The craziest rags to riches story I’ve ever heard ($1/day to billionaire)

0:00:08 It seems like it was an insane decision to go to China with no money, no plan, no relationships, no language skills, slept in a bush, and literally build your own factory.
0:00:17 That was a disaster. When I say we were naive, I feel like that is even an understatement, but to be fair success is about teacher and in our business now.
0:00:25 I’m a huge believer in firing bullets and failing fast, and then at the bullet works, it’s a cannonball and we invest and we build the recipe around that.
0:00:27 How big is the empire today?
0:00:31 It’s a little over two out of a billion US in revenue.
0:00:33 And it’s public or it’s not a public company?
0:00:35 No public.
0:00:47 So here’s what’s fascinating to me.
0:00:56 So I have like a love language when it comes to business and my love language is self-made, dropped out of college, family business, multiple.
0:01:00 Multi-billion dollar company with no outside capital.
0:01:05 Like you hit all of the things on my little bingo card there, which is what got me interested.
0:01:07 I want to start with the origin story.
0:01:09 So here’s the bullet points.
0:01:28 I grew up on a dairy farm, started selling door-to-door hot air balloons, was in law school, then quit because he didn’t like walking up a big hill every day, and then made a crazy rash decision, moved to China with no money, no plan, no relationships, no language skills, slept in a bush, somehow turned that into a billion-dollar company.
0:01:32 So that’s the bullet points. Can you unpack that a little bit?
0:01:34 That’s quite accurate.
0:01:37 That’s quite a good way to summarize it quite quickly.
0:01:47 If I was to frame up our probably first 10 years, it’s that famous saying that success is going from failure to failure with no loss of enthusiasm.
0:01:50 I think that actually really does sum us up.
0:01:58 Grew up more or less on a farm and then we moved north for our schooling, and my brother won the New Zealand Science Fair with a model hot air balloon.
0:02:10 And then we decided, or he decided, he was 12, that we should make these kit-set balloons and sell them door-to-door on festivals when we’re at school, and I’m slightly younger than him.
0:02:16 So he kind of hired me as the, when I say “hi,” I was the free labour to help make the hot air balloons.
0:02:19 And yeah, we used to make these model hot air balloons and sell them door-to-door.
0:02:25 I used to, when I was quite young, get my friends together and backpack around New Zealand and sell them door-to-door.
0:02:35 And I can tell you that learning how to sell door-to-door is a great life lesson because you never know who’s behind that door, and you never know what response you’re getting.
0:02:42 And on top of that, selling a flying, burning plastic bag is particularly hard to sell, so it really hones your skills early on.
0:02:45 What was your technique? So knock-knock.
0:02:51 Yeah, I used to be like, “We’re just a small company trying to get off the ground, wink-wink, like no pun intended.”
0:03:00 We were young kids, so that always helped. And we’d often like, we’d sort of build theses around which neighbourhoods were more likely to buy.
0:03:05 It was usually not the richest neighbourhoods, they were all maybe a little too smart.
0:03:12 And so it was sort of somewhere in between, we’d always look for signs of children in the backyards of houses.
0:03:19 And I always remember that, one of my good friends, still one of my very good friends today, Fraser, he was always out-selling.
0:03:27 I don’t think there was a day where I outsold him, and I always thought I was a much better salesperson than him when the door opened.
0:03:35 But he just did not care about being rejected. He’d go from each house, he’d get yelled and shouted at and swear at,
0:03:39 and he’d come out laughing and he’d be knocking on the next door within seconds.
0:03:45 And I always had to build myself up after getting rejected, which was most of the time, to knock on another door.
0:03:53 And it just kind of taught me, I guess the power of just persistence, right, and you kind of keep going,
0:04:00 and if you keep going and have that level of grit and perseverance, then your chances of winning, your chances of success are much higher.
0:04:03 So I was certainly learning that at a very, I guess, young age.
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0:04:49 Yeah, from there, Matt went to university as well, and then he dropped out after a year to set up and make or develop this hot air balloon
0:04:53 through to a little bit more of a professional level.
0:05:02 And Matt said, “Why don’t we explore going to India or China to try and manufacture our hot air balloon?”
0:05:05 And given I was making them, I thought that was a great idea.
0:05:11 And so Matt actually went off to India and China, did a little scowling trip, came back and he said, “China, let’s go to China.”
0:05:14 And my licks go to China, he said, “You go to China.”
0:05:22 So I tapped up, didn’t go in my second year law, found the most entrepreneurial guy from my first year at university, a guy called Joe,
0:05:32 dragged Joe to China, and we had no money, really no contacts, we went to a little place called Shantou, it was the middle of nowhere, there were no other Westerners.
0:05:39 And we had an apartment, I think it was like probably the equivalent of $8 a month to rent, it was the 8th floor, no lift.
0:05:44 So whenever you were thirsty, you had to get water, you had to walk down eight flights of stairs to go and get water and come back up.
0:05:51 And that’s where we started, but we ended up getting ourselves into all sorts of trouble and strife and there’s a lot of funny stories.
0:05:57 The story I had heard was, you guys, first night you slept in a bush, what happened there?
0:06:00 And basically, what was the plan?
0:06:06 Were you just going to go try to find a manufacturer, walk around, what were you thinking of doing?
0:06:12 We were so naive and on reflection, I look back and it’s almost like we built a toy company from first principles,
0:06:16 because we did everything different than everyone else, without even knowing it.
0:06:23 So we didn’t know that you could go and contract manufacturer, your product, we were planning on setting up our own little factory.
0:06:32 And that’s essentially what we did, but me and Joe got into some trouble and Joe had to fly home to New Zealand, so my brother came over.
0:06:39 We ended up trying to see if we could get a hotel, but everything was way too expensive, so we decided just to sleep in the bushes at Hong Kong Airport.
0:06:46 And I remember just getting completely attacked by mosquitoes all night and we didn’t want to sleep in the airport because the fluorolights were so bright.
0:06:50 And so, yeah, we ended up sleeping in the bushes and getting attacked by mosquitoes all night.
0:06:56 It was not fun and then we fed it up to China and we set up a little factory on the side of a river.
0:06:59 It was a small kind of shed, more or less, in China.
0:07:02 And my cousin Simon came out at that time as well.
0:07:06 He was an engineer to help us and he welded a production line.
0:07:11 And we bought, we pretty much spent all of the money we had on an injection moulding machine.
0:07:14 We employed a few people on the production line.
0:07:16 We had a little old lady who used to cook for us every day.
0:07:20 I think the budget was two RMB per meal, which was about 30 cents.
0:07:28 And we started making our first product and then we started making our second product out of there as well, which was a night frisbee, which we got sued on and we had no money to defend ourselves.
0:07:32 So it’s a stupid question, but like, why not?
0:07:37 It seems like it was an insane decision just to go to China and literally build your own factory,
0:07:43 literally create a structure on the side of a river and weld it yourself together.
0:07:47 Why did you feel like you needed to be in China instead of just doing it where you were?
0:07:54 Well, we understood that most of the toys in the world were made in China, but when I say we were that naive, I feel like that is even an understatement.
0:08:04 Like, we were trying to make our hot-ear balloon, but we didn’t even realise that we couldn’t sell it to any toy chains or large retailers around the world because of course they’re meeting the regulatory standards.
0:08:08 I mean, it had a burning can under it, so we were super naive.
0:08:19 So then we started looking up products that we could maybe make in our little factory and we saw this company in America making light-top frisbee with LEDs and it could be thrown at night and we thought, oh, that’s cool.
0:08:26 So we made this night frisbee in our factory and I started hustling to try and sell this thing.
0:08:34 As in, like, I would email every buyer in the world of every major retailer in every country I possibly could.
0:08:42 And I remember I sold it to a distributor called Schilling in the US and we spent what was a lot of money at the time and I went to New York Toy Fair.
0:08:53 And we made this night frisbee and we also made this other product, or copied this other product called a money gobler, which is a money bank in the shape of an animal and you’d feed the coins into its mouth and it would go down and throw it into the stomach.
0:09:00 So we started making these two products. Matt decided to be one to set up a wooden toy factory for this money gobler and we had our production line for making this frisbee.
0:09:08 So I sold them to this company called Schilling, so I go to New York Toy Fair to be on their booth to start selling these two products.
0:09:15 And I start selling these products and this guy comes flying onto the booth and starts yelling at our distributor.
0:09:24 So he’s obviously got one that we’ve made a product that’s identical to his and he had multiple patents for how the LED connected to the fiber optics and how this all worked.
0:09:29 And of course we’re, again, we didn’t even really know what IP was.
0:09:35 So Dave comes up to me off the booth, the owner of the distributor says, “Hey Matt, we need to pull that frisbee off the booth.”
0:09:40 This is probably an hour into the New York Toy Show starting, so I’m pretty disappointed because one of our products has gone.
0:09:43 But I’m like, that’s okay, I’ll sell the money gobler.
0:09:48 I thought the first guy was crazy. About three hours later, this lady, she has a whole business.
0:09:55 She’s built over 25 years building these money animal banks and she has this big booth on the ground floor of Jarvitz.
0:10:01 And she comes up and she screams onto the booth and she’s yelling and screaming and swearing at Dave.
0:10:06 And Dave sort of, I can see this from where I am, but Dave sort of wanders over to me sheepishly and says,
0:10:09 “You need to take the money gobler off the booth as well.”
0:10:14 So it’s in the first morning of New York Toy Fair, both our products have been taken off the booth of the distributor.
0:10:20 I flew back to China, I said to my brother, I said, “Have you ever heard of this whole IP thing, this whole patent thing?”
0:10:24 I think we need to start innovating and coming up with our own ideas.
0:10:27 And then we ended up getting into a lawsuit on the night fly.
0:10:29 They sued us, we had no money to defend ourselves.
0:10:33 I remember going to Colorado because that’s where they sued us to try and find a law firm to defend us.
0:10:37 And I was going to at least firms and they were saying, “Well, that’ll be a million or two million dollars.”
0:10:40 We had maybe a few thousand dollars between us at that stage.
0:10:42 And I was thinking, “How are we going to defend ourselves?”
0:10:45 I ended up actually hiring a lawyer, convincing him, his name was Chad.
0:10:49 He later got disbarred that we would write the whole suit. He just had to put his name to it.
0:10:53 And Chad did the whole case for us, but didn’t really do it.
0:10:57 We did it ourselves, we learned how to become lawyers, so we did it incredibly cheaply.
0:11:00 But he did, he ended up getting disbarred later on.
0:11:03 But that was our only way because again, we had no money.
