Podcast Transcript

[00:01:55] Sean Steele: Good everybody, and welcome back to the ScaleHQ Podcast. If this is your first time, we are absolutely thrilled to have you. If you have been here many times before, I mean, this is almost episode a hundred, I think we're like maybe 90 or something. Getting pretty close. Anyway, my guest today is Patrick Gaskin from Cardly. How are you today, Patrick? 

[00:02:13] Patrick Gaskin: I'm really well, thanks Sean. 

[00:02:14] Sean Steele: Well, we are meeting for the first time today, Patrick, and that means I don't know you very well and you don't know me very well, but we'll sort that out over the next 40 odd minutes or so. But as we were chatting a little bit offline and the reason for our chat today is probably, I don't know, it might've been three months ago or so. I was, you know, we're just in the process of launching our first course, which is all about growth strategy and execution plans called ScaleUps Roadmap. And as part of that, I was building a, I don't want to share too much, but I needed some customised cards for people that were associated with that course. And I was googling around, you know, I've done different kinds of card delivery in different countries, you know, to my nephews or nieces or whatever. I stumbled across Cardly.net and I absolutely fell in love with it. The UX was just beautiful. Everything was so simple and so elegant and so clean. You had all these great handwriting styles and I could build my own templates or I could use your templates, and you seemed to have all these templates done by different artists. And I was actually, I mean, this is the first podcast I've done in almost a hundred podcasts where I've seen a business where I've been so impressed that I thought, I have to get that Founder on the show just to find out how that is, that they're building this business. because it really blew me away. So, well, congratulations to you. It really made a big impression on me. Maybe you can just kick us off actually, oh, I’m sorry. Before I do that, I thought it was a US-based business, they just happened to have an Australian distribution, logistics capability. And then I looked down the bottom of the site and I saw that you had a PO Box in Buderim, which for those who don’t know, the Sunshine Coast is about five minutes from my house, in Australia. And I was like, wow, you live around the corner. So, hence, here we are today. 

[00:04:01] Patrick Gaskin: Yeah, it's funny, if you had been on the US side, it would've said a completely different address. But yeah, look, it's…Thank you. I mean, that's pretty humbling. We get a little bit of feedback here and there, but it's always awesome to hear that someone's actually seen all that hard work that's gone into that and actually appreciate it. So, thank you. 

[00:04:22] Sean Steele: They are a labour of love these businesses. That is for sure. I'm sure there's been a lot of learnings for you on the way. Tell me about how, can you just give us a quick overview of what Cardly actually does, and then tell me about the genesis of the business?

[00:04:33] Patrick Gaskin: Yeah, sure. So, I mean, at its core we're a technology company. We take what people type and make it look like handwriting. And essentially the real proposition is to allow, you know, people to connect and create meaningful engagement. And that works in both two spheres. A direct to customer type offering, which is just for consumers to come on and, you know, send friends and family cards and the like. And then also from a B2B perspective, we allow organisations like yourself, and certainly plenty of others around the world to create an account and upload contacts and have birthday cards, thank you cards, letters, postcards, and a bunch of other personalised mail go out. And ultimately with the objective of driving greater engagement, increased loyalty and often transactional outcomes as well. So, yeah, that's kind of what we do. How we came about it, was not a straight line. They never are. 

[00:05:34] Sean Steele: And sorry, just on the B2B side. It's also, correct me if I'm wrong, but you also allow APIs and automation views…things like Zapier. Yeah. I mean, like that is a game changer. So, you know, for someone who's got, let's say you're a real estate agent. And you've got a database and you know where their birthdays are, you know their wife's birthdays, you know their kids' names. Like you're trying to really personalise everything to have something that can actually pick up your data, automate the process, push high quality, great looking, but personalised in a handwriting style card out and have the whole thing managed for you, I just think it's really a fantastic.

[00:06:11] Patrick Gaskin: Yeah, and you're right. Like that is absolutely how many people use it. They will connect their CRM, and when someone gets to a certain point in the the customer life cycle, they will trigger things out to them. And then yes, always on stuff as well. Some of the examples that we see quite often, are probably even less obvious than that. So, say for example, a plumber or a trades person performs a task for someone. They know that Google reviews and referrals is hugely important to their ability to be found online when people are searching for a local service provider. So, what we do with those clients is yeah, they likely connect their CRM to Cardly in their Cardly account, and then when they are going to finish a task or complete the job, automatically triggers out a thank you card. And one of the things you may not have spotted, but that we do with that is that, we can also include a personalised QR code. So, not only do we get this thank you card that sort of says, “Hey Sean, thanks so much for using our services. We really appreciate it.” They can also include a call to action that includes a QR code that's actually unique to you, but goes to a, say a review site or something like that. The beauty of it being unique to you is that we can actually then tell you; Hey, these are the hundred cards you sent out. These are the ones that got scanned. They were scanned by these people at this time. So, using that, we've been able to sort of take, which is largely a sort of an offline, more traditional way of engagement, but connecting it back into the digital spheres, so those QR codes can include UTM tags and other extended bits of detail that allow…

[00:07:51] Sean Steele: For the Founders who don't know what a UTM is, do you want just explain what UTM is?

[00:07:54] Patrick Gaskin: Yeah, so basically, it's just means of tracking the link, adding it to the extension of the URL, so that you can actually have that feedback in and report on it, and potentially it feeds into your CRM, and truly closes the loop that you can see exactly when people engaged.

