71 minutes | Jun 16, 2021

Tony Nash - Creating Booktopia | #Perspectives Podcast

Perspectives Podcast - Tony Nash[00:00:00] Hey, everyone. Welcome to this episode of  Perspectives. It's such a pleasure to join you. And I want to thank you for being with us. I really appreciate you. I got interviewed the other day and I got to brag about our view is, and I think you're fantastic. So it's great that you're here today. We have a very special guest, especially if you're Australian centric.So his name is Tony Nash. You may know him as the man who co-founded Booktopia. It is a very large online book seller here in Australia. It's massive. It's where I do my business, which I didn't get to tell Tony in the interview, but Tony is just a great guy. He's a real pragmatist. You're going to enjoy.He's very down to earth approach and nature. When it comes to building such a successful business, it is the world's largest online and offline book retailer. In the world, which is quite the achievement. I think it's fantastic because obviously everybody's minds go to Amazon, but Amazon's focus as Tony reveals is an inbox now.So they've [00:01:00] carved out this phenomenal niche themselves with some entrepreneurial thinking, pragmatism seeing gaps in the market and just figuring out obsessing about what the customers want. He created the business with his brother, Simon and friend, Steve. And they're starting budget on Google ads was $10 a day.They deliberately did not make a profit until 2016. They started in 2004 did not make any profit to two 16. We talk about that in the interview, and that was deliberate because what they wanted to do was to keep funding the growth that was required to take care of their customer demands. It turns over in exists.I think it's over $200 million a year. Now it's been listed in the AFI Bow's fast hundred, eight times the only company ever to achieve this feat from 2009 to 2017, it's been voted bookstore of the year. They've moved into publishing as well. We didn't get to talk about that as much as I'd liked, but that's a really interesting new niche they're carving out for themselves.It has [00:02:00] won the New South Wales Telstra Business  of the Year the Australian Telstra Business Award People's  choice Award we were a finalist in that. I remember that. They've been a finalist seven times in the Telstra business awards and they are state, it stated that Australian authors and titles are a key focus for this company.And you'll hear that come through. When we talk with him, they completed an IPO in 2020 during the first year. Did you believe he'd ever say this the first year of this global pandemic and our response to it? They did an IPO. So initial public offering, they went public and their capital raised successfully.They did an 11 week launch from decision to IPO, which I think is fantastic. They hold nearly 200,000 books in stock, ready to ship. They sell an item every 4.8 seconds. Their warehouses in excess of 10,000 square meters. Their main rival apparently is Amazon. Even though Amazon is in Australia, Booktopia is just doing gangbusters, going from strength to [00:03:00] strength.We talk about teams, culture. We talk about what it takes to build a business very much this theme of pragmatism and keeping your head and focusing on the customer and figuring out where the sale is going to be made because everything else up until then is talk and with no further talk from him.Here is Tony Nash. So you've been going now, you began in 2004. How would you say if you were to describe right now, how you got here? Rather than telling me what you did. How did you get here to be in this position where you are now with Booktopia mostly, for me, it feels like one thing led to another. So I'm very horizon point driven.That means that I have a clear picture of where I want to get to. And I may not necessarily know that that's. How to get there, but by having that horizon point to me it's more like a mountain range beyond the mountain range that I can see in the [00:04:00] distance and going, right. We've got to get to X and at the moment we're turning over 200 million.So therefore, what have I got to do to get to 300 million? But before that, of course it was getting from 100 to 200, from 20 to a hundred and so on and so forth. So if you work your way back then that's that's quite often when I think about the driving force, it's like, if someone said to me, come on, let's, let's get on a boat and go for a trip.And, and, and where do you want to go? And I say, look, let's go east. Well, we can end up in Alaska. We could end up in Antarctica and you got, what can you be a bit more specific? And it's like, well, New Zealand, north or south island and north, so Wellington or Auckland, Oakland, Ryan and I were in Oakland.Well, you know, the where the marina is, where we're going to where they had the America's cup, that's where we're going. And all of a sudden everything gets clear. And, and that to me is a lot about having that destination that then creates a level of [00:05:00] thinking, which gets you into action. Okay. So you start with the end in mind, which is what anybody who's an entrepreneur who's successful and not successful starts with that's.I imagine that's part of it, but there must be more to the soup because. It's not as simple as just set the intention and the horizon line cause a new horizon line keeps presented itself and that horizon line is always further away and to get to their new horizon line, the challenge is always unique because the once you've conquered one horizon line, you've conquered those challenges.The next horizon line is completely different. Challenges are required for you to overcome. Can you talk about that? Yep. So where the Where the engine sits in terms of how we fire up and what we do comes from asking one question every day, what do our customers want? So even though there's an end point in mind, it's still coming from the point of what do they want, because that will determine what we do to get where we need to get to, to the horizon point.So that's how it feels to me. In [00:06:00] terms of, I guess, if you were to use the New Zealand metaphor, it's kind of like, oh, we're going to go in a cruiser or you're going to go on a sailing boat. Are we, how are we going to get there? And, and so that, that would be the next unpicking of the, you know, taking the layers of the onion away.There are many, many other things though that make up the. You know, who who's on your crew what sort of roles do you need to have or the other we can't afford to have passengers. So who's doing what that comes, that comes into play. If I think about it I've never really used it in this kind of metaphor before, but that makes sense to me.How are we funding it? So are we, do we want to have more month left at the end of the money or do we want to have more money left at the end of the month? We focused more on cashflow statements in the beginning that we did in profit and loss. There was a very clear growth strategies that I had in mind in terms of, in terms of getting, you know, I didn't want to overgrow.I didn't want to under, but I didn't want to grow too quickly. So it's slow down there. So it's talking about capital raising [00:07:00] or not capital raising. How did you decide what your sweet spot was for over or under growing? How did you, was it an intuition? Did you have numbers to base it on? How did you go?Yeah, kind of felt to me, like by growing at around 25 to 30% a year was was a, a stretch that was manageable. But not exhaustive. And so, and what I liked about that, it wasn't lumpy. So every year people were used to beat in the distribution center and customer service, sales, marketing, whoever, like, they just knew that we were growing at a very steady, right.And I found that to be really helpful in terms of people getting used to, if we were jumped, like. 80% one year with the pandemic, which some companies would have. And then it's only 10% the next year. Overall over two years, you've increased by about 40% a year, 35% a year. But for us having that steady growth all the time, Pru proved that we could