550: He Went From $0 to $50M Selling THIS Product | Mike Smith [VIDEO]

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0:39Just head to omnisend.com forward slash founder without the E to get started. All right, now let's jump back into the show. We trekked for a month along the border of Afghanistan and Tajikistan, literally in the middle of nowhere. There'd be a beautiful turquoise lake at the head of the valley and it'd be covered in rubbish. And that's when I was like, this problem is actually way bigger than anyone realizes. I said to myself, I'm going to make It's my life's mission now to try and solve this global waste problem. To solve this big complex problem, we need to just break it down into really bite-sized chunks.

1:08And really all we have to do is two things. To be honest with you, it nearly killed me. 2am calls with factories in China, 10pm call in France, get in the car and drive to the Central Coast. It was one of the most stressful moments of my life. There's been multiple times in this business where I've been walked away. A lot of pressure, a lot of stress and no clear path. But this project has just taught me to like get punched in the guts, take five minutes on the ground and then get up and dust yourself off and go again.

1:37Hear the stories, learn the proven methods and accelerate your growth and future through entrepreneurship. Welcome to the Founder Podcast with Nathan Chan. all right well mike thank you so much for coming down to our studio doing this as i was saying offline it's always awesome to do interviews in person so talk us about this amazing business you've built zero co how did you get started you embarked on like an 18 month journey around the world before you i kind of figured out this is the problem you want to solve about zero co so So talk us through it. Yeah, totally. Well, first of all, we make personal care and home cleaning products.

2:22So stuff you use every day at home like hand wash and body wash and deodorant and shampoo and conditioner. And we deliver it to you in the world's first paper-based refill. It's about 97 % less plastic than anything you can buy at the shops or online. And then we use the proceeds from the sale of those products to go and fund ocean cleanups. So I've got a full-time operation doing cleanups now. We've removed 45 million water bottles from the ocean. Wow. So that's Xeroco in a nutshell. and in terms of the journey to get here as you said like before zero co i had a previous business it was a winemaking brand called cake wines i sold it in 2018 and my now wife elissa and i decided we're gonna take like a little mini retirement and go on this big crazy trip around the world and just forget about like startup life and business and the world for a while and the brief of the trip was like we want to go to the most wild crazy places on the planet and so we literally bought an atlas one day and started looking at the map for countries that we'd never heard of before and then when we like found a country we never heard of we started researching we're like what's the most crazy place within that crazy place that we could go to and so we sketched this big overland trip around the world basically and and ended up spending like 18 months trekking and hiking and living in a tent through some like crazy wild places uh and it was during that trip that i became aware of the severity of the global waste problem um you know like a couple of highlights we we trekked for a month along the border of afghanistan and tarjikistan like literally in the middle of nowhere in this this place called the wakan valley um and it's where the himalayas end and the tian shan mountains begin it's this the valley's maybe 100 meters wide one side you've got 6 000 meter peaks the other side you've got 5 000 meter peaks that's afghanistan 50 meters away that's darjikistan 50 meters away and we tracked for about a month through this valley and like literally the middle of nowhere no human civilization and multiple times we'd kind of go up out of the valley into like a side valley and we'd be 4 000 meters above sea level and there'd be a beautiful turquoise lake at the head of the valley and it'd be covered in rubbish and you just think how's this stuff even getting there um and they were just moment after moment after moment on this trip in the middle of nowhere uh and that's when i was like holy crap this problem is actually way bigger than i realize and i think anyone realizes right because when you go to like dense population centers uh busy cities and developing countries particularly you see rubbish right and you expect to see rubbish but when you go out literally into wilderness and you see it there it it really affected me to be brutally honest um and it was during that trip that I just said I I'm going to try and do something about this problem it feels like there's not enough people working on this problem and as woefully unqualified as I was at the time and probably still am to this day that's what I said to myself I'm going to make this my life's mission now to try and solve this global waste problem and that's what I've been doing every day for the last four and a bit years.