0:11:07 And I was so enthusiastic, we had no other choice that we had to sell this product.
0:11:13 And I remember selling the Night Frisbee to the department store chain in the U.S. Coles with the K.
0:11:15 I know we have Coles down here in Australia with the C.
0:11:18 I’ll never forget the buyer’s name. I actually still work with her today.
0:11:22 This is 19 years ago. Her name is Jen Sarah. She was the buyer at Coles.
0:11:25 And I would email her every single day.
0:11:28 And one day I got an email reply from her and it was all in capitals.
0:11:32 It said, “Nick, I do not have time for your daily email communication.
0:11:35 Please stop emailing me every single day.”
0:11:39 And then I always wrote back, “Oh, I’m so sorry, Jen, but I just think our product is really great.”
0:11:43 And at this stage, we knew we were in a little bit of legal trouble, but we had to sell something to survive.
0:11:48 So I was like pushing and pushing, and then eventually I get this email back from her.
0:11:51 It was just two words, and something else said, “Seeing the sample.”
0:11:55 So we send the sample to her, and she ends up ordering a full container.
0:11:59 I think it was 20,000 units of this Night Frisbee, so we were pretty happy at this stage.
0:12:03 It was a big celebration. We never had a full container order of any product.
0:12:08 And so we ship this full container of Night Frisbees.
0:12:15 And of course, she gets enjoined in the lawsuit as well at Kohl’s.
0:12:18 And it didn’t speak to me again for a long time.
0:12:21 The irony is today, she’s the director of Family Doll Stores in the U.S.
0:12:24 and we’re their second biggest toy supplier after Vitao.
0:12:26 So that’s the funny thing.
0:12:28 You’re like trauma-bonded.
0:12:31 Correct. But we have so many of these stories.
0:12:35 That is one of many, many, many in those early days.
0:12:40 But we really were just scrapping every day to try and survive and sell something
0:12:42 and just live somehow.
0:12:45 But we were living on this than a dollar a day.
0:12:47 Okay, I have two things.
0:12:49 One, let’s do a detour to the dollar a day thing,
0:12:52 because my guy Diego, who helps me with research, he goes,
0:12:55 “You got to ask him about the McBrook diet.”
0:12:57 And the McBrook diet, I said, “What’s that?”
0:13:00 And he goes, “Apparently they were just eating off the dollar menu
0:13:02 at McDonald’s in China every day.
0:13:06 And he had some trick about the French fries to get free French fries.
0:13:09 So what is the McBrook diet as far as the McDonald’s?
0:13:11 It was, we didn’t eat McDonald’s.
0:13:13 McDonald’s was a treat, so me and that were in China.
0:13:15 And for Christmas, of course,
0:13:18 I think my brother didn’t come back to New Zealand for eight years.
0:13:20 He lived at a factory for 10 years.
0:13:23 He had a tiny little room at a factory for 10 years,
0:13:25 which is crazy in itself.
0:13:29 But for Christmas, we would celebrate by going to McDonald’s.
0:13:31 And probably the equivalent of a combo
0:13:33 is probably $2.50 in China at that time.
0:13:35 So that’s how frugal we were.
0:13:37 We wouldn’t even go to McDonald’s.
0:13:39 But we’d go and celebrate Christmas.
0:13:41 And I always remember going, “Merry Christmas, bro.”
0:13:42 “Merry Christmas, bro.”
0:13:44 And finally eat some good food.
0:13:47 I looked like I was so skinny at this point.
0:13:51 But I’d always play a trick in order to get extra fries.
0:13:53 I’d always eat half of them.
0:13:55 And then I’d take them up to the counter and say,
0:13:57 “Hey, you only filled my fries? Half full.”
0:14:00 And then give me another one so I could get more for free.
0:14:02 But we were like,
0:14:04 even when we’d go on the train,
0:14:06 we’d use a concessionary or children’s pass
0:14:08 and hope we wouldn’t get caught because it was half the price.
0:14:10 But I looked back and it was like,
0:14:12 a fear would only be 12 RMB or a couple dollars,
0:14:14 and we’d be saving a dollar.
0:14:16 So we were getting a concessionary fear,
0:14:18 and we did that for years.
0:14:20 So what was driving this?
0:14:22 Because you lived in New Zealand.
0:14:23 New Zealand’s a beautiful place.
0:14:25 I assume you could have just had a normal life
0:14:27 that was more comfortable.
0:14:29 And I love, like, I’m a founder,
0:14:31 I’ve been a founder, but I didn’t do what you did.
0:14:33 I didn’t sleep in the factory,
0:14:35 like a mat on the floor for eight, ten years.
0:14:38 I didn’t live off of the less than dollar a day.
0:14:40 Like, were you guys just like, was it,
0:14:41 you’re having so much fun,
0:14:43 or you just felt there was no other choice?
0:14:46 So what was the mindset that kept you going
0:14:51 because it was like many, many years just scrapping?
0:14:54 I reflect back on this.
0:14:57 And it’s a little bit hard to understand,
0:14:59 in all honesty, when you reflect back on it,
0:15:02 but I think when you’re in it together,
0:15:05 you kind of hold each other accountable
0:15:08 and you push each other because you don’t want to fail.
0:15:12 And I would say, me and my brother are equally as competitive.
0:15:14 And so I don’t think you want to let the other person
0:15:17 down in a sense, and so you just keep fighting
0:15:20 because if one of you gave up,
0:15:22 you’re kind of emitting defeat.
0:15:24 So in a sense, you hold each other accountable
0:15:28 to continue to fight and push forward.
0:15:30 And as well as that,
0:15:33 I think we didn’t really have another option.
0:15:36 We didn’t understand, like back then,
0:15:39 that there was even such a thing as going and raising money
0:15:41 to build a company or…
0:15:43 You know, again, I look back at the extreme myivity.
0:15:46 I used to write emails to my mum from China,
0:15:48 and she was beside herself.
0:15:51 You know, I was so young, 18.
0:15:53 And I read these emails,
0:15:57 and to understand how little we understood,
0:15:58 even about the world,
0:16:01 but just about business and how things worked,
0:16:03 is quite scary.
0:16:05 And so I just think we didn’t know any better.
0:16:07 We just thought, we’ll just keep fighting
0:16:09 and try and get these little wins
0:16:11 and little wins and little wins.
0:16:13 And, you know, we started to get, you know,
0:16:14 a little win after little win,
0:16:16 and then we started to get a little bit more momentum,
0:16:17 and then you started to learn.
0:16:20 One of my favourite sayings is you win or you learn.
0:16:22 You lose, you never fail, sir.
0:16:24 And so connect the dots.
0:16:27 So now you’ve painted the picture beautifully
0:16:32 of the extreme naive approach, the scrapping,
0:16:35 and then somehow, you know,
0:16:37 fast forward the tape and the movie,
0:16:41 and you end up with this super successful toy company.
0:16:42 I think, you know,
0:16:44 the third most profitable toy company in the world,
0:16:46 doing over a billion dollars a year of sales,
0:16:48 plus, like, forget the other stuff you’ve even done after that.
0:16:50 I’m just saying, just the toy part.
0:16:51 So connect the dots.
0:16:53 Where did you start to really get the momentum
0:16:55 or what were the breakthroughs, the epiphanies,
0:16:59 the key breaks that got you to actually getting to that success?
0:17:02 Well, there are a few stories along the way.
0:17:06 And I remember just sitting there every day harassing
0:17:08 and thinking really big early.
0:17:10 So thinking, I’ve just got to get warmer.
0:17:12 I’ve just got to get tame out of that timer.
0:17:14 I’ve just got to get these big retailers.
0:17:19 And, you know, one story, I remember ringing Walmart every single day
0:17:21 and because of the time zones, it was late at night
0:17:23 and to month after month after month after month.
0:17:25 And I always remember all the early names
0:17:27 because I just see it in my memory.
0:17:30 And I remember one night, my brother was basically telling me to give up.
0:17:32 He was like, “You’re not going to get Walmart.”
0:17:35 And eventually, the buyer, Ryan Halford, answered.
0:17:38 And I was on the phone to the Walmart buyer from China.
0:17:41 And again, I was up with this young company, a distant child.
0:17:42 We’re trying to get off the ground.
0:17:45 And he asked me, “Do you have a showroom in Hong Kong?”
0:17:48 And I said, “I didn’t know what a showroom in Hong Kong was.”
0:17:52 But of course I said, “Yes, I’ll get back to you at the address.”
0:17:56 We started to learn that the toy industry at the time
0:17:59 revolved around these showrooms in a place called Timchastui in Hong Kong.
0:18:01 All of the companies had showrooms there
0:18:04 and all the buyers from around the world congregated in Hong Kong
0:18:07 twice a year to come to these showrooms.
0:18:10 So I got on a train the next day to Hong Kong
0:18:13 and had research where these toy companies were
0:18:16 and so knocking on toy company doors and trying to do a deal with them.
0:18:18 I said, “I’ll bring the Walmart buyer in
0:18:21 if you just give me some space to use in your address.”
0:18:24 And then hopefully you could sell some of your products to them as well.
0:18:28 And every company denied me and denied me and denied me.
0:18:31 So I thought, “Okay, we need to rent a showroom.”
0:18:32 And at the time there was a lot of money,
0:18:35 but we found these little glass cubicles in a place called South Sea Centre.
0:18:37 And they were just a few metres by a few metres,
0:18:39 like tiny little cubicles.
0:18:40 But I think there would have been like,
0:18:43 I don’t know, $2,000 or $3,000 a month to rent
0:18:44 because Hong Kong was so expensive.
0:18:47 And so at the time, we didn’t have that money.
0:18:48 We were so poor.
0:18:50 But I thought we don’t have an option.
0:18:53 We’ve got this chance to get the Walmart buyer coming in.
0:18:55 And so we just said, “We have to do it.”
0:18:57 So we rent this little tiny cubicle
0:19:00 and it kind of had cursions on the inside of it.
0:19:03 And I found some shoveling
0:19:05 that someone was throwing out from the other showrooms.
0:19:07 So I put this little shoveling in there.
0:19:09 We bought like a table.
0:19:11 And then I had a little roll-up mattress
0:19:13 and I would sleep in the showroom under the table.
0:19:15 Each night, because there’s no other room to sleep.
0:19:17 So I’d unroll the mattress under the table, sleep in there.
0:19:19 And then I’d wash in the little bathroom
0:19:22 in South Sea Centre in the morning.
0:19:24 But I had the showroom
0:19:27 and I start kind of realising that the buyers
0:19:30 come to Hong Kong in January and October every year.
