Episode 1: Raising Capital in Australia, George Freney, Founder & CEO Booodl

 

Welcome to the Tech Lowdown show where each episode will be discussing opportunities in the tech space with entrepreneurs from the US and around the world.

I’m your host Chris Jones. Since this is our very first show I’ll give you a brief background on me, started local/ multiple *businesses over the last 17 years both here in the US and abroad, raised a bit of capital, haven’t hit the home runs just yet but I’ve had some amazing experiences along the way.

 

On Tech Lowdown I’ll be introducing you to some of the smartest entrepreneurs I know and picking their brains to help you find opportunities and learn from their experiences.

 

I was fortunate enough to spend almost eight years living down under in Australia and got to know the startup space well there. During that time I ran my own startups and consulted to others. Today’s guest is one of my favorite entrepreneurs; he brings an enthusiasm and energy to his work that is actually infectious. George Freney is the Sydney-based founder of Booodl.  He has a keen eye for identifying opportunities and frankly a talent for raising capital.

George what’s the lowdown my man?

 

George: Alright Chris, good to chat, well the low down here in Sydney is that it’s nine o’clock in the morning it’s hot and humid and it’s a beautiful place to be and thank you very much for making me your first guest and I’m delighted to be on the Tech LowDown.

 

Chris: Thank you my man. So, briefly just tell us about Booodl and how you came up with the idea.

 

George: Well, It’s been almost five years to the day since the first sort of inspiration for this idea accentuated, It was five years ago, I had a three-month-old baby, had been to the shopping center in Bondi, two weekends in a row I forgot to buy a USB cable to plug my DVD into the TV and my wife, this is pre-Netflix remember so she couldn’t  stream anything she wanted anytime, my wife was like you are an idiot! Like why can’t you remember to buy this cable? I want to watch TV. I want to watch movies when I’m breast feeding and I thought if I had an App with a list of products that sends me a push notification when I was nearest store that sold what I want that would be very useful and that was the nucleus of getting it started on this on this problem in this problem space. We’ve come a long, long way since then.

 

Chris: Very interesting, very interesting so I know this wasn’t the current incarnation of Booodl which I want to come back to, wasn’t the original incarnation and you raise money with that original idea before you even had a product. How’d you determine if that was a good idea that was fundable and how’d you convince investors to put money in “pre-traction?”

 

George: So, you know this was back in 2012 with this problem when I first personally experienced it, it got us thinking about how do products and people sort of have a relationship, so we started thinking about how we solve this problem sending a push notification to someone when they are near a store. We started thinking well you have to have a list of product you want to buy, if you have a list of product you want to buy, you might as well have a list of product you want to buy and a list of product you have. And if you have a list of product you want to buy and the list of product you have, you might want to share with friends and other people. We started to build out of business sort of strategy around a list of products you want and have I mean I share that list of products socially and then connect through the ability to buy online or offline from that list and that was the first sort of idea that we  shaped around this problem to go out and build the consumer audience which would then give us the leverage to get retailers to provide us data about what they are selling in their stores and we packaged that up into a pitch that looked pretty appealing. This was early 2013, you know everyone has social media, social comments buzz and played into that sort of world and we were able to present that to investors in Australia and they sort of liked the macro size of it is a very big audacious problem very well-articulated in a PowerPoint. People thought it was worth having a crack at so on the back of that we got some funding and we started building the first incarnation of Booodl which in many ways if you think about it is a bit of a combination of Pinterest and Instagram and it’s like list the things you want and have, put a photos of them out, share them socially and they either click through and buy  them online or you be directed to a physical store that sells it.

In hindsight that was a way too bigger problem, it was the opposite of an MVP because it was a multi viable product, not minimum viable product.

 

Chris: Right, Interesting, so now take us through to pivot to where you are now and specifically how did you identify when the pivot and taken some of the key meetings that you had to have with your investors you can keep them on board?