bring on [00:08:00] people that we could fulfill the orders that we were getting, that we can manage our cashflow, that we weren't spiraling out of control.That's how it felt for me. And I imagine if you had overreach, you would have been in danger of not getting the capital funding you needed to bail you out of the overreach. So it wasn't as simple as finding the sweet spot, really the business relied on it because you were profit net, nothing for how many years.That was extraordinary. Part of the story. Yeah, that was, that was intentional. So to me it was about pushing, putting back into the business, everything that we were accumulating. So having started the business off a $10 note back in. 2004. We we had another business at a time and when I say we I've been in business with my brother and my sister and my brother-in-law and we had another business, internet marketing.So we were doing consulting work and Booktopia was a little side project for me that got bigger and bigger. So it was about, it was just about getting old that And the beautiful thing for us, of course, it customers paid upfront. [00:09:00] So they, they transacted, they gave us their money. We then hustled as hard as we could.And then our suppliers, mostly in the book industry is, is that it's 30 days end of month. So in some instances we may have sold the book on the first, second, third, fourth of the month. We didn't have to pay that for, you know, almost 60 days later. So there was an aspect of using our customer's money. They were our investors, they, they handed over their money and we, we worked hard to hire more people hold more stock, write more software, buy more automation.Yeah. But there were times when we when we moved, when we change facilities, we invested in automation and our suppliers were, were stretched to we, we were late in paying them. We had to continue selling more books to then eventually pay them. And, and then we got to the next level and we finally were able to.Kind of get some clean air again. And once we'd done through that light not make money for that was until 2016 and that was incredible, but that was on par. [00:10:00] So it was on purpose. It was on purpose. And what happened was we tried to IPO in 2016 we had got to 80 million in revenue and we we went through the whole journey and it was basically like going down to Bondai beach and Sydney on a mid winter's day to try and sell ice greens with a southerly coming in from the Antarctic.And it was eight degrees because temple and Webster were trading at 15 cents. Then now at $10, a Kogan had flatline over the six months since they had listed SurfStitch was going off. The market red bubble had gone backwards. And so it was there. And then the, the week that we were trying to firm up the price and do our management roadshow, Amazon announced they were coming to Australia and the fund managers all said, well, they're going to annihilate you.So we're not interested. And, and we had to go away and do go from 80 million to 200 million in the meantime. And so Amazon didn't annihilate, but the one thing I took away from. From that particular process, was that okay. Growth has been great and, and putting all the money [00:11:00] back in has been terrific, but I think we now need to become a little bit more sustainable and, and focus on revenue and profit.And, and so we, we started to focus on profit and build that up as well. So that then type it out our growth. So we didn't put as much money back in, but we had we still had high double digit growth. We just didn't have as much, but we were then is no one gave us money. If we couldn't raise money ever, ever, ever, ever.Then we still had our own business too, and we were still funding it then. So they put us in a stronger position and that's why we, we shifted. And I shifted from being a revenue based business. And in the early days of the internet, people really didn't care about profit. They just wanted to know that you were growing.Yes. But it'd be, I, it was clear to me that especially talking to fund managers, they wanted to know that if they put the money in it, wasn't, it wasn't only going to be potentially capital growth, but it was also going to be dividends as well. In long-term yeah. When you're talking about sustainability, you talk about in terms of the needs to be the cashflow and the [00:12:00] profit.Isn't sustainability though. Also about stabilizing your supply chains and stabilizing distribution in Australia. Tell me about it. So you had to not invest as much money back in your business, as you had to stabilize a sustainable distribution network. How did you do both? How did you do all of that?Nope. The way that most people do that is they, they understand their supply chain model and where they can get their product from and how that works. And then they start to order and and build up a level of capacity that Takes into consideration the slowness of whoever whoever's supplying you.So in our case the, the algorithms that we write to, to order the stock that we needed for the. 150,000 titles that we had in stock was to make sure that yeah, we would buy them out and have zero for a little while, but then it was coming back in now algorithms, cause we've got the funding is to hold as much as we can.So we, our low tide is well above the zero [00:13:00] point. And so then you do that. What I'm doing now though, is which is more exciting for me having moved from online retailing about four or five years ago, we got into distribution. Now the publishers are appointing us as their Australian distributor. So we go to ourselves, but we also sell to Amazon and Dimmick's and QBD and all the little indie bookstores, whether they buy from us, buy from us.So we've actually, we've actually addressed that supply chain by saying, Hey. We can hold your books. We can actually sell more if you keep less. And of course for Booktopia we get better discounts because we are the distributor now. And so that's one of the areas. Okay. Thank you. And, and then also we are we're talking to printers, like for example there, there are printers, there's a legal publisher here in Australia.They print in Sydney, their warehouses in Canberra, which is three and a half hour drive away. So they drive all the stock and all the product down to Canberra, put it in the warehouse. Some PR obviously gets sold in Canberra, but it's mostly in Sydney and [00:14:00] Melbourne. So then it all comes back to Sydney, into Melbourne, right?What the hell? Like my company is making money out of that. And there's yeah, there's even at the last semester we were very big on academic books and one of the PhD students ordered a book from us, which John Wiley is the publisher. So we ordered it from Wiley. It's a. PhD books are not many are needed.So it was print on demand. It was printed in Singapore, which is the PID partner. They then ship it to Queensland. Where there John Wiley shed is their distribution center is they then freight it down to us and Sydney and we sent it to the customer. What the hell, how much it's all going to the freight companies?So my goal over the next 10 years is really to address that Leia historically in the book industry. Cause it's been going for 570 years and certainly for the last several decades, it's very siloed. So the printers did the printing and the publishers did the publishing. The distributors held the books, the authors write, then the literary agents represented them and so forth.It's very, very silent and I'm looking [00:15:00] at it addressing that without investment in logistics and publishing which we've also stabbed in the last couple of years. And and, and just kind of see if we can remove some of that and have that profitability. Sit with us, give more to the author.And, and hopefully make the price very compelling to the customer. What you're also doing is taking over proud of the market. That's never been addressed. You're doing something you're making a unique offering that hasn't been available to authors until now. Yeah. And one of the reasons for that is The lucky thing for me is I'm not really a reader.I actually do. I listen to audio