Ed (02:30): Simon, welcome to Scaling Up. There are a few brands in the world that resonate with me as much as yours, and I’m pumped up to share your journey and the journey of Who Gives a Crap with, with all our listeners. I guess you really are at the epicenter of what I would call conscious consumption, not only in Australia, but around the world and this idea and philosophy of consumer driven philanthropy. You have built a massive business now from being laser focused on the mission and the purpose, knowing that the results will come, and you can change the lives of many just with the humble role of toilet paper. So welcome. Maybe a great place to start is with the mission and purpose of Who Gives a Crap.
Simon (03:16): Yeah, sure. So, I mean, we got started now seven or eight years ago, with a crowdfunding campaign in 2012. But the reason why we got started was because at the time, 2.4 billion people globally didn’t have access to a toilet. And that might not sound like a big deal but imagine yourself in your house if you didn’t have a toilet in your house. It’s pretty devastating in terms of the dignity side of things, but then there’s also these really horrendous health impacts that come from that. So, the short version of that story is that the bad stuff ends up in water that’s used to cook clean and wash that results in diarrhea related disease, which is the number one filler of hospital beds in sub-Saharan Africa. And it’s the second largest killer of kids under the age of five.
So, more than 700 kids under the age of five dying every day as a result of that. So, it’s this mindboggling statistic almost 40% of the entire world when we got started. It looks a bit better now, which is definitely the good news, but there’s a long way to go. That was kind of the reason why we thought it might be a cool idea to start a toilet paper company. I guess our mission goes a bit further than that. we also sell environmentally friendly products, it’s all recycled or made with bamboo or sugar cane, and then we use half of our profits to help build toilets in different parts of the developing world, which is why the brand name is what it is.
Ed (04:31): And we’ll come onto the impact that you’ve had on communities that you’ve touched. You’ve now donated close to $9 million with a commitment of donating half your profits to these organizations that are focused on sanitization and hygiene. And that in itself, if that’s the only thing that you do, is just a remarkable achievement. So well done.
Simon (04:53): Yeah, thank you. It’s awesome to think back to when we got started. I remember when we first hit a cumulative donation of a million dollars, we were like, whoa, this is working. Fast forward a few years and we’re getting close to 10 million. It’s amazing to think about what the next five years and 10 years will look like. So super exciting.
Ed (05:12): And you touched on it, but this is probably a good time to go back to that founding story a bit more specifically, but you could call it a PR stunt, you could call it a crowd sourcing campaign whatever you would like to call it. You sat on the toilet for 50 hours until the crowd funding came through. Can you just wind back the clock and talk me through that?
Simon (05:34): Yeah. What a silly thing to do. I guess 2012 was kind of when we got started, Dollar Shave Club had launched six months before us. Warby Parker was in its infancy. So, the concept of direct to consumer, the terminology didn’t exist. Crowdfunding was starting to become like a known phenomenon, but Kickstarter was definitely not a household name. We thought crowdfunding was perfect for us because we could get the first $50,000, we needed to place our first production run. But more importantly, we could find the first 1000 customers to actually take our product, try it, tell us if they liked it or not, and hopefully tell other people about it. That’s actually quite a big problem with toilet paper because if you spend $50,000 on the first production run, that’s enough toilet paper to fill your whole house from floor to ceiling.
So, you need to find those first 1000 customers, otherwise you have this really serious problem on your hands. I guess we realized that when we were crowdfunding, we were probably crowdfunding the most boring product in the history of crowdfunding at that point in time. It was toilet paper. So, someone that was working on the campaign had this brilliant idea that we should shoot the crowdfunding video with me sitting on a toilet and I should pledge to not get off that toilet until we pre-sold the first $50,000 worth of product. We set up a toilet in my warehouse apartment that looked like our warehouse and a live stream and started this stream at 6:00 AM on a Tuesday morning to try and get into the international news stream in the US in particular. And we thought it’s probably going to take 24 hours, that’s probably the campaign duration, or it’s going to take a week and we’re going to have to get a doctor to come in and say, hey, you can’t do this anymore.
