535: How a Former Lawyer Built a $450M Global Travel Brand | Adam Schwab [VIDEO]

21:51So if you travel, like bed and breakfast places would come to us. And with travel, you have a couple of solutions that weren't there for experience. Firstly, a much higher basket size. So if you sell an overseas trip, it's like 10 times, 20, 30 times the basket size of a mass arch. So the cost of acquisition is the same. So you have unit economics, which is how much gross margin you make essentially, were much better for travel. The other problem we solved in travel, got solved in travel is travel, so hotels you work with are hospitality businesses. They naturally care about doing a good job for the customer.

22:21And if they don't, there's something called TripAdvisor or something called Booking.com where you can get rated. If you get a bad rating, you're stuffed as a business. So A, hotels cared about it naturally. And B, there was this sort of sort of Democles hanging over their head. They're going to do a good job. So the big problems, the two big problems with the deals business, which is bad economics, bad LTV, were solved with travel. And we kind of didn't know what these concepts were. This is back in 2010, 11. We just could see this as a better business. And we just lent into it. We had a great, one of our friends called Mark, who did a law a few years behind me, just incredible negotiator.

22:54He'd be able to walk into a hotel and do a million dollar deal wearing a Bintang t-shirt and thongs. Like he's possibly the best negotiator Australia's ever seen in this part of business. And not only that, he was a great merchandiser and really understood the customer, which is what every great salesperson can do. And he, along with Jess and I and Josh, who was another person who was really deeply involved in the business, we just sort of stumbled across this model that didn't really exist for travel and let's call it flash sales or tactical sales is what we're talking in the industry and basically the principle is we'll go into a hotel ideally a sort of four five six star resort and hotels are never full so or very rarely full and when they are they know when they're going to be full so for 50 weeks of the year hotels got either a lot of inventory or some inventory that could be 70 occupied 50 or 95 percent so we're basically coming to a hotel and we'll give you lots of sales really quickly and we'll give you the sales when you need them so if you're full in christmas the christmas week we're not going to sell that week we'll sell in all the other weeks where you're in where you're empty or empty and hotels go okay well i'm getting money for nothing i'll give you a big discount so we can then give a customer a 30 or 40 or 50 discount and inclusions like breakfast dinners day spas all that kind of stuff so crazy we're women hotel owner makes money and the customer saves a bunch of money and we just sit in the middle and facilitate and it becomes it's become more complex than a lot more complex than that but the basic principle is hotels have empty rooms customers want to stay in those hotels and don't know these rooms exist will essentially be an early bird model for these hotels to sell these rooms in advance so they say they sell rooms early b they get to yield up which means because they're not zero percent full or twenty percent full going into a need period they can charge more on other channels and the other thing is because we never just sell the bed in the room we include breakfast dinners day spas massages blah blah that's high margin for the hotel.

24:38Hotels making 80 % margin off F &B. They're making maybe 30, 40 % off room. So we can give a much higher, what's called revenue available room and much more profitability for the hotel. So customers love it. Who doesn't love a massage and a dinner and a breakfast? And hotels love it because they make more money. So we're creating that really great win-win. So when did you start to pivot into the luxury escapes model and build out the brand? Because if you've done an exceptional job with the brand, you've got a retail store, like retail stores, not just in Chadston, but other places around Australia now too.

25:11You've got one in Sydney. Sydney, Sydney. Okay. All right. Can we talk about that? We can go about it. Yeah. It's coming, Sydney. It's coming. But it's really, really cool. Like what you've done with the brand is very, very impressive. And this is not a small business. Like this is a big business. Yeah. So in terms of, you're right. So we started doing travelunderthedeals.com.au brand. and we started doing more and more deals. And we realized probably within 18 months, 2012, 2013, that our customers loved it, but hotels didn't love being on deals.com.au because you're sitting in it. We had all sorts of stuff on that site.

25:45We had homewares on that site, fashion on that site, some cheap stuff,$25 massages, like all sorts of stuff. If you're the Ritz Carlton, you don't want to be next to that. You want your brand in a pristine environment. So we knew we needed to create a travel-only website. And then Jez, I think Jez found LuxuryEscapes.com somehow. He was great at finding domain names. A lot of terrible ones. This really good one. Paid 100 grand for it. Maybe 120 grand to it. It was a travel agent in Sydney who owned it. Wasn't using it. Yeah. So great win for her. Yeah. Great win for us. We created this brand that didn't really exist.

26:15And then we bought a business called Getaway Lounge from Channel 9, which is a TV station in Australia. They had this business that wasn't going. It was a similar concept, but it wasn't going that well. And then we rolled some of their members because we bought that business and they didn't want us to call it Getaway Lounge. We said, we don't want your name anyway. So shove your name. We'll take the customers and roll them into Luxury Escapes in 2013. So that's from the TV show Getaway? Yeah, exactly. Exactly. How did you find that? We bought a business called Kudo, which was very well known from Channel 9.

26:43And they were linked together. And that was run by a guy called Mike Sneesby, who until recently was running Channel 9. So it was a really interesting business. That was a really great, probably our best ever acquisition. We did 15 or 16, most of them terrible. That one really good. Yes. And yeah, that probably put us to$100 million plus revenue, doubled our staff to well over 100 um we still had to learn a lot after that yes took us next and then so we launched luxury scape 2013 and the beauty of having a different brand for the first three years is you make all your mistakes on the first brands are the customer service errors and not that we were always we always lent hard into customer service and over indexed on cs spend uh but we learned so much over that first three first six year apprenticeship in the in the backpacker apartment corporate apartment thing and then three-year apprenticeship online web 2.0 and then we were ready to go we had 100 person plus business by then when we started Luxury Escape.

27:31So we didn't make the brand mistakes that pretty much everyone makes when it's their first time running an online business. And you also had that portfolio of brands so you could see what the game was and what worked best. Why did you start acquiring other brands? Because you said you acquired 17. I think 15 or 16. Yeah. Why did you do that and not just focus on one? we were trying to get scale so we did actually weren't trying to acquire brands we were trying to acquire customers so we bought a business called Kudo a business called Living Social and a business called UFA and a business called Brands Exclusive they were all sort of doing slightly different things a business called The Home which was Homewares be like Temple and Webster or Wayfair for the US audience so we bought all these businesses for a cheap customer acquisition cost the problem is when you buy a business and you probably spoke to a lot of people about this is it's not a simple matter of just putting the you can't just bulk business together there's a bunch of tech work so we'd always want to bring the platform them onto our platform that so josh would lead that stream and then the other thing with acquisition is you got to be really careful about staff because usually some really good staff in the business they're the first to leave so you're going to be really you're going before you buy the business we'd work out here's the best 50 percent business here's the 20 staff you can't afford to lose there's 30 that you can't the ones that never leave for the 20 you don't want to leave so you got to we'd work day one go in straight and i spend a week in meetings with the top 20 staff and effectively begging them to stay and they generally would uh and we've had people from our regions who are still with us eight nine years later and they're cornerstones of our team and some that stayed four five six years who are incredible servants of our business and we we were super grateful that they joined us and stayed with us uh so i'd run the people side josh were on the tech side we integrate but that's six months of hard work you can't integrate a business in less than six months best case for like the fashion business it was longer because there was a whole warehouse piece and a massive tech integration.

29:18So we tried to get to scale because these businesses depend on scale. But with the experiences business, we just never got there. So we ended up descaling and we scaled up the travel business. And our travel business has grown organically for sort of 12 years now. We haven't bought anyone in travel obviously after the getaway lounge thing, but that was very early and quite small. And we just scaled up through a combination, a lot of organic, a lot of word of mouth. And we spend a decent chunk of money marketing through digital channels. We have a TV show. We have a retail store, which is really a big marketing piece.