5:23Yeah, so talk us through. So you come back from this trip. How do you get started, right? Because so many people, they start with a dream. They start, the best way to start with a problem, how do you solve this problem? But how do you work out the products? What was the first product? Talk me through. So when I came back, I was completely agnostic about what the business was actually going to do. like um i guess the insight i came back with is to solve this big complex problem we need to just break it down into really bite-sized chunks like at a very philosophical level to solve the global waste problem and and really all we have to do is two things we have to reduce the amount of plastic that we're buying and throwing away in our homes because that's the source of the problem and then we've got to go and get all of the plastic out of the ocean and rivers and beaches around the world so i'm like okay that's what i'm going to do i've got no idea like what the products are going to be or what the actual business is going to do but it's going to do those two things yeah uh and so then i came back uh and i actually moved back in with my parents because i hadn't had a house for two years and i spunked all my money that was made selling my last business traveling around the world you spent it all most of it not why not at all because i was overseas for like 18 months having a great time um and so then i moved back into my parents house that i was 35 at the time or something like literally moved back into my childhood bedroom yeah i had a bit of cash left from the trip all of that went into this business yep can you share how much yeah there's about a hundred grand yep okay so i had a hundred grand back left in the bank account yep and i put it all in to start this business yeah and um i started going down to the supermarket was the first thing i did because i'm like where's all this plastic coming from it's coming from the supermarket let's i'm just going to go and walk around the supermarket and like watch what people are buying and just get a bit of a feel for like where's all this plastic coming yep and so then like the very first iteration was of the idea was i was going to try and build a food business that had reusable packaging because i'm like this is where the bulk of the plastic is coming from um so like a closed loop kind of model where you'd buy some food in a piece of packaging you'd use it you'd send the packaging back it'd get cleaned and refilled uh the more i looked into the food space the more i realized number one the margins are terrible in food in supermarkets going to be really hard to scale and make money and then number two like the the regulations around food packaging are wild for obvious reasons right yeah um and so it felt like it was going to be way too complex to solve the problem and scale from my bedroom my childhood bedroom with this into that category so then i started spending more time down the like far end of the supermarket the last three aisles where all the personal care and home cleaning products are sold right and that was my second big aha moment on this journey where i was like oh my goodness like if you just look at these three aisles alone it's floor to ceiling wall to wall single-use plastic and there's been basically no innovation in the category for decades right from both the product and the packaging perspective yes and so then i was like okay cool i'm going to go and work out how to build a personal care and home cleaning brand and i'm going to solve the plastic problem in this category um so that was literally how it started yeah and so you started that journey around 2019 correct you did the kickstarter campaign was around 2020 right yeah was that pre or post COVID?

8:39So the Kickstarter campaign itself was pre-COVID. Okay. And then we got smashed by all of the stuff that was COVID. Yes. So I guess the context there was like the next kind of insight I had was what we're really trying to do here is build this community of people who care about the planet. That's the heart and soul of this business that we're building. It's a community. Yes. And so I just said to myself, if we're trying to build a community, let's go and build a community from day one. Let's go out and do a crowdfunding campaign and tell people this is the idea yep we want you to be part of it so that led us to doing a kickstarter campaign yep i'd never done one before um was a complete novice yep uh it ended up being wildly successful yep um but then literally four months after we did our kickstarter campaign that thing called covert happened yeah and i don't know if you can remember or the listeners can remember but those early days of covered were crazy like global supply chains just went into meltdown we told all of our customers we'd be delivering in six months and then all of our suppliers were like you're not getting anything think for at least 12 months yeah like okay cool um and so that was one of the big learnings early on and on on this journey was around like building community and being radically transparent about the stuff that you're going through as a business and so we just started communicating really really clearly to all our customers like all the stuff that was going on and what we were doing to solve it and it became this real kind of rallying cry for our community because they just like totally rallied around us and got these big complex problems that we were facing because of COVID.

10:07So yeah, then it ended up being a whole year until we first started shipping the products. It wasn't until like late 2020 that we officially started getting product out into the world. Yeah. So there's a bit I want to unpack there because you didn't just do a crowdfunding campaign. This was the most successful crowdfunding campaign on Kickstarter in Australia for that year. It was, yeah. And you raised basically three quarters of a million dollars. And it went gangbusters. It did. So if we rewind for a second, you had the$100 ,000 that you put into the business. How did you find your manufacturer?

10:49How did you work out what products you went to market with? How long did that take? Talk us through that because that's the part that gets people so tripped up. and it's the part that is so intimidating it's so scary yeah where'd you find your manufacturer talk us through that stuff yeah yeah so the first thing we did was we went and got a um a chemist to like a formulator to start building the formulations because that's the start of everything right like without amazing product there's no point having a business so um i literally just started like trolling linkedin and the internet and just like hunting for australian formulators that had expertise in personal care.

11:28Had a bunch of meetings. A lot of them went nowhere. Ended up finding the right person, which then led to a contract manufacturing relationship basically. So it was just a case of like trial and error and 100 conversations. It's a classic kind of startup hustle mentality, right? One door closes, you kick down the next door until you get a yes kind of thing. So that's basically how that all happened. And that was probably six months from memory. like just to get that process in place, get the formulator, get the manufacturer. And then it was another 12 months to do all the product formulation and testing and whatever.

12:04Yeah. And how did you know which was the right manufacturer, chemist, any lessons you can share there? Yeah. So I think one of the things that we did, I think, really well in the early days was we sat down and thought really, really hard about the type of business that we wanted to build and like built some really basic principles around each part of the business. I read the book Let My People Go Surfing by Yvonne Chouinard, founder of Patagonia. And that kind of became a bit of my Bible for like how to just think strategically but keep it simple. And so we just wrote out some like core values around product and marketing and customer service and supply chain.