You’ve got to give up and go to bed. But yeah, fortunately the campaign got picked up national television pretty much straight away national print, I think that happened on the third day. And we went viral on social media, I think had 2.5 million social media hits, so kind of an amazing way to launch a business, but yet took 50 horrible, never ever to be repeated hours. And while I’m talking to you, I’m actually getting pain in my left leg in the same spot that that happened in that campaign. I have to, almost 10 years later, I still have to be careful how I sit because sometimes my legs get uncomfortable from, from that stunt.
Ed (07:47): That’s incredible. I thought it might have been even just the recollection has the neurons firing and bringing back bad memories that sends pain signals, but an incredible way and such a novel way of gaining product market fits so quickly and it speaks to the entrepreneur at the heart of everything that you are doing. Maybe it’s worth touching on even before that, what was the moment that you thought, I actually need to make a difference in this world. I’m going to try and sell toilet paper over the internet?
Simon (08:22): Yeah, I think we all, you know three founders, we all came to that place in very different ways, which I think is really awesome. For me, that was this journey of going to university and I’d traveled from Western Australia to Melbourne to study at the University of Melbourne and I was studying economics and engineering and I realized pretty quickly as a good economist would that it was cheaper for me to spend all of my holidays in Southeast Asia than it was to go back and see my family in WA. Out of what I thought was self-interest at the time, I spent a lot of time three or four months of every year throughout university in the developing world. I’d work all semester really hard to get enough money and then I’d travel and do volunteer work and different bits and pieces throughout Southeast Asia and eventually further abroad. An amazing thing to do throughout university.
Very lucky to be able to have done that, but I sort of didn’t think too much of it other than it being something that I enjoyed. And then I think towards the end of my degree I realized that I probably didn’t want to be an engineer. I probably didn’t want to work in finance or economics and that actually if I really followed my passion, it wasn’t going to work in a corporation, it was to try and solve some of these problems that I was really fascinated by in the developing world and social mobility being one of those. For me, that journey was this moment of realizing that sure I could be an engineer, but I didn’t feel like I was working on a problem that I truly cared about. And as a result, I was only able to give it my 70%.
I couldn’t unlock my full potential and give it my 100% and the same thing happened when I tried working in finance. I realized that if I was going to unlock everything and give it my all, I had to find the problem that I was truly interested in. I think that concept, if you play that out me finding my potential, if you play that out across the rest of the world, there’s 2 billion people who don’t have access to a toilet, who don’t have the privilege of being able to find what their own potential is. And that means that we have all of these people who there’s all this extra creativity, all of this extra output that we could achieve globally if we were able to go and solve some of these basic needs like access to sanitation. And for me, that’s incredibly exciting. How do we make that possible through the decisions that we make as consumers in the developed world? So that’s kind of how I came to it.
Ed (10:41): Even just hearing you talk; it does bring tingles to my spin. It’s amazing that at such a young age you had the personal awareness to understand what your personal values were and how they were going to shape your career and your impact on the world.
Simon (10:58): Yeah, I think like all of my friends looked at it, and were like what the hell are you doing? Like you did really well at university, you’re throwing your career down the drain by going out and trying this thing called entrepreneurship that back in the two thousands was a bit of a dirty word. There was no Silicon Valley kind of shiny lights in the way that there are today. Entrepreneurship in Australia was seen as like selling people stuff that they didn’t need, which wasn’t what I was really interested in. So yeah, it was a bit of a challenging trajectory to take on, but one that I’m really grateful that I sort of figured that out early.
Ed (11:30): Yeah, we touched on the crowd funding, and we might come back to funding later, but it’s worth touching on that you’ve been completely bootstrapped from the start. There’s been no venture capital, there’s been no private equity. This has just been a hustle and a grind from the deepest of your passions to make this work. And that to me speaks to you and your co-founders more than anything.
Simon (11:52): Yeah, thank you. And it’s not just our grind, it’s the grind of our team and the people come to work for us, and they get excited to get out of bed every day because of what we’re doing in the world. So, that collective grind that we can all pull together around is really what has propelled us to where we are today. So, it’s just this massive team effort with a whole bunch of people who love what they do.
Ed (12:15): Incredible to hear. We’ll touch on the incredible culture that you have built a bit later. Let’s start with the product itself. It seems slightly contrarian to think that you could do toilet paper differently to every other toilet paper that has ever been made, but you found a means of doing this. So, I’d love to dig into the product itself, the product development, the innovation that you’ve brought to make sure it’s as sustainable as it possibly could be. And maybe we can even touch on some of the failed product developments that have happened over the years because people only see the good stuff. So, let’s start with the product itself.