29:48We do a lot of radio stuff. We do heaps of newspaper stuff. So we do a lot of affiliate. Every form of marketing that you would do, we do. And we tend to zig when other zag. So we start a TV show and do a lot of content stuff. So that's a big lift for us. We produce it ourselves. We show it on multiple channels in Australia. We cut it across digital channels. We work with some of the best celebrities in Australia. We contract with them. They come on our show. And we have a big influencer team who does a lot of stuff with our – We've got a couple million people who follow us across socials, probably one of the biggest social followings in Australia.

30:21And Lean really, we've got a great team that runs all that stuff. So it's a really interesting business from a marketing perspective. We don't consider us experts at anything, but we try lots of stuff and we're quick to learn. So you said something interesting around like some of these businesses that you started or acquired that you couldn't get scale or if you started them, you couldn't get product market fit. For people watching, listening, how would you describe, you know, when you hit product market fit? I think when you're starting to make profit, I think when you're generating profitability and typically you're a SaaS business, you're not going to be profitable that early.

31:00But certainly profitability on a unit level, if you're making gross margin, there's a degree of product. If certainly you're making contribution margin, I think you can say you've got product market fit. So if you're getting back your cost of acquisition and it's different if your lifetime is 10 years, then you can obviously have a more lenient view of this. But if you're a retailer like we are, essentially, I think to get product market, you want to be profitable on first purchase. To me, that's always been the measure of a retailer. You can't rely on subsequent purchases because there's so often, there's a thing called a Google tax for a reason.

31:30Google will tax you every time a customer buys and worse if you're a product business because you've got Google Shopping to pay. I think the really interesting piece is, and this is what we've learned probably more recently, is I think product market fits one thing. How do you build competitive advantage? And we've really spent the last, probably the last five years, how do we build competitive advantage in this business? Because we were a nice business, had a pretty strong brand, like a reasonable brand. This is about 2018, 2019, but we didn't have that great competitive advantage. And we spent the last five years trying to work out as a D2C retailer, which is one of the hardest things to build competitive advantage in because I think the classic competitive advantage is switching costs.

32:11and no D2C retailer has that unless you can get a loyalty program up which we've recently launched and which obviously Amazon's the classic one. So the notion of one thing having product market fit and being profitable, it's a very different thing having competitive advantage and building sustainable business that out earns profitability compared to its contemporaries. Can you share some of the things that you guys have done to focus on competitive advantage? I know one of them is tech infrastructure and doubling down on tech. Yeah, so I guess what does tech give you? is that we don't really have process power.

32:42Think of the Hamilton Helmets, Seven Forces that the acquired guys talk about so well. So brand, we had a bit of brand before and we've clearly got brands in Australia. And you can tell that because our conversion in Australia is double what it is. We operate in 29 countries, but really Australia is our biggest market. New Zealand's a great market and UK is becoming an increasingly good market for us. And everywhere else, we're still a work in progress. Singapore's okay, US is not bad. India, we're in and out of and Europe's actually showing some interesting promise, but UK is going really well and New Zealand's been a great market for many years for us.

33:11But Australia has doubled the conversion rates because our brand is so much stronger here. So brands, and you think of all the great businesses, especially the great DTC, Coca-Cola, Nike, McDonald's. They're selling largely commoditized products, but they've got brand differentiation. Nike added us, there's literally no difference in product. It's pure brand. And we've seen Nike's brand drop off and it depends probably why Nike's dropped off as a business in the last two years. You reckon Nike's dropped off? Well, share price is off 60%. So if we're simply looking at what shareholders think, That's interesting.

33:40From a culture perspective, I don't see that. And Nike's had a decision with John Donoghue, who was CEO after Mark Parker, who was on the Air Pegasus, who followed obviously Great Phil Knight and came off some service now, which has been a great business, but has really struggled. So Nike, but the beauty of Nike's brand being so strong is it's been able to, to an extent, survive this catastrophic business performance. So we've got a degree of brand. Our brand allowed us to survive COVID. So if you look at COVID as a travel business, and you obviously know travel very well, we were able to, our customers trusted us to not demand a refund in almost all cases because they love luxury scapes.

34:16They knew we sold a unique product. They wanted to keep that product or they'd buy something else with us. So very few of our customers demanded a refund versus like a booking.com. Booking.com is the best travel business in the world or Google and booking.com are the best travel business in the world. But Booking sells a commoditized product. So just gave refunds and they were fine. They did very well and continued on. But we were lucky enough that our brand was strong enough. Our customers loved us so much. they were happy to keep it as a credit or keep the actual package itself till COVID went away.

34:43So look at other competitive advantage, cornered resource. Do we have a little bit of cornered resource? Because we do exclusive deals with our hotel partners and we deliver more volume than anyone else in the world. So we would go to our great friends at Hyatt Bali or Pan Pacific Singapore or Royal Horse Guards in London, all these great partners of ours. And we deliver a genuine amount of revenue for them. so we've got and they give us a really great package to sell to our customers and they don't give it to anyone else so we've got a cornered bit of cornered resource you can buy those hotel rooms on booking.com but you can pay double so I'd say it's a bit of cornered we don't really have process power and we had no switching costs which is a real challenge so we have the highest MPS of any retail travel business in the world we think take out the I'm not talking about the high-end tourer business like Abercrombie because that's a bit different but for a non-verticalized business we have an MPS of 72 which is unheard of given booking, which is like the best in class, is like 10.

35:37So we've got unbelievable NPS, yet our customers will buy from us and then go to booking next week because for any number of reasons. There was zero switching costs in D2C. How do we build switching costs? I'll tell you how we're trying to build it in a second. So switching costs, cross, process power, cross, counter-positioning, yeah, we have that. We did flash sales, booking.com can't, but every startup has counter-positioning. So put that away. I think I pretty much covered all the key competitive advantages. I can think of. So how do we build? Oh, so network effects and scale. Didn't really have scale because we weren't global and had no network effects, obviously.

36:11So how do we build switching costs and how do we build some sort of network? So again, this is not our idea. It's not original, but Amazon Prime, the absolute classic loyalty program. We wanted to be, we've spent five or six years thinking about loyalty. COVID happened in the middle, so we had to put it on pause, but COVID finished up. How do we build loyalty? And we're doing two, one, we're about to launch a point scheme, but like the airlines have, that launches in six months. But about four months ago, we launched what we call Lux Plus. Not the most original name, but we like it. And eventually that's$250 a year,$500 subscription fee, and you get significant discounts on our core deals.

36:45You get lots of extra inclusions on our marketplace deals. You might get 40 % off insurance, which is massive. You get priority customer support. You get access to hidden deals, get exclusive access. We'll have a Lux Plus week like Amazon has a Prime week. So you get lots of things, but you basically get back your purchase cost in some cases on your first purchase. So you can save$250, not your$500, but you save your$250. So you basically pay yourself off day one and then everything's cream for the customer. So we want that as we want people to buy into court, some cost fallacy, but it's not a fallacy here because they should get in real value.

37:19We think customers can save$2 ,000 easily for$250 a year. And the reason we're happy to give those kind of discounts is we're not paying Google to reacquire the customer time after time after time. So we launched three months ago. So we've seen some incredible metrics. So we've seen metrics like 30 % to 40 % more average sessions and average orders per user. Clicks are 50 % up. We've seen every cohort's significantly better. And I think about 10 % of customers, 10 % to 15 % of customers have subscribed to LuxPlus since we launched LuxPlus, so the LWU universe. And they're now purchasing about 40 % to 45 % of the product being sold on the site.

