707: How Two Aussies Took On Samsonite & Rimowa - and Won ($100M+)

25:20You still smiling? Yeah, it's the best thing in the world. You know, running a creative business where you've got creative outlet, you have autonomy, you've got purpose, there's global scale. Like, oh, cool. You know, we're doing well, particularly in Oz, but I would say 80 % of Australians still don't know who we are. 99 % of the world still doesn't know who we are. So I feel like until you tackle, there's always another problem to solve. And until we tackle the US properly, until we do UK properly, like UK for us, bleeding. I'd love to think that we would do well in the UK, but I don't know, maybe we're not British enough.

25:57Maybe we just haven't been there enough. It's been a struggle. There are some parts of the world that we just haven't been able to grasp onto. And I think that's the next challenge for us. How do we then show who we are? can't just come up to the Brits and go, we're from Australia, buy us. They couldn't care less. So how do we put our best foot forward, all the brand equity work that we've done here, to then go to the UK and say, we're great. We're another great brand. You should try. How do we do well in Indonesia or Malaysia? How do we do well in any other part of the world that we're trying to grow in?

26:33So what is it about the UK as an example that you think you've tried that it's just not working? I think early days, you just go, what we did for the US worked exceptionally well, which was get a great PR agency, set up operational excellence, find a messaging angle and double down. And I think maybe that works in the US where the audience is open to new products, new ideas, new brands. Ah, shorthandle.com looks the real deal, free returns. It's a buy now, worry later market. Yeah. And I love them for it. I love their energy to try new things. I think the UK is not like that. I feel like they're a little bit more, is the heritage behind the brand?

27:17Why am I buying this? What's the return policy? Do I really need another thing? They seem a little bit more resistant to new brands entering. And it could be, I don't know. I don't know what it is. Maybe we're just not doing a good enough job. I know there's a few e-com brands, particularly in Melbourne and Sydney, who have done exceptionally well in the UK. So, you know, I speak openly by saying, you know, we've got work to do. We have to figure out ourselves in different markets and what we represent there. So during that time when things were tough during COVID, it sounds like you and Rich went through a lot of pain.

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28:42Was there ever any time that you thought of giving up? Yeah, we started a quick wear brand. Between that, you know, we started a quick... You was by by Hex Club, was it? Hex did a great job. There was a few brands in the US doing great things. I personally love cooking a lot. And so it's a personal hobby of mine. And so I jumped on the opportunity to do something like this. And so we started molding things. We did a really good job, I thought, really strong handles. It was all about the handle for us. And we started molding. I think COVID was just such a weird time. You don't know when it was going to end.

29:24And we had started this amazing business. And now it feels quite large and amazing. But back then it was one year in. Yeah, it was only three years ago too. It's crazy. It was really crazy. So, you know, at some stage you thought, well, COVID is going to be a one-month thing, then a three-month thing, then it's a six-month thing. Especially in Australia. Yeah, especially in Melbourne. So we just didn't know what to do. And eventually you do lose hope because you just don't know when it's going to end. So what kept you going? Well, I mean, the bottles helped. You know, turning the wheels helped a little bit.

29:52We did try a few other bits and pieces. We helped some friends start their businesses, which we see them now as super successful. I mean, I wouldn't say we did that much, but we had a lot of free time on our hands. So come to the office. Let's chat about it. You know, when you just help friends out to do things, you like to think that some of those workshops and some of those concepts made it through and it's helped them progress now. And, you know, Pear is one of those guys. The Pear team, Rex and Nathan, have done a phenomenal job with that brand. But early days, they were like, well, how do we do some of the marketing?

30:26How do we do this? You know, again, they were great at manufacturing things, but it was the next step that they needed. So, and, and, you know, that was, that was sort of the beginning of this origin of no such thing as boring categories, only boring brands. And you could do things like socks, suitcases, cookware, things like that. How can you make things exciting? What's the unique selling proposition? and yeah I remember early days with you know I was in the room hearing these boys coming up with ideas and I feel privileged to be in the room when they came up with the idea of putting feels good on the feet so if you take a photo you know how do you take photos of your feet and socks what brand is it you don't know what brand it is but if they've got good and feels on your feet they take a photo of that I think it felt like a really nice marketing opportunity I think that That's what helped them year one get that promo out.

