689: I Sold ONE Product in ONE Color - Then Exited for Half a Billion

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1:03You exited Quad Lock last year for half a billion dollars. When that happened, that was like a, oh, okay. All this hustle, blood, sweat, tears. That was like, oh, wow, it's real. There's money in the bank. We started doing this stuff in like 2010, 2011. We didn't have any education in the space because we got ripped off. We learned so much from that. We were doing 20 million. We probably had 10 people. That's crazy. No investors, no playbook, just an idea and the will to chase it. Rob Ward turned a bootstrapped brand into Quadlock. And walked away from it with half a billion dollars. The biggest myth is when all these brands said that scale was going to fix their unit economics.

1:42I don't think that ever happened once. You get big, you get a lot of management, get a lot of layers in a business and they slow down. That's why like little startups are always going to have an edge on it. and it's the hardest thing to learn because you don't get many shots at these things you've had this incredible life-changing event what's next dude like gonna start another brand what are you thinking i don't know hear the stories learn the proven methods and accelerate your growth and future through entrepreneurship welcome to the founder podcast with nathan chan

2:17hey have a quick ask if you're loving these episodes leaving a quick review is honestly the best way to support us it helps the show grow and means we can keep bringing you the founder stories and insights you tune in for please share it with a friend thank you so much now let's get into it welcome back rob it's like been 10 years in the making we are going full circle. You've seen both sides of the table. You exited Quad Lock last year for half a billion dollars. We met in like 2020, we met in 2014, early days founder, early days Quad Lock. And we've been friends ever since. I interviewed you first in 2018 and you guys were doing about, I think 10 mil a year.

3:06And then I interviewed you just before COVID in 2019. I think you guys were doing like 20 mil, probably give or take, maybe a little more, maybe 30. And then you guys have been on a tear and then you eventually exited the business. So welcome back, man. Thanks for having me. Thanks for the recap. Memory lane. You're welcome, man. So look, dude, I interviewed you a long time back and you're pretty good on trends, right? So you're now working, doing advisory with brands, and you've had an incredible exit. The first question I have to ask you that people will think is you've had a life-changing exit for you and your family.

3:44When the money hit the account, how did it feel? And was anything different? Well, I answer this in two parts because, as you know, our journey wasn't just one big X at the end, it was just after COVID or even during COVID, we sold a chunk of the company to Quadrant Private Equity. And when we did that, that did sort of set us up for life sort of anyway. And when that happened, that was like, oh shit, okay. All this hustle, all this blood, sweat, tears um this is you know this it's it sort of it makes it real because you know you know you got this thing you know it's potentially very valuable but you're sort of running around with your whole net worth sort of in this theoretical value you haven't really probably been paid that much up until these points um and at that kind of point that was like oh oh wow it's real there's there's money in the bank.

4:49Um, and that was, that moment was, um, that kind of, you know, things can be different from that point onward. And I think you only get that moment once. And so I actually had that moment to do with the money and the lifestyle change and that kind of thing when we did the first sort of sell down. Although the second sell down was a lot more, well, the actual exit was a lot more money. It just doesn't hit the same. I think you only get that feeling once, but it's a different feeling because when you do the first sell down, you just go to work the next day. Everything's just the same, really, in the way the company works.

5:37You're The founder, you're still the boss. You're still running the show. The same with the CP. We just rock up and you just go, right? And the mission was clear. We're going to go do this thing. But then when it comes to the second time we did it, when we actually fully exited, that was less about the money. It's more like, oh, like this thing I've been doing and that's all I can remember doing and the people I've been hanging out with and everything that we do, that's not mine anymore. And that is the big, that's a whole nother emotion and a whole other journey you've got to go on. Even though, you know, CP and I hung around for another year and just kept doing what we were doing.