37:55So almost half has been bought by sort of 10 % of customers. So these are our best customers. and 38 % of these customers weren't existing customers. So they became a customer after they, a good customer after. So we're seeing sunk cost fallacy in real action, but not just that, because people are getting great value. So we're able to give customers incredible value. Even we already have great value, we're giving them better value. So yeah, we're not making much margin, but we're not paying marketing costs. Our contribution margin sort of gets higher. So it's a great win for the customers and it's a great win for our partners.

38:25And also lots of travel partners, hotels are willing to give bigger discounts if the public don't see it. So because this is a full paywall part of the site, a hotel can give a free dinner, free breakfast, always through the year and know that the other partners aren't going to get annoyed because it's behind the paywall, they don't see it. Yes. Very, very clever. So talk to me. There's been some hard times. You've been a founder for 20 years now. You've seen the ups, the downs. I know some crazy stories where like, you know you guys were pretty close to losing it all can you share like what that's looked like it's really been one time where we came pretty close uh and i talked about when we bought a couple of businesses and the first business we bought in 2012 it was a bit of an aqua hire the business was it was actually a decent sized business but it's really an aqua hire because josh was running it and we bought that business then we bought a couple other businesses at homeways business and a kind of pop culture business straight after had we just bought the first one would have been okay when we buying the three having to integrate three businesses all at once was just way and we've never done that position before so it was just and we're changing tech platforms we're doing just too much so the ridge of the court deals business is profitable and doing all right but these other businesses especially the last two had always massive liabilities we didn't really understand and we came towards christmas that year christmas is always a bad time for travel because people aren't buying travel for christmas sort of the month before christmas and we were doing our modeling and thought we could very much very likely run out of money here we're making money in our core business but we're about to run out of money which is a weird situation to be in and probably you run out of money you run out money like you die uh so we were we were we didn't get to like a day away we saw if this we had a month of cash basically so basically shareholders got together and all but one shareholder put cash in the business so we did made a merge we didn't have that much money at the time we put sort of all our cash in the business and mitch mark who is that great negotiator managed to do an incredible deal which gave us a couple hundred grand, which sort of gave us that plus the cash put in.

40:24As soon as we put the cash in and did that deal, we knew it would be okay. And then we did another great deal in January. And then after that, we were all off to the races. But we were running around town into early December that year thinking, we aren't going to survive, like unless something changes. And then Mitch did his magical deal and we all put cash in our own pocket. All but one put cash in our own pockets and we're able to sort of skate through. But I was waking up in a cold, like we were waking up six o 'clock thinking, this is I think it was 2012 we've done that's eight years of being in business I would have been a partner at a law firm or a managing director at an investment bank by then thinking how much you'd be earning I think I've done all this work eight years I wasn't married then but I was living my then wife who's going to become my wife all this work we've done like eight years of sweat of putting together furniture of dealing with bed bugs thinking about all this you think about the end of survivor and going through like what happened to me I could think about that in eight years about all the stuff we didn't get all this stuff is for nothing and you look like losers because people think you're a high flyer, how much money, how well.

41:22By then, people thought we were doing really well. This wasn't, people think you've been through this yourself. People think you're a loser. And when we started in 2004, like entrepreneurial, being a founder wasn't cool. Now being a founder is, people like you and me being a founder are cool. It's not cool back then. Back then, it was like, you're a failure. You couldn't succeed in law. So you've done this, whatever, this apartment thing. We finally got to the point where we weren't laughing stocks. We were sort of doing all right as founder. We then became more successful. We were doing all right.

41:52We weren't in the rich list or anything like that at that point. But people thought we were okay. And the humiliation of having a business go under at that point, it's different. Business goes under after six months, people go, whatever. Gave a crack, no product market fit. We had all that. So it would have been a death by stupidity. And this is before we got the$10 million out of that. You have runs of bad things and runs of good things. and we then had a run of good things not long after. We had like bad, bad, bad, bad and we just through pure grit got through and through backing out, we put money back.

42:24We took all our money out, put it back in. Like when you're in playing poker, you just chuck everything you have in that last hand and we literally did that. And yeah, we didn't come within a day or two of time. I remember we'd been with Josh in Sydney and thinking, what are we going to do? Like, who can we speak to? Can we speak to this person, this person? And nobody gave us a cent. Like, had anybody invested us then, somebody could have invested us for 10 million bucks then and we'd have happily taken like 5 mil on 10. And you could have had half our business and could have 50 bagged it or 100 bagged it or whatever it was.

42:51But nobody takes those bets because they're too risky. Well, most people wouldn't and nobody did. Even our existing shareholders, like the founders put money in, but the other shareholders didn't, but I don't blame them. We had a few people who put together a deal for us and became shareholders. I don't blame them for not putting money for a second. But we did and we sort of got away with it in the end. But it could have gone the other way had Mark not got that deal, have we not been able to put money in? Have we not got the second deal? There's a fair chance I wouldn't be sitting here speaking to you.

43:19I'd be, God knows what I'd be doing. Yeah. Well, look, you have a great podcast and you interview and speak to all the successful founders too. I'm curious to hear, do you think every founder, if they are not getting an experience like what you described, and I've experienced this too, that you're just not pushing hard enough and it's a rite of passage to build something of true worth and significance? Like for me, I see this as a common theme. Yeah. It's a really good question. I don't think it's necessary. I think like - It's definitely unnecessary, but it just happens. It does happen a lot.

43:57Like the Airbnb guys with the Airbnb news or whatever they call it. It does happen. Uber guys had it happen every two weeks. Amazon happened a bunch of times. Like I think, when you think about it, if you're trying to build a big business, especially a really big business, you've got to take, you've got to double, double, double, like keep betting the farm. If you don't keep betting the farm, we probably, we were a negative working capital business. So, and you're probably a similar sense in that we get paid by our customers in advance. So we always had that cashflow, but you always find the risk there as well.

44:27So when you run a negative working capital business, yes, you don't have to raise external capital, which we didn't till after COVID where you sort of fixed the balance sheet because COVID impacted our balance sheet a bit, but you run a much riskier model or if you're raising cash and you're trying to, like look at how risk-seeking Jeff Bezos was at Amazon. Of course, he's going to almost collapse because he's kept betting the farm. Like you're always going to go on that. So I think it's the nature of almost because if you got really big, to get really big, you take massive risks. And if you take a massive risk, by implication, one of those may have gone wrong and killed you because you're taking existential risks repeatedly for the first probably five years of your business.

45:01So when you think about it, it actually makes sense that you speak to a lot of people. Can you speak to a lot better, big entrepreneurs than I have ever spoken to? and you probably see the very best and the very best have probably come it's like you're sort of playing you're about to crash and you sort of just as you're about to crash you sort of suddenly the propeller starts spinning again and it's a bit like that where reed hoffman says great entrepreneurs you're sort of building the plane on the way down or putting the parachute together on the way down that's kind of what you're doing as an entrepreneur yeah and it's it's it's really interesting right because like most founders of our friends you know i'm sure you've had friends that have come had these close calls and it's like every time it happens to you too it's like the best thing like it's caused you to to do things that you would have perhaps not have done and you've always been better off have you found that you've always been better off as well well think about instance one is when we had the backpacker apartment business and then we chat we pivoted to corporate apartments we wouldn't have we sorry we probably would have pivoted at some point we definitely wouldn't have pivoted as aggressively wouldn't have forced us that's right we wouldn't have bought those properties have we not bought those properties we wouldn't have had a million bucks We wouldn't have had the million bucks to start our next business.

