shipping. Yes. There's no way, again, that it should cost$45 to line up at the post office and send a parcel from 10 kilograms from one side of the country to the other.

20:04Amazon is not paying$45 to send that parcel, right? Yes. And that's a huge disadvantage. And so we realized, and yeah, frankly, I mean, you know, we're doing that for less than half the price. And we realized that actually we can help tip the tables, the amount of cross subsidy that's going on. We can, by just focusing on that emerging part of the market, we can absolutely level that playing field and turn the tables. Oh, 100 % is a big business. There's a lot of people starting small e-commerce brands or small businesses that use a service like this. And I love the fact that we can even start to outperform.

20:42I think one of the cool things about technology is when you can have services for the really small folk who are nimble that can be the same or even better. We can now send a parcel in two days from Seattle to LA and we can do that for less than$4. Yeah, crazy. And that's crazy. And, you know, for me, that's amazing. Now here's a small business that can basically compete, like truly compete with the really big folk. So talk to me around kind of the technology side, because I think that's like, that's really where the value creation is, right? Because you're connecting. You said trucks are often half full.

21:29So you guys are finding, I guess, you're managing yield, right? So, and you're kind of cross, like, yeah. So talk to me about that, what the early days looked like, how you brought that together. Is it because of your engineering background that you were able to write? Did you write the first version of the app or? Yeah. So I was there. I mean, my co-founder is actually our CTO. So he was the one who built it in the early days. And I think, you know, really what is our technology? So, you know, it's become even bigger than that now. It's not just filling idle capacity in trucks. It's actually buying baseload capacity in networks.

22:08But again, generally underutilized networks where we can find massive, effectively helping those small businesses to come together. Yes. And get huge amounts of leverage. But still filling the capacity in networks, whether it's the line haul, whether it's the pickup where most trucks are delivering lots of things to neighborhoods and then they're going back empty. Yes. So, yeah, what our technology does, though, is actually starts to connect networks together. Yes. So, if I wanted to send your water bottle from here to Azerbaijan. Yes. It would actually be picked up by one provider. it would then move to a second provider which then gets transferred to Azerbaijan and then a third provider probably Azerbaijan Post at the end will actually deliver it that's three different ways and what we do is we connect all that together with one label one tracking one customer support it's all us because we know the most important thing for a small business is not to become an expert in logistics yes it's actually to be able to say I've sold this thing you know press a button somebody take it and then i'm going to get delivered at the other end so i'm curious how come you know the fedex's or the australia posts of the world how come they don't either buy you guys out or compete with you guys on margin i think this is one of the interesting um things around incumbency yes um and if you can find i mean we were very fortunate we did find effectively a functional monopoly.

23:47Yes. Is the way I think about it. And the cool thing about finding a functional monopoly, for example, if you've got 85 % market share. Yes. For small business. And it doesn't make sense in some ways to put your prices down by 10 % because you're not going to get 10 % more market share as a result. Yes. So, you know, this is where you get really interesting opportunities. Yes. You know, if we're going to save you a dollar a parcel or a dollar 50 parcel or whatever, it's very hard to compete in that space. And I think that's where they call it counter positioning. Another great book, The Seven Powers.

24:27You know, it's about what can your powers be, which are powers of both benefits and barriers. And for a lot of early stage companies, counter positioning is amazing, you know. And we realized that, yeah, being an alternative that is cheaper and more reliable or more convenient, right? It's very hard to compete when you are the incumbent. So I'd love to switch gears. Talk to me around kind of this idea of building, I guess, eco-friendly businesses. You guys are a B Corp as well. You've dedicated most of your life to this. What's changed over the decades? I think the, yeah, we, I mean, I've, from the very early days, I used to do a lot of work with the United Nations Environment Program and all these other areas.

25:15Yes. And I think from the very beginning, I love the thesis that, you know, businesses need to have a purpose. If you're not clear about why you should exist and that why is linked to some sort of positive environment or social outcome, then it's very hard to sustain you. through all the ups and downs of the startup journey. And so from day one, I love the idea of saying, I want my business model to be deeply aligned with my purpose. Yes. And so when we're thinking about Sendle, again, our purpose is effectively level the playing. We call it shipping that's good for the world. Level the playing field between big and small and help them compete.

25:58And also, and I guess this is the big shift that's happened since we started, also do it in a way that takes full responsibility for the impact of shipping, which is why every parcel we've ever sent, you know, has been, one, we try to find more efficient routes, and we're even starting to convert some of our network to solar. Yeah, wow. But, you know, everything else where we're, we've basically taken responsibility for the emissions and planted sufficient trees in order to make sure that's all 100 % carbon mutual. and you know for us being a b corp was actually a way of of writing that deeply into the dna yes of the company and also having independent verification that yes you're doing what you said you would do but yeah for me and the big some ways that's again for those founders you know out there who are just starting their business there's there's things that may not feel important in the early days yes which is i think your purpose and your culture but what happens the The further, the more islands you visit, the further down that journey you go, the more important those things become.

27:10And the seeds that you plant in the early days, I'm going to think about the culture of my business. I'm going to think about how I like to operate and the people I like to have around me. I'm going to think about the purpose of my business. Why should we exist? The earlier you can think about those things, I can promise you the more dividends will get paid when you're successful. in three years, four years, five years time because those are the strategy credits you've built for yourself. Hey guys, I hope you're enjoying this episode and learning a ton. As you know, in this series, we interview some of the greatest founders of our generation to find out how they did it.

27:48However, if you're thinking of starting your own business and you want to hear from some incredible stories from everyday people like you or I who are actually in the trenches, only been building their business for maybe one year or two years, like that are building right now and they're really in the early stages, but they're getting success, you should come and check out our new podcast From Zero to Founder, hosted by our community manager, Molly Flynn. These are in the trenches stories from our very own successful students that have gone through some of our programs. People just like you who are deep within the process of building their very own successful business.

28:26These are the founders of tomorrow. You can find the From Zero to Founder podcast on all platforms. And remember, it's founder without the E. All right, now let's jump in the show. So let's talk about the planet. Are you optimistic around the future of the planet? Look, I'm a natural optimist. Yes. In a lot of things. I'm pessimistic about our speed. you know i think one of the things where we're realizing um whether it's um you know just the catastrophes the environmental disasters we've seen everywhere you know whether it's texas freezing or australia being flooded or whatever it might be this stuff is not going away and we're in for a really rocky time and a lot of you know a lot of folk are going to be um you know displaced and hurt and generally those who are the most disadvantaged.

29:21And so I'm very pessimistic about speed at which it's going to take and what that transition is going to cause. I am optimistic that there are so many solutions out there. And I think about us, like if we can be more affordable, right, more convenient, you know, a better delivery performance than these giant postal monopolies and do it while taking responsibility for our companies, why can't they? And it really is about will and it's about customers saying, you know, this is what we need. You know, this is what we demand. And so, yeah, so from that point of view, I can see the solutions really are there already, but it's the transition.