[00:08:09] Sean Steele: Does that mean you could also, so you can fundamentally generate a, you know, you can have them go to a landing page, you could include a coupon code. So, it could be a sort of an upsell, resell, you know, move them to subscription from the first transaction menu? 

[00:08:21] Patrick Gaskin: Absolutely. Or perhaps they've lapsed, right? So, in the e-commerce world, it will be sending out something to someone to try and reengage them because they're no longer opening their emails. And sending them a special offer. So, we got some testimonial back from a retailer very recently, and they were sending out reasonably small campaigns out to part of their database, and they're getting an eight times ROI like in a 28% response rate. So, which compared to email is like mad. Right. 

[00:08:51] Sean Steele: And your timing seems like, from my perspective, timing is obviously timing has a lot to do with sometimes, you know, tailwinds and headwinds in any business. Sure. But as you know, direct mail used to be a really big thing, and then it sort of seemed to die in the ass as everybody moved to e-commerce and everything had to be measurable. And then all of a sudden, all the marketing people said, if it's offline, we can't really measure it. Yes, we can do some kind of attribution, but let's move away from anything that's sort of broadcast and hard to measure. And you're actually rebuilding that in an environment where all of a sudden, it seems pretty uncluttered to me because there's nothing interesting that ever comes into my mailbox anymore. And so, the moment you get something that's quality, looks good, personalised, nice kind of kinaesthetic touch, it just gets cut through.

[00:09:32] Patrick Gaskin: Oh, and even more than that, and this is why we kind of, well, I'll tell you about the journey, how we got to B2B, maybe a bit later on, but, the handwriting is key to that too. So, when you would've got your sample card or when anyone is using the service, when they send out to recipients, these cards are arriving in a handwritten envelope with a real stamp, that in itself means that it's not getting lost in that other type of direct mail, and it means that, well, I'll give you some stats. So, in the US, the average household receives less than 10 pieces of handwritten mail a year, so we're pretty confident we've got enough data to suggest it's pretty much the case, a 100% open rate. 

[00:10:16] Sean Steele: Wow. So, do you know what I'm wondering? I remember hearing, I know that in the UK, and I'm pretty sure in the ATO I'm sure by now, but the UK has a, what do they call it? And they had a special business unit in essentially their equivalent of the tax office that were called the, I don't know, like the clever numbers unit or something like that. But basically, they were just a huge team of kind of market researchers and split testers and everything was about, you know, what you write on the, like, how do we get people to pay their taxes if they're overdue for taxes? And it was all about, how is the handwriting? Do you have a stamp on it? Does it say urgent or does it say alert or does it say, from your neighbour or like, how they actually write the letter has absolutely everything to do. And so, they did huge amounts of split testing. And the intricacies in actually getting those pieces right to make the person want to open it. And I imagine when they receive it, how it's presented will also change how they feel before they open it. And then of course, the way that it's written and how it's presented will change the way they receive it. So, then to have a call to action that's got a QR code, like that's just a beautiful. I feel like I should be a sales guy… I'm going to… 

[00:11:21] Patrick Gaskin: We'll sort you out with an affiliate link, but yeah, it's interesting you say that because that is actually one of the pieces of education we have to work on quite a bit without naming names, real estate people often, where they go, yeah, I want this a hundred percent open rate. I want to create you know, to get engagement. And they want to use it for cold calling basically, or cold outreach. And I kind of always remind them that when you send out something that looks handwritten, real stamp, you know, all of that, and it's looking quite personal. You are almost like there's a social contract almost being established by that because you are going to get people with their guard very much down. And if you then, you know, you open the envelope and the first thing you see is some real estate guys face like, three quarters of the artwork. instantly, it feels like a bait and switch like you suckered me in and then you played me. And people will get a reaction to that. So, it's definitely better for maintaining relationships like yep, you've already got that contact. We call it sort of like light touch, ongoing sort of engagement, but it can be used in that other setting. You've just got to be aware of what game you're playing, which is that you've got to be, you know, offer value all of the sorts of things that are relevant to any sales person, but make it about them. Don't make it about yourself, you know. Try and be contextual. And we do see that working like other real estate agents that don't go in that direction. They might, for example, go out with house anniversary cards. So, they'll go out, they know who in the area has had their property sold and when it was sold because they can access that sort of data and they'll go out to them in a really meaningful way saying; Hey look, did you realise it's been 33 years since you've been in that house? Like, we can help them create all of this context from the data. So, really contextual. It's about the property specifically. It's addressed to them. And yeah, they have a call to action that says; Look, if you are interested in just getting an appraisal, scan this link, and then that brings them into a more traditional sort of funnel. So yeah, lots of interesting use cases. 

[00:13:34] Sean Steele: So, before I ask you about the genesis, actually, can you just explain, give the audience a sense of the scale today, you know, customers, revenue, employees, whatever you're willing to share to give us a sense of…

[00:13:45] Patrick Gaskin: Yeah. So, we're bordering on about $3 million worth of turnover a year, and growing pretty, pretty handsomely. So, pretty much doubling year on year. We're hoping to accelerate that a little bit more as we go on. We have a tiny team, it's literally just two people. So, both of us co-Founders, both of us work in the business, exclusively, and of course we do need to use others to make all of this happen though. So, we use distributed print models. So, we use print partners in the US, UK, Canada, and Australia. So, we have a larger team, but they're not directly employed by us, but they're the people that get the product out into the market. Yeah. Ambition over the next two or three years is get that closer to 30 million and it feels like that's doable. And yeah, that's kind of where we're at. 