46:03So that was a massive stroke of what turned out to be luck and built resilience. And then if you look at the next one, the existential therapy, we almost ran out of money. We probably had less learnings from that other than just being a bit less aggressive, more conservative with cash flow. But that was less beneficial. But I look at COVID. So I think COVID travel business. Yeah, so what happened there, man? Like most people think travel business, like you guys must have got killed during COVID. For a pure profit and loss balance perspective, absolutely we did. If you look at value of business, the opposite happened.

46:34So just before COVID, so a year before COVID, I stepped out of the business. Me and the key shareholders agreed, we'll try and sell a majority of this business. I mean, there's a lot, I don't know, you talk about founder mode, manager mode. Founder mode comes in and out of vogue. It's a bit like sort of baggy jeans. Like sometimes founder modes, sometimes everybody loves founders. As you see, some people hate founders and we should bring, like Sequoia Stoll, sack the founder, bring in a manager. Eric Schmidt at Google, I can say. Steve Jobs, John Scully, the most famous one. Now, founder mode is very much in fashion, probably more than ever before.

47:06And you've got, think of every founder, obviously, Steve Jobs isn't alive, but he's dietified. Jeff Bezos, still considered one of the best CEOs of all time. Evan Spiegel, still running the shop there. Zuck, obviously, still doing a great job. Jensen, probably the king of founders now. Two jobs, Denny's and founding NVIDIA. So, founder mode has come very much in fashion. 2019, it wasn't in fashion. So, we all thought, founder's not there. We can get a better valuation from, say, private equity. who's potentially buying a minority or strategic. And we put a manager in to run the business. That manager will then go work for the new buyer and we'll get a better valuation that way.

47:40And there was a lot of merit in that. So I wasn't 100 % sold on that, but I kind of thought, yeah, there probably is enough merit that it's worth a try. And it gave me a chance to go traveling and do some other stuff. COVID happens. We literally had 50 people go through the data room, had people spend$2 million on DD, get to our final three, COVID happens. And understandably, all the final three run off. Looking at valuations that were kind of mid twos or early twos, which we thought was massively undervaluing in the business. But the market is what the market is. We had a fulsome process and the market was right.

48:10We didn't have a competitive advantage. We didn't, apart from brand, had very little competitive advantage. And the market smartly recognized that. And certainly in hindsight, even at the time, we kind of agreed, yes, we wanted a lot more. And we thought the business could be worth more, but the market doesn't lie in a fulsome process. So we ran this process and all the buyers went away. So we had to go back to the drawing board. So six months later, the business, COVID certainly impacted revenue. Obviously, people, our business was outbound travel, mostly from Australia. And that wasn't, was illegal.

48:41So we could do a bit of inter-Australia travel, but then you had lockdowns that impacted that. So yeah, our business, our revenue was impacted, but not to zero, like a lot of our, we sort of maintained 30 to 40 to 50 % of our revenue. So it was not the worst. We could sell domestic and we also could sell US to Maldives, for example. We became a massive seller of US to now this product. And UK was still going. So we didn't fire a single person because of COVID. That's awesome. I think the only travel business in the world to not fire anybody. In fact, we grew our team during the duration of COVID.

49:13That caused a pretty big profit and loss balance sheet hole. So we had to raise money post-COVID. But what COVID did, apart from kill the process that would have underpaid us, it really made us think about competitive advantage. And we started building our first marketplace. So instead of having just a small number of short time, really discounted deals, we had always on deals through the year and then tours we had on through the year. And we had them started cruisers and villas and experiences we sort of redid and put as a marketplace. So we went from 30 technology people in the business being product, design, engineering to 140 now.

49:44So we went from business that was, people maybe thought we were a tech business, but really we were an industrial deals business with a veneer of tech to being a genuine, really strongly technology enabled business. Our tech team now is world-class. Like we get people out of it last year and people out of Canva, people out of what people think are the best tech business in the country. We recruit really good people for them to work for us. We've got an incredible team, led by an incredible leader in Shai, who's built an amazing team. Shai left us, went to Amazon and came back and had all those Amazon learnings.

50:13Amazon's on such an amazing business. We had the advantage of having somebody who was in there. So when I came back, I came back six months into COVID. First thing I did was got Shai back and then brought a few other people back, rebuilt the team and really focused. And the beauty of it, and the guy who came in around it did some really good things, but did some things I probably wouldn't agree with. But a lot of the mistakes I was making, he just continued, like it wasn't his fault. He just did what I was doing. And then I look at it and go, hold on, that was stupid. So it gave such a new lease of life, being able to effectively look at yourself from outside the window.

50:45And I could see everything I was doing wrong. I'm still doing stuff wrong, no doubt. But I could see a lot of the things I was doing wrong as a CEO and really tried to fix that. So it was a huge benefit stepping in and stepping out 18 months in. Obviously COVID gave us heaps of leeway to do experiment with lots of stuff. And especially when we raised capital, we could experiment with lots of stuff. We were private. We didn't have to raise dilutive capital like Webjet or like Flight Center. Great businesses had to do. Even Airbnb had to raise hugely dilutive capital. So we didn't have to do any of that.

51:12We raised capital at a valuation that was like double what we were getting offered pre-COVID. What we're going to sell for turned out to be the bargain we thought it was at the time. That's because we changed the business. It was much more technology driven. We're now a business of 3X the size we were pre-COVID. Almost 3X the staff, 3X the revenue, more profitable and a much more stable business with significant, well not significant, but with competitive advantages that we can see. So if you look at Lux Plus, yeah, we've got sticky customers now, so switching costs. We'll do a bit of a network.

51:41So you think of what that subscription business is, is we get more benefits from members, exclusive benefits that are hidden for members. So more people are likely to join. As more people join the platform, more hotels participate because there's more customers for them, which gives us more. So creating the famous Jeff Bezos flywheel. So more benefits to customers, which gives you more customers, which gives you more benefits, which gives you more customers. So we finally started to build our very first flywheel. We've never had a flywheel, really. We've now got a flywheel. We've seen that with the metrics of Luxe Plus.

52:10So it's just leading to a halo effect. We had three of our most profitable months ever, our biggest contribution margin month ever in September. September is usually a terrible month for us because of school holidays and other stuff. We had a record month last month from a contribution margin perspective. I think October could be better. And January, November, December won't be because they're always sort of seasonally bad months. But January should be a huge month, assuming nothing goes wrong existentially. And that's because we had the cover of COVID to work on a bunch of stuff that we otherwise wouldn't have done and wouldn't have the guts to do.

52:38Probably wouldn't have even thought about, we probably would have sold half the business and tweaked on to being a business that made 25 million bucks a year or whatever but was growing pretty slowly and it was sort of a nice business and people loved it but wasn't ever going to be a multi-decker unicorn or decacorn or whatever we now have we've got a lot of work to do still and we've got an incredible team to do it but we could become a decacorn one day i'm not saying we will we have the foundation to keep growing into that whereas if you go back five years we never would have like maybe we could have got to five, 600 million, whatever.

53:08We never would have hit unicorn and definitely wouldn't have got further than that. Now I think we have the team and the market to potentially do it. That's not to say we will because there's competitors and markets change and lots of things happen. But we have, I think now got the real TAM to grow into, whereas I don't think we had that before. Man, just for everyone listening, watching, what's a Decacorn for people that don't know? It's a 10 times unicorn. It's a$10 billion business. And how far away, like where would you say you guys would be valued at now? We did around 18 months ago, just under 500, sort of 450.