0:19:33 So that was good because now I have this kind of like base
0:19:34 to like invite people to.
0:19:36 So I get Walmart to come in.
0:19:38 And I actually got a guy called Frank D’Amico
0:19:39 who is from Walmart, Canada.
0:19:41 And I’ll never forget because he came in
0:19:43 and I think he was so shocked that he’d given me a meeting
0:19:46 when he saw this two metre by two metre showroom
0:19:47 and he came with his two merchandisers.
0:19:49 I went to shake his hand, didn’t shake my hand.
0:19:51 He didn’t even sit down and he just yelled at me.
0:19:52 He goes, “Quotes” across the table.
0:19:55 And I’d filled out the quotes for around two or three products at the stage.
0:19:56 He kind of reads the quotes.
0:19:58 And I’d filled something out wrong
0:20:00 and he just throws the quotes down on the table
0:20:03 and just walks out and leaves us to Hong Kong Merchandises
0:20:04 and he’d be a steering at me.
0:20:05 I think that was my second ever meeting.
0:20:07 And I’m just like in shock.
0:20:09 I’m like, “Wow, where it’s going to be?”
0:20:10 And he just storms out.
0:20:12 And then I contacted his boss and said,
0:20:14 “Hey, I had this really bad experience.”
0:20:17 And I said, “Frank, I genuinely think he was really rude.”
0:20:21 And his boss made a meek knee again in their procurement
0:20:23 and Walmart’s procurement centre in Shenzhen.
0:20:24 So I was like, “Screw this.
0:20:25 I’m going to go up and meet him again.
0:20:26 Meet him for a second time.”
0:20:28 And he ended up ordering.
0:20:30 And at the stage we had a night ball along with our night frisbee.
0:20:33 But I think he ordered us $70,000 of this night ball.
0:20:37 It was another good example of persistence.
0:20:39 And then I remember one day,
0:20:41 I hadn’t been what came out of Australia,
0:20:43 but I was sleeping under my table
0:20:45 and the door was only about a metre from my head
0:20:47 because this is such a little small showroom.
0:20:49 And the buyer came an hour early
0:20:52 and I was still asleep under the table
0:20:54 and she was knocking on the door
0:20:55 and I’m sort of like there,
0:20:57 looking at her feet under the door, thinking,
0:20:59 “Shit, I’m still in bed under my table.”
0:21:01 So I had to wait for her to go away
0:21:02 and then message her afterwards and say,
0:21:04 “Hey, didn’t you know that Tina called me?”
0:21:06 And she says, “Oh, I thought it was 9 a.m.”
0:21:07 So I had all sorts of experiences.
0:21:09 But I used to crash buyers’ hotels.
0:21:12 I used to post samples under their hotel room doors.
0:21:14 But really we did what it would take.
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0:21:21 It’s called Billion Dollar Moves.
0:21:23 And of course, it’s brought to you by
0:21:25 The HubSpot Podcast Network,
0:21:28 the number one audio destination for business professionals.
0:21:29 Billion Dollar Moves.
0:21:31 It’s hosted by Sarah Chen Spelling.
0:21:34 Sarah is a venture capitalist and strategist
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0:21:38 she wants to look at unicorn founders and funders
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0:22:01 It’s brought to you by The HubSpot Podcast Network.
0:22:03 Again, Billion Dollar Moves.
0:22:05 All right, back to the episode.
0:22:09 The first bright we got is,
0:22:11 and this was a crazy story,
0:22:16 is I was in the UK at a company called Recreation
0:22:19 and they were selling our night sports balls at the time.
0:22:21 So we developed this other product.
0:22:23 Instead of our night frisbee, we made a night football,
0:22:25 lit up at night, and a night soccer ball.
0:22:27 So we’d sold this company called Recreation.
0:22:29 I met a guy called Sean on their booth
0:22:32 and he had developed a soccer Tamaguchi.
0:22:34 And so it was kind of like a Tamaguchi,
0:22:36 but you trained your player and then through infrared,
0:22:38 you could play against each other.
0:22:40 And he had like the Manchester United license
0:22:43 and it was selling reasonably okay in the UK,
0:22:45 but he was having troubles with manufacturing.
0:22:47 And I was like, well, we can make that for you, like no problem.
0:22:49 And he was like, great, great, great,
0:22:50 you guys can help me make it.
0:22:51 ‘Cause we were really, you know,
0:22:53 anything was sort of wink at the time.
0:22:55 We were trying to find a way to win anywhere.
0:22:57 So we’re like, Sean, we can make this.
0:22:58 And then we started talking.
0:22:59 Maybe, you know, David Beckham,
0:23:01 he’s moving to the US to play in the US.
0:23:03 What if we get the David Beckham license
0:23:05 and we can try and sell this in the US.
0:23:06 And he thought this was a great idea.
0:23:07 So we went and pitched at the time.
0:23:10 I think it was Simon Fuller, who started at Nerf and I,
0:23:13 had the David Beckham rights at the time.
0:23:16 And I’m like a super young kid, right?
0:23:20 And they said, well, we’ll give you the David Beckham license,
0:23:22 but it’ll cost you a million and a half dollars.
0:23:24 Of course, we don’t have a million and a half dollars.
0:23:28 But then we go to Walmart and Walmart, the buyer,
0:23:30 who named Danielle Primal, never forget it.
0:23:33 She loved David Beckham and he was moving to the US
0:23:35 and she was just obsessed by David Beckham.
0:23:38 And we probably blew a few bubbles.
0:23:40 But anyway, as it turned out,
0:23:44 Walmart turned around and ordered 2.2 million units
0:23:47 of this David Beckham Tamaguchi,
0:23:49 which I think they were like 14 bucks, 50 or something.
0:23:51 It was almost 30 million US dollars.
0:23:53 So keep in mind, we’d probably never had an order
0:23:55 more than $70,000 at this point.
0:23:59 And our total revenue was like in the hundreds of thousands.
0:24:02 Suddenly we get this order for almost 30 million US dollars.
0:24:05 And then we’re like, holy shit.
0:24:07 We thought we were going to make a lot of money
0:24:08 because we had huge margin.
0:24:10 We were making this thing for $3.
0:24:12 We were going to make this thing for $3 or $3.20
0:24:14 or whatever it was, it’s out for $14.50.
0:24:17 So we were sort of counting our pennies and super excited.
0:24:19 We didn’t even understand that sell through was a big thing.
0:24:22 But then we were like, oh no, we have to look at how to make this product.
0:24:25 We’ve got our tiny little factory with 20 people
0:24:28 and there’s no chance we can make 2.2 million units.
0:24:30 So we’re not first going to China.
0:24:34 I’ve been on a tour with, he’s one of the wealthiest guys
0:24:35 in Hong Kong, life in France.
0:24:37 He owns Burley Light International.
0:24:39 They’re the contract manufacturer for Hasbro
0:24:41 and Mattel and all the toy companies.
0:24:43 One of the first factories I ever toured,
0:24:45 I somehow got in touch with his tourist.
0:24:47 I see a guy called Wilson and he’d taken me on a tour
0:24:49 as an 18-year-old with their factory.
0:24:51 And you can imagine me coming from New Zealand
0:24:54 and then going to these factories with hundreds of thousands of people
0:24:57 and just being like, what this is like insane.
0:24:59 So I still had this contact with Wilson
0:25:00 from early light.
0:25:03 So I got a meeting with Wilson and I said, hey, we’ve got this huge order.
0:25:06 2.2 million pieces, can you help us make it?
0:25:07 And he said, yup.
0:25:10 And then I said, oh, and by the way, can you also pay for it as well?
0:25:12 He said, let me check with Francis.
0:25:15 He came back to me and said, yeah, if you transfer the liver of credit to us,
0:25:18 you know, we’ll help you pay for it as well.
0:25:19 Great.
0:25:21 So we start making this product.
0:25:25 2.2 million ICs, 2.2 million LCD screens, 2.2 million.
0:25:28 So they’re all the components and then Walmart turns around a tensile.
0:25:35 They cancel it from 2.2 million pieces down to 8, no, 1.2 million pieces.
0:25:37 And I was like, no, no, no, they can’t do that.
0:25:38 We’ve got a little credit.
0:25:39 They’ve made it all.
0:25:41 And then I’m flying back and forth at this point.
0:25:46 Sean’s kind of like in the background on this like, I don’t know, 20 year old.
0:25:47 And I’m thinking there’s no way.
0:25:48 But I was thinking, well, it’s still fine.
0:25:49 1.2 million pieces.
0:25:51 We’ve got so much margin in this.
0:25:53 We can still make like good money out of it.
0:25:57 But then they turned around and canceled it all the way down to 300,000 pieces.
0:26:00 Yet Francis was making all of this product.
0:26:03 And I was just like, oh, that’s where I’m going back and forth.
0:26:07 It reads like some kind of soap opera because Danielle got fired.
0:26:10 Obviously, part of this was part of it.
0:26:14 And with Francis, I was like, there’s no way I can tell Francis that, you know,
0:26:18 that they’ve canceled this many pieces and he’s paying for it all.
0:26:21 So I’m going back and forth to Walmart and I calculated that if I get the order back
0:26:25 to 800,000 pieces, we could still pay Francis off because we had so much margin
0:26:28 and still make like a million and a half dollars.
0:26:32 And eventually I convinced Walmart to get the order back to 800,000 dollars.
0:26:35 That’s 800,000 or 900,000 pieces, whatever it was.
0:26:38 And we shipped this pro light.
0:26:41 And it was a disaster.
0:26:43 Like it hit the shelf and it was culprit on the shelf.
0:26:45 Like no one would buy it.
0:26:46 I think they retailed it 30 dollars.
0:26:49 They discounted it to 25, then 20 and 15.
0:26:50 No one would still buy it.
0:26:51 Then $10 no one bought it.
0:26:53 Then $5 no one bought it.
0:26:57 And then they eventually sold it to the dollar and discount channels for like 50 cents on it,
0:26:59 like 50 cents a piece.
0:27:01 And then of course, Walmart came back to us and said,
0:27:05 you have to fund all the Markdown money from 30 dollars to, you know, 50 cents.
0:27:08 And we were like, what’s Markdown money?
0:27:13 And we were determined to keep our little bit of margin and refuse to give them any money back.
0:27:18 And so we had this, we were like, no, but you cancel these pieces and like this huge thing.
0:27:21 Anyway, we got black ball from Walmart for like five years.
0:27:24 We never did business with Walmart after that.
0:27:30 And it was not two years later that I met Danielle’s boss at New York Toy for dear Laura Phillips.