[00:14:39] Sean Steele: So, I mean, I don't reckon there's another Founder listening today who's doing $3 million with two people. So, I love a variable cost model. And I assume the print partners are a variable cost model, right? Like they're pretty much tagged to revenue, they're all cold.

[00:14:53] Patrick Gaskin: Yes. So, I mean, yeah completely fixed. So that was part of the reason why we don't want to own that function of the business. We largely want it to be own costs so that we can think more of it in the sense of it's we're selling widgets rather than variability, that's come really from my own background. So, prior to starting… 

[00:15:18] Sean Steele: Sorry. But the printing cost is a essentially just attached to the revenue of each delivery or you're paying some kind, so no fixed cost…?

[00:15:27] Patrick Gaskin: Yeah, no, that's right. So, it's fixed in the sense that we know that per unit is a fixed cost. It doesn't matter if they send out a hundred cards in a day or 10,000 cards in a day, we know what it is. Of course as we scale more, it actually comes down, not the other way around. And the other challenge with it is it'd be super capital intensive for us to do it any other way. The printers themselves, so we print on the latest sort of digital presses and they're a lazy $2 million each. So, yeah, not until we are doing crazy scale, in which case, yeah, we can probably realise a whole bunch more margin. But for now, we've got those, you know, we know exactly what we are, what our unit cost is.

[00:16:14] Sean Steele: Correct me if I'm wrong, but given all the artists that look like they've done cards, so are they all contractors? Is it a marketplace for artists?

[00:16:21] Patrick Gaskin: Yeah. So, it's basically a marketplace. Yep. So, it's a curated marketplace, though. It's not sort of an anyone can play marketplace. That's, again, I'll get into the reasons why maybe later. But yeah, essentially we reach out to artists or occasionally, well, we get approached by a lot of artists, but occasionally we'll accept one of those artists, and then they get, you know, there's basically an agreement with them. They upload their artwork. They only get paid if it sells. So again, yeah, we know what our costs are associated with that.

[00:16:51] Sean Steele: Beautiful. Tell me, can you take me back to a start? I'm very curious as to actually your… So, A) Why you started this business in the first place. What the genesis was, but also like, just really quick summary of what your kind of career was before you got to doing what you're doing now and also what role you play in the business if you've got a co-Founder? 

[00:17:08] Patrick Gaskin: Yeah, sure. So, a bit to cover there, but essentially, my first job, as a. Kid, probably not even in pre-teen age almost, my family's business was news agencies. So, I grew up working in stores as a kid, went off to uni and then still came back into the family business. And so together with my dad, we built up a chain of around 50 stores around Australia, which was the biggest news agency chain that's probably ever existed in Australia, and turning over like 150 million a year or something, so reasonably sizable, and as part of that, I obviously had plenty of experience with greeting cards. It was our most important category in the business. We were the fifth biggest seller of greeting cards in Australia, so reasonably big. Yeah. I then, we went through a joint venture where we sold half of the business to a larger retail organisation. That seemed like an apt time for me to exit, but they were quite keen on me actually moving from Queensland. That's where the family's business was based, down to Melbourne. So, I got poached by them to go and be, basically run their e-commerce. So, I'd had some experience with e-commerce prior, built a few things, along the way, you know, always loved that digital.

[00:18:32] Sean Steele: How old were you at this stage? 

[00:18:34] Patrick Gaskin: So, this was around 2007, I think. Maybe, just prior. So yeah, I was just 30 or so. Yeah, I'm older than I look. So yeah, that was, and the other thing that I could see, you know, 2007 I was in the States, you know, I was one of those crazy people that bought an iPhone before we can get an iPhone in Australia and had to bring it home and try and jailbreak it, and actually managed to break it while doing it. Yeah. But the moment I saw Steve Jobs stand on stage, and I think I literally can visualise, I went into my Father's office, and I said, see this? And he goes, what's that? And I go, that's just killed our entire business. Like, which was back then, you know, there weren't mobile enabled websites, but the fact that you could pinch and zoom on the iPhone and move around and actually use the web, I was convinced that that was… so, the dwell time that was previously taken up by magazines, newspapers, I could see that shifting completely to the internet and said, well, look, this is, the writing's a little bit on the wall here, so we need to divest and do other things. And that's when I started to push us trying to do some stuff online. And then we went through this whole JV thing. But yeah, so I then left the business. I then went, so that company owned Borders Books in Australia and Angus and Robinson. So, I then started running the Borders, and Angus and Robinson websites and a bunch of websites in New Zealand. And one of my key tasks that I was, , charged with when taking on that role was to also look at the digital disruption that was taking place in the book industry at the time, which was eBooks. So, I went and invested in a company on behalf of Red Group Retail, that was the name of the retail chain or group, and invested in a company called Kobo in Canada, which is still today, the second biggest e-book retailer in the world. Owned by Vatican in Japan, and, you know, I was trying to convince him to invest $10 million. I think I managed to convince them… well, they were happy enough to invest a million, and in six months’ time, that was worth about 20. And when Borders was ultimately came to its unfortunate demise, that was one of the biggest assets they still had on their books. So, I left the business though, that business, after a year or so realised that, you know, they weren't very good at retailing and I could see also that that was going to be problematic for the way they were being managed under private equity. So, and I got approached again to go and work at Samsung. So, I started working at Samsung in eBooks and music streaming, digital content just generally for, at that point the Samsung Galaxy S2. So, again, I'm, I'm, I'm dating myself a fair bit here, but like very early generations of trying to convince people to do anything on Android, so you know, working with the likes of NewsCorp and ABC and trying to convince them that this made sense. And then at that point which would've been 2012, somewhere around there, I had this itch to go and do something else. And startups weren't really a thing. So, I went and created a digital agency to try and help other businesses navigate digital disruption and helped a bunch of businesses do that. But then the idea of startups did start to become a thing and I started to go, hang on. That's actually what I wanted to create. So, I folded that business down, had a bunch of ideas that I was looking at and weirdly came all the way back to greeting cards simply because they had gone through some disruption. So, there are some pretty big players in that space in the UK. But I didn't think they'd quite nailed the execution. For mine, what I'd learned through retailing, physical greeting cards was that when people buy greeting cards, they're effectively using it to sort of reflect their own feelings and thoughts about the recipient. But what really made it special was what they wrote in it. So, the care and attention that goes into writing the message, in some ways it's almost like, an excuse for someone. You know, I'm giving you a birthday card, so I'm going to take the time to actually say something meaningful about how I feel about you. And for some people, that's the only time they ever say some of those things. I don't actually even feel comfortable saying them out loud. So, for us, it was all about the writing. And we also noticed that when we did some analysis of this, about a third of people also like to put little doodles and little drawings in their cards. So, we went, well, we should probably do that too. So, we sort of lent into this whole idea of being able to hand write and doodle inside a card and make it personal doing that. So that's… 