53:46Somewhere between there and unicorn. Like it depends how you're valuing us. We get valued on EBITDA. So because we make money, we don't get, like if we got valued on Airbnb's valuation, we'd be multi-billion. But we don't consider ourselves, we don't consider that valuation to be right. we get valued on EBITDA multiple and potentially a PE multiple at some point because we make real EBITDA not fake EBITDA and that's what we do how do we keep growing cash flow like we like to think of ourselves a real business that actually makes money and when you're a e-commerce business you kind of it's different when you're a SaaS business you're a marketplace when you eventually can grow and scale into a really big valuation if you're a retailer and you're not making money at a contribution margin level you've probably got an issue and it's probably not a great business and yes you get better from scale we want to as we grow what's called ttv is a bit of a vanity metric that isn't relevant for us but our ttv is over a billion dollars now that's a irrelevant it's money through the till but if we can get our margin of ttv up to sort of six seven percent which we're not we're not there at the moment we're a lot lower than that but as we scale that's the challenge so we want to scale ttv and we want to scale margin really and we want to scale margin percentage so how do we become more and more profitable and that to an extent happens as you get bigger because your fixed costs obviously scale out of them.

55:00We haven't grown our tech team in probably a year. So it's stayed at 140 level. And the aim is to, obviously we will eke it up. Our customer service team scales to an extent, although we're trying to use AI to reduce that. Our sales team definitely scales, although our hotel team doesn't have to scale too much because we do it by region. So once all the regions have allocated, you don't need to scale that too much. So I think we can keep, we can definitely scale ahead. The question for us, can we keep getting our marketing more efficient? We've had a great, our marketing team's done a great job of significantly improving contribution margin.

55:28So we've reduced our marketing spend year on year and increased sales, which is sort of what you want. If we can keep getting marketing more efficient, hold employee costs, we probably can eventually get to that 6 % margin, 6%, 7%. And then if you can get to a billion,$2 billion in turnover at 7%, that's a really good bit. That's$140 million in EBITDA. So can we get there one day? Man, that's impressive. Well, we're nowhere near that yet now. But can we get there? Well, time will tell, but that's what we're aiming for. And how long do you think that would take? I'd hope we can get there within five years.

55:58There's a lot of ifs and variables. We've got to execute on loyalty. We've got to execute on bed bank switching. There's a bunch of hard stuff we're working on. Loyalty is really hard. So we've done the easier loyalty, the subscription loyalty, which I think is a great product, but it's a pretty easy product. It's a single product. Points loyalty, which is effectively creating your own currency, is much harder. You've got liability on the balance sheet. You've got to make sure you get the points right. You've got to work with third parties like Amex and like the banks to sell points. There's a lot in there.

56:27If you can tap into the Amex stuff, that'll be game-changing. How do you tap into that? Amex only puts on one new partner every five years. So assuming you've got to be that one partner is probably wrong. But we work with a lot of banks. We work with Amex in a number of different senses. So we hope one day maybe we'll be able to work with them in that sense. But we work with a lot of the banks and we think the banks are much more likely to jump on. When we ask our customers, would you rather luxury escapes points or airline points? 72 % said Luxury Scapes points. And part of the reason, a lot of your customers are US-based or Australian-based.

56:57A lot of people know about points. And the problem is it's really hard to spend points on airlines now because airlines are full. They don't want to give point seats. Yeah, I know. That's a massive problem. And now they doubled the points, tripled the points. Yeah, exactly. They're not as valuable as they used to be. Yeah, so that's what we think. So if you look at the value of a business class points, five cents a point historically. But you can never redeem for business class. So yes, they were notionally worth 5 % in this make-believe land. In reality, they're not worth that at all. Your economy points value is one cent.

57:24We think we can come in at sort of just over one cent and that's before our deal value because remember our deals are 30, 40 % off. So it's really like 1.5, 1.6. And it's always redeemable. It's not like an airline where you go, oh, there's nothing available. People will be able to use it as cash on our site. So we think we can make an impact there. So for our customers who actually want to use their points and don't want to have points that sit there literally deflating because every minute these points are deflating, A, there's inflation and B, there's actually points deflation as well. If you can actually use your points on Lux, that's, we think, a huge bet.

57:55So we want to target the everyday value of points. So yes, you're not getting the five, six cents you've got in business class, but I'd much rather get one and a half cents I can use than five cents I can never use. No, that makes sense. So I want to switch gears and ask you a question about you personally. So you're actually very active on Twitter. You do throw a bit of shade around on certain companies or individuals. And you're not afraid to share what you're thinking or if you think something is bullshit. You know, you are quite active. You write some op-eds and you're quite vocal there. Like you write controversial articles, if I'm going to be honest, man.

58:38But if somebody met you at a bar or like at a barbecue, you're a very unassuming guy and you don't have this kind of – in your writing, it is quite like full on, man. So like where does that come from and what inspired you to go out and kind of call bullshit or what you believe is bullshit on certain company valuations or even political? Like, yeah, like it's a very interesting side to you. Do many people ask you this? Not really. In terms of business, for a start, I try to never punch down. So it's very, very rarely I speak badly about a small business or a startup. It's always punching up to big business.

59:15So if you look at the people I've – and I would usually – So I've been very vocal on the valuation of business called Alassian, Australia's 10th biggest business. But the founders are incredible founders who have done an amazing job and two of the best founders Australia's ever produced, Mike and Scott. Being critical of valuation is very different to being critical of people. So I tend to be critical of where the market has overvalued a business or if there is a CEO that's, I think, being a bit dubious with what they're saying, that's a bit different. But again, that's punching up. I'd very rarely say that on a small business.

59:45That's usually a big business. But if you look at most of the business we talk about on our pod, The Contrarians, where we talk about we delve deep into businesses, they're mostly billion, 10, 15, 20, like$50 billion businesses. It's not often we'll talk about, certainly in a negative way about small business. We tend to talk, I don't love big business. I don't love government in terms of like the waste. So that's what we'll sort of focus on. So I think if you look at like sort of the greatest range of the Joe Astons, Joe's like the loveliest guy I'll ever meet. people you think in his writing is he was pretty sort of firm uh but he would always never punch down as well he'd only ever punch up so i think it's a similar sort of context where if you see it's probably comes from like high justice like you see something that's wrong uh you want to inform people about it i wrote a book called peaks the trough in 2010 yeah 2010 i didn't know about that yeah i got you a copy amazon.com microeconomics bestseller um and it was talking about the companies that collapsed during the global financial crisis and not just any collapse, and there was some stuff on executive pay, but companies that collapsed and the founder or CEOs took a bunch of money out.

1:00:53So that was kind of the theme. So where a shareholder have been ripped off by dubious sort of founders, executives. So that has always been the focus, the high executive pay. Why should a CEO get 100x or 500x someone who's on the front line? If you look at our business, my pay is right in the probably below the 50th percentile of our business and yeah i'm a shareholder but i get that either way um i think ceo's historically been fundamentally overpaid almost across the board and look at elon musk 50 billion dollars or whatever 50 billion dollars at tesla's click look he doesn't need the money he's the richest guy in the world why is he getting extra money for running tesla why is tim cook getting billions why is cheryl samberg and tim cook are both brilliant executives getting a billion dollars it just doesn't make any sense So a lot of what I've written about has been about executive pay.

