A Chat with Ben Nowlan, Co Founder of Sherpa
This week Gen sits down with Ben Nowlan, one of the co founders of Sherpa. Watch the video (or read the transcript) of them chatting about last mile delivery, double sided marketplaces and what’s next in the retail and logistics space.
B: Ben Nowlan
G: Gen George
G: Hey guys, Gen George and Ben Nowlan today… Thank you very much, as always, to Fishburners for hosting us. Today, we’re gonna hear about Ben Nowlan and all the things that he’s been involved in, as well as Sherpa, the gift economy. And I’m sure you’ve got lots of other things on e-commerce and the future of retail and Amazon and all those sorts of things, so no pressure. But I’m going to hand over to Ben to take over while I awkwardly share everything online. So, Ben, who are you?
B: I don’t know that, it’s a life-long journey that I’m on! Hi everyone, nice to meet you all. Yes, thank you Gen for the intro. I spent the afternoon actually going to the wrong location and also trying to…
G: The new location!
B: The new location. And then I couldn’t couldn’t work out why the levels were a construction site and then trying to get my chairs, so clearly I have better skills than navigation. I’ve spent the last couple of years with Sherpa, which is a logistic technology business and we’ve taken that from a lounge room right through to a fully fledged business now with lots of multiple millions of dollars in revenue and expanding across Australia and obviously, not obvious, but soon to be international. I recently moved on from Sherpa and am now moving into what I would say is a broader landscape of the future of retail, which I find to be a very interesting space. So I’ve got a new business and consulting, I guess, professional services arm in that space. I guess that’s probably a good platform to start from, if that helps you Gen. How else would you like me to introduce myself, I don’t know?
G: Can you tell us a bit about, what made you start Sherpa? What was the big idea moment and how did you guys get started? What’s the startup journey story?
B: Okay, so Sherpa is… logistics technology but in reality we provide retailers, big and small, with the ability to access a plug-and-play delivery network to offer, you know, an exceptional last mile delivery experience, which up until, I think, recent times was the battlefront for retailers winning the customer. You know, having a great last mile experience, delivering it fast, delivering it with real-time tracking. So we’ve got a technology platform and delivery network of over 20,000 drivers and forty thousand businesses across Australia. So yeah, we’re very, very proud of what we achieved in the last couple of years
G: How did you get there? Like, what was day one strategy versus a year in strategy?
B: Well I think that’s partly linked to your first question, which is the startup journey. So you know, I’ve been down this road a few times. We started Sherpa in a lounge room, we focused on all those classic lean model MVP type things in the beginning, making sure that we had a problem to solve and that customers were willing to pay for. So very early on with hardly anything of really measurable or quantifiable traction, but enough to say that we were solving a problem, we were able to raise capital and grow it from there. And so and then, I guess I can fast track and tell you all the bits in between–getting boards, raising more capital, growing the business, hiring people, all those fun things that you go through.
But where were we at with getting customers? Well, I think if you are able to build a consistent and meaningful narrative to your customer base, I think the customers will come to you. Now that sounds like a very sort of abstract, fluffy statement but that you’ve got to have the tried and tested channels of marketing and build a tone of voice that’s consistent and that can reach your customers and make sense to them. If you’re solving a problem and communicating in a way that is, as I keep saying, meaningful ,it really does hit home and we were very successful at doing that through outreach through Facebook channels and social channels, building a good content strategy and then ultimately nurturing those customers once they’re in our platform and ecosystem and in the end, you know our customer base grew pretty much by itself.
G: So, what would be, if you’re starting a start-up today, what would be– for a two-sided market place like Sherpa–what would be the first thing that you’d do to try and attract those businesses. Would it be trying to build that brand online, or would it be hitting the streets and trying to get people? What do the first ten customers look like?
B: Yeah, really good question. Two-sided marketplaces are the hardest businesses to grow, hence why Gen George is tackling that space with her marketing, which I think is a great business. The first thing I actually work with other founders on with marketplaces is find out–one, that there is an important side to that marketplace really early on that you need to get right and another thing, and the other is side is probably less important. And so what’s the hardest to acquire and retain and attract? And for us we could get businesses but you really needed to have the driver, what we call driver liquidity. If there weren’t driver, businesses couldn’t get delivery. So businesses are consistent, drivers were not consistent, high attrition rates. So we really had to focus on having good driver liquidity and then once we could serve that, we were able to keep the businesses happy.