books. I listened to a lot of audio books, but to sit down or because I have ADHD is that I I don't, I was never much of a Raider. So I came into the book industry as, as an outsider, looking at it from a very different perspectives. They had a very, like, this is the way it always was the way it always is.We're looking across the valley of, of publishing in the book, industry gain, look at our valley and I'm going well, [00:16:00] I'm in a helicopter looking from up here. Or I went over to the other side of the valley, or I sat down through the river through the middle of it and I got a different perspective. And so from my view, I just didn't see it the way that they saw it.And I just saw other opportunities within that. One of the things that you saw was a belief in a business model. I'm going to say it. Perhaps Amazon may have been on your mind in a couple of those meetings. How did you know to keep going? When this monolith had decimated the U S book market and the publishing industry around the world, how did you, I want to know your thinking.Cause it's more than a punch that you've done. This is well, in the beginning though, the thing was, is that Booktopia was started with no light bulb moment or insight, or there's a gap in the market. It was just a side project, $10 a day. We used another company to manage our site and fulfill our orders because they had done it for one of our internet marketing clients, Angus and Robertson.So they built the site for you as well, the first ever ordering. [00:17:00] Yeah, they, we got through our internet marketing consulting business. We got Angus and Robertson. One of Australia's oldest bookstores, their website to the top of Google as a project. And they use this company in Sydney to manage their site and fulfill their orders.And this company managed 80 bookstores websites. So my brother who had done that project set up a meeting and Christmas of 2003 pitched the idea of, of of us. Being introduced to their other clients and getting them all to the top of Google so they can make more money. And the owner of that company said not interested.I said, you're not interested in making more money. I said, seriously. And he goes, he goes, no, we build websites. We manage you. We've got this platform that we can, we can get a bookstore website up and running within 10 minutes, 10 minutes. There's a million books on there. And if you sell anything, we pay a commission.I said, well, that sounds interesting. Yeah. And he goes, yeah, I know, but no internet, only businesses have made anything out of it's all been off the back of a traditional bookstore. So I went away from that meeting. I [00:18:00] said to my brother, he said, what? Wouldn't mind giving that book thing a bit of a guy.Cause I could see there was very little cost from outside other than driving traffic and, and getting a commission. And, and so I kind of went away from that, came up with the name, Booktopia registered the business and sure enough, this company got the Booktopia website up and running within 10 minutes with a million books on there.And my brother handled the finances, said. You can stop Booktopia it's gotta be outside of hours. Cause we're doing all this consulting work. And I said, sure. Yeah. So you was selling your time for money as a consultant, not even. Visualizing the vision of what God's hope you could become. No, we had no idea my brother, right.My brother read the sales plan. You'll you'll sell one book for the first three months and then it'll go to two and then it'll go, right. This is awesome. This is awesome. And my brother finances gave me a budget of $10 per day to start. What did you spend the $10 on? I've been dying to ask you that question.Google ad words. I was a Google ads, Google ads, but I didn't [00:19:00] go for search terms like books or bookshop or, or or, you know, those kinds of generic terms. I went for authors and titles and sent them deep into the site because they had already used Google to do a search. So I sent them to where those books were and it took me three days to sell my first book.And that was the total sales for the day one book. At the end of the month, I had done $2,000, but by the fourth month, I was up to 30,000 a month by the end of the year, a hundred thousand dollars a month by the end of two years, $200,000 a month. So We kept publishing distribution back then they, so that, that company that managed our site amazing, they took care of it all for a commission.That's all right. Yeah. Well, they, we got a commission for generating a sale, so it was a white label system. They had 80 odd stores that they were managing and they, they did Angus and Robertson, Collins books bunch of other independent bookstores. And, you know, we were one of them and then we quickly became one of their largest and it was once we got to [00:20:00] around 2 million in revenue we could see that there was something going on here.And I went through the Australian booksellers association annual conference in 2006, and we were still doing the internet marketing. We were still using this other company. And I came back from that and I said to the family, these guys have no idea what's going on. We got to go out and do this ourselves.And because of my background before internet marketing I was, I. Sorry. I was a recruitment consultant for the competing industry. And before that I was a computer programmer and my brother-in-law was an IBM software engineer. And so we had the confidence to build our own site, which we did. And in 2007 beginning of 2007, three is after we had started Booktopia.We parted ways with the other company when it moved into a small warehouse in Sydney, 500 square meters, next door, a brothel. And not that we knew that when we moved in, we had found out later and then bought some shelves on eBay. Hi, hi to warehouse manager rang the publishers and we said, it's assets.Booktopia, we're [00:21:00] turning over 2 million a year. Never heard of you. Because all our orders have been going through this other company. So we've got basic terms, basic discounts, and we still did our consulting work. So it wasn't until two years later that we could finally say, all right, Booktopia is turning over.I think it was around 7 million. So we could stop doing the recruitment or the internet marketing. So we could focus on the, the Booktopia business. What were the publishers saying to discuss, to offer you such lousy terms? When you clearly, the volume you were moving was bigger than any one bookstore or brand in Australia, we were only doing 2 million, so there was nothing there.In fact, I remember getting a letter from PSM, the education publishers to say, as you're an online retailer and have no overheads, your discount will be 10%. Now at that stage, I think we had about 10 people working in the business. I looked around at our warehouse and our shows and our people. What do you mean no overheads?I just think that it's some sort of smoke happens by magic. And so [00:22:00] it took quite a while. It took I would say another five or six years for them to really get their head around what was going on. And they started to shift because it was a very archaic industry where you know, where they they controlled everything.And, and so w once we got to 30 or 40 million in revenue, we were starting to you might've negotiated a little differently, probably. Yeah. I just got some discounts, improved terms improved once we, of course, you know, paid our bills and, and, and put more volume. Yeah. What was it like signing that first contract on the first warehouse, still working in your other job that wasn't too scary?It was $1,500 a month. Yeah, I think so. It was not much more than what we're paying for an office in, in north Sydney. But it was. We didn't hold any stock in the beginning. So we literally took orders from customers. And we would order it from the supplier would come in, you know, a few weeks later, five weeks later, eight weeks later, and people were [00:23:00] bitching and complaining saying, you don't like you guys suck.I should have bought from Amazon. And it was about a year after we had gone out on our