Simon (12:53): Yeah, I think our big realization was that there wasn’t a huge amount of innovation that was required with the physical product. Three ply is pretty good, we don’t need five play or eight play. When we looked at it, particularly after the crowdfunding campaign, we saw that there was this opportunity to innovate around the product with the customer experience. Yes, sustainability’s baked in, but the real innovation came with the online sales channels, so, you’ve got delivery to your home, which back in 2012 was not normal for toilet paper. 99.9% of Australia’s toilet paper was sold in supermarkets. Really fun, well packaged product that made people proud to take this thing that was always at the back of their cupboard out of the cupboard and put it on display to brighten up their house, but to also give them a chuckle and make them want to share that with other people in a really good customer service.
Which I guess has sort of become table stakes in a way in 2020. But again, in 2012 all that stuff was really not the expectation of the customer and then doing limited editions twice a year. So, we kind of changed up the rappers to work with illustrators or artists to bring a crazy concept to life. Doing all of this stuff with free shipping and great returns and everything else that is required to give the customer a really delightful experience that is not what they would normally get when they buy a toilet paper. they go to the supermarket, they buy this big pack of something wrapped in plastic, have to throw it in the boot or like carry it home under their arm, which some people find incredibly embarrassing.
We solve all of these problems that in a way people didn’t really know existed with toilet paper. And on top of that did some fun stuff like putting red emergency roles and at the bottom of every box when you’re about to run out and setting up a subscription service, you could sign up and we work with your household to figure out what your unique usage looks like and then we ship you a box three days before you’re going to run out to make sure that you never run out again. That’s kind of all of the innovation around it and then it’s just a commitment to constant innovation. So, we’re listening to customers all the time, taking feedback on board. A great example of that was with one of our product extensions into tissues. We’ve done this a couple of times with tissues that when we first launched them as an engineer, I was like, the empty space in the top of the tissue box, it kills me.
We are shipping dead space to people. Let’s put lots of tissues in there and give them a great experience. And we sold the minimum order quantity was about 3000 units and we sold those to our customers, and we listened to the feedback and the feedback was, love the concept. I can’t get the first 10 tissues out of the box without tearing them sort it out. We took 10 tissues out of the top of the box ended up increasing our margins on that product, which was a win for us. It was a win for the customer because then they could get the tissues out more easily and as a result we could make a bigger donation, which was a win for everyone. So, we thought that was just a great piece of customer feedback. About two years later, customers were saying, why have you got single use plastic in the top of your tissue box?
And we said, Yeah, great question. We tested removing it, customer feedback was really positive and then we went back through our supply chain and said, where else can we remove plastic from our supply chain? So, I think the final pieces of plastic are the pieces of plastic tape on the top of the box, which we’re about to get rid of. And we have shrink wrap in our, particularly in our Australian warehouses because there’s an OH&S issue in Australia around stacking boxes and making sure that don’t fall on people, which is really important, but we’re trying to find a way to solve that problem without plastic. So, we’re just constantly listening to that feedback and baking it into the product as we go to continue making it better and better.
Ed (16:22): Well, the joy of having that relationship with your customer is that you can get that instant feedback and the director consumer model is built around that relationship. So, it’s amazing to hear real time how someone is actually weaving that into the day-to-day product innovation and little changes here and there to make sure that the customer is delighted. Because at the end of the day, it doesn’t matter if you’re selling toilet paper or coffee or any other consumer staple, you have to delight the customer.
Simon (16:52): Yeah, that’s exactly right. And that’s the most fun part of it, right? When you hit that moment of delight, that’s delightful for you as well as for the customer. So, getting those moments right, is a really yeah, it’s a great moment for everyone.
Ed (17:04): Sustainability is still at the core of those decisions that you’re making, whether it’s the recycled paper fiber or the sugar cane. And this actually makes a difference in itself in terms of water usage, in terms of greenhouse emissions, in terms of number of trees that are being used so that there’s an impact greater than probably what you set out to do in the communities around sanitation and hygiene.