0:27:34 And I wrote this big long email of everything that happened and like,
0:27:36 and we started to work together again.
0:27:42 But that was sort of our, as crazy as it was, that crazy story was our first break to actually make a little bit of money.
0:27:49 And then from there, I started doing deals with US companies that only sold product in the US,
0:27:50 but didn’t sell internationally.
0:27:55 So I started doing deals with them because we were really bad at designing and developing toys, terrible, in fact.
0:27:58 So we needed good products so I could open up these channels.
0:28:04 So I’d do these deals with American companies like Zing or Zocca to deal with the Australian company called Yoho,
0:28:07 to take their products and sell them internationally.
0:28:11 And that kind of, and I’d tell a big story that I could get their products in everywhere.
0:28:12 They don’t have to go out and hustle.
0:28:16 So we had a product called ZDs, which became really successful in a product called Schnooks,
0:28:18 which was out of Australia that became really successful.
0:28:20 So we started kind of taking other people’s products.
0:28:22 How did you figure out that model?
0:28:25 Because, you know, did you see somebody else doing that?
0:28:28 And you’re like, oh, that’s much simpler than what we’re trying to do.
0:28:30 Or did you fall into it?
0:28:32 It seems like you didn’t use a lot of mentors.
0:28:39 You did a lot of running around with the fork, sticking it into outlets, trying to figure out which ones are working.
0:28:41 That is a great analogy.
0:28:43 That’s exactly what we did.
0:28:49 To be honest, we were making these products and the second product line we made were these night balls.
0:28:54 But the product was so bad, Matt would move factory by this stage.
0:29:01 And the engineering of them was so bad that they had these sort of foam EVA patches glued into this frame.
0:29:04 But the production, I actually was getting quite a few orders.
0:29:09 I was hustling around and getting orders, but Matt couldn’t produce them because the production was so hard to do.
0:29:13 And I get so mad at him that at one point I said, I’m coming back from Hong Kong.
0:29:16 I was living in my showroom and then from there I upgraded.
0:29:19 I was living in a dorm room with 18 people at a place with puncture mentions in Hong Kong.
0:29:21 So I wasn’t exactly living the life in Hong Kong.
0:29:23 I was getting these orders and my brother couldn’t produce them.
0:29:26 So I was like, I’m coming back to like, to China to take over the factory.
0:29:28 And I learned two words of Chinese.
0:29:31 One was Kaimon, too slow, and one was Claudia, let’s go faster.
0:29:38 And we ended up like, I was like, on the production line pushing to get these balls out the door.
0:29:41 And I remember they were coming off the end of the production line, half mangled.
0:29:45 And I was just like, ship them, just ship them, ship the balls.
0:29:46 We’ve got to ship them.
0:29:51 But I remember years later, like you’d see these things on shelves and all the air had gone out of them.
0:29:57 All EVA patches had peeled off them and they were just these shriveled up little prunes that had come to your health.
0:30:01 I love that you’re honest about it because there’s so many people because it’s a very sexy thing to be like,
0:30:05 you know, all that mattered was product and we really just built a great product.
0:30:07 And then everything worked because we built a great product.
0:30:11 And like, I know, I know I’ve been there is like, dude, the first version of all my products sucked.
0:30:13 In fact, the 10th version still kind of sucked.
0:30:19 And I think I love that you’re kind of unabashed and honest about like, look, we weren’t super innovative.
0:30:20 We saw shit working.
0:30:24 And then we were like, cool, we could do lights on a Frisbee lights on a ball like that.
0:30:27 Okay, let’s copy what works and that your product kind of sucked.
0:30:32 And you were just like, basically you just kept doing door to door sales even like at a global level.
0:30:34 You just started doing like door to door sales.
0:30:42 And literally it sounds like it was like distribution and salesmanship and marketing that was keeping you afloat at the time.
0:30:46 Yeah, well, we would sell, I would sell a product to someone and then we wouldn’t get a real order.
0:30:52 We didn’t know what a real order was because the product would sell through and then we just sell a new product to a new customer
0:30:54 and we wouldn’t get and I just held another customer.
0:30:58 And we didn’t know for probably seven or eight years what a real order was.
0:31:02 Like we had a product actually sold off the shelf and the customer came back to buy more of them.
0:31:05 But we could like continually hustle to all these different customers.
0:31:10 But we did crazy things like we like a little back on it and it was kind of nuts.
0:31:13 Like we sold this product, the night ball.
0:31:17 We got a distributor in the US called Spin Master, one of the biggest toy companies in the world.
0:31:23 Yeah, pretty similar story to our own free Canadians built this toy company, very similar to us.
0:31:28 And Spin Master had agreed to take our night sports falls for distribution in the US.
0:31:34 And I’d kind of hustled a few retailers and so it was this, “Should we sell the product to retail?
0:31:35 “Should we use Spin Master?”
0:31:39 They’ll really put lots of TV marketing on, TV marketing at the time was the thing.
0:31:42 And they said, “Well, we’ll run this test in Cincinnati.
0:31:45 “So we’ll put your night balls into all the Walmart’s in Cincinnati
0:31:50 “and we’ll run media in that city and then we’ll decide whether to roll this thing out.”
0:31:54 And whether or not it was dishonest, I think it was more desperation at the time.
0:31:57 But of course, I flew to where the test was.
0:32:00 I got to New York and I couldn’t get a fight to Cincinnati.
0:32:02 Well, I could, but it was too expensive. It was summer holidays.
0:32:04 I went down to the bus station.
0:32:06 I remember the bus station in New York at the start of summer holidays.
0:32:09 It was like nothing I’ve ever seen. It was absolutely chaos.
0:32:10 But I got a greyhound to Cincinnati.
0:32:13 I think to like 30 hours it broke down, stopped different places.
0:32:19 A greyhound to Cincinnati stayed in this absolute, like, horrific place.
0:32:23 But every day, and yes, this is a little bit dishonest,
0:32:25 but we were desperate back then. I would bus.
0:32:27 I’d get the bus schedule. I’d bus to each Walmart.
0:32:30 I’d give people cash to go buy a ball.
0:32:32 I’d go out and buy them on different credit cards myself.
0:32:37 I was so parallel that we’d get caught just to help our test sales go up a little bit.
0:32:39 And I’d buy all these night sports balls.
0:32:42 But it was a long day because the Walmart’s were all so far apart.
0:32:45 And I was taking this bus schedule to get to each one.
0:32:47 I stayed there for a month.
0:32:50 And I almost got kills in a place called Over the Ride.
0:32:54 Over the Ride, if you look it up, it was the most dangerous neighborhood in America at the time.
0:32:56 Over the Ride, it’s like wild.
0:32:58 It was over these railway tracks.
0:33:01 And I managed to walk down there in the middle of the day.
0:33:04 And it was the scariest thing in my life.
0:33:07 I had a guy come up to me and he said, “What the fuck are you doing here, white boy?”
0:33:09 And I was like, “I’m just a tourist.”
0:33:11 And I hadn’t realized I was in this, like, area.
0:33:14 And then I managed to somehow, like, weeks later walk into it.
0:33:16 I was walking back from downtown.
0:33:18 There’s no such thing as Uber back there in a taxi.
0:33:22 I was trying to walk back to where I was staying, which was very close to Over the Ride.
0:33:24 And I walked in the wrong direction.
0:33:27 I walked in there in the middle of the night and I got chased and had to hide.
0:33:29 That was very funny.
0:33:33 But, yeah, we were doing this to get our test results up, which we had a good test.
0:33:35 And then spin master rolled the product out.
0:33:37 Of course, it wasn’t a great product in terms of its construction.
0:33:39 It was the same thing.
0:33:41 But my God, did we have to hustle?
0:33:45 We had to strap and fight so hard to, like, literally just to survive.
0:33:50 But we got to a point where we were selling enough to each new customer of each new product.
0:33:53 And we weren’t getting real orders, but we were profitable.
0:33:55 And it was actually funny because after the David Beckham thing,
0:33:58 we made, like, that million and a half dollars or whatever it was.
0:34:02 We got a little bit fat and happy and we had a month where we lost $200,000.
0:34:07 And I remember sitting, we sat down and we were like, “Oh, my God, we lost money this month.”
0:34:12 And we were like, “From this day on, we will never have a day, a month, a week, a year where we lose money.”
0:34:17 Like, if we’re losing money in a month, we will, like, sit down and we will, like, eat nothing
0:34:22 or we will, like, get rid of people or we will, like, live on nothing just to ensure that we’re, like, profitable.
0:34:28 Because people wonder how do we get to, you know, a few billion dollars a year in sales now
0:34:30 and we’ve built it completely organically.
0:34:34 And the truth is we just, because we, like, we’re so frugal and we start building,
0:34:38 our business got more and more and more profitable just every year for 20 years.
0:34:42 So it was almost this cognitive process to how do we remain profitable
0:34:46 and then that’s just compounded over 20 years and we’ve just got more and more and more profitable
0:34:50 to the point where, percentage-wise, by far, the most profitable company in the world,
0:34:56 where we run at, like, 40% net profits, which is unheard of in any profit industry in the world,
0:34:59 in the product industry in the world, let alone in the software company.
0:35:01 So we just built a very, very different model.
0:35:02 That’s why I reflect on it now.
0:35:05 It was almost like we built something from first principles, the way we set up factories,
0:35:09 the way now we automate all of our production, the way we don’t do domestic shipping,
0:35:14 we do all FOB, the way we centralise all of our content and data systems.
0:35:15 We’re on marketing globally.
0:35:18 We’ve almost built this company from a first principles approach
0:35:21 because it’s so different to how everyone else does it,
0:35:24 but we did that more through naivety than through planning.
0:35:27 So you’re starting this kind of like 18 years old when you go to China.
0:35:30 Do you remember how many years it took you to get to your first,
0:35:34 where you made a hundred grand or when you made a million dollars?
0:35:35 Like, how many years was that?
0:35:39 Well, it was probably a couple of years where we started to make money,
0:35:44 but we still lived the same way because we needed that money to fund our growth.
0:35:47 Effectively, you can’t grow to billions of dollars a year in sales organically
0:35:50 without borrowing money or going to a bank unless you’re super profitable
0:35:52 to continue funding that growth.
0:35:56 And so we started to make money, but we never speed it.
0:35:58 We still lived the same way.
0:36:01 I still lived in a dorm room in Hong Kong.
0:36:04 And so for years, for probably eight years,
0:36:08 and as I said, Matt had, as we slowly moved and built big impact trees,
0:36:10 Matt would always have a tiny little room,
0:36:12 like a tiny little room in the factory.