own. So almost four years of being in the business, there's one book had been selling really well at because the author had been on Oprah and it was the wife of Jerry Seinfeld, Jessica Seinfeld and, and America had sold out of its 300,000 copies and HarperCollins in Australia had 200 copies left.So I said to my brother and brother-in-law, we shouldn't buy all of them then no one left, but except us. So we did, and it arrived into our warehouse. And imagine what keen to a bookshop where there's only like one book on the shelf or that yeah, that's how a bookshop looked at that time. So, so when this order, when an audit would come through the site, we just pick it, pack it and ship it.And the feedback from everyone was, wow. What great service you guys are really quick. And I, I said to the others, you know, to kill a Mockingbird is sold every single month for 50 years. Why, why are we ordering it in? And what else is there? How to win friends and influence people, power positive thinking, thinking very rich Harry Potter, Dr.Zeus. So a little warehouse that was supposed to be more of a cross-docking kind of thing [00:24:00] really started to fill up. And then after a couple of years, by 2009, we had to move out of there to, to 2000 square meters. And we thought, well, this will last us five years, the five years that ran out of space after two years.And then we take another 2000 square meters. And at this stage it's all manual handling of every book. Yeah. Yeah. Except we had, we bought one packing machine that in the middle and someone would have the one in, just put it through and we'll come out with a package wrapped around. And it was in 2014, seven, seven years ago when we moved to 10,000 square meters.And that was a pretty big league. We were turning over 40 million. And we moved here. And that was where we invested initially 5 million in automation and then, which was conveyed as in more packing things. And then, and then over the next few years we invested another 5 million in, in automation to improve our capabilities.And then that got us to around 150 million in revenue by the beginning of 20 [00:25:00] 2020. And that's when we did our first raise, how, how did you come to the decision to do the crowdfunding? Can you talk a little bit about that? I think our listeners would be really interesting interest in how Boulder moved.That was to even consider it. Was it over a glass of red that you came to that decision when you're on MBMA how did you crowd go to crowdfund? Talk about that. So what happened was when the IPI didn't happen and we had when you do an IPO, there was there's a lot of costs involved and we accumulated those costs and then we never raised the money to pay our first costs.What I recommend to the listeners, if they are looking at it is definitely. Accumulate the money for the capital raise rather than trying use it out of the proceeds of your business, because that really stretched us. We had a couple of million dollars in costs that needed to be paid down and that put pressure on our suppliers, which meant that we were putting, being put on stock because we couldn't pay them.We had to sell so more and it was a very tricky period to navigate and our way through to get that's not how you want to do an IPO. Yes. Well we [00:26:00] didn't have much 80 million in turnover, so we didn't have many other options, but yeah, that was our learning, our lessons and learnings on that period. So then once that didn't happen, we didn't look at a trade sale.So we, we engaged a company from Seattle to go around the world and talk to companies who might be interested in buying us because we were on track to under a million in revenue. We got no interest there, so then, okay. That's that was done. And then we the business was continuing to grow and I felt well, you know, one of the reasons why we wanted to IPO in the first place is that our customers are our hugest fans.They've been our investors all the way through buying books from us. And that's why we wanted to list. So I knew some guys who did had the crowdfunding platform and I reached out to them and I said, look, how about we do raise some capital through you guys. And so we we had some conversations and we said, we already had a prospectus that could be used reused to go to market with.And, and so we, we did that and we were going to be able to raise a few million dollars out of that. [00:27:00] And the reason why we didn't was because we also did a road show with a guy who has a company called wholesale investor. And we went to Sydney, Brisbane, and Singapore presenting ourselves to to invest at the investor community.So this was alongside the crowd funding and through those. Those events I did end up at the top of the Sheraton at 11:30 PM, edging my way to the back of the room. Cause it was so noisy standing next to this guy who we get into a conversation and he came out to Booktopia gave him a tour, told him where we were at and he goes, I think I know a guy who might be able to help you out raise some capital.Yeah. And then this guy, mark Peyton from ifs G capital came out. We really liked each other. He came into the business three to four days a week working inside. And that's the one thing I feel at that time, it felt like the problem or the reason why we weren't getting any any results in terms of raising capital is we didn't come from the capital markets and other companies who had been [00:28:00] succeeding, had someone there.Either an investor or a CEO or something who had come from the capital markets and can talk the talk of the, of that part of the world. And so, so he came on and there was things that were missing in terms of some of the modeling that we had within our books. That's helpful, more profits. So we've made some changes to some of the things that we've been doing in terms of postage and so forth, and made sure that we upped our profits slightly.And then within six months we had completed an $8 million raise. And then we also added to that $12 million of some senior debt that we had had for, we ended up having for about 11 months until the IPO, and that enabled us to, to invest in the automation that we needed to get to the next level. So that was, that was how come the crowdfunding came into play.I still won. 10 11. I wanted to have our customers own a piece of booklet. Exactly. I love that. It's a really inspiring message. How was it received by your customers? [00:29:00] W well pissed off in the end because we, we closed it off and and, and went through the traditional because we were going to raise a lot more money, which is what the business actually needed rather than, you know, three to 5 million.But they, they loved it. And those that were going to invest More than most people that were investing 5,000 and more we're invited to be on the priority offer for the IPO. Yeah. And that, that would have been great. The head away to have P feel part of the story that was unfolding. I'm interested that when you went looking around the world, there were no potential buyers.Was that because you feel you were under in terms of what those potential investors may have been looking for, what weren't they seeing that this is a stable, sustainable replicable completely. It can only scale up because all you're doing is supplying to customers, not consulting clients. So the scalability is obvious.What was the gap? That's a tricky one to [00:30:00] answer. Cause there's two types. There's obviously private equity firms who have got a specific mandate and they'll, they'll be looking at businesses in a very. Two dimensional way going, okay, where are they geographically, geographically? Are they based? What's what vertical or sector are they in?And a variety of other things and being Australian and growth, they care about growth trajectories, tremendously. They're going to show how they can make the money in five years. Yeah. The Australia was not part of their geographical mandate or, you know, what, what they were looking for for those that were in publishing.Because we're e-commerce and because of the value that we, and Amazon and others at LaSeon and so many other businesses