 

George: So** I think we put quite  a lot of investment, time and money behind that idea and that strategy and it started to become apparent, I think, some people call them persevere or pivot meeting and I think that was like an inherent part of that sort of cycles of business we keep thinking about is this idea….is this way we’re building the product is going to get us to where we want to go and is there a market for it. And then we put a lot of effort into that direction and we are starting to see based on

changes in the market, Pinterest has become a lot more mature, social commerce is starting to measure up and better understanding globally around how that world***  work and we are starting to see the complexities***  for us in building a consumer audience at the same time is trying to get businesses to engage with us, it’s just really hard and we just decided after a number of weeks that this was not going to enable us to build the sort of scale and size of business we have the ambition for. And I think this was towards the end of 2014, we really started to get a pretty good appreciation to the fact that if we kept going in this direction we’re just going to continue to burn through  capital. So we decided that we need to rethink the product strategy.  Nothing has changed since the original problem that I had encountered and shifted from what I will call a sort of entertainment driven sort of consumers growth strategy to doing a utility that would suit a lot less people but would show our real true value so the early 2015 we started to build a brand new product that let people put a product on a list, find a store and push notification that are near a store, send a message to store and even buy from that store; all-in-one App experience. Now shifting our investors and other stakeholders from one perspective to this new one was real hard work. There was a lot of emotional attachment to the direction the Booodl product and brand was going. The market knew about it, so we had to take people along on that journey.  We lost some directors and some investors who were involved early disengaged. And we took the view, and I think it’s reflective of the Australian environment, that whilst in some ways were we building a brand new business we wanted to bring all of the existing investor base and everyone who had supported us along into that new business. It took a lot of time Chris. I had to do a lot of work on managing expectations, educating the stakeholders and shifting them. And I don’t think a lot of them believed it was a good idea for quite some time but we knew in our hearts that if we kept going into the original direction it would not get where we wanted to go.

 

Chris: And you say it was somewhat reflective of the Australian Investors and investor community, what do you mean by that?

George: If you are in the Valley, you far more likely just end the company and start a new one because over there that’s what people do, that sort of put money behind an experiment and an experiment being a company, if the experiment fails, start a new experiment – a new company.

In Australia people are not as sophisticated from an investment perspective and I don’t think that they would have appreciated that view so probably good for the investors that we did that, less good for the founders and employees of the company but I think it’s the right thing to do in Australian market.

 

Chris: That makes sense , how did you manage through this change with the employees and still keep them motivated what were the specific things that you said to them?

 

George: I think most of the employees were feeling the same thing we were, so all the internal teams, the management leadership, founders***  employees working on the problem, they could all see the data and they could all see what was going on, in terms of like pulling the employees perspective to this new way(indistinct) that was actually not that hard, they all believed and could sense the need to make the change. I don’t think we lost anyone that was someone we wanted to keep as a result of that.

Chris: Speaking of that how did you manage to the downsizing how did that go how those relationships turnout?

George:  look I think I think like upsizing and downsizing is an inevitable part of every  business so it’s very rare that  you start on day one with one or two founders and just add people from that point forward.  There is ups and downs in nearly every business ever in the world that so I think that you know that’s like people sometimes have to go, you have to get rid of people that you wouldn’t otherwise get rid of if you had endless resources. Got to be respectful, honest, transparent, treat people with dignity. It’s pretty easy – like don’t tell lies. Give people the facts. Tell them how it is. realize that shows straight very expensive because the fact of how do you I think we have very good relationships with everyone that has ever worked here as a result of just being honest and upfront about where you are.

 

Chris: That’s something that was great with Booodl, full disclosure, I spent some time consulting with you guys earlier on, and there was a sense that everyone was in it together, pulling in the same direction and there was never a sense of a whole lot of stuff going on behind the scene that you felt like somebody might be out to get me or a lot of that friction some times that goes on in a lot of companies.

You’ve got a bit of a unique business model now, can you tell us a little bit about the business model and then, specifically, how did you identify what exactly constitute the traction for this business?