0:36:15 And that’s where he lived in China with no other,
0:36:18 no interaction really with anyone else.
0:36:20 And we were going crazy in those first years in China.
0:36:24 Like, I looked after that and like we had some serious problems.
0:36:27 And so you take it all the way,
0:36:32 at some point you start figuring out toys that are new, novel, good products.
0:36:35 Like, I’ve bought your bunch of balloon products where you fill up,
0:36:40 I don’t know, it’s like 100 or 500 now, like 100 water balloons at once.
0:36:43 You can fill up and like it takes like 15 seconds to fill them all up.
0:36:46 So you eventually start making good products. How did that happen?
0:36:48 So we’re still in a parallel path.
0:36:52 We were taking other people’s products and that was helping us really open up distribution.
0:36:55 I would hustle and get them into all the retailers across all the countries.
0:36:59 There’s an email that I’ve sent internally that I had from like 20 years ago
0:37:02 and it kind of lists every country in the world and all the retailers
0:37:05 and distributors I was working with at the time trying to sell our products to.
0:37:07 So we’re really like pushing out to everyone.
0:37:11 And at the same time, we were starting to learn how to make better products ourselves.
0:37:16 We were sort of building a team in China and engineers and like some designers
0:37:21 and we’re starting to sort of parallel path, building our own products as well.
0:37:25 But I think our big break after Zeebies came when we did RoboFish
0:37:29 and RoboFish is still, we still sell about 8 million of them a year today.
0:37:33 And this was a Chinese in Bentay. We ended up getting sued for this as well.
0:37:36 We’re at a five-year lawsuit but a Chinese in Bentay called Xiao Ping
0:37:41 and I met a guy in Hong Kong, a French guy who had a factory in China.
0:37:45 I was running a factory in China and he was doing some brokering for some inventions
0:37:47 and he showed me this RoboFish.
0:37:49 I thought that it’s cool, didn’t think too much of it.
0:37:51 Then he showed my brother and my brother loved it.
0:37:54 He was like, we’ve got to make this RoboFish promite.
0:37:58 And part of the deal was we had to make it in their factory if we licensed it from them.
0:38:01 So we licensed this fish and it was like, it’s got little carbon sinks.
0:38:05 So it’s a very, very clever design. It has an electromagnetic coil in it.
0:38:07 So when it touches water, it’s all micro.
0:38:11 It swims and looks like a real fish swims in all directions and it’s water active at it.
0:38:15 So we start making this fish and then the guy who was the inventor
0:38:21 had worked in a U.S. company before and he had tried to sell this invention to them.
0:38:24 That said, no, he decided to release on the invention saying,
0:38:26 “No problem, you can go sell it to anyone else.”
0:38:29 Of course, RoboFish blew up, came on the best selling toys in the world
0:38:33 and then he decided that actually the inventor had designed some schematics
0:38:36 or diagrams why he was under employment and he would sue us
0:38:40 because they were still on his computer systems and so we’re in this long long war suit.
0:38:43 But even worse, we finally had like this massive hit.
0:38:46 It was like the number one selling toy in lots of countries around the world.
0:38:49 It took us to, I think we did like a hundred million U.S. dollars.
0:38:51 So this was like a big break for us.
0:38:55 But unfortunately, there’s always a curveball,
0:39:00 the factory that we were bound to make it with, weak bankrupt in the middle of production.
0:39:04 But we had to design so much specialist production.
0:39:08 Not just the tools, but all of these fish were tested underwater for precious.
0:39:12 They didn’t leak and there was just a ton of like specialized equipment
0:39:16 built to produce a RoboFish that were all slightly that weights had to be perfect.
0:39:19 So this whole factory gets shut down.
0:39:24 And of course the wars in China mean that the factory workers are the first creditors essentially.
0:39:29 So they send the army in to like stop anything or any assets being taken from this factory.
0:39:32 So we’re like peak RoboFish production, peak demand.
0:39:35 Finally, we’ve got clients that are selling and everyone’s scrambling.
0:39:38 There were retailers that wouldn’t talk to me for like seven years.
0:39:43 Actually one of my good friends today, it’s one of the biggest independent retail chains in the UK could be entertainer.
0:39:48 And the son of the owner, Stu, one of my closest friends today.
0:39:50 He wouldn’t even talk to me for eight years.
0:39:52 Like I couldn’t even get an appointment with him.
0:39:58 But suddenly when RoboFish took off, suddenly all these buyers were coming to us and hey, like that RoboFish.
0:40:03 So you’ve got to imagine we’ve finally had this momentum and then this happens to the factory.
0:40:06 And we’re like, we’re like shit.
0:40:07 And it was crazy.
0:40:09 We could not get into the factory.
0:40:15 So my brother, we had to do and this again, there’s so many of these stories, but we were like, we have no other option.
0:40:18 We have to get our tool and we have to get all our equipment.
0:40:21 We have to get everything out of that factory and really relocate it to another factory.
0:40:22 But the army was there.
0:40:23 Everyone was here.
0:40:24 You couldn’t get in.
0:40:30 So in the middle of the night, my brother got like eight trucks, got all of our team from one of our little factories,
0:40:38 filled these trucks with people in like 2, 3 a.m. in the morning when there were less people like camped out at the factory,
0:40:43 pulled up to the factory, paid a bunch of bribes to go in, took all the trucks into the factory,
0:40:48 all our people went in, ticked up all of the tooling and all of the equipment,
0:40:53 loaded up all the trucks in the middle of the night, left and we went and relocated to a new factory.
0:40:55 So we continued production.
0:41:00 So it was crazy, but that was like again, like nothing ever happens without a hiccup, right?
0:41:03 Like it was sort of like we finally felt like we had momentum and then this happened.
0:41:06 So how old are you now?
0:41:07 39.
0:41:08 Okay, you’re 39.
0:41:14 Do you still go as hard or like, are you still as nuts as the early version of you?
0:41:18 Like, do you still have the same drive or are you human?
0:41:25 And you’re like, you know, yeah, I used to really be super, you know, super driven, super resilient going,
0:41:27 going really, really balls to the wall.
0:41:31 And now I’m, you know, tired and whatever, you know, I’m an old guy now.
0:41:33 Like, do you still have it?
0:41:34 I still have it.
0:41:38 I think we still just as motivated today, if not more motivated than we have ever been.
0:41:44 We see a pretty, pretty cool roadmap ahead of where we want to get to the next 10 years,
0:41:52 particularly taking building houses on production lines and Zuri Agila.
0:41:53 So let’s talk about that.
0:41:58 So can you just summarize how big is the, how big is the empire today?
0:42:05 So there are over two out of a billion US in revenue, but we’re drawing at about 25 to 30% year on year.
0:42:07 And so that’s compounding.
0:42:11 But I think the thing with us is, is our revenue is one thing.
0:42:13 It’s just how profitable we’ve built the business.
0:42:15 And it’s public or it’s not a, not a public company?
0:42:16 Not public.
0:42:17 Okay.
0:42:19 So privately held super profitable company.
0:42:23 That’s like a billion dollars a year of profit basically out of the toy business.
0:42:25 But then you have this diaper company.
0:42:28 You started, you started buying other companies, right?
0:42:29 Not so much buying.
0:42:31 I, I actually got Crohn’s.
0:42:35 So I got sick in China and Hong Kong.
0:42:38 And I had to have my bowel, my large intestine removed.
0:42:41 This probably has something to do with living in China for all those years,
0:42:43 even incredibly poorly, I’m not sure.
0:42:49 But I had to move home to New Zealand to get surgery about six years ago.
0:42:52 And it ended up being a great thing.
0:42:54 So I was in Hong Kong.
0:42:56 I came home for the surgery.
0:42:58 I was meant to rest for a while.
0:43:01 And I was sitting at home and I was getting restless,
0:43:04 trying to rest as I had my bowel, my large bowel moved.
0:43:08 And I had a friend who had started a small darker business.
0:43:11 And he was doing like 50 grand a year, DTC in New Zealand.
0:43:12 So really, really small.
0:43:14 He’d been mapping a way out of it for three years.
0:43:16 And I thought, well, I might as well help with this.
0:43:22 But I always thought like toys is this industry where there really is a ceiling to the size of the business you can grow,
0:43:27 just because of the, you know, the addressable market, the size of the market.
0:43:30 Also, you’ve got brands like Hot Wheels, which are super hard to disrupt.
0:43:37 And I was looking at FMCG and I started to realize that there’s like nine companies that dominate 80% of it globally.
0:43:41 And when you build a toy business, you work in every material form.
0:43:44 You work at speed, like speed of innovation is your DNA.
0:43:49 You build this muscle for speed and working fast and innovating,
0:43:54 because you reinvent 40, 50% of your entire product line every single year.
0:43:57 But because you haven’t been so much of your product line every year,
0:43:59 it comes really hard to keep growing, right?
0:44:02 Because it’s a reinvent to catch up every year.
0:44:06 And so I started to form this thesis about six years ago.
0:44:08 I thought, man, we’re so good at automating.
0:44:13 And we sort of, I would classify Zuru today as more an automation company than anything else.
0:44:16 Like the product is almost secondary.
0:44:19 We build incredibly sophisticated automation.
0:44:20 We had a huge automation team.
0:44:26 So whether that’s building a house on production lines with robots or a dart blaster with robots,
0:44:28 it’s, you know, a big part of what we do.
0:44:32 So, you know, I was like, we’ve built this automation muscle and the speed of innovation muscle.
0:44:35 And I feel like these biggest companies, one, they don’t innovate too.
0:44:36 They have a lot of duopoly.
0:44:38 So if you look at pet food, it’s Mars and Nestle.
0:44:41 If you look at baby, it’s Kimberly-Clark and Procter and Gamble.
0:44:44 If you look at beauty and personal care, it’s L’Oreal and Procter and Gamble.
0:44:45 A little bit of Unilever.
0:44:46 So there’s a lot of them.
0:44:48 If you look at laundry, it’s pretty much just Procter and Gamble.
0:44:49 A tiny bit of Unilever.
0:44:53 So all these duopolies and monopolies across the board.
0:44:56 And through that, they were delivering much margin to their retail partners.
0:44:59 They really held the power.
0:45:02 And I remember mapping out Walmart’s revenue.
0:45:05 And I met that against the top eight FMCG companies in the world.
0:45:08 So Walmart did more revenue than all of them combined.
0:45:11 What’s that acronym you’re saying?
0:45:12 What is that?
0:45:14 FMCG, fast-moving consumer goods.
0:45:17 So FMCG, CPG, consumer package goods.