31:16So it's nice being in the room, seeing those ideas come up, and then seeing them executed as well. So for us, you know, for Rich and I, just keeping the wheels turning, doing creative things helps. And you did have to raise some money too, right? We did. We raised in 2019 first. Yep. So when we first opened our retail store, so we basically started retailing. We did a pre-order campaign December 2018. delivered that product February 2019, opened a retail store August 2019. Very quick. And the whole point of that was just to show off a little bit. Well, we thought retail was a great touch point.

31:55I don't think anyone was doing retail back then if you started at an online level. And we thought it would be a great idea to do it. Plus, particularly for Richard and myself, we're not very organized travelers. So if we wanted a suitcase from our own business, it would take two or three days shipping from us post. What if I just wanted to buy it today because I leave today? We knew that it was a customer problem. So we were like, let's get into retail. As soon as we opened the shop, it felt like we were more of a real brand, if that makes any sense, from just a pretend online one to a real one.

32:34And that's when we started getting hit up by investors and people. it was almost a week later from that shop opening so we did we raised we raised a bit of money early on I think it ended up being around five mil cash plus you know you know a loan here and a bit of that but ultimately five mil and we cleaned out some of the the early investors and so they're two high net worth individuals now who have helped us over the years to not only get through COVID but to continue growing the business as well. But, I mean, ultimately a lot of autonomy and they just let us do our thing. And there's a really crazy story about how one of them come through.

33:18So I know this story because your co-founder Rich, he come to our house before I even met him. So we bought, this was with my partner at the time, we bought a July bag and he come to our door and fixed it. There was something wrong. And basically he said that he tells a story. You should tell a story. You know the story. Yeah, yeah. I mean, well, yeah, the story is we're at one of our investors' house for lunch, sorry, and he had a chef come in to cook. And we said thank you, and that was in Sydney. And while we were in Sydney, we saw one of the tickets come through. Somebody had forgotten their coat on their lock, which happens two or three times a week here at this business.

34:06We know how to break into these things now. So we said, oh, let's go down and fix this lady's lock. And Rich goes in, does his thing with the lock, pats the dog, takes a photo with the dog, and we leave and we go back home. She posts the photo. It ends up being that she's the sister of the chef who'd gone into work for this guy on her birthday just to cook for us. and obviously tells him the story of after the lunch, we went down to fix her lock and this and that. And that was it. There was no due diligence process at all. Didn't open Xero, didn't ask for the spreadsheets or the data center, the data box.

34:43Just said, I'd love to help you guys grow and here's some cash. And we were wrapped for it. It's a great story at how being very customer-centric can solve all things. And it's a small world. It's a small world, man. Australia is a small world. There's a small world and doing things that don't scale in the early days when you're launching any new product. You can't beat it. It takes a lot of time, energy, effort. You probably should think to yourself, fuck, why am I doing this? But it makes so much of a difference. You've got to do the detail work. You've got to do everything. There's no dropping the ball on any of it.

35:20And I mean, do things that don't scale is the best way to frame it. but the bigger businesses get, typically if you're the founder, as most of the listeners would be here, you get further and further away from the revenue from the customers. You add so many layers in between you and the customer. You replace the word customer with revenue. And why are you so distanced from where the cash is coming from? Learn as much as you can about the customer. Learn as much as you can about the revenue because that's where it all comes. The whole thing is supported by these guys. You lose sight of it. I see a lot of people losing sight of it.

35:55You know, they make too much cash and they go off and do other things. Yeah. Look after the customer. You look after the money. 100%. So I'm curious. So you said offline that one view that you have that not enough people talk about is how good retail is. It's a weird world. And you say like – I never would have thought that that's my – that would be a line I ever said out loud in my future. Let's talk about it. Let's talk about it. So what do you mean? Like when it comes to customer acquisition, you have drastically lowered your costs because you have retail stores. Yeah, I think early days, you know, there was a golden time for all the meta assets now that you could get cheap ads and you could scale quickly.