1:01:37So it's, again, these are wealthy people who are much wealthier than I am. I don't think I'd ever talk about a founder, like a single founder who's like the business collapsed. I never talk badly about that because I've given it a crack. I've tried their best. That's very different to the people I talk about. You know, you'd been hustling, building business for eight years, you know, perceived successful. And this is the crazy thing. Like sometimes on the outside, it looks like your business is doing so well, but people don't really know truly what's going on behind the scenes. and from the outside it could look like it's absolutely killing it, but you're not.

1:02:08And you said even then, imagine how you would be perceived by others. So there's a little bit of a trade-off there. You're not worried to speak out, and that's a fear of mine too. We all care about what other people would think if we fail. I've always felt that if I say something that is insightful, that adds value to readers or watchers, and that is correct, then it's a net positive for society. and I'll generally try and make a well-reasoned argument and know that sometimes people will disagree with it and you're not going to please everybody all the time. If you try and please 100 % of people, you'll drive yourself crazy.

1:02:43Like, can I please enough people and can I change people's minds? And in terms of the other point, which is sort of worrying what people think from a business perspective, I think probably certainly the last five years, we've sort of got to the point where like COVID, if COVID didn't kill our business, it's probably like something will kill it. Like no business lasts forever. Like, look at the business, the biggest business in 1970, like three of them are still around in the top 50, like Exxon and a couple others, but most weren't. So we'd love to build a 50-year business. That's certainly a big goal of ours or 100-year business.

1:03:17I'm not saying we'll be able to do it, but we like to be long-term greedy. We'll be very generous for customer service. We want to keep customers. We understand the lifetime value of customers. We're willing to sacrifice short-term profitability for long-term profitability. we want to build a long-standing business and we often think about that but I don't think our business is going to topple over tomorrow or in six months or in 12 months so it's a very different business now to what it was in 2012 when we rely on a small number of great people a small number of great deals now we've got 600 people on the team of which hundreds and hundreds of them are elite people who add a heap of value we talk about founder manager mode like yeah I'm a founder of this business, but it doesn't matter how good a founder you are, you need 100 amazing people to be able to make a great business.

1:04:02And Brian Chesky, who came up with the founder mode thing, Airbnb isn't because of him. Airbnb is because of Blender Johnson, who was his great off-sider for a number of years. I think he's still there or maybe recently left. He had a number of people, hundreds of people who made Airbnb what it is. Having a great founder like Brian there is handy, but Brian himself ain't doing anything. Adam Schwab ain't doing anything by himself. Adam I'm sure I'm with an incredible ELT, an amazing SLT, an OLT, some incredible talent for everybody from doing hotel deals to answering our phones to doing the design work to writing the words.

1:04:33It's an incredible team. And my job is to assemble and retain that team and allocate capital and work on the product. But that's only a small part of the business. There's a bunch of people doing a lot of other stuff. Yeah, that's a really great point that you make because oftentimes we see the CEO, the founder, that's the person that gets all the recognition, a lot of the, you know, quote unquote, like spotlight, but behind them are just incredible people, right? Like just like next level killers, like just absolute machines. And people don't talk about enough. Like that is so key if you want to scale a business.

1:05:11Like you can build a million dollar business by yourself, especially with AI now. Like there is no doubt about it. You could build a million dollar, one product, e-com business, SaaS business, service-based business. It is possible, right? Definitely. There is a one-person business in you. But to get to 10, 20, 30, 50, 100, 200, a billion, you need to surround yourself with just really quality leaders, great people. But not enough people talk about how to actually do it. You have to learn it yourself. and there's just so many, once again, a common thread, like hiring and overpaying for execs that promise the world.

1:05:50Like it's unfortunately a rite of passage, right? We've both seen that and we know about that better than anyone probably. And sometimes you've got to pay up for really good people and sometimes you just be really quick when somebody isn't contributing to move them on because it's actually not helping them either. And I think we all know like fire fast is – and I never fire fast enough. and partly because it might not be the right time. It might be coming to Christmas or it might be like someone's had an issue at home or there's often a reason why not to do it. And sometimes actually you should just wait till there's a slightly better time for that person.

1:06:24But as soon as that window opens, sort of to jump through it. But when you do, so a great domain role of a manager sort of for our businesses at our scale is finding really good people and keeping them and not having to pay 5x market. So paying markets, you want to make sure people are paid fairly. So you want to pay someone less than what they get elsewhere because it's not fair to them. So you pay someone the market rate, but you want to pay someone double market rate because you're a terrible employer in other respects. But finding great people is, and I think the one really, and it's something that I'm sure you deal with a lot, is how do you scale as a CEO, as a leader?

1:06:57So we all start with zero employees, and then there's a different set of skill when you get to 150 and a very different set of skills at 300 and 500. I'm sure there's a different set of skills at 1 ,000 and 10 ,000. and as Reid Hoffman says, you've got to be a continuous learner, infinite learner. You've got to constantly reinventing yourself every year, every six months. How am I learning? How am I growing? And if you're not learning and growing, you're probably going to stop contributing to the business and I don't own all the business. So there'll be a time where Cheryl will say, actually, Adam, you've done all you can.

1:07:27We appreciate it. And let's bring in Nathan to run the business because Nathan's going to do a better job than you because Nathan's run a business that's this scale and whatever. So at the time, and it's really hard to recognize. Very hard. Not many politicians quit when they're ahead. Very few CEOs resign at the right time. It's a real sort of challenge knowing when you're not adding value. You also don't want to leave too early. You don't want to do a Howard Schultz either and come back 17 times because how does that guy ever hire a CEO again? But you also don't want to stay too long. So it's a really tough challenge, but the real key is how do you keep learning?

1:08:02How do you keep adding? And also how do you recognize when you're not adding value? And so I'm curious, like you've obviously had some incredible people around, like you talk about the deal-making dude and like stuff like that. Like, so what do you look for when it comes to hiring great people, having great people around you? Pretty key things. It really depends on the role. Certainly grit resilience is a massive one. So what you look in a founder, you're also looking for an employer. A great employee for us is an entrepreneur. If we can have 200 founders in our business, and we've got a lot of people who are kind of like quasi-founder or entrepreneurs or re-founders as Reid Hoffman calls them.

1:08:37We've got a bunch of people who could quite easily have their own business, but being an entrepreneur in our business, we love that. So someone who's been an entrepreneur, someone who really shows that love of entrepreneurship. We've had lots of people and we have lots of people like that who work in our business. And there's some people who are just great workers. They're not entrepreneurial as such, but they're just super smart. Other people are really good negotiators and create value. It's actually really hard to know day-wide. Interview is a shocking way to test it. But people will prove pretty quickly how good they are when you throw them in.

1:09:08So yeah, we look at sort of what people have done. Someone's worked for a big bank or spent their career working for a big bank, probably not going to be a great fit in our business. If someone's had a startup themselves, more likely be a good fit. Not always. If someone's worked in a scale-up, that's great. If you've worked, if you were employee five at Uber and grew the first 20 billion, that's perfect for a scale-up like us. We love hiring people who have been in, who started early because they really take a risk and has scaled up with the business, they're unbelievable people to have in your business.

1:09:35So someone who's worked in a scale up and has done it before is fantastic. We just want people who are lots of high initiative, high EQ, not a dickhead, love collaborating, love coming to the office where we'll soon be back five days a week, we're four days now, but we tell people that so they know. So someone doesn't want to come in, they're aware. Someone wants to work from home every day. And there were some exceptions, of course, like carers, disabled. So let's take out the exceptions because there's reasons for that. But if you're able-bodied and aren't a carer, we want you in five days a week as of January.