6:16By that team, like for the last couple of years, we built out an ELT and everything we had to do to set the business up with governance structures and everything to be part of a bigger listed business. So that was all done, but it's still that finality of like, oh, okay, this is, you know, I don't call the shots around here anymore. That's a very different feeling. And then you get the third feeling, which was at the Christmas party last year, which was at both CP and I's last day. And then that's a whole other thing. You're like, okay, I'm done here. All my work's done. And that is another weird feeling again.

6:56So I could tell you, it's a hell of a journey. And it would be weird if you had all of those three things at one exit on one day, I'll tell you that much. But even having them spaced out, it's a hell of a trip. So it's been incredible to watch you guys grow Quad Lock. Big customer here. Yeah. Thank you. I've used this product ever since I met you. Yeah. Right. And it's such a genius idea because iPhones are always updating. So naturally, when you get the new iPhone, you get the repeat purchase. You need a new case. And it mounts on your bike. It mounts on your car. You've got the portable charger now.

7:39You've got everything, right? So it's a full ecosystem play. And I was always in such admiration of watching you scale that business because I've had the privilege of watching from afar and we've had many conversations over the years. And you've done it all. You were the lead marketer for a very, very, very long time. You were early Facebook ads. You guys were early crowdfunding. Yeah. The last conversations that we had like on air was you were talking about retail and you said a lot of people reached out to you, right? So you're pretty good on trends. You guys were early Facebook ads, very early Facebook ads.

8:19You were some of the first to use a crowdfunding campaign, Kickstarter in Australia. What do you see now? Now you're doing advisory with brands. Like, what are you seeing? Like, where is it going? when it comes to growing a D2C business? It's a really good question. I think some things that have always actually been important, it's just so important now it's non-negotiable, is that you need to have maybe either high-ticket items or you need to have like an ecosystem is the best if you can have that. I get it doesn't work for every D2C brand. So if you can have subscription, If you can have something where you have the customer coming back, you can't just be one and done.

9:07You can't have a product or a widget where you think, geez, we're going to solve this problem and we're going to get this out there and we're going to sell a gazillion of these single things. I just, I don't see it work. The unit economics don't usually hold up. You hit all sorts of scaling issues. and it'd be nice if it's that simple, but it's just not that simple. You can't just have this one killer product that will take you to the moon. It doesn't seem to work that way. And I think it's actually always been like that. It's just that people found that out through a lot of heartache, trial, error, and ended up with eventually being where they ended up, right?

9:50but I think now it's kind of like we've seen these companies come and go. We've seen things go up and come down. And if you're going to start like from scratch today, I just think you've got to start with in mind that, hang on, we need to be in a position to keep customers for a long time and have valuable things that they want to keep coming back to us for and some sort of lock-in because you cannot afford to acquire a customer and then pay to keep acquiring that same customer. It's just we could sit here for days and talk about how many companies that's gone wrong for. So it comes back to some of these things are not that sexy.

10:38They're not like some little hack that's going to unlock something, but they're the hard things that you've got to really work out. You need good unit economics. You need to understand your numbers. You've always needed this, but now it's just not going to work if you don't, I think. It's just not as easy. It's just not as easy. It's not as easy, but it's still doable. But you've got to have the foundations right first, I think. And I think the other thing is when you look at, say, we were going retail, that was what we were doing. The jury maybe was still out if it's the right thing to do or not, but it turns out it worked quite well for us.

11:13and if you've got to think about it in in terms of like you spend so much money acquiring customers and promoting your brand at the same time i think if you've got like an ncac that's getting to where you can't scale it too much more don't go breaking your business model if you can go and collect some customers and yeah it might take a little bit from your your owned owned customers but if you can use retail to leverage the brand you've already built and maybe a little bit of pull in the market and it can actually increase your marketing efficiency ratios, then you can start to have these really considered strategies of like, okay, we've got a product, we're selling it here, we're doing well ourselves, what's another string to our bow?