36:36Way easier. That D2C era of cheap and cheerful and getting things over the line was a great time. And people have sort of jumped on this board now and there's no way out. There's no way for them to get off that train. And so your acquisitions go from 100 to 200. What are you going to do about it? It's the mafia. So what we found with retail, and again, I wouldn't call it strategic by any means. We opened up our first store because we thought shipping won't work here. But they've turned into brand centers, fulfillment centers that, I mean, if you do the acquisition cost, it's a fraction of what you do online.

37:14The shipping is bulk shipping to your storage facility. The acquisition is your rent plus variable wages. It is, and like a CapEx on the fit out, which is half paid for by the landlord. So ultimately you're in this really great position where now you start to, it's like entering the matrix. You start to see how all these retail brands, how they survive. And once you see the numbers, you realize actually the bigger the store is, the better, the more tier one the location, the better you're going to do. And the rents start to make sense. At one stage you hear 100K rent and you think, this is wild.

37:48100K a month? No, 100K a year. But now I hear these numbers and I can hear a million dollar rent and be like, what's the foot traffic? Pitt Street starts at a million bucks. You guys, where are you guys in Sydney? There's one in Pitt Street. There's one in Galleries. There's one in Chats with Chase, Bondi. So you're paying a million dollars? We're not paying a million dollars because it's inside the shopping center. But if you want to be on the drag, it's a million dollars starting point. And you reckon you could make the numbers work? It ends up being – the numbers end up being around – you want 10 % of your – the rents to be 10 % of the revenue.

38:28So if it's 200 grand rent, you want to be making at least 2 mil rev. And then your wages should be somewhere between 12 % and 15%. Basically just filling in the percentages. So 10 % is a really good number. but you could probably crave up to 15, 20 if you wanted to muck around a little bit. Like a Chadston would be charging significant rent. You're probably hitting 20. Whereas you'd be going somewhere like, you know, somewhere else that's not Chadston and saying, yeah, closer to 10. But that's the number. And once you see it like that and you know that you can pull in that number, it actually all fits and you do an acquisition cost analysis.

39:06I mean, there's a cap on the revenue. That's the difference. Yes. Right? So your acquisition cost is low, but your revenue will only ever be X. Yes. And so you start to get into ranging possibilities and how the store looks, how the staff are incentivized to sell. It becomes another game. But you'll never, if you justify the two mil rev at the 200 grand rent, great, but you probably won't get 10 mil out of it. Whereas online provides you the opportunity to do that, to scale that. But at the same time, you're beholden to the online mafia. Yeah. but you're building an ecosystem and you're building brand.

39:41You've got to do a bit of both. Yeah, the brand component is phenomenal. And that's where I feel like I've gotten a little bit out of my system to double down on the architecture, the fit outs. I've looked to what Zimmerman and Aesop have done. Phenomenal retail experiences. They make these places feel like holiday houses. Why do you feel so good walking into an Aesop store? I mean, 50 bucks, we've all got 50 bucks on us to buy soap. but it feels luxurious going in there. It's because they've spent somewhere between eight and 10 grand a square meter on the fit out. It makes you feel like you're on holiday.

40:17And I've just taken that theory and gone, well, why can't, I want people to feel that when they walk in. If you're buying a suitcase, you're going somewhere. And it's the first thing that we ask, where are you heading? Most people want to talk about their trip. So some founders watching this, they're doing well online. How do you know when you're retail ready? You've got to take a leap of faith. Who knows? No one knows anything. If you're a consumer-based business, what's stopping you? Why are you afraid to do what everyone's been doing since the 1800s? Opening up a retail store is nothing new.

40:54There's nothing exciting by it, but you should make it exciting. You make it your thing. And I feel like that's exactly what happened for us. We tested, started small, by all means, don't do the million dollar pit street rent from day one. You got to warm into it, you know? And maybe going back to that running analogy of start small, just start running, see what happens, do a pop up, spend the money. Ultimately comes down to, can you spend, can you justify the money? Anyone who's watching or listening probably has massive meta budgets and I'm sure you could shave 5 % off that budget. Roes would be similar.

41:32you could do a pop-up and you could measure the effectiveness and go, I think that worked pretty well. Let's double down. Everything in life is a leap of faith. And you can always, like you said, test a pop-up. Yeah, yeah. Plenty of tests, plenty of things to do, you know, but it's not for everybody. A friend of mine runs a business called Cyber Organics, hand washes and like cleaning chemicals and things like that, but 100 % organic. He couldn't do it. Couldn't do a retail thing because it would literally just be a marketing exercise and it would blow out. That's a brand made for wholesale, supermarket retail, things like that.