1:10:09And if you don't want to, that's completely fine. There's a lot of businesses who aren't five days a week and we go work with those guys and you'll have a great career in and out. But we want a certain type of person who just relishes being with other people and loves collaboration. And that's what the model we've built. And it's not for everyone. Atlassian takes a very different approach and they're a$40 billion US business. So there's different approaches that clearly work. That's our approach. And we want a certain type of person. And there are certain people who do really well in our business and certain people who just don't do as well.

1:10:39And we want to try and when we're doing it, I'm interviewing people. It's not simply them trying to impress me. It's me trying to impress them and also being really honest. And saying what's good and what's bad about our business. And we're not, no business is perfect. No person's perfect. No business is perfect. So we want to let people know we are a hard charging business. we can be pretty brutal if you're not up to it we'll probably move you on but if you're really good if you've got high initiative if you want to work in a high performing team if you want to make lots of money you probably and you love working with people then we're a great business for you that's not everybody so there's certain people who want to and if you're not that there's lots of government businesses you can work for there's lots of big businesses you can work for so just pick and choose and somebody's lifelong career at a bank I'm not I'm talking about retail not investment investment's different if you've worked at JP Morgan your whole life or come up bank your whole life probably not gonna be a great fit for us.

1:11:28Like unlikely. If you worked at a big corporate, sleepy corporate government body, probably not. That's it. If you worked at a startup, spent six months in a bank and hated it, maybe you are the right person for us because you hate that environment. You love this environment. So it generally sorts itself out, but we have a good idea of what works and what doesn't. So what's interesting is I used to work at a travel company. Well, it's been around for like 40 years now. Great travel business. Intrepid travel. Like, you know, I've worked there. I ended up leaving, not because I didn't love the company or the culture but just the work wasn't for me and I wanted to do bigger things.

1:12:01Clearly you have. Yeah, well, there you go. But like, man, what you just described is very, very different for like the travel business industry and the culture. It's usually very, very casual. Like so you don't really hire people from like the travel industry by the sounds of it? In some roles we do. Okay. Maybe agents or reps. Agents, yep. Yep. So if you're working, so if you're speaking to our hotels, that's usually, not always, but usually out of travel, but it's a certain type of sales negotiator. Yeah, because it's very chill, man. But if you look at Flight Centre, who's the great Australian travel business, they're pretty hardcore in many ways as well.

1:12:40And then we get a lot of great people from Flight Centre and Screw who runs it as a classic entrepreneur. So a lot of people who have left flighties come to us or have left flighties, gone somewhere else, come to us. It's a pretty common route. But yeah, if you look at our tech team, It's not travel generally. Almost no one's come out of travel. And if you look at other sort of marketing teams, generally not travel, for example, finance not travel. So yeah, but part of the reason why we've had some success in travel is every travel business has done it a certain way. And the same reason Flighties had all that success.

1:13:09The same reason Intrepid had that success is they came from generally not, like so Screw who runs Flighties was a vet. I was a lawyer, Jez was a banker. Not having that rusted on travel knowledge was a massive. So we didn't know anything about it. I've never stayed at a five-star resort ever. And I started a business with a lot of risk gaps. So that was helpful. So agents used to hate us and some still do, but now we work with agents. So agents sell our product and we give them commission. So we've gone from agents hating us almost across the board to some agents absolutely loving us because we make them lots of money.

1:13:39So we've sort of changed a bit there. But yeah, part of the reason we're able to succeed in some sense in travel is not being from travel. Because yeah, you guys basically like are a full-blown travel agency now, you would say, yeah? In many ways. We sell, we consider it really a tech-driven travel seller and we create the world's best holidays. So we're not simply selling a dumb travel product. We have a product called Trip Planner where you can drag and drop all your stuff, all your experiences, your hotels. While you're on holiday, you can be adding stuff in. As you're going to the airport, you can add - Oh, like TripIt, but better than TripIt.

1:14:12Yeah, like TripIt. TripIt, you can't buy stuff on. So TripIt, you'll buy on Qantas or Delta and you forward your things to TripIt. So we have that. but you've got to buy on another platform. You can buy on our platform or other platforms. So you can redeem your points on Chris Flyer on Singapore Airlines and then put your flight in our trip planner or you can buy Singapore Airlines flight on luxury escapes or as you're driving to Melbourne Airport, you can go to the Aspire Lounge, one of the nicest lounges in the airport and for 62 bucks have, or you can drink champagne and an unbelievable meal before your flight by swiping and bang, it comes right in.

1:14:45And then you can plan your trip and part of the fun of travel is planning, looking forward to it. So we sort of gamify the planning process. Once we have our point system established, we're going to do a lot more around that. But you can share it with your partner. And here's what I want to do. They can say, no, no, get rid of that. I want to say Ritz-Carlton, not Park Hyatt. And they can sort of jump, jump, jump. And then when you're on holiday, I think most itineraries travel agents give you this piece of paper and you're kind of handwriting on the side or crossing it out if it's changed with us.

1:15:10It's all online dynamic and you're just changing it. So really it's probably, I think, the best travel planning tool in the world and it's getting a lot better. Yeah, wow. That's really cool. So a couple of last questions. We have to work towards wrapping up, man. We could talk all day. This is awesome. So one thing I think you've done exceptionally well, and you kind of talked to it, was brand, right? I think the Luxury Escapes brand is a very, very good brand. Like you've done a really great job. You and the team should be super proud. I'm curious, what advice would you give to early stage founders that want to create a brand in a space where it is easier than ever now to start a business, right?

1:15:52Easier than ever. You've got AI, you've got basically a co-pilot helping you to speed up things. You've got so much information out there, like Founder, like we provide so much gold for people, right? Like, you know, what would you say to people that want to create a brand that is getting cut through, that speaks in a crowded market? Obviously, it takes time, but what, and you've got to chip away. Just like with Founder, like I've slowly, built the brand and chipped away and it takes time to build brand but like what do you have any principles or anything you could share that's a really good point in that like you've got 30 40 years so don draper madman and you put an ad on tv and you get great reach and that's how you build a brand forget that that doesn't that's that's just non-existent how have we built i can only speak to us because it's hard to advise on the hypothetical but if you look at us how do we build our brand and it was like you slowly so we built one on just having the best world's best product so we'd have the world's best travel deals travel deals you couldn't get anywhere else you had a cornered resource so you want to spend say 40 when everything else is apart you have to go through luxury escape so people would slowly discover us that first thing is goes they think we're a fraud this is too good to be true how can they be so much cheaper than everyone else there's something going to be a catch and some of the early adopters and the mavens start buying and they tell three or four friends i did this amazing luxury escapes you wouldn't believe how good this was because it actually is unbelievable you're at a resort and the person next to you's paid two grand and you're paid two grand and you've got 17 and seven breakfast transfers and massage and this person's got nothing is paying two grand for what you've just got for free that's that's a and then they find out and go oh my god i'm doing that next time so it's been a lot of someone tell someone tell someone so great product was one big reason the second one is really good customer service so we over invest in customer service we always have it's we're a high high not high margin high cost products so even more reason why we've got to put a big emphasis on customer service we had phone service for the last of 10 years unheard of in travel booking.com has zero service you literally cannot speak to anyone you die on when you're away good luck speaking to someone booking these can't they don't have no one it's expediate the same and then be the same uh or mmb is less bad actually in fairness to them we have 24 7 customer service on the phone all year christmas day 2 a.m we'll answer the phone uh so it's so there's great product great customer service and then we do do marketing but we actually did mostly direct response marketing so we actually advertise our deals themselves not we've done a tiny bit but like we're talking like sub five percent brand marketing probably sub one percent of your total um total expense yeah and total so your total annual budget would be sub one percent you reckon on brand now it's probably eking up now but i'm talking about the whole bit the whole lifetime business yeah the sort of difference is we've done some stuff we've created a media business so we've got we run our own tv show we produce it we run it every year we had eight seasons of it we have our own magazine we had a podcast briefly uh we do a lot of radio editorial stuff so i'll go on the radio sort of two three times a week for like five ten fifteen minute segments so we do a lot of a new and a lot of newspaper ads which again people think newspaper is dying well it's been incredible for travel sector so we do a lot of stuff uh but sort of semi-brand semi-content combine that with incredible product combine that with incredible customer service that's how we've been able to grow the brand to it's got six percent recognition we're still not booking.com we're still not flight center we're still on expedia we're still on mmb we're not at those levels um but i think our brand's always been bigger than our business if that makes sense and now you can speak to there it'd be rare that i'd speak to somebody in australia who hasn't heard of us and a good chunk of people i speak to have bought from us at uk we're slowly making progress like most people in uk haven't heard of us but but maybe one in 15 have uh and eventually that might be one in 10 then one in five, then one in two.