Second part is really focusing on a niche and again, maybe not an overused cliché, but one you commonly hear that unless you’ve really been able to achieve it at a decent level, understand the importance of it. We went out and found what is the market segment of our total marketplace that we thought we could go after. What had the highest propensity to us, the highest needs state, the largest problem to be solved. And we really honed in on that. And I think too many businesses in those early stages struggle to work out where that niche market is all that and stay focused on next the segment because it’s so easy to get distracted. For us, it was actually florists and cake shops and small businesses that just needed delivery every day but then we kept getting inquiries from different market segments and I think if we had got distracted by trying to serve them, we would have actually dissolved the density that’s important for a market place and tried to sort of you know serve everyone and everywhere and in the end you end up with a business that’s serving no-one. So, that’s really important. So again, getting those first ten customers is about density, focusing on market segments and serving that world–marketplaces grow with density. And some good reading to follow up on this is the Flywheel Way on Amazon.
G: So as a founder then, how did you figure all this out? You know, who are the right target markets? Do if you have to hit the street yourself, do deliveries yourself, how did you connect with both sides of the marketplace?
B: Actually, nearly exactly that. When we launched the business and I was trying to work out who actually wants to pay for this bloody thing, I walked into a few florists and you know they used to do delivery a lot, actually, but then I found that trying to displace an existing provider was more difficult than I thought and also it wasn’t scalable. Walking the streets was a good thing and it’s still a big part of those early days… you’ve absolutely got to you hit the pavement and bang down doors. But one thing that I did that I think honestly was a game-changer was I asked one florist to take me to the flower markets in Sydney. So she’d never met me, she said this over the phone, she said no problems, I’ll pick you up at 4 a.m. So she’d already very probably, somehow, made an assessment that I wasn’t an axe murderer and she picked me up at 4 a.m., drove me to the Sydney Flower Markets, I was so tired, and I got to see every florists in Sydney in one room. And the next day we had you know over 25 to 30 customers trialling us for delivery and honestly the rest is history. Yeah it went from there we really found our niche and for each market segment, I tried the same approach. How do I get to the hotbed where these guys hang out
G: Yeah, that makes perfect sense. So, Katie Johnson just said, “How did you define your target market?” But, by the sounds of it, you just covered that by getting on the streets.
B: Exactly. But I think there’s also a little bit of a methodical approach in there, you know, putting like a matrix down and asking who this type of service already, working out what sort of pain points you think other businesses have and building that out like a matrix. Where you go, “Well, these are the segments that I think are most likely.” And we ended up literally with florists, cake shops, bakeries, even small liquor shops, because the need state was customers want that stuff fast
G: Yeah, that’s great and obviously day one you approached it that way. But then a year in, once you’ve been testing that and getting up and trying to then scale that market place, how do you takethat next step?
B: How did we take that next step? Okay, so a couple things we did we did at Sherpa that I’d like to share that I think would be important in growing your marketplace for any business. Really, the number one was that we focused on what we call an organism or a density model through growing the marketplace. So focusing on a grid area and the number of businesses, versus the number of drivers needed, we’re able to be more scientific about how we approach growing that. So rather than just saying all of Sydney or Melbourne or Brisbane, we kind of did instead 5k grids of Surrey Hills and then you know, Piedmont and then Glebe and those areas. And that allowed us to build density because once the density is there, goes back to what I said earlier, it becomes a self-sustaining ecosystem. Enough drivers come to the area, enough businesses get good service more businesses join, more drivers come in and it becomes perpetual and rewarding cycle for the ecosystem.