that are out there based on it's a very different valuation than a publisher or a traditional business is based on. So they, they struggled to get their head around the multiples.So the multiples are higher. Yeah. Yeah, because not according to them though, no [00:31:00] traditional businesses there was there was little appetite there, so it just, I mean, interestingly for me after the IPO didn't happen because many reasons, but one was because Amazon was announced that we're coming to Australia.So I reached out to the Amazon through that process. And personally, directly, I reached out to the Amazon M and a team and I said, are, you know, here we are, we're turning over a hundred million a you interested in. I said we only buy businesses that we don't care what revenue you're doing. We don't care how much profit you make.They just have to be aligned to our three to five year goals. And I said, well, where Australia's biggest online book retailer, you guys sell books with turning over a hundred million and we're on track to get a 200 million. And you're saying that we're not aligned to your three to five year goals. I said, To myself, not to them.Thank you for that insight information. I will take that away and on. That was really helpful because we were seeing that Amazon was moving away from books and have been doing that globally. And [00:32:00] even though they're still the biggest book retailer, the publishers and the evidence was there, that they actually were moving more into a tech company rather than a supply chain and logistics fulfillment business.That was a very inspirational conversation to have had. So that's led you to decide then and there to do IPO again, or what was your thinking that time just to, were you always going to keep it in the family? What led you to decide to IPO again? Was that a turning point moment or what was the turning point for you?For us, it was always about how do we get money off the table? So we build a business and my brother is always, he's two years younger than me. I'm the CEO and have been he was, once we got past 50 million, it was big enough. He was happy to still leave it at 50 million revenue, pay a dividend lovely business.Thank you very much, but that's not what our, it, he may say. That's not what I wanted, but it's actually not what our customers were wanting from us. And to be fair. And yeah. And when you say that, can you just slow down? So I assume you mean by that you had to [00:33:00] provide a bigger range and faster. Is that what you mean by what our customers wanted?No, it's just that more people were transitioning online and therefore more people were coming to us. What do you do say we don't want you to buy from us. We, you need to stay at 50 million. No, they, they continued to To want to transact with us. And that's what was fundamentally, we kept doing what we were doing.More people were moving online. We were, and we did it well. So, so Simon, my brother, he, he was ready to retire, which he did just before the IPO. But part of that whole that whole journey, that goal was to how do we get money off the table? How do we convert the value of the business? So the family can know, can be set for, you know, how many generations who knows.We knew that we had done the hard work. There were many ways to, would have been happy to sell it to someone if the price was right. But that, that wasn't the way it worked out. So when we did the capital raise at the beginning of 2020, which is quite funny because I'm assuming one who is the founder and chairman of champ [00:34:00] benches and He was it wasn't through champ.It wasn't through private equity is to resign personal investment and a consortium of people who came in with him to make the $8 million investment. Six weeks later, the pandemic hit. And I remember meeting out with him and looking at his very grave and grey face going, what have I just done? I've just put what was money into a company.And we're being hit with a global restructure and, and it turned out to be one of the best investments that he's been the best investment. He made that. If you're online and you must've known it at the time, I'm going to throw that credit to you. Everyone has to go home. They have to have things to do.Now. That's not in the moment. In those days. When I, when I reflect on it, there was no guarantees who knew with the postal service stay open with, would we be able to deliver, how, how devastating was it? How, how did it, was it transmittable by, by a book? All these things, [00:35:00] there was still a lot of dust had to settle.Got it. So but things very quickly, we worked out that we were on the right track and sales kicked in excuse me. So, so what happened was we we were never planning to IPO. In that year we were going to wait a whole year because the investment that we had that they had made in us was to, to, for us to.Increase our capacity by adding more automation. We want it to go from our capacity of 30,000 books in and out per day to 60,000 out per day and an hour. That, that was a project that we'd been working on for some time and why we did the raise and that wasn't going to go live until the end of the year.So pandemic hit and we didn't have that in place. So we wanted to we wanted to get that deployed, get it optimized, and then be able to say to the market look how much profitability we have now. Look at the scale, look at everything else and, and have, have the runs on the board, but everything was very [00:36:00] uncertain and.E-commerce had moved from the wings to send a stage theater had been darkened and the spotlight was on e-commerce and we decided in August let's do it. And basically we did an 11 week IPO. Yeah, it was bloody quick. And that helped actually it helped so well because we could nothing was as long as a piece of string, everything goes, no, no, don't worry about that.We'll just, you know, just do this, do this. And so we stripped a lot of a way decisions were made quicker. And we, we were fortunate to a degree because we tried to IPO four years before and we still have that Pathfinder, which is the pre prospectus document we have We had, we had appointed out chairman four years before and we, he and I liked each other and he stayed on for those four years as our unlisted chair of Booktopia.So he'd been to our monthly board meetings. He had heard us discuss everything. I'm assuming Wong had joined us as a board member [00:37:00] already at the beginning of the year and had met with me already. Well, before that, as we discuss the plans for the business and he was on as a director. So, so there was already quite a bit of.Knowledge about our business quite often, when you try to IPO, which is what happened last time, you're appointing your, your non-executive directors. They're going into the due diligence process and the DDC meetings which is due to the due diligence committee meetings with the lawyers and with the accountants and so forth, doing all of the due diligence to then get their head around what your business is.They have a cultural match or a philosophical match about how to, how to do it. Exactly. So you had, so your feeling is, and your perception is it was successful this time around partly because you had the right people around you who already up to speed with how you were doing it. No, because it was like going down the Bondai beach on a mid day.So ice creams, right. We were oversubscribed four or five times. The value survey on the valuation of the business is [00:38:00] 300 in 15 million. And when we started probably four or five months before, it was probably more like 200 million. So e-commerce was e-commerce was really hot and we had the product and to be fair, even though a businesses value today at around 350 360 million, we're very similar in size to temple and Webster who have got a market cap of 1 billion.We've got a, we're much bigger than Adobe beauty and their market cap is in the mid 400. So we, we knew we had a very, very good business. And, and so what we've been able to do is get some money off the table. Like we had planned the school that the family still owns at this stage, I think