0:45:22 So if I looked at Procter and Gamble, Nestle, Mars, all the biggest FMCG companies,
0:45:25 collectively their revenue is less than Walmart, who does 611 billion.
0:45:28 But then Walmart makes only a fraction of the profit.
0:45:32 And the big FMCG companies make the lion share 75% of the profits.
0:45:37 So I thought, is there a world in which we can be disruptive in FMCG fast-moving consumer goods?
0:45:39 Can we deliver more margin to our retail partners?
0:45:45 Can we innovate faster, bring our speed of innovation mindset to these categories?
0:45:48 And can we reach customer in a far more efficient way?
0:45:50 And can we move at the speed of culture?
0:45:56 And obviously at the time, digital and data-driven advertising was starting to become a bigger thing.
0:46:00 And targeted advertising, and I was still looking at 80 and I was thinking,
0:46:05 well, you’ve really got a mum who’s an incredibly targeted audience or a parent
0:46:06 who’s an incredibly targeted audience.
0:46:09 How can we serve them and add every single day in a targeted way,
0:46:12 rather than just like break a media so that’s a super efficient way to reach our customer?
0:46:16 What if we do the better product, deliver more margin and position it at a better price?
0:46:18 And that was kind of my overall thesis.
0:46:19 Can we do this?
0:46:22 And can we run our same kind of first principles toy model like FOB
0:46:25 so we don’t hold products, super lean, large advertising dollars spent,
0:46:28 but in a really centralized, controlled way.
0:46:31 And I thought, okay, I can do this.
0:46:33 So I worked with my friend and I said,
0:46:37 okay, let’s launch this diaper brand in New Zealand as a test market.
0:46:42 And within one year, I think we’re taking 40% market share in New Zealand, launching a diaper.
0:46:45 And I remember meeting Greg Foren, who is CEO of Walmart at the time.
0:46:50 And he’s in New Zealand and I met him in New York and I was like, Greg, toys, it’s great.
0:46:55 And it’s been this incredible university for us because it really allows us to, you know,
0:46:59 it’s built skill sets that is very hard to build in any other industry.
0:47:01 And I said, we’re going to take on Dithers.
0:47:04 And he turned to me and he said, “Nit ever heard of coconut pepsi?”
0:47:07 Like he was saying that it was going to be that hard to crack.
0:47:11 Like Pampers and Huggies are going to be that hard to go and disrupt.
0:47:14 And I said, I get you, but I think we can do this.
0:47:15 I’m going to give it a go.
0:47:17 So we launched in New Zealand.
0:47:19 The second biggest brand in New Zealand was Treasures.
0:47:20 Treasures was number one.
0:47:21 Treasures was a local brand.
0:47:22 Their share just plummeted.
0:47:27 They ended up going out of business and having to sell the brand for pennies on the dollar.
0:47:30 And you’re spending a ton on Facebook ads or what are you doing?
0:47:32 I find Facebook and then it progressed to Instagram.
0:47:33 Now it’s progressed to TikTok.
0:47:35 Like it sort of always progresses, right?
0:47:38 Like so you’ve got to move the speed of platforms, but you’ve also got to move at the speed of cultures.
0:47:41 How do you move at the speed of trends to build content to move the speed of culture?
0:47:44 And was that a new, new-ish skill set for you?
0:47:46 Because it seems like the toy company was retail driven.
0:47:50 Yeah, well, YouTube was starting to kind of thing that it was mainly TV advertising for toys at that time.
0:47:54 So it was still TV was prominent and then it kind of switched to YouTube.
0:47:57 So today we don’t speak any money on TV and toys.
0:47:58 It’s all YouTube.
0:47:59 It’s all TikTok.
0:48:00 It’s all YouTube shorts.
0:48:03 So it really like the platforms change and how you reach people.
0:48:07 So I had this thesis, but we just quickly took all this market share in New Zealand.
0:48:10 And I was like, holy shit, we can make an incredible fight.
0:48:12 But to be fair, success is a bad teacher.
0:48:14 Like we just got the success out the gate.
0:48:15 I was just, we watched better.
0:48:17 I just took off.
0:48:19 And so I packaged up that case study.
0:48:20 We went to Australia.
0:48:23 We went to Coles and I said, hey, look at what we’ve achieved in New Zealand.
0:48:25 Look at all the margin we’re delivering.
0:48:26 Look at the category share we’ve driven.
0:48:29 We helped foodstuffs reverse their category share decline.
0:48:32 Like they were getting hammered by the competitor Woolworths here.
0:48:33 We inverted that.
0:48:34 We took them the other way.
0:48:35 We’ve been one year.
0:48:37 So Coles was like, love it.
0:48:38 Launched with Coles.
0:48:39 Same thing.
0:48:42 We won Coles non-food supplier of the year award in the first year.
0:48:46 And just help them take heaps of category share.
0:48:48 So I was like, wow, this really works.
0:48:50 Took that model, went to the US, went to Walmart.
0:48:54 Was like, hey, Walmart, we could help you disrupt your two big suppliers here.
0:48:56 And they gave us a Dallas test.
0:48:57 Same thing.
0:48:59 We became actually last year Walmart’s fastest growing brand.
0:49:02 Total box all categories with rascals.
0:49:04 We targeted the same thing with our brand Millie Moon.
0:49:06 Millie Moon actually just over to private label.
0:49:09 And Huggies is second biggest sub-brand in target in under,
0:49:11 or about three and a half years, which is incredible.
0:49:14 So it was sort of this like, wake up moment that, wow.
0:49:17 And I think last year we produced two billion diapers.
0:49:20 And this is all in under, this is all in about five and a half years.
0:49:21 We built this business.
0:49:26 So well over a billion dollars of retail sales last year in diapers in, you know, five years.
0:49:29 So from start to go a billion dollars a year.
0:49:31 Should I say, and growing incredibly fast.
0:49:33 Like this year, gonna grow 30% again.
0:49:35 So this was sort of an eye-opener for me.
0:49:38 And I thought, wow, we can do this in all FNC categories.
0:49:40 So I started testing in New Zealand and losing.
0:49:42 Like we tested infant formula, did it work.
0:49:44 We tried fem care, fails.
0:49:46 We tried like oat milk fail.
0:49:47 I did all these old things.
0:49:49 I started faking and I was like, oh.
0:49:54 But my partner at the time, Jamie, had a background in luxury PR and beauty
0:49:56 and was a huge beauty enthusiast.
0:49:57 I said, hey, don’t do that.
0:49:58 Let’s start a beauty brand.
0:49:59 And we started Monday haircare.
0:50:02 And which is the little pink bottle Forbes called it.
0:50:05 Last year the most famous shampoo and conditioner bottle in the world.
0:50:07 But we launched that peak COVID.
0:50:08 And that was the second one.
0:50:09 It just took off.
0:50:13 We, I think in Australia, we won product launch of the year
0:50:15 and we had five of the top 10 in total here.
0:50:16 Yeah.
0:50:17 We over to Pentene and sales.
0:50:19 What do you think is the difference between the ones that worked
0:50:20 and the ones that didn’t?
0:50:21 Is it categories?
0:50:22 Some categories were just more ripe.
0:50:24 Was it you nailed the packaging and the positioning?
0:50:26 And that’s actually the thing that matters most.
0:50:27 Is it luck?
0:50:30 Diapers is driven by price and performance.
0:50:33 And we’re the first one in the world to take a China diaper to the world.
0:50:35 And China’s making the best diapers in the world.
0:50:38 So in China there’s like a thousand domestic brands all competing
0:50:41 to the technology and non-wovens and substrates and SAP
0:50:43 and machine technology has just gone like that
0:50:44 because of all the domestic competition.
0:50:47 So we took the best product in the world to market at the best price
0:50:49 in a category which is price and performance driven.
0:50:52 So it’s either you got to be price and performance driven
0:50:54 in a performance driven category.
0:50:56 Or you’ve got to be innovation driven.
0:50:59 So we launched dummy um which is super innovative to victory product
0:51:00 like really innovative.
0:51:04 And that was just pure innovation that made that like take off.
0:51:05 So innovation.
0:51:07 Or it’s got to be design and creative.
0:51:09 So Monday was still a bowl of shampoo
0:51:11 but incredible design and creative.
0:51:13 And then we just owned TikTok
0:51:16 as in it is the number one here here brand in the world on TikTok.
0:51:18 And by a long way.
0:51:23 And it was just the right design, creative, positioning, branding,
0:51:25 marketing and it just took off.
0:51:28 And I think last year in the US it was second only in total growth
0:51:31 in here here to Proctor & Gamble’s total here here portfolio
0:51:32 just the Monday brand.
0:51:36 And so then I started to learn kind of which categories would work for us
0:51:38 and we’ve gone super deep in those categories
0:51:40 and we applied our same model.
0:51:42 So building all the factories and diethers.
0:51:44 We built a factory I think just nine months to reduce
0:51:46 and we’re doubling the size of it right now.
0:51:48 So we’ll have four billion diethers capacity by next year.
0:51:50 In beauty we built the whole factory.
0:51:51 Everything under one roof.
0:51:54 Injection modelling, rotor modelling, filling, mixing all of it.
0:51:56 We built all the lab in Shanghai.
0:51:59 We’ve got L’Oreal formulation specialist over.
0:52:01 You can leave a formulation specialist.
0:52:03 As soon as we found something that was working.
0:52:04 So I was out for sourcing to begin with.
0:52:06 Then we do the Zuru thing which is go super deep.
0:52:08 Automate everything we possibly can.
0:52:10 Put all AGVs in.
0:52:13 So every little part of it we want to like automate as much as possible.
0:52:15 And then pet food, I started at the same time.
0:52:19 I bought a young guy who won New Zealand’s high school entrepreneurial program
0:52:20 out at Gakut Alastair.
0:52:21 He’s incredible.
0:52:22 I said let’s start a pet food business together.
0:52:25 Actually we were at the supermarket and we said let’s do pet food.
0:52:27 And so now we’re getting a huge momentum there.
0:52:32 One of our brands I think, Bulkers, drove 30% of all cat treat growth in America last year.
0:52:36 And then we experimented in supplements which has been a little bit hard.
0:52:38 I built a brand with the Kardashians called Dosenko.
0:52:40 We ended up selling that last year.
0:52:42 It worked everywhere else in the world.
0:52:43 It failed in the US.
0:52:47 And so as soon as we don’t have the scale of the US, it sort of lets exit it.
0:52:48 And supplements.
0:52:51 We’ve sort of struggled with our brand habit which is sort of ticking away.