12:07How can we diversify? It's not as simple as just we own all the customers and we just do this thing and people buy from us and we just do the same thing over and over again. That'll get you to one point, but what gets you to one point, what gets you to the next point? And you've got to be adapting. You've got to be looking at your numbers. You've got to be working that out. And I think if you can do that and if you can have good, solid unit economics right from the start, I mean, you need more margin, I think, than you think you're going to need. You just do, right? If you could do it again or if you were to start another e-com brand tomorrow, what sort of gross margin percentage would you be going for?

12:44I think you'd want like 80. Yep. Yep. 80%. I mean, you're always going to want higher, right? Of course. Of course. Of course. What's realistic. Yeah. What's realistic. And it depends on your category. Yeah. It depends on your ticket item, like how big a ticket item is. Yeah. But yeah, you want that because it just goes. Like a lot of it goes. Like CAC, the biggest myth is when all these brands said that scale was going to fix their unit economics. I don't think that ever happened once. I don't know of it happening. All it does is usually scale the pain. Yeah, 100%. Yeah. So I just think on that, I think, and it's not just, okay, we plug in a million stores to get that scale.

13:30It's like these things have got to be considered and worked out and then measured and then go forward. And that's the good thing about being private. You have time to try and work these things out. You can try something that doesn't work. You pull it back. You try it another way. So you've got that when you're a startup, your private company. So we were talking about offline. You said one of the big things that you're seeing is brands. AOV's too low, right? And I was saying to you offline, you know, we're building out our D2C community, founder operators. And I haven't even said this publicly, but it's crazy the results we're getting people.

14:06Like we did a measurement in the last three months. On average, they've grown revenue by 23%. That's mad. And one of the big things that we're focused on is offers, bundles, and just boosting the hell out of your AOV. Because it's only going to get more expensive. I mean, you've got levers, right? Yeah. And often you see people just like back in the day, people would just think, oh, we need to sell more discount lever, you know, or spend more on ads lever. But both of those just whittle away what you're going to have left, right? And then how you're going to do the next month. And the other thing, like you discount, you just got to discount more sometimes.

14:47So it's kind of like, what can you do that strategically going to get you there? and like consistently for us it was as cacks going up obviously you've got to do everything you can be to keep that cack as like be as performance orientated as you can be with your spend and your and your marketing and your content to keep that cack just even keep it at bay right because if you're trying to grow scale your spend in a market where everyone else is doing that like you scale at the margin so you get your worst return on the last part of your budget that you scale, right? So what can you do to it? You can't maybe reduce it.

15:25If you're going to be there, the antidote is higher AOV. You've got to get more out of that customer. You've got to keep them for longer. You've got to get them to come back more and more. And now that can be, like you said before, like, oh, we just got to make another product. I mean, that can help, but only if there's a story there, which is, you know, you buy product A, and therefore it leads you to buy product B. But if you've just got a product A here and a product being you got to go get customers for both of them you're going to have the same problem on both on both sides of that of that equation so you need that and that's like quadlock for us that ecosystem really like that is the that is the model for that i suppose but not everyone's going to have an ecosystem so it's like what do you do how do you sell the customer one one product and then sell them another product and then make it that it makes even more sense for them to go buy the next product from you and have some kind of lock-in, then you can do that through, I mean, it's not ever going to be a silver, it's not going to be, you hear people say like, oh, we do it through better quality.

16:29Like I'm not, everyone's got better quality. We do that through better customer support. Everyone's got elite customer support. It's going to be a combination of a lot of things to get to arrive at that. So let's talk about this because like a lot of founders watch the show they've got a brand they're trying to grow it they've got somewhat product market fit they're getting sales how could they get lock in man like if you kind of got your brand you know what I mean like you kind of what can you be doing like you can't I mean there's a lot of different there's a lot of different things like we were lucky enough at Quad Lock and I get we didn't have subscription but this is the thing if you've got the Quad Lock and you've got a mount in your car you've got a mount on your desk and you use the wallet, say, that goes on the back.