42:10There's, I think, horses for courses for certain things. Yep, of course. But it doesn't mean that you can't do cool experiences. We are anchored on the best of the best in the world right now. You scroll through Instagram every night and you're looking at what Skims is doing online. You're looking at what Nike is doing. you are like benchmark on the best of the best. So what are you going to do in little old Australia here? How much fun are you going to have here? You've got to start thinking creatively on how to execute things. And I think just having some guts and trying things out, you only live once.

42:44I agree. You get married a few times, but you only live once. And he said that because you're on your first marriage. So, yeah, just for context, I'm getting married. I go to Greece this weekend. I get married the following week. Magic. Congrats. Thank you. So you guys are spending, right? You would have a sizable budget still on Meta though, right? Yeah. Yeah, yeah, yeah. Massive. Massive. Yeah, massive. Like a million plus half a month. Yeah. Okay. Wow. Okay. And you guys that run that, do you run the marketing still or you may be in creative direction? We've got people smarter than us who know what they're doing to make sure that they're doing it.

43:28But it's a growth team. It's a brand team. And who work together. But ultimately, we're a small team. We're 35 people in the office. Everybody plays a role. Every single one plays a role. Wow, you're only 35 people. Yeah, yeah, yeah. We've kept it lean. Yeah, because I remember early days you kept it pretty lean. Wow, that's impressive. Yeah, yeah, yeah. For a sizable part of the business being in the US, we don't have an office there. Yep. It's all run from here. Yep. Everybody shares a role. So the retail guys also play a strong role in marketing. Yep. Actually, our tech guy, he does a lot of marketing work, a lot of operations work.

44:09Everyone plays a really strong role, and we want to hear everyone's opinions about all different things. So when we talk even promos, marketing promos, it's actually a full team leadership effort to come up with ideas for promos and campaigns. Creative, like we're doing a partnership with American Airlines. Oh, wow. It's a full bag of what are the ideas? What can we do? How do we max this out from operations, not just marketing? Wow, that's impressive, man. That's impressive headcount for a nine-figure brand plus. That's amazing. And that's obviously been strategic to keep it that way. Yeah, I mean, you know, yeah, it is.

44:45We don't want too many people. Why? It's a headache. I know it is. It's a headache. I mean, you ask any business owner and they say less is more. You don't want too many people because it becomes a bigger problem to deal with and you're managing people as opposed to growing the business. And I say this openly, like Richard and I are very much zero to one guys. We love the slaves up all in approach. You get bigger, you'd stop being that. You really do stop being that. And so even just finding our own little pathways of like, yes, you know, Richard, special projects, product development, myself, special projects, brand marketing.

45:25It's nice having those little avenues to be able to get it out of our system a bit. But if it's too big of a business, it starts to feel weird. Like retail for us, so at 35, that's in the office, but retail seems like 120. Yeah, of course. This is the first year we don't know everyone's names. it's hard, you know, and they're kids. They're all kids. I don't know what their names are. Like, you know, I don't want to look like a creep asking them either. You know, so it's, it's a really weird moment of like this person who's in the kitchen, do we know who this person is? Uh, and I, I, look, I love the fact that we're growing as a business, but it does, we are trying to hold onto what, what the DNA of what that business is.

46:02Um, and you know, the work from home thing is a big one. We don't do it. Uh, and you know, we have a lot of questions about that and we love talking about it because we're so passionate about it, right? It's not like Richard and I are off in Italy on yachts. Like we're here every day with a team trying to problem solve. We still feel like July is a toddler and you can't remote parent the toddler. We need to be there every day feeding it, coming up with ideas, guiding it through life. Whereas some of the bigger businesses that are teenagers, if anybody's got teenagers, mate, they don't want to know you at all.

46:38They're happy. You know, if they see you once a week, they'd be happy. So for us early, like we're still in this early stage mentality of growth mindset, all hands on deck. Everybody's involved in everything, but you've all got your own specialties. Let's go. And I love hiring internally for things. You know, we've seen, we've got a super young team. Most of the team is sub 30 years old. Yep. Our head of retail is in his early 30s. He went from on the floor, Victoria lead, state lead, state lead to national lead. And now training people across Malaysia, Indonesia, the US pop-ups for global. I love that.