1:19:34In the US, no one's really heard of us yet. Some of the people who have bought from us love it. We sell more Maldives to US customers, nothing to anyone in the world because we're great at Maldives. But clearly we're nothing like Expedia and booking in the US. But yeah, so we've had a few different ways to build a brand. And we're just trying to do the right thing by customers, I think is a really big one. If we provide a great product at a really good price and do the right thing by customers through the process, if you look at our reviews on trust pilot product review it's probably the highest retail travel it's sort of 4.8 4.9 uh and there's always been some people are unhappy and usually people are unhappy because the hotel sort of done something wrong which is not common but occasionally hotels just want to do the wrong thing or there's confusion or there's a techie who knows but it's pretty rare that a customer has an issue with what luxury escapes have done They probably won the 100.

1:20:25Yeah, well. Yeah, look, I think when you think about – you said something really interesting. You said we are bigger than we're perceived. Like why do you think that is? Is it because of the name, Luxury Escapes? Yeah, the name. It's a very generic name, which should be a factor. I think just because the stuff we do is – because we're out there and the way we do our marketing is pretty sleek and the brands we work with are pretty impressive and the product we sell. And because a lot of people have had a luxury scapes holiday. We have 800 ,000 people went on a luxury scape last year. 800 ,000 customers last year.

1:21:01That's pretty. People went on a luxury scape because multiple people go on a booking. Yeah, okay. But still, that's pretty impressive. It was a lot bigger than we used to be when we started, but it's still probably like 100 million went on a booking. So it's still like a lot smaller than booking.com. But I think people in many cases, because in Australia, they know so many people who have used us or who do use us. It possibly appears we're bigger than we are. So yeah, we're not a small business, but we're not a Booking.com and Urban Bay who are giant global goliaths. Yes. So I'm curious, in terms of penetration, you said that US isn't as strong as you'd like it to be.

1:21:36Do you guys plan to have that media arm in the US and really start to build out there? Like, is that not the plan? Well, the US is the world's biggest travel market. So that's it. It's not that much bigger than Germany and the UK, surprisingly, just because more people in Germany and UK travel. travel so if you add up germany the uk they're bigger than us funnily enough yep and then australia is probably only like a fifth of the us even though it's a tenth of the size uh because we travel more we over index uh so if you look at we're in certain niches we're dominant so if you look at people traveling to bali we're like 20 of people who travel to bali we'd be the eighth largest country supplying bali sorry that's not no sorry we're about 10 of people go to bali and 20 of australians who go to bali uh it's pretty significant uh we're 50 of australians who go to Maldives.

1:22:18So certain routes were very dominant. Other routes were less so. US, we were pretty good during COVID, pretty aggressive during COVID. But we probably focused too much on growth and not enough on profit. And now, obviously, since COVID, our focus has been how do we grow profitably rather than how to grow any cost. So what we said, we seem to have more product market fit in the UK and potentially in Europe. Our product's just more appropriate for those markets. So So we're leaning, we've got 30 people in Barcelona now. We've got a course into the services of the UK. We've got much more people in Europe sourcing European and UK hotel packages.

1:22:53So we're just saying, let's focus on one or two markets, which is sort of UK, Germany, Netherlands, a couple of those really good markets there. Get them right and then look to Asia and the US down the track. So we are still operating in Singapore, Hong Kong, India, Middle East, US. But they're not focused markets. We sell every day in those markets, but not to the extent where we sell in the UK. Our UK business is becoming material. It's now our third largest market behind Australia and New Zealand, and it will probably overtake New Zealand in the next couple of months. Yeah, wow. Growing well over 100 % a year on year with no increasing marketing spend.

1:23:25So it's been a really great result. It's really come from really smart people there and great, great supply. And do you need much boots on ground to launch in another country or to go harder there? To launch, no, because we were in 30 countries. but to go hard you need better supply so if you look in Europe we don't need people boots on the ground in Germany necessarily we can probably do that from our Barcelona hub so once you've got the supply so we can do but Europe supply is pretty relevant for Europe so if we get like hotel product in Czech Republic in Germany in France in Turkey in Morocco it's kind of appropriate for everyone there and we've got great product in Asia already we dominate Asia great product in Maldives very solid product in the Middle East So a lot of what we already have existingly is really good for these markets.

1:24:12So we probably won't put boots on the ground in every European country, but we want to grow through Europe. We've got some people in the US now sourcing product and we will rebuild that US demand side called the marketing side. And that might come, probably won't come this year, but probably in the next two to three years, I suspect. We really want to lean into Europe. We think that could be a really big growth engine for us. And look, Australian companies historically don't perform well overseas. So you don't want to be too arrogant and say, we succeeded in Australia, we're going to do well. The ones that have, so Lassian and Canva, are actually inherently global businesses.

1:24:44There are actually very few businesses that start in Australia and then recess will overseas. And it's pretty obvious why. Because you understand the Australian market, you're brand strong here. Our brand's zero everywhere else. So you get much lower conversion rates, much higher CPAs. You've got much higher credit card fees in places like that. So it's certainly challenging. But the UK experience in the last year has been a much better one. We're definitely not there yet, but we're getting there. And I'm much more confident we will hit genuine product market fit in the UK. And US will hopefully chat in two years and hopefully we'll have hit it.

1:25:18Yeah. Okay. There you go. Well, look, Adam, man, this has been a whirlwind. We've gone pretty deep on the business, the operations, the highs, the lows, economics, the crazy wins that you've had. so just anything kind of that you'd love to finish off on any questions that you wanted me to ask you any questions that you think interviewers don't ask that they should ask more often as a fellow podcaster yourself I think you've done this a few times I think you've hit all the questions pretty well it's a super honor to be on you've done an incredible job as a family obviously we've been friends for a long time and I've watched on your business incredible business and if you're watching, subscribe to Founder because it's a ripping program.

1:26:02But yeah, it's a real honor to be on the show. I've followed you for a number of years and Jez has been super envious that he's not a shareholder in your business. And yeah, it's been a pleasure to chat. Awesome. Well, thanks so much, Adam. Thanks, mate. Hey guys, if you love this episode, you've got to check out my interview with Davey Fogarty on how he finds trends in undercapitalized markets and turns them into multi-million dollar businesses. I'm generally looking for trends globally. We find trends that haven't been kind of capitalized in certain markets or in certain marketing channels. And then we also obviously add our flair to it.

1:26:40You need to differentiate your product.