[00:23:38] Sean Steele: And just for an example for the audience, I did four nephew and niece birthday cards only about a month ago on your platform, and it's exactly what we do in our family. We are always, you know, like there's usually a blank left-hand side of the, you know, the inside left of the card, right? And so, it's like, okay, draw a birthday cake, put stars, put balloons, like use colours, like make it interesting. And so put all of that, you've got all these choices for doodling that can just be done for you. I just love that. 

[00:24:02] Patrick Gaskin: Yeah, and by contrast, all of our competitors were just getting really fixated on the front of the card. So, it was like, you know, they'd let you put it Happy Birthday, and then Sean on the front of the card, which was fine like that. 

[00:24:15] Sean Steele: Well, you quite often see the front of the card and you go, oh, that looks interesting and then you read the terrible message that they've put inside and you go; no, there's no way I putting on the card. 

[00:24:21] Patrick Gaskin: Yeah, exactly right. And that was the thing they'd focused there, not focused on the inside. Basically, you could just type on the inside and it was often limited by characters, it was pretty impersonal. So, it was like, that felt like a bit of a disconnect and we went and played with that concept with a bit, we sort of built a very basic wire frame concept of how, you know, we thought it could work. I sat down with independent artists and sort of got them to sort of give their thoughts on it. I also, went across to the states and had some conversations over there as well about the same sort of thing. And yeah, generally people seem to like the idea. So, yeah, we fired up an MVP, got something in market at the very end of 2017. Is that right? 

[00:25:10] Sean Steele: Yeah. So, was it six years ago now?

[00:25:11] Patrick Gaskin: Yep. I think, I giving myself… I think that's right. I should know better. The reason why I don't remember that date so well is that we've completely rebuilt the technology and probably don't the current version of the site is a lot newer than that and basically sort of 2020. So, yeah those first iterations, not amazing. One of the biggest challenges, and I've learned this from my time at Samsung is that, if we were to go down the path of trying to create an app and make it something that you download, sure. But at that point it was probably already half a million apps out there and our chances of actually getting onto someone's home screen and being used in one of those top 10 apps is very unlikely. So, we went down the path of doing a web app. Now the challenge of the web app is making it work on every device seamlessly, which is a huge, huge undertaking and to be honest, was one we kind of struggled with that first round of tech. So, yeah, that was part of it, the challenges, early doors. 

[00:26:15] Sean Steele: What have you ended up doing in terms of role split between you and your Co-Founder?

[00:26:19] Patrick Gaskin: So Tyson, the co-Founder, he is purely technical. He is the CTO. He is the amazing engineer behind everything you've just given praise for and I've taken credit for. So yeah, no, he is responsible for all of that and does an amazing job. Like I've dealt and worked with a bunch of different developers over the years, and he's just outstanding. He is a unicorn, very incredibly capable, but also able to understand sort of the reason why and the context and the business.

[00:26:56] Sean Steele: Yeah. Well, you can tell through the way the UX come together. I'm super keen to get into some of the stuff around your, the strategy and the business model. What is your, I mean, given you've got, one of the things that we teach in our… so perfect time to plug the ScaleUps Roadmap Program, for those who haven't registered yet, one of the things that we talk about, we have this big module, module three in our ScaleUps Roadmap Program, which is all about optimising your business model for scalability and valuation. And one of the lessons in there is all about variable costs. Like where can you take fixed costs and shift them to a variable cost model, which you've done absolutely beautifully. You've got artists that are only being paid for their designs when they sell. You've got a distribution model where they're being paid a piece rate per, you know, so it's perfectly linked to your revenue. You've got two people in the business in terms of your fixed opex from a wages expensive, which is amazing. What about your customer acquisition model, because you've also got, it's not just consumer focused. You've got a strong B2B side of the business. How much is consumer versus B2B? And then what's your acquisition model look like? 