over 40%, 45% of the companies, which is, which is Terrific.And we were able to sell down and, and and bought some and great institutional funds onto the register and very passionate about a business we're in for the long term and also the retail customers as well, who are now. So we, we did accomplish, it was very helpful to have the pandemic [00:39:00] accelerate.E-commerce exactly. What was the biggest challenge you've faced in your first 10 years when you had made a conscious decision not to make profit? It was 12 years. What was the mental challenge? Not the physical challenge of making sure you had enough money and money, but what was the biggest challenge you faced for you?I never feel like I haven't like them. The question I get asked often as, you know, what keeps you up at night? Nothing. I hit the bed, I got to sleep. So I'm I don't feel like that. It's this, you make it sound like it's it's you know, it was a big burden or that it was heavy or that it was like, oh my God, I, you know, I don't know how I'm going to do this, but we did it.It's it's never been like that. I don't think that way, I think, okay, this is what you've thrown at me out of left field. Never expected it. Okay. How are we going to deal with this? Because we will, and, and that's, that's one of the attributes that I have, I think, [00:40:00] I think so, which is quite helpful. I think maybe the things that I don't, and this is the way that I explain it when I do my keynotes to entrepreneurs and, and hopefully anyone can get this you know, through this, just through talking about it, is that Yeah, I've got a, I've got a good friend of mine.She's she's in credible talent, but she rides the highs. Like she, she has a great month or like win an award and like, she's just not there. Right. And then something doesn't work out and it's just like, blah, she's just bitching, incompliance. Right. And then she's up again. And she said, you know, I get exhausted just watching her go along this journey of like a roller coaster.Like we, we list on the, on the ASX. So we win the Telstra business award of the year or whatever. It's like, I, yeah. That's how I celebrate very little, you know, a fist pump and we're on track. And then when something doesn't work out, so the distance that I travel, right. Modulator is very flat. It's very modulator.[00:41:00] Very rolling. Rolling Hills. Yeah. And so I'm not, I'm a peaks in the valleys. And I think for me that, that. Solid being solid and, and not being. And actually she and I caught up only the last couple of weeks because I told her exactly what I what I tell people in, in I gave her that and she goes, you know, I've, I listened to that and I I've stopped myself sometimes and going, I don't need to get that pissed off or agitated or aggravated.And she, even, she, she heard me, she listened. So that was but I that's the way that I do it. And I think anyone that is in business, particularly as a business owner you get stuff thrown at you out of left field that you do not expect. The government will contact you. The regulations will change.The ASX will have a view. Yeah. In our, in our warehouse, the first time we moved in here, we moved in mid winter. It was called, of course it's a warehouse, but then it hit summer and it was 42 degrees in the warehouse. And then everyone struggled and it got to winter and everyone was fine. And then it was coming around to summer and they [00:42:00] were going to complain to fair work and it was okay, what do we have to do?Well, we're going to have to strengthen the stress into the ceiling and we've got to put these big jet engines. Two of them that are going to cost $600,000 and that'll keep it at 28 degrees and get all the hot air out. Okay. That's what we've got to do. You didn't expect it was an extra cost, but that's what you do.And you, you, you just keep pushing through that. That's that's that's what it is to be in business. You've got to say, bring it on. You also gotta be pragmatic. So the biggest challenge I faced, so you didn't really face my, my biggest challenge when I built my business in the first 10 years was my inability to trust others.As much as I trusted myself, I could do everything better all the time. And that was my biggest thing to get over. It's just that I know best. So therefore I should do best or interfere and just learning how, when to let go when it's not abdication, but delegation, which taught me systems. That was my biggest challenge.And is the only way we go. We're nothing like you. We do [00:43:00] over eight, we do eight figures, but to get to my first eight fears, I had to overcome my own BS about what others could do around me and how to build a team and what culture means. Yeah. That's interesting. So I do talk about that in my keynotes about Shlomo.So he, he also had an online bookstore and Booktopia, and his company started a similar time and we were turning over about, I don't know, five, $7 million. And I keep in touch and I called him. I said, man, how you going? And he goes, all tidy, terrible. I said, what's the matter? And he goes, well, I've had 18 angina or texts in the last three months.Wow. You're kidding mate. What's why. And he goes, well, you know, my wife and I were working 18 hours a day, six days a week. And and I said, how many people have you got working there? Cause he was turning over 2 million and we had, I don't know, maybe 12, 14 people. And he goes, oh, and there's my wife and I, and two casuals.You're joking. He goes, why don't you hire more people? [00:44:00] He goes, well, they just never do it as good as us. I said exactly, but at least they're doing part of it and they're taking it away. So if it's at 80 or 90% or 70%, but that's more because I'd come from a recruitment background. And I 14 years in recruitment, I understood hiring people.I understood what it took to bring people on board and let people go and so forth. So it was, it's been very much part of me as bringing people on and empowering them to, to give them the opportunity to grow with the business. So that was not one of the things that that I had to, that I, I had to NGO or challenge like you, you had to do.But I will share one thing with you, which I think has been really valuable to me when I was a recruitment consultant. I had contractors it contractors working for me and. I had 15 of them. And I went and did this course with Robert Kiyosaki, the guy that wrote rich dad, poor dad, about seven years before you wrote that book in the course called money in you, I did that.Or you did that. Okay, [00:45:00] great. You know what I'm talking about? 1992. And, and what happened was it was actually, I went in there because it said money, but in the end it was more about you. You probably have the same experience. And so, so I came back from that course, having had some great insights about myself, because the problem I had with my recruiting was that I got to 15 and then.I would drop back down to 11 contracts and then I came back up to 15 and then I dropped back down to 10 to eight and it just, I was stuck at this invisible ceiling. And then I had some breakthrough realizations about myself that I realized how I was self sabotaging or my thinking was not this certain.Right. And I went from 15 to 30 contractors in three months. Yeah. And then I got stuck there and I'd got back down to 24, 25 that got to 30 and then down to 20. So then I went back and did another one of these courses called creating wealth. And I had another breakthrough and I got to 45 contractors and I'd get back then.