George: That’s a big question, so I might tackle that in a few parts. I think first it will be good to explain to your audience what it is that Booodl is doing now. So what we discovered through our journey is that if you want to send a push notification to someone near a store, you have to actually have a directory of the physical retail stores and the product they sell. So first and foremost, we are building a store directory with the best data in the world about physical stores. Once you’ve got that, to a certain degree, then it’s easy to send a push notification to someone who wants a product because you’ve got right data. For the consumer preposition, we are helping shoppers. Consumers find physical stores that sell what they want, for businesses, retailers. Shopping malls, high street brands, we help with digital discoveries, so we help make sure that physical stores or shopping malls are easier to discover on digital devices. So if we did that well, we organized our data really well then shoppers find stores, shoppers visits stores. Every time a shopper visits a retail store or shopping mall it creates economic value. The way we started to understand traction was that most people try and find physical stores by asking questions on Google, they type store name-location, brand-location, product-location. And we saw that our directory and the data we organized performs really well in that context and then when someone finds a store profile page on Booodl as a result of that Google search, we then know that they have a 50%-70% likelihood of visiting that store. So you can see that consumer traction that, that demand for consumers to ask questions about finding stores on Google can be met and then create value for retailers and shopping malls. So we are very comfortable with consumer problem and traction that our directory could facilitate. And then we started to understand what the business model should look like for retailers and shopping malls and we didn’t want to be in the business of selling advertisement because I have a view that in the future, the advertising model will be broken when people shift behavior to digital systems. So we didn’t want to shopping malls and retailers to pay us to rank high on our directory so we decided to charge these companies a monthly subscription fee to be listed on our directory and get access to data about shopper visit intent.

Chris: When you started, what was it you were measuring, when you started seeing “Hey, things are starting to move in the right direction with this, we might be on to something”?

George: In early 2016, we started to measure Google search impressions that were serving, clicks through to our website, booodl.com, our store directory. We started to measure how, as we increase the number of stores and the data about stores, we ranked better on Google and drove traffic from Google to Booodl and then to see how much organic traffic started coming to Booodl directly. And we measured what we called Intent Aligned Store Views. We called them “App Directory” has store profile pages for every store, so if someone with the intent to find a store visits one of those pages, then we’ve helped that shopper find a store, thereby, helping the store to be more easily found and get a shopper visit. So we started measuring that, that has been growing at an average above 30% month-on-month since February, so that was the consumer side and then in September last year we started selling this product to shopping malls and we sold 43 shopping malls in Australia from a standing start in September at good average subscription revenues. It’s a very comfortable problem for them, a pointy problem and something they’ll pay to solve.

Chris: That’s very cool, I think it’s a fascinating business model and something that is scalable over time. I want to shift a little bit and just talk a bit about people. What’s the environment like for getting developer talent in Sydney and Australia in general?

George: I think there is a lack of enough talent. There’s excellent talent but we need more. I think it is hard to find, really, really, really good talent in the engineering, marketing and product space and I think we are seeing a lot more well-funded startups start to grow here which is good and bad. I think it creates a short term challenge on the talent front but I think on a long term it will help the talent pool to develop further. I think that you need to really, if you’re in Australia, be thinking about 457 visas and pulling people in from overseas.

 

Chris: Yes, I had a similar experience. I know there were some legislative challenges, are you able to compensate development talent, any talent that you need in the business in a way that is commensurate to what you might see over here in the US or elsewhere?

George: I think there has been an improvement in the legislative environment around using share options so it’s easier now to use options as part of remuneration package for employees which has made improvement. I think it’s pretty expensive, I think it will be one of the second most expensive places in the world to hire talent after Silicon Valley and our tax regime is challenging because taxes are quite high here, so I think it is a fairly high cost environment to do development but on the flip side if you’re doing a lot of research and development there is a fantastic Australian R & D rebate, so you get 45 cents in a dollar back on every dollar spent on R & D, which is fantastic, so that sort of mitigates some high cost of employees.

Chris: So if you can last long enough to get to it, you’ll be in a good place…

George: Every year in September, we get a cheque from the Government, an actual cheque back from the Government which is 45 cent in the dollar, every dollar we spend on legitimate R & D. So it’s actually an important part of how we plan our cash flow and funding.

Chris: Yeah, I can definitely see that. As you know I’m a big fan of Raj, your co-founder. How did bringing him in changed how you viewed the business?

George: I think, there will be no business if I hadn’t met Rajat Kulshrestha, he’s one of the world most interesting and talented CTOs and leaders of Technology and product capability I’ve ever met, without a doubt. I feel truly privileged and honored to come to work with him every day, I couldn’t have imagined not working with him, he is the yin to my yang, he is sensible and pragmatic and make sure we continue to focus on what needs to be done. I remember when we were like recruiting him, I met Raj as a result of a recruitment process and he kept saying during that process that George I believe it’s always day one. No matter where we are, no matter how far we’ve gone down, we have to think about how are we doing the right thing today, those issues and things we are trying to get done. I think he’s got a relentless focus to me on making sure we are doing the right thing and throughout that pivot it just wouldn’t have happened without him. I just don’t think there would have been a business without Raj. So I therefore very much think of him as my co-founder.