[00:27:56] Patrick Gaskin: Yeah, so it's about 50-50, and that's sort of skewing more towards B2B over time. In terms of acquisition, look, we've done a few different things over the years, but for the most part, intent based marketing is what works, so paid search has been pretty good. So, we can land with a fairly reasonable cost of acquisition through that. We're always trying to get that down. Like we don't, it isn't, we're not quite profitable on first sale in consumer land, but that's okay because our lifetime value is reasonable. So, our cost of acquisition is around $4-5. But lifetime value averages at about 22. 

[00:28:45] Sean Steele: So, what about on the B2B side? 

[00:28:47] Patrick Gaskin: B2B side, you know, significantly better. Our ROAS on our return on ad spend on that sort of 8x, so that's healthy. 

[00:28:56] Sean Steele: 8x. Lots of people would be pretty happy with an 8x. 

[00:29:00] Patrick Gaskin: Yeah. And that's just down to the sheer size of the order the average B2B customer will spend $600, which is considerably more than consumer land. And that is of course, I mean, it's probably one of the biggest challenges in a business is like business like ours where you're trying to play in both spheres, is that you're kind of not one or the other wholeheartedly. So, we tend to have to focus for periods of time on B2B and then we focus back on consumer. Not how the wind is blowing, but sometimes it feels a little bit like that. Like we don't have the ability to sort of do both really, really well at the same time, which is one of the biggest constraints of resource in our business. But that said, consumer is very low touch in terms of onboarding. It's designed that way. B2B obviously is a lot more high touch.

[00:31:03] Sean Steele: Well, it also sounds like you get to profitability far quicker on a business customer given the ROAS and maybe initial spends are a lot higher than a single card. What has that meant for how you financed the journey so far, have you had to raise external capital? Has it been through cashflow or is it?

[00:31:19] Patrick Gaskin: Yeah, so we did raise, we did a raise of about 230 odd thousand dollars. 

[00:31:28] Sean Steele: With Angels or a VC or?  

[00:31:31] Patrick Gaskin: Yep. So, combination of both. So, a couple of reasonably prominent angels, and I think still to this day, it might forever be a badge of honour, but we're AirTree’s lowest ever investment of only $50,000. Actually was it even that? No. Maybe I've just over quoted. Anyway. So yeah, we raised back in again, my dates are not great here. I think it was 2017 around then, and we've never gone back to raise again. We've been able to do things with cashflow since, so. In some ways, that's been pretty good to see that. But in other ways it's like, well, why did we dilute ourselves back then when maybe bootstrapping could have been an option. But I do think that one of the challenges really with a business like ours is the VC landscape. So, we are not SaaS. I think everyone who would listen to your podcast, you know, if they're a SaaS, they're sort of fix fitting into that square box that people are looking for. We get weird stuff and …

[00:32:40] Sean Steele: And most of our audience is not SaaS, by the way. Most of them are services businesses. 

[00:32:44] Patrick Gaskin: Yeah. And they will know then that most Aussie VCs are pretty low risk and are desperate looking for SaaS businesses that have a very clear recurring revenue model they can sort of pin future growth on. The weird thing with us is that we do kind of have elements of that. You know, we have these subscription models that, well not subscription, but to play in the business space you pre-purchase credits. So, that's also been advantageous from a cashflow perspective. So, we take money front for our B2Bs. And similarly, our consumers, we get paid before anyone else gets paid, our printers or our artists. So, from a cashflow perspective, we're always ahead. But the other thing around that B2B space really versus SaaS, which infuriates me, honestly, when we've thought about going out and raising was that, they don't like the seasonality of our product. So naturally, being in the greeting card space, the most common time that people are thinking, oh, I better go and send someone a greeting card, is around the holidays and Christmas, and that means that…

[00:33:58] Sean Steele: It's a bit lumpy. 

[00:33:59] Patrick Gaskin: It is, it peaks at Christmas time, it just does. 

[00:34:06] Sean Steele: And they like things to be just constant month on month incremental growth. No peaks, no troughs, just fast inclined. 

[00:34:17] Patrick Gaskin: Yeah, exactly. And whilst we can give amazing recurring, like we know that people will come back and continue to use us, they just don't like that seasonality element, which is strange. It's sort of like, do you not expect Christmas to come back next year?

[00:34:34] Sean Steele: So, given the, and I've worked in… having worked in education for many years, they're very seasonal. You have absolute peaks and troughs based on when people make decisions about taking on education, whether it's adult education or school or whatever. Maybe corporate is a little bit different, but the rest of it is pretty fair bit of seasonality in it. Given the ambitions that you've got, given the revenue you're at now and the ambition that you have to get to where you want to go, are you thinking that you can continue to do that through cashflow or are you going to go back and raise again so that you've got material capital behind you to do so?

[00:35:07] Patrick Gaskin: Yeah, so we we're kind of tossing that up at the moment. I think if we really want to go, really large, we will potentially need to go back and consider VC and I think the metrics are really strong and that should be more favourable than when we've gone back and done it previously. But, yeah, I think if we want to tackle some of those really big incumbents that I mentioned, that sort of have existed for longer in other markets we likely have to do more traditional advertising like television and these sorts of things, which are hugely cash prohibitive. 