12:41And we just have leaned into those values throughout the whole time. And they helped us just really formulate a tight brief to a formulator. you know and with us not knowing anything about product formulation but we knew like these are the values that we want to build products around so sustainability um no nasty products no products that are bad for people or for the planet um locally sourced locally manufactured so we knew like the values that we wanted to build around yes and then it was a case of explaining that vision to a whole bunch of formulators until we found someone that got it was aligned and could do what we wanted to do basically yeah are you hesitating to take the next step in your e-commerce journey?

13:21Founder Plus has you covered. With proven frameworks tailored to your business needs for fast results, a supportive community of over 30 ,000 like-minded entrepreneurs, and weekly live mentorship sessions, Founder Plus is your key to success. Try Founder Plus today for just$1 for seven days and start building your dream business with confidence. You can visit founder.com forward slash start dollar trial or click the link in the description to claim your trial. and where did you end up finding your manufacturers to to do the first run yeah so they're in australia yep um on the central coast of new south wales just north of terrywall yep uh they had been we were our contract manufacturer for the first four years of our business we've literally only just changed manufacturers now as a result of this new product innovation and pivot that we've been working on yes um and so they were great partners for us they were very understanding that like hey this is a little startup and we're just trying to get this thing off the ground yes uh but then once we did this big kickstarter i think they started to get you know really buy into the vision of what we're trying to achieve uh which was great like the kickstarter did a lot of good for us other than just like getting some funding and some customers in the door it gave us some credibility it gave investors confidence then come and invest in the business it gave contract manufacturers some confidence it just kind of built uh a level of confidence i guess around the business that most startups don't have when you're just starting up you know in your bedroom and got a website and you're selling some stuff yeah yeah so talk me through i guess um you had the 100 grand you found your chemist you found your formula as your manufacturer um what was your moq and what how much money did you need to raise to go you know what this I'm on to something and how long did it take to prepare the kickstarter because a lot of like I've interviewed the founder of Indiegogo and I never forget what she said to me it was kind of cool so I was telling you offline we raised a couple hundred grand for our quick kickstarter product which is just a coffee table book and I did like some recon so I did a crowdfunding magazine edition and I interviewed some top campaigns just to learn and I interviewed the founder of indiegogo yeah and she said and and she was the one that actually indiegogo was the first to conceptualize crowdfunding and then kickstarter kind of came along and kind of took that headwind but she said to me the number one thing i can tell you nathan is do not go on these crowdfunding platforms just to beg and to and just to get try and get some money for your product let the community decide if your product needs to exist do not beg and the market will tell you if it needs to exist but in of that you still need to be good at marketing right like a good crowdfunding campaign from my experience you need to spend at least three to six months to do it right how long does it take you talk us through that how much you need to raise like talk to some of those mechanics yeah so i can't remember what our initial moqs are yeah but i had in my head i needed a million bucks like that was the number that i knew i needed to get this off the ground to get all the products built out to get the website launched to get this thing to market yeah um and i initially went and started talking to investors first it was my first port of call and turned down turned down turned down turned down turned down turned down turned down yeah uh which is then why we you know went and said because the plan was we'll go get some investors first then we'll go and do a crowdfunding campaign and then we'll go and get some bigger investors once we've kind of proven out the concept yeah uh and then not being able to get access to any kind of angel investors up front we just said okay let's go and do the kickstarter yep i can't remember exactly how long it took but it wasn't a long time it might have been three months or six months or something and i was a complete novice like i've never i'd never done one before i've never done one since i've done one kickstarter i am by no means an expert at all yeah but it's all about the video man yeah it's about the story yes it's about the story right and so again we just had these really succinct principles that we're going to build this business around and we just lent into that And one of those is radical transparency.

17:27And so that was the guiding principle for this Kickstarter campaign. I just said, I'm going to go and film a video. I'm going to do it in my parents' kitchen. I'm going to tell people who I am and this problem that I've uncovered and what I'm going to try and do to solve it. And it was just real and vulnerable and it wasn't like flashy. We weren't trying to do anything, you know, crazy production. It was one of my friends shot it on his camera. Yeah. And it was just real. And I think it just resonated with people. and that was one of the key things that led to the success of the campaign. Yes.