And then from there, what we really did was we actually treated our business like how SaaS companies grow. How do you think of LTV over KAK, what’s the cost to acquire a business versus the lifetime value? And how do you start to remove human touch. And so this is not common for service businesses, it’s very common for SaaS companies and it’s something Gen, I’m sure you’ll go through. So we actually implemented marketing automation very early on enough in the end of our first year and the results were phenomenal. When we plugged it in and developed events and triggers for every event, every business, and every driver, it actually just became this amazing engine that just looked after itself. And what I mean specifically is rather than a BDM or a Sales or Account Director calling a business going, “Hey, you know can we increase your volume, you haven’t used it in a while,” whatever the touch points are, we actually did it although email or SMS. And our lifetime value, or our average monthly use, actually tripled. And so it went from like $190 to more than tripled closer to $600. And that that’s still consistent you know to this day in keeping the in keeping an average monthly usage and I think that was the biggest thing we did to implement scale.
G: Wow, yeah, definitely, that’s great. So with then getting the right people to your team then to figure all this stuff out, because you can’t be an expert at everything as leader. How do you find the right people or how do you attract the right skill sets in your business?
B: I’m definitely not the expert in everything, in very, very few things, actually. Look, I love building teams, it’s my favourite part. In terms of the most rewarding things I get out of building companies has actually been putting together a bunch of people that are smarter than me and can and putting a common goal in front of them and I really enjoy doing that at Sherpa. At one point, we had about 16 people and you know the whole focus for us is–I’m less about skill and more about will… When hiring people, I focus on what are they motivated for. It’s less about logistics and do you want to be here for three years, it’s about who are you as a person, what are your values, what do you love about this space. And we were so fortunate to get people that were, I mean we had people that heard about us from overseas that came to the country, said they’d heard about Sherpa, “You’re a great fast-growing business.” So we actually really didn’t struggle when hiring people and so our team weren’t always specialists. I think if I was to offer a piece of advice, I think having specialists is really important in startups because they can keep you efficient across the world. But we didn’t always have specialists, but often liked hiring someone who was clearly skilled and talented and motivated and may not always fit the exact role, but could actually contribute to the business and that really, really worked for us. So that was how we built a team of experts around us and in the end, a business you know is just another organism take care of yourself and so I think that’s a really rewarding place to get to.
G: Yeah, definitely and finding you know a lot of startups, I mean, in this building in Fishburners alone, and you know the start up community globally, working as a solo founder, there’s are lots of different ways that could work. What is your advice on how that works?
B: You mean, finding co-founders or going in alone? I think you really don’t know yourself until you’ve run a few businesses. Number one is that you really don’t know yourself. Even now, leaving Sherpa, I’ve learned more about myself and how I like running a business, what it is that I can contribute and also what are the things that don’t work well with me. And also, how do I need to adjust for different profile personalities? I think it’s really important, I think, to find people if you are going to have a team to balance the skill sets across–particularly if it’s classic, like sales co-founder versus tech co-founder. I really think that’s important. I know there’s an argument about do you need to take a tech co-founder these days or use the ability to outsource, but I’m not really willing to get into that argument.
G: Like Jess and I, we’re business partners, and she’s the complete opposite to me. But we’re also so similar in other ways.
B: And I think that’s important for balance
B: Finding people who have the same values for you and then this is something that I continue to advise when I mentor founders on is when you go through those early stages where you’ve got people in business you can never expect what comes out later. The pressure points, money, investment and boards, all that surface stuff, it really is like a marriage. And so, sitting down and setting up a you know a founding charter of how we’re all going to work together, working out what your values are, what happens when conflict comes up…
G: So assume the worst.
B: Absolutely because it gets messy later. And all of those things that you don’t think you want to talk about and it sounds silly to talk about, even about work roles and responsibilities are really important, so I think having all that upfront, if you are in a team, is important. And really at the end of the day, if you’re working with people that have the same values as you the conflicts are easy to resolve and that’s the biggest takeaway from this.
G: Yeah, it’s massive. Sorry, Tara Jay, we’re finally coming back to you. “How long did it take to build the app and approximate cost and how did you reduce the risk of spending that money?”