[00:46:00] And I was stuck at 45 and then I did business school for entrepreneurs in Hawaii in 93. And then I had more breakthroughs. And then I ended up with about 110 contractors working for me. Now, the reason why I share that story with you in particular for entrepreneurs, because I talk about, and I make up, I make up the scenario.And if you can hear me out, imagine if you owned them as Alrighty. I actually. Was presenting to a group of jewelers. My friend is in the jewelry business and I S I said that, you know, imagine you're in a Maserati and they all looked around the room. Yeah,well, that was quite a, that was not the normal reaction, but imagine you're in a Maserati and Maserati being an Italian sports car, quite often, it needs to end up in the workshop. And, and this particular day, there it is. You've got to drop it off and a mechanic needs to work on it. He gives you the loan and the loan is a 15 year old to Dorothy it.And you've got this very important meeting that you need to get to. And it's [00:47:00] in double bay or it's in Toorak if you're in Melbourne. All right. And you've got to get to this meeting and, and you, you get there and when you arrive there, It's a little restaurant cafe that you're meeting this new, big client that you're going to pitch to.And, and you think, well, I'll just pack in the back straight and I'll walk around and there's no parking spots and the light is light. And if you do not get there on time, right? It's a reflection on the opportunities, but there's only one spot available in front of the cafe restaurant. So you pack 15 year old two-door theater in front of the restaurant and you get out and you look at the client and they're looking at you and you're looking at the car and they're looking at the car and you're going, I mess it, rati.This is not, this is not my car. It's not, this is not who I am. Right. You got to get out of that car as you is not. About the car, right? You are not your car. You are not your wife. You are not your husband or boyfriend or girlfriend. You are not your kids. You're not your kids' academic results or their [00:48:00] sporting results.You are not your footie team. Even though one of my best mates thinks he's the Richmond tigers. He is not the Richmond tight, the Richmond tigers. And, and with Booktopia. Right. I am not. Booktopia. OPR is listed it's Booktopia that was listed when it wins the Telstra business awards. It's Booktopia. And I remember when I started it and I was walking through the apartment and pass the room where I was doing my work in, and I stopped all of a sudden in front of the door because I felt this boom, boom, boom.I felt the baby. Like I could feel the hopper business. I remember when it crowed. I remember when it took it to the steps. I remember when we went to daycare for the first day, I remember when it went to primary school and high school and went to university and went out on its own. And because I see it as a separate organism and I'm thinking all the time, what does it need?What does it need right now? Who does it need to have in its team? What funding does it need? What nourishment does it need? What [00:49:00] space does it need? Right. I am not. I have not overlaid my own ego and my own belief systems about myself onto my company, which is for me. I honestly, I can honestly say to your listeners that one of the reasons why Booktopia has had for from 2008 to 2000, 20, 30% plus company, and you guys, right.And its revenue is because of that is because I have not identified myself as the business. It's its own organism, it's its own thing. And I I'm sure that that's how Jeff Bezos and others think about their business. It's unencumbered is enabled to, to flourish, overturn a core because if it, if it was me and I had to overlay my own ego on it maybe we'd be at 60 or 70 million because that's all I could.You know, imagine of myself, it's been a very interesting aspect to the growth and the success of the business. Have you made mistakes with hiring with someone has brought their ego or their own [00:50:00] insecurity into it and tried to move it in a different direction or a bad direction or a self-serving direction?Not that because I'm, maybe I'm waiting. Maybe I'm just way too dominant in terms of my vision. I do empower people to get on with it. They, if they know what they need to do, and I'm not saying I'm, I'm not micromanaging. I think people who've worked here will attest to that. So this is what we need to do.Go away and make it manifest it, make it happen. So they have a lot of scope there, but I, I don't feel like I've been. Now that we have a board there's that aspect in terms of being listed, of course, non-executive, they can have their inputs, but I think one of the reasons that's the beauty of the Booktopia business versus say an adore beauty is that you know adore beauty, Kate has stepped back new CEO.She's very talented actually to kneel. But it's a, it was an IPO led it was a private equity led IPO. They already own quadrant owned 60% of the business. That's not the situation here, so people are investing in [00:51:00] Booktopia and see Booktopia because of the vision that I am the executive have not necessarily that it's transitioned more towards, towards you know, a, an investor led business.So You know, Jeff Bezos owns 10% of Amazon. That means 90% is owned by everyone else. It's still quite a large number, 180 billion us in, in personal wealth. But it's yeah, it's, it's I think that's one of the things, so I don't, I didn't experience that. And I, I understand the question that you asked, but I've never felt like I've been.Railroad I've certainly made mistakes. I've certainly learnt from certain things where I've been able to pivot and change and, and go, yeah. Okay. That didn't work. So let's, let's move on and let's do this. I'm sure you get a lot of questions about your mistakes. I'm generally pretty interested to know what are you most pleased about in terms of strategic thinking?People will say you only learn from your mistakes. You don't learn from your successes. That is not true. I've learned stacks from when I'd make a good strategic decision, and I'm going to keep doing [00:52:00] that. Where did your strategy really serve for you to get to where you are now? As you look back in hindsight, you can think, ah, I see now why that really contributed.It's asking that one question over and over. What do our customers through through asking that and exploring that and be curious, curious around it, holding stock, investing in automation all the things that we've done to, to. Complish that has, has led us to here. So I think that that has been one of the the most insightful and valuable things that we were able to hold onto as a, as a, a guide along the journey people ask me, is they all the time, the same thing, actually oddly enough I give them the tour of the facility.So they see all the automation and the robots and the automatic packing machines, conveyors, you know, hundreds and hundreds of thousands of books everywhere. It's like, they go crazy. And as we were walking back towards the office, they say, oh, you must be so proud how proud you must be. And I say, [00:53:00] I say to me, I said to them, this is pride to me.Imagine yourself in a pitch black room where you can't even see the hand in front of your face, that you. You know, when you take a step forward that you're on track or off track, simply by the way that your foot strikes the ground. Nah, that doesn't feel right. That that's where I'm going to be. That is pride to me.So it's very, very internal. It's very internal. It's a very, yeah. Internal sense of knowing they say that in the money in you, I remember that flip chat that height was on track only 3% of the time and 97% on you know, correcting and re and reconnecting back to be on track. So it's a bit like that.So yeah, I'm the successes to me in terms of some of the things that have come that have come through is, is like, is that knowing that you're on track? Knowing that that, and that, that you're not, you're not there yet. Like one of the thing with the IPO people asking me, oh, you must be, you must feel fantastic.It must be [00:54:00] great to list. And like I could tell by the way they were asking, it's like, this is kind of feels like you finally made it. And I said at the ASX, in my, in a speech to the people that were there, I said, I said, here it is. This is the way it feels to me. It's like being on the tour, de France you're on the 10th stage.And the IPO is the 40 kilometer go banner, where you've got still 40 Ks to get to the top of the mountain to finish the stage. And after that, you got an another 11 more stages before you get to the sharps Elisa. When you