0:52:53 And then very much home care.
0:52:55 We’re building a bunch of brands as well.
0:52:59 So we’ve built this, what I call our five vertical strategy.
0:53:03 And we’re going very, very deep within all of these verticals.
0:53:10 And I think all of them individually can be bigger than our toy company within two or three years.
0:53:12 What’s the dream?
0:53:14 Like so why go so hard?
0:53:15 Why do so many?
0:53:19 Like you could, just off the toy company, you could be sitting on a boat you own,
0:53:23 looking at an island you own with a beautiful drink in your hand.
0:53:26 Is that just, you love the game?
0:53:29 You have some dream, you want to be a hundred billionaire?
0:53:32 What’s the, what’s driving doing more and more and more?
0:53:34 I think we love it.
0:53:36 Number one, love having a thesis.
0:53:37 Love competing.
0:53:39 For me, it’s sport, right?
0:53:42 Like it is sport, having a thesis, going into something, working it out.
0:53:49 And as we build these things, you know, toys, business, the edge business, FMCG business,
0:53:52 you know, as you become more successful, you think,
0:53:54 “How can I solve bigger problems?”
0:53:56 And the same person, Greg Forewell, I said,
0:53:58 “You got to wrap your business on a bigger purpose as well.”
0:54:01 And I thought, well, we thought, how do we solve bigger problems?
0:54:03 Because we’re almost in a privileged position now, right?
0:54:05 How do we go on and actually solve bigger problems?
0:54:07 Which is why we’ve started building ZuruTech over the last,
0:54:09 what’s actually been eight or nine years.
0:54:10 Can you explain what that is?
0:54:12 So it’s a crazy moonshot idea.
0:54:18 I think you have, you either have or are building the largest factory in the world, period.
0:54:20 What do you, what is the, what is that idea?
0:54:21 What is ZuruTech?
0:54:25 So ZuruTech, the thesis really was, if you look at the construction industry,
0:54:27 it’s been done the same for hundreds of years.
0:54:31 It’s also the biggest segment or market in the world,
0:54:33 construction and property development.
0:54:40 And the idea was, how do we build the first factory in the world that has a customized input,
0:54:44 so the design of a building and a fully automated output?
0:54:50 So how do we build the buildings for a small fraction of the cost of what you build a building for
0:54:51 today?
0:54:58 And, and we’re now, we started off, so we built a software which is called Dreamcatcher,
0:55:00 which is built on Unreal Engine.
0:55:04 It has an incredibly simple UI sort of user interface,
0:55:09 but the logic layer or the coding layer below that is incredibly, incredibly complex.
0:55:11 We’ve cataloged every building code in the world.
0:55:14 So you can drop a pin on any location in the world that maps the terrain.
0:55:15 It does the building code.
0:55:21 And then you can design your house or building or whatever building you want in our Dreamcatcher software.
0:55:26 We’ve also built our AI Assistant or our own large language model called Quera,
0:55:32 which is basically training, it’s training our model on all the great architects.
0:55:37 So you can talk to your building and it builds it in front of you.
0:55:38 You can put a 2D plan in.
0:55:40 You can decide on this room.
0:55:44 I want it to be Stockholm style and furniture and it maps all the furniture and does it for you.
0:55:47 So it’s an incredibly intuitive software.
0:55:52 Basically a 10 year old can design on Dreamcatcher and then it does all the structural side.
0:55:55 It does all the EVP, the mechanical, the electrical, the plumbing.
0:55:57 It does it all in a super intelligent way.
0:56:00 Wherever you drop the pin where you’re building the building,
0:56:05 it works out the orientation of the building for the sun that works out how many HVAC units you need.
0:56:07 It works out how many solar panels you need.
0:56:11 So basically then the software translates every part into our factory.
0:56:14 The factory builds every single part and it’s completely automated
0:56:16 and the factory is designed from start to finish.
0:56:21 So originally we built a one-fifth scale factory to test the software with the hardware
0:56:23 and how that all integrates together.
0:56:26 So it builds these mini houses that are one-fifth in every dimension.
0:56:31 And then once we got that working, we built a, it’s about a three hectare factory
0:56:33 and it’s a test production line.
0:56:38 And that right now is producing, we’re testing the software at full scale with full scale houses
0:56:42 and we’re building a house about every two weeks right now which is tested
0:56:46 and then we have like a hundred little changes and we go in software and changing it.
0:56:51 And then we bought a factory or a building that’s 25 acres in size
0:56:54 which is our first commercial factory for producing commercial households
0:56:59 and then Phase 4 will be building one of the biggest factories in the world.
0:57:01 I think second only to Boeing is the plan.
0:57:03 So that’s all planned out now.
0:57:08 But we are building a house for $500 square meter
0:57:10 and it’s the best quality in the world.
0:57:14 Erated concrete, ceramic tile, but we have innovated every single part of the process.
0:57:18 So we have the wall module, the tile module, the window module, the lighting module,
0:57:23 the smart home module and every single team I think is the best in the world at what they’re doing.
0:57:25 So it is a huge project, it is a massive undertaking.
0:57:29 I think we have about 700 software and hardware engineers working on it.
0:57:32 Are you self-funding this or did you raise money for this?
0:57:33 No, we self-fund it.
0:57:36 So we’re getting very close now to a final product.
0:57:41 We think we’re five test houses away from getting it very close to perfect
0:57:45 and then it should be transformational in terms of how the world builds
0:57:47 and anyone can use Dreamcatcher the software.
0:57:50 So you could go on to Dreamcatcher and there might be a million different
0:57:53 two-bedroom houses that have been designed by people on the platform
0:57:56 and you can look through them, you can put a price on selling your own design,
0:57:58 you can go through them in real time, you can stage furniture.
0:58:02 We’ll have a market place, IKEA could digitally scan all of their furniture
0:58:05 into our market place, artists could digitally scan all their art in
0:58:08 so you can put it in your house, you can go around in real time and see it.
0:58:15 And so the software is really incredible, you know, what we’ve built.
0:58:18 So super exciting that we’re getting so close now
0:58:24 and the houses that we’re producing each couple of weeks are really incredible.
0:58:28 I mean, this is an insanely cool idea.
0:58:32 Just to basically, it’s like, like if you go to the website,
0:58:34 it looks like you’re looking at the Sims, the video game,
0:58:39 like you could just kind of like zoom around a house, you can like move things, whatever.
0:58:42 But you’re saying there’s a button where you just basically click print
0:58:45 and then the house gets built in an automated factory,
0:58:49 which is just a kind of mind-blowing idea.
0:58:51 How much are you going to put into this funding-wise?
0:58:55 Like this must be like, you must be putting hundreds of millions of dollars.
0:58:57 Is that right or am I overestimating this?
0:58:59 We’re getting a lot for sure.
0:59:02 So the software, so we have three offices in India on the software side,
0:59:04 Pune, Cacada and Underband.
0:59:07 And we have two in Italy, Milan and Wanda.
0:59:11 The reason in Italy is we actually acquired, years ago, the software part of it.
0:59:14 It was two guys, Martha and Eliseo, they appear as both architects.
0:59:19 They decided that architectural software was built on
0:59:21 incredibly old software stacks.
0:59:26 And so they were like, well, gaming engines are going like this.
0:59:31 And so they decided to build software or architectural software on Unreal Engine.
0:59:33 And so we acquired them and that’s sort of the reason.
0:59:38 I think we have about 160 or so people sitting in Italy on the software side.
0:59:40 And then they worked with India on the software side.
0:59:43 And then in China, we built all the hardware side out.
0:59:48 So we have three sites where we’re doing all of the hardware and automation development.
0:59:52 But we’re kind of parallel to our automation team has sort of grown in parallel.
0:59:58 They automate, for example, we produce 57 million dark water blasters a year.
1:00:03 But we produce a dark blaster from a plastic granule through the finished product with no people.
1:00:08 Our competitors, like Hasbro, they outsource to factories who still produce with drills on production lines.
1:00:12 We’re now building our automation 2.0 where we’re using vision and machine learning
1:00:15 so we can actually change out any model of blaster on the same production line.
1:00:18 They can see the molds and they can see the shape and where all the screw holes are.
1:00:20 And it adapts completely.
1:00:25 So we’ve kind of paralleled our automation with building a housing project
1:00:29 but also taking all that expertise and building it across our zoo region
1:00:33 and toys business which makes us so disruptive.
1:00:37 But the big difference is when we automate a product in FMCG or toys,
1:00:40 you’re making the same product over and over and over again with robots.
1:00:44 This is incredibly complex because you’re building a tailored product
1:00:48 for every building site in the world and every building code in the world
1:00:50 and it’s different every time.
1:00:54 And so having that fully automated output with a fully customized input
1:00:58 has never really been or has never been done before in the world.
1:01:00 Dude, you’re a madman.
1:01:05 Who are your peers? Who do you relate to?
1:01:08 Do you just read like an Elon Musk biography and you’re like,
1:01:11 “Oh, that’s the only other guy in the world who I have something in common with?”
1:01:13 Is that somebody you admire?
1:01:17 We have a huge admiration for Elon with the big Tesla backers and fans
1:01:19 for a very long time.
1:01:21 Do you know him?
1:01:24 I had a chance to meet him and then I had to fly home for an emergency
1:01:27 and so I actually don’t know him.
1:01:30 My brother was very similar to Elon.
1:01:34 So my brother was sort of the driver behind ZuruTech at our building project.
1:01:38 He’s very similar in his way of thinking, I think.
1:01:41 Like, Elon calls it the Idiot Index, for example, right?
1:01:45 And the Idiot Index is when you look at the cost of a rocket.
1:01:48 Well, he looked at the cost of what a rocket used to cost to build
1:01:50 and then he looked at the cost of the materials
1:01:54 and it’s like, you know, hundreds of times the cost of materials to build a rocket
1:01:56 and he’s like, well, then he takes a first principles approach,
1:01:58 he breaks it down and he works out effectively, you know,
1:02:01 how to build a rocket at a price that makes sense
1:02:03 based on the cost of the raw materials.
1:02:06 I mean, we’re having a similar approach to how we build a building,
1:02:08 whether it’s one story or hundreds of stories.
1:02:10 It’s look at the cost of materials out of the ground
1:02:12 and look at the final cost of the building.
1:02:14 The Idiot Index is really high.
1:02:16 And so it’s the same or similar type of thinking.
1:02:18 So how do you go back to your first principles approach
1:02:21 and do it from the ground up in a completely different way?
1:02:24 Did you see the other day, I think yesterday or two days ago,
1:02:27 Boom Supersonic did their first supersonic flight?