B: MVP three to four months overseas, 10 to 15 grand from memory. It was the worst app that’s ever been put in the App Store, but it worked and I think it was a testament to–as long as it was able to log a delivery and provide some of those basic features that we needed to validate, that was all we cared about. Like, most the time you couldn’t log in it and was really clunky but we did it dirty, we did it fast and we got it out there and it was just enough to prove what we wanted to. Then from there, you know, the app was a constantly iterative process. How did we reduce the risk of spending that money? I’m still a big fan of outsourcing those MVPs, it’s the easiest way to reduce cost. Number two, we had a technical co-founder so we’re able to make sure we had all that scoped right. I think if you don’t have a technical co-founder or you’re not technical, get someone to help mentor you through that process because outsourcing–and I’ve experienced this five or six years ago, can be very expensive if you don’t know how to manage people. Because you could end up with a product there’s not what you expected.
G: Do you think there is an element that because there are so many tools these days that kind of show you how to drag-and-drop it together, you know, like Share Tribe or Marketplacr or you know there’s so many free online tools on how to code, even basic apps to kind of get you up and running really quickly. Do you think there’s merit in people who might not naturally be you know in that tech space, who could kind of head down that path first to save 10 or 15 grand?
B: Well, it depends on what your what floats your boat. I know me and personally, I just don’t have the propensity to sit down and dedicate myself to that. But if you really want to be that type of founder and you want to learn that skill, purely out of interest, then absolutely. Because I’m aware those things exist and I’m aware that even Google’s got some great coding education courses online
G: Code Academy is good…
B: But I’m not that sort of person I’m I would rather really genuinely say what I’m not good at and then, I guess, just get moving and find someone that can build it so I can bounce off them
G: Yeah, makes sense. So what are you seeing are some of the really interesting startups in the Australian ecosystem at the moment? No favouritism of course.
B: Definitely not Tamme [laughter] or Tokem, my new platform. I’ve been sort of been out of it the last couple of months, I’ve been fortunate to have been overseas in Europe… What are some good apps out there? Let me think about this. I really can’t take my focus from the retail space because if I was to, it’s somewhat similar to where you’re at I think Gen. Where we are at, and I think, in the current status of the world is that, you know, it’s for businesses to win the customer against sort of the behemoths in most verticals. It’s become about winning the customer at the top of the funnel. So I think business, and that goes for retail, you know you can’t compete against them on Amazon just because you have a good delivery experience. You actually have to bring the customer first and it really comes down to data. So I think that companies that are focusing on, you know, really innovative logistic solutions, really innovative data solutions, really innovative marketing solutions, will fit into my favouritism.
Who’s doing that well here in Australia? Well, I have to say some good friends of both of ours, I think, Premonition is doing an amazing job… in logistics and I think we’ll see them on the global radar soon. I have to say I think what Tamme is doing is an amazing step forward in how we’re using data and AI to drive smarter marketing… I’m trying to think who else I’ve seen pop up on my radar. I do think Australia’s producing some good FinTech plays and there’s still a couple of good businesses out there that I want to see you know go beyond our shores. What’s it called–Pocketbook, which is a couple of years old now. I don’t really know who else is around.
G: No, fair enough, and so with these start ups today–oh, we’ve got a question first. Food Bombs, ah, Ryan. If you haven’t raised capital before, how do you manage the expectations of your investors?
B: Really, really good question, Ryan. Good name for your business, by the way… So, you’ve to got to sit up front. Value your founders and get squared up on the values because what I think is a big challenge for startups in Australia is the type of money that–it’s kind of a maturing landscape and I think most founders will testify to this. We’ve got later stage VCs in the middle and in the early stages, there’s not a lot, except for very early stage, when you have what’s called high net worth money. High net worth money can be really good and easy and low maintenance, but it comes from individuals and individuals have expectations and individuals have value systems and individuals have a lens on the world and so, be really, really clear about what it is that your dream is ,why they’re investing, why they want to invest in you how you guys are going to work together. And set up, just like the founder scenario, set up a framework early on how when you’re going to report to them, how you’d like their involvement and just really get clear about doing that very from day one, because there’s no point taking investors’ money if you both have a different outcome or an idea of an outcome for the business.