[00:35:46] Sean Steele: So, what are the biggest constraints, so outside, cash flow and your ability to reinvest earnings, what are the biggest constraints to scale for you at the moment, and how are you trying to tackle those?

[00:35:56] Patrick Gaskin: For us, it's resource. So, it's time, the most precious of all resources. So, there's always just so much to do and never enough time to do it. So, yeah, a team of two can get a lot done, but never enough. So, we know that if we had more resources, probably in the short term, our productivity would go down significantly, but potentially longer term, that will allow us to do more. At the same time, we try and work smarter rather than harder. So, if we can get our B2B side of the business to be as easy to onboard people onto as it is for consumer land. We will be that kind of frees us up significantly in terms of time and we can just go after much larger enterprise sort of level opportunities.

[00:36:50] Sean Steele: And do you see, you know, given the market, so the market, you said you've got distribution in Australia, UK, US and Canada. Was those the four key ones?

[00:36:58] Patrick Gaskin: That's correct. Yeah. So, they're the key home markets. We also do send cards into 50 other odd countries. But yeah, the US is massive. Like the US is our growth engine these days. They really understand our relationship marketing. 

[00:37:17] Sean Steele: Right. Okay. And are the competitors, is the competitive landscape, I mean, obviously it's a much bigger market,  you know, 10 times the size of an Australian market. So are there 10 times the size and quality of competitors, or do you still find you've got an edge because of the way you've designed your business?

[00:37:32] Patrick Gaskin: There are definitely more competitors, but I'd say they're not better. So, you know, their approach is different. But the thing that really sort of stands out to me in the US is that we've come at it from a much more scalable way of doing it. So, to put some context into that, so a lot of the competitors we come up against use robots to do the handwriting. So, they're investing in a lot of capital to have these machines that hold pens and write on cards. But more than that, they're having to produce cards separately. Then they take the card over and they give it to a robot to then write on, and then they're manually putting that into an envelope, putting a stamp on it. So, there's a lot of manual labour involved in handling the product. Now the US is obviously a very low labour cost market because of the way they operate. You know, people get paid peanuts, which is fine, but, well, it's not fine, it's bad. But their model is sort of built on people power, whereas we've gone with technology and scale. So, we could turn on a dozen more printers quite easily, and scale very significantly, whereas they have to build new robots, and that's slow and cumbersome. And to give you an idea of how quickly we turn our things around, if you placed an order right now, it'd be in the post, well, we're talking on a Friday. It'll be in the post first thing Monday. But if we were talking midweek, it's in the post the very next morning. So, it's very, very quick. And that doesn't change Peak times, we still turn it around that quickly. So, some of our competitors are saying in early November; “Hey, don't forget to do your Christmas cards this week.” And we're saying, “Hey, you got all the time in the world, you're fine until sort of mid-December. Don't stress.” And typically, people leave these things to last minute. So, we've got a huge advantage over them in that regard. 

[00:39:24] Sean Steele: And I expect kind of human psychology plays all the way through your business model given how people are with cards. If you think, just from a strategy perspective, fundamentally it sounds like you've probably made a couple of big bets that if you in retrospect, there's been a couple of things that you've really invested in that you feel like have made the biggest difference in your success to date. And those may be different things that you feel like you need to invest in to get competitive advantage in the next five years. What have been the couple that have got you to where you are today and how are you thinking about the next five years to ensure you retain a strong competitive advantage in the future? 