17:56I think also there was a lot of luck involved, right? And I think I always pay homage to luck because you need luck in any startup, right? I think a lot of founders don't pay enough respect to how much of a role luck plays in your journey. And so for us, we launched our Kickstarter campaign literally a couple of weeks after the end of the first war on waste tv series which was the top rating tv show in australia we had no idea this show was happening at the time and it just so happened that there was this massive national tv program on the abc talking about this massive waste problem and then a month later we come along and be like hey you've heard about this waste problem we're working on a solution so we we tapped in at the right moment um where there was a cultural movement happening and no competitors like there was nobody talking about the waste problem in our category when we launched this thing so i think it was a combination of like values and storytelling and luck to be completely honest with you yeah and so what was the minimum that we set for the kickstarter yeah we set a target at 250 yep okay so you you basically tripled but then there's a post right there's a post you know yeah yeah your little fancy tricks with those tools and correct and a little get literally a little bit more and then post you know people are still waiting in lieu so you probably i'd assume you probably actually ended up hitting a million dollar time we did yeah so we had i think from memory it was about seven and a half thousand customers yeah that backed the kickstarter yeah and then because it ended up taking us 12 months to get to market we actually had our website ready to go like six months in yes so then we've launched the website and had a pre-sale for that next six months yeah and so i think when we launched we had about 12 and a half thousand orders yeah at that stage is my fuzzy memory yes which brought with it all of its own challenges right like 12 and a half thousand orders to ship on day one yeah um so yeah it was it was quite a roller coaster those very the early days of zero co yeah okay and then so what products did you launch with did you have one hero product what's your recommendations there did you have a range yeah that's such a good question and it's something that i debate all almost every day on this journey so we launched with i think we had 10 products to launch because our whole hypothesis was we're going to go and try and solve this problem in your home in as many places as possible so we had things like laundry liquid and dish liquid and hand wash and body wash multi-purpose cleaner we basically had like an essentials kit for the stuff you use almost every day in your bathroom in your laundry and in your kitchen and that was the box that we sold at kickstarter um and there's pros and cons to having a bigger product range versus a smaller product product range right um and i think what we found for us is that it enabled the business to scale really quickly because we had a bigger aov um and also because the products that we make you literally use them every day it enables us to create a bigger lifetime value on the returning orders.

21:04But it also comes with a whole bunch of challenges, right? Because you've got more products to manage, more SKUs to manage, more warehouse to manage, more raw materials to manage, all of that stuff. And you can't pay as much attention to 10 products as you can to one. Like it's just the nature of reality, right? If you've got one product, you're focused on one product. So I don't know what the right answer is, to be honest. And if I had my time again, I don't know if I would have launched one product or 10 products. I debated every single day. Yeah, but it all worked out. It all worked out. Yeah.

21:33Yeah. Okay. So you said that after the Kickstarter and the success, that's when you were able to, I guess, get investors to really start taking a little more seriously. Talk me through that process. How much did you end up raising on top of? Yeah. So then one of the tricky things with the Kickstarter was because it was so successful, It meant we actually needed more money to get it to market because we had to buy three times the amount of raw materials that we thought we were going to need. And so then I think after we'd done the Kickstarter, I reached back out to a whole bunch of investors that had said no previously.

22:15And now with some runs on the board, like a pretty good success story from one month of pre-orders, those conversations totally changed. yeah right uh and so then we were able to raise a million dollars uh from an angel network yes uh who are still all the major shareholders of the business they're on my board yeah uh and that network here in australia in australia yeah yeah so um from adelaide actually of all unusual places uh so my previous wine business that i had was based out of adelaide yes i called a friend from the wine industry and said do you know anyone you know investors that have invested in startups in your network.