G: So how do you suss out who that–is it a strategic, is it a VC, is it a corporate? You know, how do you suss out what that is?
B: Well, I think it well it’s a naturally surfaces itself, Most VCs here we’ll probably won’t touch a business unless they’re doing at leat two million in rev. I mean, that could be a generalisation, but I think that’s pretty much right. There’s one or two that I know will come in quite early and then in between that, you literally have a couple of seed funds, or you have Sydney Angels, Melbourne Angels, or you can just find your own private networks. Australia has slowly has a growing official market that has lots of money to spend but finding them, accessing them and getting them to move away from their traditional brick-and-mortar investments or mineral investments into tech is moving but it’s still slow. So it naturally happens because their threshold of investment or threshold of risk is linked to where they are at the stage. So the guys that’ll chuck 250 K into a business that’s pre-revenue, or you know, pre any real genuine proof are guys that have probably made their money on their own and are happy to have a few cracks or punts per year. That’s the same sort of money we took at Sherpa and it’s the same sort of, I think, money most or a lot of businesses I should say most I’d get, at that early or pre-revenue stage because that’s the risk profile.
G: What about a couple years on, when you’re looking to get that next stage of growth? For example, OneShift took on money from Programmed, which is a labour hire company, so it made sense from a candidate and a business point because you get two sides of our marketplace. How do you think people should be approaching corporate?
B: This question let’s come up a bit lately. In my view, corporate investment has to be approached with caution. What you achieved at One Shift is…Corporate investment has to be tried with caution because corporate venture realms are not mature here in Australia either. There’s only a few that are (and I’ll be working with a few, hopefully, over the course of 2018) not mature enough here, it’s very common in the US and what can happen, so I think your scenario is unique and approach if possible and if open. But what can happen is that it’s often a very selfish investment, without them even knowing that it’s a selfish investment, because their interests may only be to suit their needs.
G:Do you think it’s kind of a badge–like saying, “Hey, we’re investing in start ups?”
B: Yeah, that and “We want your tech”. But particularly in Australia, which is a land of duopolies. Like, for example, taking an investment off Woolworths can ruin your opportunity to have a in an agnostic technology for, you know, Coles or anyone else that they see. That is not always the case but that might be, that’s an example of thinking about what are the interests of the corporate venture realm. So I think definitely think about that because it can be strategic if that business has the right value of why they’re investing and they want to see you grow and also if they have the ability to expand you beyond what an increment of exponential amount of value and I think you’ve got to explore all that. I think, basically, the summary is take each investment in its own merits and approach it as it is. I think to answer further flesh out your question, Australian startups have to really look at investment as the business model. And this is one thing I’ve learned over a couple of tech businesses, you know your investor strategy, and your business strategy and your founder strategy and all the different ones is actually all one. You’ve got to, as you mature, as founders, you’ve got to think about it all as one and that is there as you’re thinking about growing the business, you should be thinking about exit plans, milestones and investment stages and how you want to map all that out and how it fits in because if you create a business and then think about investment as a separate parallel, you know, that can actually make it difficult to create a liquidity event and can make it difficult for follow-on investors. So you should always be thinking about these things as you’re growing. It’s hard and overwhelming for early stage founders and as you want to think about scaling you’ve got to think about investors that can help.
G:Makes perfect sense and so then I guess from your point of view with the businesses that you’re now starting, can we talk a bit about that?
B:So, as I’ve alluded to a few times, I think the retail logistics is sort of all the same space now. i think it’s really exciting I think what we’re seeing geo-politically, bare with me here, you know with with respect to China’s one belt, one road strategy. Read up on it if you don’t know what it is, it’s really interesting. It’s about the plan to take products, merchandise, resources, labor and investment all the way through to South Africa. Sydney and Australia plays a huge role in that based on our ports. This plays right into where Amazon and Alibaba are conquering retail. So, a big part of
part of what I said earlier around winning the customer at the top of the funnel is why retailers lose. There have been all these misnomers about what Amazon will do when they come to Australia. We’ve got everyone writing articles every day on LinkedIn. The reality is it’s a combination of things but Amazon wins, because of their sheer ability to win the customer and keep them. And that comes from the fact that they have seven or five hundred million active buyers monthly informing a machine learning or an artificial intelligent engine that makes their page so are highly converting that it’s so much better than other retailers that they don’t even get to fit into the same competitive landscape. So companies like Maya, David Jones, Harvey Norman, these guys will struggle, because it’s not just about everything else it’s about winning the customer.