17:17All of a sudden, you've got like maybe$200 worth of mounts scattered around, maybe more. You've got one on your motorcycle or whatever. And then you get a new phone. You just go buy the new$50 case. If you've got to go buy a new different case, you then have to replace$200 worth of mounts. So the barrier to exits there, right? So you've got some form of lock-in there. so it's about thinking okay what is it that for example when we were just a cycling brand and we did had one mount and one case it's sort of easy to leave right but then when you put it in your car when you have it on your desk when it's on your motorcycle when the wallet that you use is part of that system all of a sudden like it's throughout your life it gets pretty sticky so you got to think like it's going to be different for every brand.

18:10And I think it's not always going to be one thing. So it could be that, you know, we did that and then we tried to give great customer, you know, experience, try to make it the best place to go and buy that product, try to make it that we talk to them in a way that they knew we were part of their community, not just selling into their community. There's all these things you can do around it. But I just think when it comes to it, it's not going to be like one thing. And often what happens is people want like a clear, easy win. And I just think that there's not that many clear, easy wins left. It's like, and it's not a bad thing.

18:48It's just, it's like, all right, got to get busy. We've got to work out like, you know, get 5 % there. We're going to get 10 % there. We're going to get another 3 % there. And you just got to do all of the things and build up to something that is a very compelling offer that makes people stick around. Yeah, I was hanging out with some founders. These three kids, they're 23 years old. I won't share the brand, but they're doing about 2.2 million a month. And they spend about a million bucks a month. They've got 20 ,000 subscribers for their product. And they only started in 2024. The two of them they met playing Minecraft and they're just, they're on an absolute tear.

19:34And I met them at the gym and we work out every now and then and we just chat and dude, like they used to watch founder videos when they were like 15, man, like watching interviews like this, right? Yeah. And then we just have a really good convo and they said something really interesting. They were like, like man it is so hard to compete now with ads and the marketplace yes you can yes you can get to a decent scale but if you want to play at the scale that we're at one thing that we honestly believe now is you have to have some form of lock-in subscription just being able to go into that negative and really know your numbers because all yeah because all these other companies that's what they're doing, the Groons, the Iron Mates, and they're just eating the marketplace alive and driving up the cost.

20:30Do you agree with that? I think it depends on your category. Because I think the thing you think about is when you're buying, like if you think about you're competing, right? You're buying ads against somebody else, right? So it's an auction and we're all going in trying to get the best we can. And then as you see different products, they have a different profile of the CPMs. So I think it depends what market you're in. If you're in a market that has really big players that are willing to invest super heavy up front and then make it on the back end, that can spell trouble and you're going to have to play a similar game because of the way the unit economics stack up.

21:12But I also think it's like you get to choose the game you play. So if you're just playing that simple game of like all we're doing is, I'm not saying it's simple, it's just it's less dynamic in a fact that your go-to-market is we have a product, we market on social, we get people to a website, they sign up for a subscription, and they pay us every month. If that's the model and you're competing with other people doing the exact same model, it's like sometimes it's like, what else can we do that's going to get us in front of them? So you say something like, like Ironman, like, you know, they've got super cool ambassadors, right?

21:57Front running. So they've got those people in their ads and then it's like, okay. So, and they're international superstars, right? So you go, okay, how do we go up against that? Like, maybe that's not the game we play in that market against that kind of talent with that kind of money. Maybe we got to go a bit more hyper-local. Maybe we got to tell more PR stories around a different vibe to try and compete and get a different customer, someone who doesn't care about David Beckham or whoever it is. So you got to, I think it really depends where you're at. I think there is still, it depends on where you want to scale to as well.

22:36Not everyone wants to make a huge brand. there is like you can find things that work at a subscale and they tick over because you keep the cacks low and you and they can be good little lifestyle businesses so things like that can work and then when you decide to try and scale the hell out of them yeah it all breaks yeah so it depends what game you're playing i think so that's a good question like did you know that quadlock would get as big as it is? And did you want to play that game? Because I remember, dude, we had conversations where you're like, man, we're very profitable. We don't even need more than 10 people.