22:56He introduced me to a guy called Rob Chapman, who's the ex-CEO of St. George Bank based in Adelaide. I caught up with him for a coffee one morning in Sydney. We both happened to be in Sydney. He said, great, I love it. After half an hour, come to Adelaide and we'll put a table of people together and we'll try and raise a million bucks. And it was that simple. Like we went down, we didn't even have a presentation. I just sat around a table like this and just talked to people about who I was, what my background was the vision for the business the success we had and a week later we had a million bucks so it was just like it was quite a crazy moment to have these two big things back to back and then uh yeah then we were away essentially yeah so talk me through i guess those supply chain issues like how'd you work through it how did you keep your backers under control and happy like dude dude when i got into the the crowdfunding community i felt like i need to support other projects and i supported a range of projects yeah and i all of them have been delivered except one and they still send updates so this is like literally eight nine years ago it's coming on 10 years it was a table you saw that we have a nice table tennis table it's a french table tennis table yeah okay competitor great competitive like it's a competitive one great one and i've got a robot i'm still waiting eight nine years right insane they are still sending updates yeah right so how did you like i know i know how it can get so how did you manage that how did you work through those supply chain issues yeah well i think like the first thing with with our backers we just leant into this radical transparency thing and um to be honest with you like before doing Xeroco I never was the face of a business I had two businesses previously and I was behind the scenes I was just running the show the brand lived its own life yeah but with when I started Xeroco I realized like if we're going to build this community and it's all about doing good in the world we're going to need a spokesperson to be the figurehead for this mission right and so I reluctantly started putting myself out there on social media I didn't even use social media myself personally and I just started shooting videos and just being real right and we lent into that when these issues started to happen around COVID and it got to the point where I was just sending an email every single week to all of our backers and I just literally tell them like here's all the crap that went down this week here's how I'm feeling here's what we're doing oh you know I'll come back to you when the next crazy thing happens yeah and it was really powerful learning because people I started to know these people and they started to know me and like there was an actual relationship that we built that was real it wasn't like this faceless company that's doing this thing it was just this guy living in his parents house trying to launch this thing and so the more that we lent into that the more we realized we were building a community people were rallying around us so that was the main thing for that i just kept putting it all out there like wearing my heart on my sleeve and then with the supply chain stuff uh to be honest with you it nearly killed me like there were 2am calls with factories in china where we were making some stuff and then a 10 p.m call in france where we were making some stuff and then getting the car and drive to the central coast to oversee stuff and then testing products and it was just it was one of the most stressful moments of my life to be honest and because it had ballooned so quickly like the volumes that we were talking about the amount of product it was all big scale stuff uh and so yeah it was just literally a case of just kind of persevering i think right like just persevering and shoveling through the mud every day until you get to the nugget of gold and then you know you get that little bit of gold and gives you adrenaline boost and you keep pushing basically so it was just yeah hard work and perseverance to get us there yeah so after two years you had a you know pretty loyal customer base of 70 000 people that's pretty large um how have you continually fostered that you've talked about radical transparency were there any tools that you used um a newsletter a facebook group uh you know a circle is there anything yeah yeah there was nothing fancy to be honest with you it was just like all of the basic simple stuff um so i would even once we launched i continued to send an email to every customer once a month just being like hey here's an update like here's what we're working on just keeping people in the loop i made sure that i was in socials a lot and just talking about the product talking about the mission uh and then probably like 12 months in 18 months into the business we really got serious about this cleanup ocean cleanup side of the business yes uh which at the start was something that we were just doing ourselves like literally our initial team we'd go to the beach and we'd do beach cleanups on the weekend yes uh and then probably 18 months in were like we want to get really really serious about this part of our business and that's when we started building our own team like we started employing people to do cleanups uh and then i started like going to all of these major cleanups and getting in front of the camera and showing people the scale of this problem and the more that we've done that the more people have gotten engaged because like some of the content that we're shooting now is brutally confronting you know uh like me waist deep in rubbish as far as the eye can see in a river that you can't see any water uh and again it's just like the more real and vulnerable we can be and just showing people this is this is the extent of the problem and we care about it so much that i'm here doing it like this is not just some face value thing that we do for marketing like we're serious about solving this problem i'm getting on a plane and traveling around the world doing these cleanups and i just think a combination of all of those things has has built this trust and this community around us you know we take our shareholders we take customers to cleanups we get people involved in these things and we just reinforce it like every time you buy one of our products we are removing 10 water bottles from the ocean on your behalf it's a really direct link and it took us a while to get to this 10 for one promise to be honest that wasn't part of the business model at the start yes but since we've come to that articulation it's just supercharged our messaging and our impact.

29:15So can you talk me through how you got to that? Yeah, yeah. Because I know a lot of people, like sustainability is a massive, massive trend and the consumer is more interested in sustainability more than ever. And I once met a really, really, really savvy founder where he's behind the scenes, but he's behind massive, massive brands. And he has a thing where every brand that he creates, there has to be an element of social good it has to be good for the environment like it has a really strong impact physical product similar space yeah and i asked him the question like you know what why do you you know why do you do this um is it a commercial thing and how does it all work out from a commercial side and he said like look honestly nathan what i've found is one it's just great to have some sort of really strong purpose and why behind each brand that we create and it and it makes more fun and it's more impactful but what we've also found is that the extra money that you spend on the administering or being able to deliver on that social good piece it basically works itself out because you get a bit of a boost like let's say it's an extra 10 % cost then you probably get an extra 10 % boost in marketing so it's net negative Like it's neutral.

30:36So it's worthwhile doing and why wouldn't you? Yeah. So talk me through that piece because like I said, a lot of brands are moving in that direction. Yeah, it's a big thing. So the thinking went like this. The first thing we did was we took a bit of a kind of purist approach to doing good and we said we don't want to do a profit model, which is what lots of like social enterprises do. They say we'll donate X percent of profit. to doing something. The reality of that is that most startups fail. Most startups don't ever generate a profit. Yeah. And it just felt a bit disingenuous to me personally to be trading off that, knowing that I'm probably not going to get to profitability for three years.