So I am going into that space, got a company called Tokem, and already fortunate to have a bunch of retailers that will join us during our early stage beta. It is still a bit secret but essentially we are building a data platform… we don’t have a website but we’ve been close to releasing the first iteration of the product and trialling it with some very fortunate, but some really, really big businesses and one or two global businesses, which is fun. So providing them with a suite of tools to be able to compete against Amazon or at least build an asset base that allows them to convert better on page and that’s the direction we’re going, it’s all about business automation, essentially, in the retail space and that’s what I’m doing now.
G: So what was this process in getting these first retailers onboard?
B: Well, I’m very fortunate to have been able to spend the last three or four years building strong relationships with most retailers across Australia and as I’ve learned about where the space is evolving and becoming, I guess I’d like to be well-informed about what I think is coming next and I think just where we are now now in terms of a snapshot in time, this will be the greatest time anyone ever has–if you’ve got a product that can help retailers survive– this is a window of opportunity if you’ve ever had it. Because, they are scared, they are worried and they have good reason to worry, because the way we see consumption changing, based on what companies like Amazon and Alibaba do, is forever changing the face of retail. And so I think maybe being able to convince them or tell them that you know, I’m now moving to the next stage of my journey and taking the product further than just delivery and that’s why I referred to top of the funnel. versus the the bottom of the funnel. I first thought that the problem was at the bottom of the funnel but I’ve moved it back upstream and I think that I want to win the customer there.
G: So, what’s next then?
B: We start Wednesday. So we’ll have a few small businesses start in case it breaks things and then from there we’ll go into some bigger retails and essentially probably not unlike the way you’ve approached it, Gen, is that we would just want to have our engine running and learning and capturing data and when we when we tell the world that we’ve got an amazing platform, hopefully it will be. So we’ll probably still spend the next six months behind closed doors and just creating a system and platform that really genuinely is helping retailers, not only to integrate all their data but to systemise and streamline things and do this on page conversion. So that’s we’re at. So it’s sort of next week launch and then spend the next six months just getting more businesses on board.
G: Oh, that’s great, thank you, looking forward to hearing how it goes and we are booking with you for the next update.
B: Oh, of course. It’s really hot in this room again, I keep going to jacket off but I don’t know if it’s weird.
G: I always ask this question. First one, if you were going to start a two-sided marketplace today, what would you focus on? And second one is, If you could have one superpower, what superpower would it be?
B:Superpower! Really like that question.Two-sided marketplace. Day one, find out which is going to be the most fluid and transient of the two sides.So, in your space it’s the customers versus the businesses that need to acquire those customers. I think the customers are most transient and find a way to own them, because the business are constant, right, when they got the use of tamme.
So really, really knowing that what size of the marketplace is important to own first as much as you’ve got to grow them is important. It’s like this is a seesaw model, but there is one that’s a bit easier than the other and so getting focused on that and then and really using density, unless there’s a really different marketplace, but most that I know think about density.
And I think Amazon’s got some good reading on that in “flywheel” but really focus on using an area to build up and create a self-sustaining model. And that’s the first thing and really try ten customers versus ten businesses and get that right first, because you find those pressure points before you scale up.
So what superpower would I like to have? I would like teleportation. I’m impatient, so I just want to move to a place or often when I should be somewhere and I’m not, like here today, I have to wait for a taxi so just be able to do that would be a great superpower.
G: Cool, awesome, thank you. Thank you very much for coming to the dungeon we love coming down to Fishburners to see where other startups are here. Looking forward to hearing how everything goes next time.
B: Thank you, Gen. Thank you everyone for listening.
G: Bye, guys. Next time, we’ve got Taryn Williams from the Right Fit and yeah, awesome, by the way so get your questions in early. Bye, guys!