[00:40:01] Patrick Gaskin: Yeah, great question. I suppose in terms of the things we invested in early on was that customer experience that you alluded to before, so we really spent time looking at the way other sites worked versus what we were trying to do. And most of them are very difficult to use. Even those competitors I'm talking about that are a reasonable size in the US, their systems are just like pulling teeth, like it is difficult to use them. And that's, you know, we sort of really wanted to make sure that wasn't the case and we're considering future rebuilds that make that even easier again. But certainly, in the consumer space, weird things like all of our competitors insist that you sign up before you can actually send a card and we're like; no, no, you don't need to do that. You can just jump on, find the card, start writing and it just like you would if you went and bought it in the store and we'll just sign you up at the end if you want to be signed up. So, you know, we put a lot of thought into that. And then of course, obviously the handwriting was a big part of it, like to get that right, we went and got, we created a patent, that patent's been granted in the US. So, we spent a lot of time trying to get those elements right. So, those things certainly have got us to this point. I think where we need to be considering sort of like how do we stay really relevant and continue to sort of exceed what our competitors are doing. It's all going to be around just continuing to let you lean into that, continue to just think about the customer experience, making it easy for people. You know, if someone's trying to get a handle on how to use our B2B platform, we're currently providing them with a bunch of videos and tutorials, and often I'll do a Zoom call with them and work with them on how to use it. That to me says it's the product's not easy enough yet. You know, we want to get that learning curve down to nothing. So, when we consider how we do that, it's about getting the time between the problem and the solution to be as short as possible, what currently happens, if someone comes onto our B2B site and says; yeah, I want to get a sample, I want to create a free account and see what this thing looks like, and then they delay their decision until they get the sample. Most people do, some don't, but most people will delay it until they know that the quality of the card is right and what it looks like. So, what we want to do going forward is get rid of that delay because all that does is make the sales cycle a lot longer. So, we want to get, you know, if they want to get the sample card, let's get them into the editor. Let them start to experience what makes our service special because we do know from talking to people, especially when deals are lost, we find out that they've shopped around, they've got a bunch of different samples from a bunch of different companies, and all they're doing is judging it on the sample alone. And if they get all finicky, they like the idea of robots and they go; oh, well that one looks slightly different because the robot held a pen, even though we've got our own technology that tries to emulate that, and most people think it does a really good job of it. What they're not evaluating on it is actual ease of use. Like, how easily can I do the things I want to do to get this thing in the mail? How scalable is that? Does it have the right APIs? Does it have this Zapier? Does it have an interface that allows me to set up really interesting rules or use the personalized QR codes. So, we've got to lean into the stuff that we're really good at and let people know about that a little bit earlier on. So, that's a big part of what we're doing currently and I think has a big impact over our growth over the coming years. The others are just chasing after things that we think we'd be a really good fit for, that we haven't necessarily seen ourselves being a fit for. So, employee reward and retention has become a bigger issue, especially from the working from home transition. So, a lot of organisations have now got teams that are quite spread out. They don't get into the office regularly. They're not getting that sort of touchpoint physical engagement with each other. So, how do you keep them motivated and incentivised and acknowledged when they do good things? We have seen, and it's kind of, people have pulled us in this direction, but you know, people have come to us ever since the pandemic and wanted to do employee birthday cards, employee work milestones, employee rewards and recognitions. So, leaning more into that space, we have an amazing sort of gift card platform as well that allows people to add gift cards and redeem those gift cards for, you know, in Australia it's 120 odd retailers that they can add a gift card from. So, all of a sudden, your organisation is sending you a card possibly, in the handwriting of the CEO with a personalised message specific to you and that your contribution to the business and that they're including a gift voucher giving you $50 to spend on Amazon or whoever it might be. And there are other platforms out there that have been super well-funded that do that sort of thing and do it terribly, to be honest. So, it's kind of like, okay, well we should be going after some of that. At the same time, like there, we know that there's just so many other opportunities for us, we know that e-commerce is absolutely huge, getting people to come and transact, like that example I gave earlier and getting good returns out of that. The biggest challenge and mine as a CEO is what I guess all CEOs have, have got is the prioritisation, which thing do you go and tackle first and next? Yeah. Because there’s literally dozens of ways that, because our handwriting tech is really quite clever. Like it really does emulate.

[00:45:44] Sean Steele: Okay. So, Patrick, conscious of the time we've got left, and you've been super generous with your time today. So, before I sort of thank you and do a wrap up, I'm really interested, I mean, there's very few businesses that have scaled to your size with two core team members on a super variable cost model, so I'm absolutely thrilled. You know, I expect your business is actually going to be an example in future programs that I do with Founders as a great example of; how to really stretch your thinking, whether they may not necessarily try to replicate the model entirely, but it's a great challenge for people to really think differently about their cost structures. One of the things I'm interested in though, is you've taken a bit of Angel and you've taken a little bit of like, I guess AirTree, you consider that VC, rightly only 50 grand. So, you've probably had some, and you've grown up and with your dad, and so you've been around some really interesting people. So, I expect you've received probably a fair bit of advice over time or you've absorbed some stuff. What's the advice when you think back to the last several years and, you know, really since probably 2017 when you had that MVP, what's some of the most valuable advice that you've received that really has impacted how you've scaled successfully so far?

[00:46:53] Patrick Gaskin: I think it's an oldie bit of goodie is having the right people on the bus like that for mine is critical. You know, I thank you for calling it out around being able to scale with, with only two people. That's something that we're kind of proud of, but it is totally not doable unless you've got another person who's crazy and as hardworking as I am. So, that's kind of fundamental to it. I guess, there's been lots of other little tid-bits along the way as well, but I do think that one is fundamental. You know, if you don't have the right co-Founder, that's a recipe for disaster. And people have got to believe in that same vision as well. So, that really is pretty fundamental to it. Outside of that…. 

[00:47:40] Sean Steele: Just to draw, can I just draw an… because I've been thinking, I've been thinking a lot about that in the last week or so. And it is a real challenge as a Founder when you are trying to build scale and therefore you end up in these periods where, if you've built a business that's not built on that sort of leaner model and you got lots of costs and all the, you know, lots of delivery costs and so on and so on. You can easily fall into the space of having to just hire the best person available because you're running out to time and that best person available, in your heart of hearts is like B-, maybe like C+. And you're going, oh, I don't want to make this higher, but I just need someone to do the work. And it's such an awful decision to have to make because, you know, they're not a main player. However, what I would really challenge Founders around is, if you're building a business that's actually quite people dependent and again, end up with quite a lot of people, no, you're not going to get A-players in every one of those roles. Absolutely not. It just doesn't happen. Of course, that would be wonderful. We don't get that choice. However, I really challenge you to be patient, if you are listening, when you are hiring key roles because the key roles that, and they don't have to all be senior leadership roles necessarily, but like the key roles that you know are absolutely yes, everybody's job's important, but there are key roles that are like the difference makers. You have to be patient on those because it is nothing but sort of disappointment and pain. Particularly if you get a B-, to be frank, you're better off getting a D+ and getting rid of them quickly if you're going to make a mistake. B- suck because they take a huge amount of time. They're never bad enough that you find a need to get rid of them. They just drain you and they just can't step up. And so, you have a real quandary because you're like; well, I can't really move them out. They're not doing anything wrong. They're not great for the culture, but they're not terrible and they're not a great performer, but they're okay. And that's actually, I think, the worst kind to have in the business because you just can't do anything like, well, it's difficult to do something, real challenge. So, thank you for drawing that out. 