31:19Yes. So we said what we're going to do is we're going to bake doing good into the cost of goods of our business. So there's literally a line item in our unit economics that is ocean cleanups. Yep. And that's kind of evolved over the years and we weren't quite sure like how much should we actually be investing in these cleanups as we go because we weren't profitable. We weren't profitable for the first three years of our business, right? Yeah. And we were just experimenting. We were like, let's go and see, let's put$50 ,000 into a kitty and see how much that gets us. Yep. Let's put$100 ,000 into the next kitty and see how far that gets us.

31:53Last year we invested nearly$300 ,000 in cleanups. And we were always like challenging ourselves like how much should Could we actually be like, what's the right number? And how do we build some kind of system and process around this? And so that's when we like probably 18 months in or probably two years in, once we had some real data around how much does it cost to do a big scale cleanup, we were then able to like work backwards and just say, well, this is how many products we sold in the last 10, last 12 months. This is how much rubbish we collected in the last 12 months. We just worked out the maths between like sales versus cleanups and what we think we can continue to scale at.

32:31and that's where it landed on this 10 for one promise which has simplified everything because the message is now literally every time you buy a zero code product you are funding 10 water bottles being removed from the ocean every single product doesn't matter what the product is doesn't matter whether it's a two dollar product or a fifty dollar product every product 10 water bottles removed yeah and you take that from your average order value of course we just yeah we take it from average order value yep um and what it's allowed us to do is then just go and have a budget at the start of every year that we say, well, we're pretty much going to sell as much as we did last year.

33:02Like we're a growing business. We're not going to sell less. Therefore, we know this is how much money we're going to allocate to cleanups and we can go and build a full 12-month plan or these are the projects we're going to go and do. And if sales exceed forecast, then we've got a kitty that we can go and do more cleanups essentially. Got you. And is there a reason that you didn't partner with another organization? You've actually built your own team? Yeah, well, we did to begin with. So, well, to begin with, we were doing it ourselves. Then the next step was like, let's go and work with some not-for-profits.

33:31So we did some projects in Indonesia. We did some projects in Bali. And we did some projects in Egypt. And they were great. Like we had a great relationship with all those people. We collected a bunch of rubbish. But what we found is that we were not getting the level of transparency that we were comfortable with. So things like even just being able to capture really good content at those cleanups and showing people like this is the before, this is the after. Yes. And then getting really robust data around how much rubbish did we actually remove. Yes. To deliver on the promise. To deliver on the promise.

34:01Yes. And so we like persevered with that for probably a year. And we just got to a point where like, if we're going to get really serious about this, we're going to be investing hundreds of thousands of dollars every year in this. We've got to go and do it ourselves. Yeah. And so then we literally went and built a team in the Philippines. So we have a full-time team in the Philippines now. 13 guys work for us. Yep. We're doing cleanups all the time in the Philippines. Yep. And then this coming year, we're going to go and do our first big global cleanup projects as well. So we've got one planned in Bosnia.

34:31Yep. We've got one planned in Ghana. Yep. We've got one planned in India. Yep. And one in Central America. Yep. On top of our eight to 10 monthly cleanups in the Philippines. Yep. And some cleanups here in Australia as well. So next year, the goal is we're going to try and remove 30 million water bottles from the ocean. Yeah, wow. Which is as much as we've done in the last three years. wow so we're scaling this cleanup operation really really quickly yeah and it's one thing to clean up but it's another thing to actually remove that's that's like okay how does that work getting it out of there yeah it's a great question yeah and it depends on the location to be completely honest uh so when we're doing cleanups in australia it's mostly beach cleanups that's literally a team on the beach yep hands and shovels and rakes and bags like it's it's that primitive uh and then in the philippines it's a case-by-case basis so like sometimes we're in a river and so we'll have boats yes um sometimes it'll be on a beach that's so crazy polluted that we'll have backhoes and excavators and dump trucks in there wow uh sometimes it's out in the ocean we're in boats uh we've done a couple in sydney and like we've scuba dived to the bottom of sydney harbor and had a team down there scuba diving yes uh so it's really like a case-by-case basis but most of the time it's manual labor yeah got you and where do you dispose of the rubbish yeah that's also a bit of a case-by-case basis so it depends on where we are and what facilities are available yes so where we can we recycle what we can yes um where we can't it goes to landfill and like the brutal reality is some of these locations particularly in the philippines will be on islands where there is no recycling facility on the entire island and so our view when we go to those kind of locations is there's two options here one we leave it in the ocean where it's breaking down into microplastics and going into the food stream getting eaten by fish that get eaten by you that's not cool or we take it out of there and we put it in a hole in the ground and if they're the two options then putting it in a hole in the ground is the least shit of those two options so where we can we do what we can where we can't we do what we have to yeah it is basically the truth of it yeah wow that's crazy so talk me through as the company has grown how you've scaled your operations because this business can you talk us through numbers or what can you share like the scale of this business because you guys are going super fast yeah so we we've actually gone through this crazy pivot over the last 18 months where we've we've put the the brakes on our growth to be completely honest with you yep um as we've redeveloped our entire product range from the ground up, an entirely new packaging system, which we can talk to if you want.