get to drink champagne with your mates, go 20 kilometers an hour and, and make it to the finish line.I said I said, this is just assigned to say, you're on track and you want that in your revision mirror really quick, because it's focused on whatever you got to do next. And that that's how that the IPO and many of the other things that we've accomplished as well, Telstra business awards, so forth, I'm sensing from you.And I'm sure it's coming through to our viewers. You ha you've become more of you through this process. And not [00:55:00] less of you. I see a lot of business owners have success. I would call a successful or a business that's in the public eye and they seem to magnify aspects of themselves that perhaps they wouldn't be pleased with.As they look back, I have a sense that you're pleased with. As you look back of you becoming more review in the aspects of you that you like about yourself. It's I would, I would put more of that down to marriage. Nice. Yeah. You know, my wife and I have been together for almost 10 years. My son is 18, so yeah.I never got married, but I I'm a father and and my ex works in the business. My wife was married before, I've got a 15 year old stepdaughter and, and I, I would say that re you've got a lot of hope and you've got a lot of you know, imagination about why you want to marry that person and be in that relationship.But I can assure you it is at times you do not feel like you're going to be married the next day. And that [00:56:00] divorce lawyers are going to be, I going to be cold in, but you talk it through and you love each other and you keep discovering, you know, how you're, how you're connected and you know, what's not working for you and why what's going on for you.And it's it's businesses. Life is like that. It's, it's a, it's a, an emotional. Marriage of, of, of achiever accomplishing something together and, and that it's easy to bail out and go, you know, I'm pulling the rip cord and I'll see you back down on the ground. You know, I'm out of this one, it's going to crash and burn or you're in it for the longterm.So, so I have no there's no guarantees that cath Catherine and I are going to be together. We just are in it every day. And Y that's how businesses is as well. It's like, you've got, you've got, you're dealing with issues and you're being, you're being asked to step up and learn and challenge yourself.And, [00:57:00] and and that that's, you know, that you're either, you're either invested in your own personal yeah, that's what I'm sensing in. You, you either are invest in becoming the best of you and you bring that and business requires that. So does marriage. You've got to want to bring your best to it for the best of it to flourish, or it's not going to be the best.It's going to be some facsimile that just can't sustain. That's right. Add on top of that parenting, would you even take you at a whole nother level? But I think, I think for me that even one of my best mates product from when I went to high school, he goes, Tony, I know you from, I know you from high school Chatswood high school, just a typical, you know, public school.And he goes, how the hell did you end up here? Like what? I know that kid. Right. It's impossible to think that you're the guy, but it's just that personal mission that voyage of discovery to find out more and ask those questions and to go deeper and [00:58:00] understand yourself and unpack. I liked, I liked to do personal development workshops.I did many of them just with Robert. I did tons of different ones to me now being in businesses like a personal development workshop, being in a marriage and being a parent is like a personal development workshop to act like it's not it's to let down the other team, you'll let down your business. You let down your wife or your husband, you let down your kids.If you don't see this moment as an opportunity for ourselves to grow, cause then we put it on them and it's up to them to change it's up to them to do bad, or it's up to them to stop it rather than saying, what can I own in this? That's what I got from my personal development. How much of this can I look within rather than.I can easily point don't get me wrong, but how much can I look within myself? If there was an entrepreneur starting out today, what would you be talking with them or mentoring that mentoring them about other than the basics and getting the fundamentals in play? Most of the time when I meet entrepreneurs what's missing [00:59:00] is that the point of cash?Where is someone going to hand over the money to that's something. And I'll share with you a story. When I was at business school with Robert Kiyosaki in 1993, I The course of 16 days, it was incredible. You at 7:00 AM and you're running team, you finished at 2:00 AM and your marketing teams. He flew people in a crisis, many different subjects all through the, through the 16 days.I learned so much and it was three years before I started my own company. But during, on one of the days as a, just as a process, as a, as a challenge at the break, he sent us out and said, what I want you to do is I want you to go out there. And we were in Hawaii on the big island of Hawaii, and I want you to go out there and sell.And if you got a dollar bill in your pocket, just take it out. That was 150 in the course, just go around and sell it. And if you, for the point of integrity of the process, if you could be the, the one being sold to, if you feel like you want that, then you got to hand over your dollar. And I went out and I was in recruitment.So I went out hard and strong. Like we've got the [01:00:00] best business, we've got the biggest, we advertise more in marketing than anyone else, Ellison in the newspapers. And we, we attract more candidates and so on and so forth. And I was just saying all these. You know, it was really intense. And I came, I came back in after that, I had not made one back test as a really hopeless, you know, I'm the best salesman in my company that that really sucks.And so I walked back into the room and the course goes on the next break. He does the same thing. I changed my tactic and I, I'm more loving, you know, I listened, we listened to our candidates. We, we understand what they need. We talk to our clients really looking for what they want. And we, we do, it's like a matchmaking service and people were much kinder in the feedback this time around tenure.I really love what you're saying, but no, I don't think so. I went back into the room and go that price that's really sucks. I hate that prices I'm in the best salesman in my company. And so of course goes on. Then we take the next break [01:01:00] and I do something completely different. I sit in the corner with my arms folded and my legs crossed and I said, well, you can go and get stuffed.Right. That didn't work either. Can't believe it. Yeah. While I was sitting there and got into myself, you know what? I just, this is not right. What am I not thinking? What am I doing here? That's this is, I've got, something's got to change. And while I'm sitting there, I realized, oh my God, two years ago, I remember I did that.That remedial massage course, I can go out and offer a massage. So the next break, I offered three minute massages for a dollar. I made four backs. And seriously, when you ask that question, in terms of entrepreneurs, it's about really understanding where the Kashi is. So when, when we had our before our internet marketing business, we had a chat software company and the.com crash.And we were not, no one was interested in putting chat software in the website. We couldn't pay ourselves a salary. My son had just been born. My [01:02:00] brother and brother-in-law his families. They, I mean, they did, they couldn't earn any money. My parents were giving us a bit of money to make it through. And I was speaking to a web designer asking them.How do you, how do you get to the top of Google? Like if we were at the top of Google for the software that we had, which was chat software for the internet, how do you get to the top of Google as someone does a search? Cause they'd been goin
Play
Like
Play Next
Mark
Played
Share