[00:49:43] Patrick Gaskin: Yeah, I think it, as I said, it's a pretty obvious one, but, to your point, like, if you have someone who's an underperformer and other people are performing at a higher level, you end up with like misalignment. Even though I'm in a small team now, I've worked in bigger teams, I know that no one likes to be the guy carrying the weight of someone else in the team, not carrying it. And it's hard to get a … 

[00:50:07] Sean Steele: High performers hate it, so if you've got a couple of A players and you are hanging onto some C pluses, the A players are going to leave, so that's why you have to get rid of the C+s’. 

[00:50:15] Patrick Gaskin: Exactly right. 

[00:50:19] Sean Steele: Yeah, any final comment? Anything that you wish I'd asked you or that you think that we've missed today, Patrick, before we wrap up?

[00:50:25] Patrick Gaskin: Well, just on the point you were raising before about the business model. So, it's interesting how we ended up there. So, it's actually because of my experience in e-Books and music streaming that I kind of went back to greeting cards. And the reason why was because I was going to do it digitally first. And then know my costs per unit. So, get down to those unit costs, was because it was the experience with digital products and the digitisation of those products and the fact that they're basically infinitely scalable. And I really loved, particularly coming from physical book retailing before that and those types of places where we didn't need to own inventory. We didn't need to own, you know, we only paid for it when we needed it. And yeah, I know that's not a fit for all businesses. But I try and help people out wherever I can, and one of the things that I see is that often people will bring forward those big capital outlays, and buy stock or buy things, produce things even before they've worked out, whether there's product market fit or any fit for the product. And if you can gain that in any way, like in this day and age, good quality renders from a lot of website. See if anyone actually wants to buy the thing before you build the thing. If there's any way that you can do those sorts of tests, I would urge you to. I mean, we couldn't avoid some upfront costs, but for mostly it was just time and effort to build out the technology. We didn't have to go and invest tens of thousands of dollars with each of our printers when turning them on. We literally just had to convince them that we were going to send them scale. But for us it was a technology investment. But I do see very often other Founders sort of going; oh, well, before I can prove out that this customised, bespoke, blah is going to work. I need to go and build the blah. And I'm like, well, no. You could just create versions of that thing, even your prototypes, and see if there's an appetite in the market for it because, you know, you can sink yourself in a lot of money before you've worked out that this thing's actually going to have any sort of momentum. Like, we got … 

[00:52:39] Sean Steele: Yeah. And get your 20 customer interviews done quick bloody smart. Because in the absence of that real discussion and testing, you just jump at false points. Like one person goes, oh, it's a great idea. Cool. Spend 50 grand to do it and set it up.

[00:52:52] Patrick Gaskin:  Yeah. I think, you know, technology plays have obviously got the advantage of not necessarily having, you know, it's mostly sweat capital upfront, which is somewhat more tolerable. But you know, if you are mortgaging your house to see if a thing flies, I admire your boldness, but I would say, try and find, high risk way of validating your ideas and concepts early on. 

[00:53:19] Sean Steele: Well, one of the things I would say to Founders who are listening, who are going; yeah, but I've got a, fundamentally I've got a service-based business that's delivered by people. Like, it's not scalable like that. However, I guarantee you that inside your business and in the relationship that you have with customers, particularly if you're in a services business, you have a lot of knowledge. And knowledge-based products can be delivered generally at very low costs. Sometimes almost nil. So, they could be courses, they could be books, they could be prerecorded webinars, they could be… like, there's so many ways to package up knowledge into something that's actually scalable that you can put a paid strategy behind. So, it may not be a disruption to your business model. It might just be a nice adjunct to your business model that helps you serve same customers or different customers, but in actually a far more scalable way, in a more variable cost way that can help to really improve your overall margins, to grow the heavier fixed cost business that you've already got. So, it doesn't have to be one or the other. It can be both. But I think you've got to think about how do I remove that scale constraint? How do I build something that can be delivered, where my costs are particularly variable? And then what is the acquisition model going to be to ensure that I can actually, if it works and people like it, I can put some fire underneath it, and then it can continue to scale.

[00:54:30] Patrick Gaskin: And any testing you can do that saves your dollars, absolutely. Yeah, for sure. 

[00:54:37] Sean Steele: Test, test, test. Patrick, thank you so much for your time today. Audience, community, Founders, people who are listening, apologies for a little technical disruption that we had not too long ago, but we got through it. And I'm sure you will have absolutely loved the episode with Patrick today. Look, the best thing that you can do, and the one thing I would ask you to do is to take a screenshot of this episode or just click share on Spotify or Apple Podcast or Google podcast or whatever you're listening on. Send it to a friend because that's how you're going to get the kind of knowledge and the value that you just got from Patrick's mind into the hands of somebody else that you care about, and hopefully stimulate some new ideas and some new opportunities for them to be able to scale their businesses. Thank you so much, Patrick. We are really very grateful for your time and I look forward to catching up with you again and hearing how you've transitioned from 3 mil to 30 mil. 

[00:55:24] Patrick Gaskin: Awesome. Thanks Sean. 

[00:55:27] Sean Steele: Pleasure.