37:15Yeah, for sure. Yeah, should we go there? Yeah, let's go, let's go. Yeah, okay. So the first iteration of XeroCo was a closed loop model where you had a forever bottle that you keep at home and then a plastic refill pouch. We'd send you the pouch, you'd empty it into the bottle, you'd send the pouch back to us, we would clean it, refill it, and we'd send it out to another customer. That was the business model for the first two and a half years of the business. We then started to realize that the business had, well, that supply chain had a whole bunch of fundamental flaws with it. We got some experts to come in, some environmental experts and some data experts to come in and like pull this whole thing apart.

37:51And what we found was pretty shocking, to be completely honest with you. Like it did a lot of good. We cleaned and refilled 250 ,000 pouches, pulled 20 million water bottles out of the ocean at that point. but what we found was that the carbon footprint of shipping empty pouches back to us like every single order that we would send out there'd be a reverse logistics piece to that so double the carbon footprint yes we're then running a purpose-made facility to clean the pouches we're using water to do that that's got a carbon footprint and a water footprint and then we found that only 43 percent of customers were sending their pouches back to us so we built this system which was like perfect in a perfect world and we found that we live in an imperfect world even though we're providing free return shipping for everyone it just became a job right a job to do you got to go to the post office and send your pouches back yeah it was it was inconvenient um and so then at that point in time we said okay we need to we need to rethink this whole business model we need to work out how do we make this even more convenient for the customer and better for the planet so we went on this massive research and development project working with companies all around the world, working with research institutions, working with university academics to try and build the most sustainable packaging system for liquid personal care and cleaning products.

39:05We're looking at seaweed and algae and hemp and mould and fibre and all of these crazy different materials. And where we've landed on is some Australian technology, which is a paper based refill. It's 97 % less plastic. So instead of having a reverse logistics model, we send you the paper refill it slides inside the bottle now so there's no decanting or pouring it's really simple and then when you're done you can put it in your curbside recycling bin gets recycled we've done all the testing about 90 of the paper material in the refill can get extracted during a recycling process in australia and get turned back into another product so we basically rebuilt the whole thing we also moved to concentrated formulations on some of our products so instead of previously shipping two liters of laundry liquid around the country we concentrated that product down into a 500 mil formula same number of washes same performance just with a quarter of the liquid so instead of shipping two liters we're now shipping 500 mils which is 75 less freight emissions so we like we pulled the whole business apart and we're like what's all the stuff we've learned in two years how do we make everything better how do we make it better for the planet less plastic less carbon emissions and more convenient for the customer so we've been on that journey for like the last 18 months and we haven't we've deliberately not been trying to scale the business we've just been servicing our existing customers getting this new product ready and it literally launched a couple a month ago um so yeah we've been in this crazy journey where like scaled really quick and then we put the brakes on deliberately and now we're literally just about to put the foot back on the on the accelerator we're going to be launching internationally next year hopefully going into physical retail like really doing all the things we set out to do at the start, but we're kind of blocked by this cumbersome supply chain that we built for ourselves.

40:48Yeah. Yeah. So can you talk us through what numbers you could share around customers, revenue, how far you've taken the business? Yeah. So we are now at about 120 ,000 customers here in Australia that are purchasing from us. Today, it's 99 % of our business is direct to customer through zeroco.com. We have a few small retail relationships with independent retailers. Yep. But the plan is to radically scale the business and get into a lot more retailers, pharmacy, supermarket, specialty retail, those kind of things. Yeah. And mainly Australian customer base. At the moment, 100 % Australian. So we're not shipping overseas.

41:27We're not running ads anywhere. We're not acquiring customers anywhere other than Australia. The plan for next year is we're going to be launching into the European market, UK and Europe, and then the US after that, North America. Yep. Got you. And you've raised$6 million from Square Peg. Correct. Talk us through that strategic decision. Yeah, so I guess when we got to a point where the business was growing very quickly, we realized that if we want to take this in global, if we want to continue to grow this, we're going to need some more funding. Yep. We'd learned a lot from our Kickstarter days.

42:02We'd learned a lot from our first kind of angel investing round. and so we were very clear about the type of investor that we wanted and the type of money that we wanted to take into the business and it needed to be completely values aligned and patient capital with a long-term horizon because I'm not building this thing to get rich and flog it in two years' time. We're building this business to try and solve the global waste problem and if it takes 30 years, it takes 30 years. If it takes 50 years, it takes 50 years. you know my view is we're going to try and build a really successful profitable business and the rest takes care of itself basically so with that in mind we went and started talking to a whole bunch of investors and I think from the success that we'd had we were able to open some doors into VC land which was really awesome basically.