1:02:29 I don’t know if you followed this startup.
1:02:30 I did, yeah.
1:02:34 He kind of had a similar story where he worked at Groupon basically
1:02:37 and he’s like, you know, a product manager at Groupon
1:02:39 selling coupons on the internet.
1:02:43 And then, you know, for fun was basically having a hobby of flying
1:02:47 and then gave himself a year to, from a first principles point of view,
1:02:49 understand how planes work
1:02:52 and figure out if there was some business he could build around planes
1:02:54 because he just loved planes.
1:02:57 And while he was building his spreadsheet, he was just like, I don’t get it.
1:03:01 There’s no reason we shouldn’t be flying supersonic speeds right now.
1:03:03 And then he took it to like professors and others.
1:03:05 He’s like, where’s the error in my calculations?
1:03:08 Because this is telling me we should be doing supersonic.
1:03:10 And they were like, no, there’s no theoretical errors.
1:03:12 Just no one’s doing it.
1:03:14 Like there’s no courage is the limit.
1:03:16 Not like, there’s not a materials problem.
1:03:17 There’s a courage problem.
1:03:19 There’s a entrepreneurship problem.
1:03:23 And seeing that go, you know, yesterday to doing their first supersonic flight
1:03:24 was super inspiring.
1:03:25 Incredible.
1:03:27 So you, you’re doing all this stuff.
1:03:28 Do you like have hobbies?
1:03:29 Do you do stuff outside of this?
1:03:31 What’s like, what is fun for yours?
1:03:34 This is like, my cup is full with this sport.
1:03:35 Definitely sport.
1:03:37 We love to just love competing really.
1:03:42 So anything that has a competition element is something that I get a lot of enjoyment out of.
1:03:45 So you’re certainly tennis golf.
1:03:49 Just sport in general is, is, is something that enjoy doing.
1:03:53 But yeah, as you’re older, like obviously we don’t,
1:03:56 I used to think you wake up every day with that pit of your stomach because you’re wondering
1:03:58 what’s going to go wrong today and what do we have to solve today.
1:04:01 So, you know, obviously we don’t have that, that issue any longer and,
1:04:03 and definitely get to spend more time with family.
1:04:05 I finally had my first child last year.
1:04:07 So that’s a big change.
1:04:10 It definitely changes your to speak them on things.
1:04:13 I think which is, which has been really good.
1:04:16 I always sort of kick the can delayed it as long as possible.
1:04:17 I think it would slow it out,
1:04:19 but it’s definitely been one of the best things.
1:04:21 So do you, when you start these new companies,
1:04:24 cause I always, I always find this interesting whenever you have like a serial entrepreneur,
1:04:26 people have different approaches.
1:04:30 So some people, they, you know, they have their main thing and they leave and they say,
1:04:33 I’m going to go on a sabbatical basically for a year, figure out my next thing.
1:04:36 Other people, they take some percentage of their time.
1:04:39 They’re devoting it to new ideas and they go,
1:04:43 they roll up their sleeves and they’re super like on the ground figuring out the new idea.
1:04:49 Other people, they recruit a operator and they just give the operator kind of like the idea,
1:04:51 maybe a little bit of a plan and then let the operator run.
1:04:54 And they kind of are there as more of a chairman or a board member from afar.
1:04:57 When you did like the diaper brand and these other ones,
1:05:00 were you like boots on the ground, like every day figuring it out?
1:05:03 Or did you do the operator model? What did you do?
1:05:04 Definitely boots on the ground.
1:05:07 What I would say is in our business, there’s a through line through it all, right?
1:05:11 We’re essentially making a product where there was a house, a bullish and poo,
1:05:15 a laundry pod or a dart blaster.
1:05:21 I mean, it’s essentially still making product, building factories, selling it into retail.
1:05:24 So we’ve built such a big flywheel.
1:05:28 Like if you look at our Shenzhen office, we have three and a half thousand people there, right?
1:05:34 It’s such a big flywheel that it just becomes easier and easier to plug into that flywheel,
1:05:36 regardless of what category you’re in.
1:05:41 Yes, they’re all different industries, but we’re still effectively trying to make the best product in the world at the best price.
1:05:44 We set ourselves the goal of making a product to $0.
1:05:46 I know that’s impossible, but that’s our goal.
1:05:48 How do we make it to $0 and how do we make it the best in the world?
1:05:50 So there’s a through line through it all.
1:05:52 So very much boots on the ground.
1:05:55 I believe leadership has to be on the dance floor, have to have your hands dirty.
1:05:57 That’s where you get the most insights.
1:06:02 In our business now, I’m a huge believer in firing bullets and failing fast.
1:06:04 So I always say, get an actionable insight.
1:06:05 Where’s an insight?
1:06:09 Find an insight somewhere in the world, and an insight forms a bullet.
1:06:12 And a bullet is a minimal viable investment into testing something.
1:06:17 And then at the bullet works, it’s a cannonball and we invest and we build the recipe around that.
1:06:18 And what’s the recipes working?
1:06:21 You can pull a lot more things into that recipe and build that recipe out.
1:06:24 So our mindset around fast fail.
1:06:27 We actually have what we call fast starts now in FMCG.
1:06:32 So we’re trying to build a minimal viable products to test quickly as fast as possible.
1:06:38 And so we can really speed up innovation is probably the biggest thing for us.
1:06:43 And we’re trying to test more things in these categories faster and learn what works and what doesn’t.
1:06:47 Because in my experience, things either just like hit the ground and start working or they don’t.
1:06:50 And then we have a mindset around continuous improvement.
1:06:53 So we call it 2% improvement a week, the power of compounding.
1:06:55 I know 2% improvement a week is nothing you can measure.
1:06:56 But that’s the mindset.
1:06:58 That’s what we put into our DNA.
1:07:01 And we always say to the team, we suck now compared to where we’ll be in the future.
1:07:07 So we had this relentless mindset of being able to look back on ourselves a year ago and be like, we weren’t even good then.
1:07:13 And I think that compounding improvement is such a big part of what we do.
1:07:16 And then from, you know, when I look at team members, I’m trying to…
1:07:19 People say they try and build talent density in their business.
1:07:20 Yes, we try and build talent density.
1:07:22 But for us, we’re trying to build like grit density.
1:07:28 And I say when we hire, we’re looking for grit smarts and someone with a biased action, like real doers, right?
1:07:31 People are just like, we fast-fail, we go in, we do it.
1:07:33 We are the winner we learn.
1:07:36 If it doesn’t work, we’re getting heaps of insights out of that on how to improve next time.
1:07:44 So our mindset or our DNA in the business works across any of those verticals or categories we have.
1:07:51 We have the same mindset and the same approach and the same DNA as to how we approach them.
1:07:54 If you were interviewing me, how would you figure out if I have any grit?
1:08:02 I think actually like looking back at your history is it’s kind of like we often find like people that really great competitive sports people
1:08:04 and they really love to win and are highly competitive.
1:08:09 Like I want to understand how competitive you are, how much you really want something.
1:08:13 And to be honest, it can be really hard.
1:08:17 Like we’ve built this loop process in our business, similar to the Amazon loop.
1:08:24 So we’re, you know, half we’re hiring and looking at, you know, whether you fit and can do the actual job.
1:08:28 But the other half is really do you align to our DNA?
1:08:37 And so we have a loop, we have, you know, eight people, you know, half of those people will interview or questions around, you know, our DNA
1:08:41 and really trying to go deep on understanding if that person fits our DNA.
1:08:45 And so we’re really trying to build our, you know, not our talent density, but our grit density.
1:08:48 But certainly it’s something that I find is really important.
1:08:54 All our best people have just incredible grit and incredible bi-aspiration.
1:08:57 Sure, they’re smart, but they just get shit done.
1:09:03 And, you know, we decide something at a meeting and they’re already kind of actioning it in that very moment.
1:09:06 And that’s kind of our culture.
1:09:13 It’s kind of that saying as well, right, that lazy people work a little bit and expect to be winning.
1:09:19 Whereas winners work as hard as they possibly can and worry that they’re being too lazy.
1:09:24 And I feel like that’s super true, right? Like, people that like work hard,
1:09:28 they’re always worrying that not doing enough of they’re being too lazy.
1:09:33 And it’s kind of those people that’s kind of like the mindset we’re looking for.
1:09:35 Yeah, I think Elon has a good question he uses in interviews.
1:09:38 He says, tell me about, he just starts it down.
1:09:42 He just says, tell me about the hardest problem you solved and how you did it.
1:09:48 And, you know, you could get so much from one question because what’s the hardest problem they solved?
1:09:52 You know, it’ll show you the scope and the trust they had in prior roles.
1:09:57 Like, were they just nibbling on tiny little issues or were they actually like biting into really meaty things?
1:10:02 Yeah, and like, can they talk about the details, the paths that didn’t work, the paths that didn’t work?
1:10:05 Because that’s the person who was actually doing the work.
1:10:08 There’s so much like resume lying where somebody says, oh yeah, we did this.
1:10:09 Like, cool, tell me how you did it.
1:10:12 They don’t know because they weren’t the one doing those parts of it.
1:10:14 Correct, correct.
1:10:16 Nick, this was awesome and I really appreciate you coming on.
1:10:20 I know you don’t do a lot of podcasts, but your story is honestly incredible.
1:10:31 I think as much as you’re building in the factories, I think you doing it at podcasts like this can build 10,000 new entrepreneurs with more grit, with more resilience just by sharing the story.
1:10:36 Because you’re showing, you know, what’s possible, you’re showing what you did, how it all turned out and how you approached it.
1:10:40 And so I think, you know, a simple hour like this can do a lot for a lot of people.
1:10:42 So I really thank you for doing it.
1:10:51 It was a lot of fun and yeah, I don’t often share our story all that often, but yeah, I totally agree if it can help inspire people.
1:10:56 And I always say it, right, it’s not really how capable you are.
1:10:58 It’s how willing you are.
1:11:07 And I think it’s the willing people that stick out for a long consistent period of time and continually improve that actually are the most successful.
1:11:09 It’s not necessarily about how smart you are.
1:11:13 It really is just grit and perseverance and you end up getting there.
1:11:17 So I think that’s the big lesson for any entrepreneurs out there really.
1:11:18 Right on.
1:11:19 Alright, thank you so much.
1:11:20 That’s a wrap.
1:11:22 I feel like I can rule the world.
1:11:24 I know I could be what I want to.
1:11:28 I put my all in it like no days off on the road.
1:11:30 Let’s travel never looking back.
1:11:30 Bye!
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