 

Chris: That’s great. He’ll like that. So I want to move to the segment of the show I like to call “the real lowdown segment”. Here basically, I’m just looking for your insight and thoughts, be as frank as forthright as you can. If you need to be controversial, by all means; tell us what is the best thing about being a startup in Australia and what are the things that hold Australia back the most from producing more successful global tech companies.

George: Firstly, we don’t have Donald Trump as a President in Australia….

Chris: That’s controversial…

George: That’s a polarizing view, and we’ve got to have a view down here that deal in facts rather than alternative facts. It’s a beautiful place. Sydney is an amazing place to live, it’s one of the nicest places in the world; beaches, environment, weather. From that perspective, it is just the best place to be. I couldn’t have imagined being anywhere else, great people, great diversity of people. You can build an amazing team in an amazing place and I think that is one of the nicest aspects about building startups… and lots of smart people. On the flip side, what’s holding us back is Australians I actually think are pretty risk averse. We don’t dream big enough, we don’t back enough people who do dream big enough and then we pull people down who achieve big. I think the things that hold back the most are not regulation, taxation. It’s our mindset, around how we sort of help people then reward people who take good risks.

Chris: I will agree with that. That was similar to me experience down there. Just that risk averseness that was a little bit different from what I was use to here. There’s been a trend in the tech business scene in Australia of small tech businesses going public via this backdoor listings or reverse take overs. What’s been your reaction, what you’ve seen in that space so far?

George: I think that’s a symptom of the risk averseness nature of some capitals, you know the stock market in Australia is probably the riskiest to investors, that’s the best place to go and get risky money. I think there’ve been some fantastic success stories but I think it’s a challenging way to fund your business because it brings you into contact with financial market, the advisers and other people to hang around that whose incentives are not necessarily allowing them to build great teams, solving a fantastic problem and building a great business. So they can really distract the founders away from what is really important and other stakes of the company.

 

Chris: What keeps you up and night today?

George: My kids, other than my three kids I think for me I get most concerned about the aspect of raising enough capitals to enable us to go as fast as I think we need to because at some stage someone will emerge, well-funded to compete directly with us,  so that’s what keeps me awake. It’s getting the right capital in place to enable us to move as fast as possible to capitalize on the opportunities we’ve found.

Chris: Just a couple of more questions; one-if you got a million bucks today, you weren’t doing Booodl, you didn’t know anything about store discovery optimization, where do you see the opportunities at now? What you would you be investing in, what would you be putting your time toward?

George: I think Digital Assistants, like people will be shifting their behavior from search to Digital Assistants. We are going to be talking to any computing devices, maybe on our wrists or in our homes, like Amazon Alexa, Google Home, Apple’s Siri, huge amount. So it’s going to change a lot and you combine that with artificial intelligence and the data that is becoming available. The number of consumer use cases that can solve the problems that we can remove is huge. What is Digital Assistance? Voice recognition, AI really mean to the services that we can build and automate and focusing on that. Plus block chain, I think that the block chain, I think that the block chain and how it deals with privacy issues plus digital assists and their data, I think it’s an amazing services that could be built in health and other areas. That’s what I will be looking at.

Chris: Last question; how has this experience with Booodl helped you grow as an entrepreneur?

George. This has been a good solid journey a few years now, it has made me look inside and understand myself and my own psychology a lot, lot better so I can deal with the ups and downs, this high pressure environment that we are in and has just made me a better leader. Just made me focus on how to motivate and inspire my team to put their best and get the best out of the opportunities we’ve got. So I think it’s made me a much better person, much more insightful person.

Chris: Thank you George. Is there anything you will like to add or maybe tell people how they can get in touch with you? Or find out more about Booodl?

George: Well, find out more about Booodl at booodl.com, we will love to hear from you. Chris we will love to work with you again sometime in the future, it’s a true pleasure working with you a couple of years back on this initiative. I can’t wait to see you next time I’m in Seattle.

Chris: Yes, likewise. We have to do that seafood again. Folks if you like the show, please download our episodes on iTunes and leave us a 5-star rating. In addition you will be able to find show notes at techlowdownshow.com and of course please follow me on Twitter @cjones2002

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