42:54Yeah Square Peg's an interesting one because I think of them usually they're you know local well well-known prominent Australian VC for everyone listening i always think of them as more tech correct focused yeah yeah and uh yeah they you know invested in you guys was there any kind of learning curve or like yeah i think i think for them like the thing i've learned from having now worked with them they've got a seat on my board yep i've become really good friends with with like a kind of principal investor there and they invest in really good businesses right um and they invest in businesses that have got a great story and we've got a great story, right?

43:34We had built a good business up to that point. We had a really great story, which is we're going to try and save the world, right? And so I think whilst historically I have invested in tech businesses, ultimately they invest in businesses that they believe can grow and become profitable and have a great story. So yeah, they've been an amazing partner, to be honest. I was a little bit hesitant about taking VC money, to be completely honest, because I'd never done it before with any of my previous businesses. You hear horror stories. You hear of like disalignment between founders and VCs. You hear stories of founders getting kicked out of their businesses, all that stuff.

44:07And just at every turning point, they've been the exact opposite of that, which has been really amazing, to be honest. Yeah, it's one of those things. You hear those stories, but of course, there's always another side of the table as well. Totally. Founders don't just get kicked out because they're doing a great job. That doesn't happen. Exactly. Exactly. And you hear like, you know, Steve Jobs and all these different stories, right? Yeah. Yeah. So I'm curious, talk me through, I guess you mentioned something really interesting. You said that fundamentally this VC, and this is a very, very well-renowned VC, I'm pretty sure they were early stage Canva, right?

44:49Correct. I think so, yeah. Yeah, yeah. I'm pretty sure they were early stage Canva. So talk me through like, you know, you said you guys have a good story. Yeah. What advice would you give to founders that are watching this, working on their product, working on their business? How do you – like what advice would you give to make sure you have a good story? Yeah, yeah. You have an exceptional story and you're a very good storyteller. Thank you. Like I'm sure plenty of people listening to this, even myself, really, really want to get behind what you're doing. Yeah. Yeah, I think it depends what stage of the journey you're at, I think, right?

45:24And again, I'm not an expert here. I'm just living this journey in real time and putting it out there. I think if you haven't started your business yet or you're thinking about starting your business, it's that classic case of find your why, right? Like before you go and start anything, work out what you're actually really trying to do. What's the problem you're trying to solve? And try and solve a big important problem because they're easy for people to rally around, right? Like if you're just going to make another widget that people don't really need, then you're going to have to manufacture some story around it and that's really hard and it's really can be really disingenuous really quickly right so i think if you're at the stage where you haven't yet started try and try and solve a big problem that that you can just it's just a natural organic story around uh if you've already started and you're working on a big problem awesome i think the next thing is to work out how do you articulate that really succinctly i think lots of founders and startups have a really difficult time explaining what they actually do uh i'm always surprised when i go to like websites and and i'll spend 10 minutes and i've got no idea what they actually like what do you do particularly in like tech and service i find it all the time like what do you what are you actually trying to sell me here so i think just taking some time and i think about it like the pub test imagine you're just talking to your dad at the pub like who's got no idea about the thing you're going into how do you just explain it in layman's terms do that make it simple less is more don't get complicated just like 10 for one every product we sell we collect 10 water bottles from the ocean that's it it's really simple yeah um yeah and then i think just another thing like with founders i think you have to decide whether you're going to be the face of it or some kind of a face of the business and if you are you just have to lean into it and then i just think a bunch of other tall poppy stuff in australia right where you put yourself out there you're trying to do something good people are going to knock you for it um and so i i had to learn the hard way just to be like ignore delete move on yeah kind of thing uh because i know what i'm trying to do i know why i'm trying to do it and so i'm just pushing ahead but it's good it can be confronting for founders when you put yourself out there in the public but it doesn't mean you shouldn't yeah i think that's the moral story it doesn't mean you shouldn't yeah and i think more than ever now um there is not i don't i'm hesitant to call it a trend but it is becoming expected right that you know if somebody finds a brand they're going to google about the founder the founder the product the brand and more than ever now there's this movement of founder-led brands.

48:12Yeah. Right? You know, TikTok, right? Somebody taking you on that journey, like showing the manufacturers, creating the product, getting feedback, taking people on the journey. There's almost a playbook for it now. 10 years ago, five years ago, that wasn't really a thing. Yeah, totally. You know what I mean? Totally. So more than ever, I think the consumer is very interested and almost expecting to see who is the person behind it. Yeah, 100%. And it makes sense, right? It builds relationships. It builds relationships and it's real. Because like I think people are just so sick and tired of corporate BS, particularly in the sustainability space, right?