47:23Our head of tech was our first team member. Number one guy. Hired him. It was just Rich I and him deploying websites. he was 19 at the time and used to wear a shirt and attire to the office you know he's now a global head of tech he's a killer he's made us such an ai strong business and still with the business 27 years old like love it like you know that's that's our team and we love that it's like everybody is just hungry and wants to get it done yeah no i love that man so dude i could talk to you all day we only got yeah no sorry i go on man no no this is awesome this is awesome we have to work towards wrapping up we have to get you back in again and man hear where you guys are at in a couple years but what's next like what are you guys doing to double triple to keep building this brand like you said like you know it's still early days for you guys yeah there's so many things like for us the biggest growth opportunities new markets new products I think we've done a really good job at creating like a base level base foundation layer of product.

48:30We started to do some really cool shit with inbuilt tracking into the TSA lock. Global first thing. We beat Samsonite by two years. Love that. Absolutely love that for us. That's cool. And that was a super cool thing. Owned the IP for it. How good. Also for patent. Everything. Man, that's a move. Insane. That's a move. That's a unique mechanism. They've done it and they couldn't put it into the TSA lock because we own the design IP around it. So like, got them, got them. So, you know, they're just cool. We're doing a lot of cool shit like that. We've created a new carry-on. You know, not biased to say I think it's the best carry-on in the world right now.

49:11You can access it standing up so you don't need to fold it open if you're in the middle of the plane or at the airport. So you're doing a lot of product innovation, but then taking that message to the world. You know, July means something here. Australian Olympic team, Australian Open, Qantas, us you know all things that people don't give a shit about in any other part of the world so how do we take what we what's what's made us strong here and scale it um malaysia indonesia like the southeast asia korea we've started in korea like slowly slowly building the the you know putting the building blocks in place for international growth the u.s everyone always says oh you know you've got to go to the u.s got to go to the u.s yeah for sure but you need millions the quickest way to burn money is by doubling down in the US.

49:54Because we've found ourselves retail strong, retail is really good in Asia. Let's continue the retail story in Asia and continue an online story in the US. So we've got plenty of opportunity, but maybe this concept that we've got of like everything can be run with a small team in Collingwood is what needs to break. Maybe we need to start learning ourselves that - Yeah, because you guys were going over there for a bit. I remember. It's painful, man. 24-hour flights. It's hard. It's hard, you know. Dude, I'm going pro. I've got three kids and a lovely wife I want to see. Dude, I feel you. Like I don't have kids yet, but I'm going pro with the pod next year.

50:32Every single episode in person, three to four, five tours a year now. Yeah. Yeah, yeah, yeah. It's crazy. Yeah, it's crazy. And you're doing a yo and all these other things. Yeah, travel's hard. Travel's hard. And I feel like the older you get, the less you want to travel too, you know. The kids want to do it. Let the kids do it. so there's just so much opportunity out there and once you see it you just want to grab onto something what are those things? I'd love to see UK work because I love going I really do love going I'd love to see US continue to grow you know I've never been to Korea we've been there for a year now selling suitcases I've never been I went for the first time this year incredible nice right I hear great things so I'd love to do Seoul we're going to open a retail store in Malaysia in KL which would be cool.

51:19Half my family's from Singapore. So eventually get there as well. You know, there's a lot to do, man. Awesome, man. Well, dude, congratulations on yours and Rich's success. It's super impressive what you guys have been able to build these past few years. And man, we'll have to get you back on in the future. After you're married. Yep, done. Thanks, mate. Awesome. Hey, FounderFam, thank you so much for tuning in today. And if you enjoyed this episode, please take the time to leave us a review and let us know what you think. This podcast is 100 % free. We work so hard to go out and find the most successful founders and entrepreneurs all around the globe.

51:57So your feedback helps us grow, improve, and even bring on more incredible guests and insights. So if you have a second, please take a moment and leave us a review. It really means a lot to me and the founder team. It makes so much of a difference. Thank you again for listening and I'll catch you on the next episode.