23:19We're good. Like you. I mean, we were always profitable every year ever, every month pretty much. So always profitable, but we're built on like a bootstrapped mindset, really good unit economics. I mean, looking back, I realized helping out, like we did a lot of stuff. Like we didn't need that many stuff because we all just did a lot of stuff. So we were sort of super efficient in that way. But to be honest, CP and I, we'd done other little businesses and we did pick this one because we thought it was the one that could scale. Oh, so you'd done other businesses? Yeah, we'd done other things and we'd sort of thought, what would it look like?

23:59What would that look like? And then he actually had the idea for Quadlock before some other stuff we'd done and then we circled back to it. Because you did the case, the bottle opener. Yeah, and we learned a lot doing that. And that was that classic one and done type product, right? Yeah. Yeah. Imagine if you still sell the bottle opener. Well, you wouldn't because we got ripped off. We learned so much from that. But it was sort of strategic doing that first because it was fatty. We thought it would be polarizing. We thought we'd get a bit of publicity from it. And we did. We got all that. And it did awesome for a year or two.

24:28But we just took that money and put it into Quad Lock. But then Quad Lock was the more expensive thing to get off the ground. There's more to it, all the rest of it. And it was a slower burn, but it was one of those things that you sort of had to believe that like this will be the thing. But I mean, it doesn't really matter if you're shooting for 10 million or 100 million or 200 million, because you sort of have to, if you're bootstrapping, you're doing the same stuff, right? And I think naturally what happens, now this doesn't happen for everyone, but I think naturally what happens is as you grow and you learn, you grow, you learn, you get new skills.

25:05new ways of thinking about the world, your ambition grows. And I think that's just natural. But I do remember I was going to say, CP and I did used to say stuff right back to staff, like let's build something bigger than ourselves. Because all the things we did before it was sort of like us doing the thing, selling the thing. Let's try and build a business that can be bigger than ourselves. And you've got to remember we started doing this stuff in like 2010, 2011. there wasn't many like DTC brands to look at and go, oh, that's what that thing looks like that I'm trying to do. That's the playbook.

25:40Like DTC wasn't a term. There's like e-commerce. There was e-retailing like that. So it was a different time. But in saying that, I think back to it a fair bit. And I think not coming from traditional like retail or traditional marketing and things like that, That was actually really good for us because we were coming at it from first principles, logic, okay, how could we make this work? What would we have to do to make this work? We didn't have any assumptions. We didn't have any education in the space. So you're just like, let's go find out what works and we're just going to do more of that.

26:19And that was really good back then. And I think today, it's still a really good way to be. With the advent of AI and things like that, things are still changing fast. there's still opportunity and outfit that you can go and get. You can be more efficient than somebody else. Any little win you can get like that means your business model can fund more marketing, can fund more product development, can fund more branding. Yeah, I think there's still opportunity out there for people. And I just think anytime there's a change in a market, anytime there's a change in the way things are done from an old way to a new way, generally the incumbents are slow to adapt.

26:59And I see what happens. You get big, you get a lot of people, you get a lot of management, get a lot of layers in a business and they slow down. And that's why like little startups are always going to have an edge on it because you just get people who are hungry and keen, maybe a little bit ruthless and they're just going to try lots of stuff and some of it will work. So that's a pretty impressive feat that since you started the business, You were profitable every month, every year. So you've never had distress about making payroll. We hired really slow for those years. You remember, we had hardly any people for a long time.

27:36I bet. I remember you said, dude, we don't need that. I think like when you said we were doing 20 million, we probably had 10 people then. That's crazy. Yeah. So we're pretty busy though. Yeah. And we're doing a lot. and that's with a company that we actually design everything we sell. That's with a full product team and all of that. So, I mean, it's doable. I don't think you can do it forever, but it's doable. But I do think at this stage, back then, you maybe had a bit more time to work some stuff out where I think now if you're trying to bootstrap it with bad unit economics, you're just not going to have the time to work it out.