Simon (17:28): Yeah, totally. And I think we find in Australia, half of our customers are coming from a virgin pulp product, so they’re cutting down trees and flushing them down the toilet before they come and buy from us overseas that percentage is even higher. So, the environmental impact of that is massive. The bulk of the carbon footprint with toilet paper occurs in the production process and pulping timber into soft paper is a very heavy carbon process, so going to recycled materials, much lighter. Massive environmental impact there. And one that we’re kind of, again, continuously improving on. This year we’ve put solar panels onto one of our factories for the first time onto one of our warehouses for the first time. So constantly looking for how can we continuously improve and get better on all of those fronts? And hopefully that means that our customers are trusting that that’s the approach that we’re taking in the long run. They’re not signing up for us being sustainable today, they’re signing up to a set of values that we will adhere to forever until the company is no more because for whatever reason maybe someone else has come along and done it better.
Ed (18:31): Yeah. Maybe it’s worth touching on most of your supply chain is, is actually out of Asia and with sustainability at the core of what you’re doing, how do you ensure that in the deepest darkest corners of a communist country that there’s no greenwashing going on?
Simon (18:50): Yeah, that’s a really good question. There’s a few parts to that. One is that we have really serious due diligence processes that we put all of our partners through before we work with them, and then continuous improvement plans once we start working with them. So, every year they’re scored by a third party on all of the things that they’re doing, and then we figure out what areas we’re going to work with on the year ahead to continue to improve. So, there’s that aspect of it, and then there’s the relationship part of it. Just like our team, we want to think about how we can build really positive long-term relationships with our suppliers, and then they understand that by working with us to do some of these things that may sound crazy to start with, there’s huge long-term benefits that come from that. Our number one producer today is the same producer that we placed our first order with, and his life has changed a lot as a result of working with us as have the lives of his team. So, to be able to build those long-term relationships so that you can see the positive benefit that happens for everyone is a really important part of getting that right.
Ed (19:55): And moving along to the business model itself, we touched on as a digitally native business, but in many ways you’re a B2B2C business and that is hard to, in a sense. You’ve got two channels; you have the B2C online but also have this wholesale business. I can go to my local IGA and buy one of your rolls of toilet paper there. How have you managed these dual channels to optimize and also to think about how the different channels can relate to scaling your business?
Simon (20:27): Yeah, I mean for us we found that we were naturally better at D2C and maybe that was because when you’re in wholesale, you’re competing against these big companies who’ve had hundreds of years refining their strategy to get really perfect at it, whereas D2C was an emerging channel and as kids that have grown up with the internet, be it dial up internet originally, we knew how to make that channel work in a really fun way. That was what we were naturally good at, and we sort of played to that strength, I think that’s allowed us to build our business to date. And D2C is by far and away our main channel that we play in in terms of sales. But moving forward where we want to get to is to be where the customer wants to buy us.
That means that those wholesale retail environments are really important from us and so, we’re finding the right moment to go and play in those, in those channels. We’re in the fortunate position where the conversation with Coles and Woolies is less important, partly because we have a great business direct to consumer, but partly because we can also go and talk to Asda or Tesco or to Safeway in the USA and have those conversations with a variety of different partners. We don’t have to be faced with the reality of a buyer of an Australian supermarket in a duopoly determining the fate of our business. The strategy was build a great business and then be able to go and have those conversations in a way where we can remove that leverage from the other side that we’re negotiating with.
Ed (21:57): I think that that makes perfect sense to hear you outline that strategy when you’re beholden to, as you say, a duopoly, there’s only one winner and it isn’t the small business, so you need to be negotiating from a position of power. And I think you’re certainly doing that at the moment. When I asked Tim Doyle, who’s a mutual friend of ours, what is your secret sauce? He said, Simon is a retention master. What do you think he meant by that? And maybe you can give some insight into your attention strategies that have made, Who Gives a Crap such a success?
Simon (22:31): Yeah, that’s really flattering. I would say that my strength’s not in retention. We’ve got amazing people in our business who are awesome at retention. My strength was actually probably more on the operational side, the logistics stuff. I, as an engineer, I love nerding out on like how do you build the one to 5% efficiencies into every part of the logistics process? So, a great way for us to do that was by selling paper towels and tissues that stacked onto the top of our toilet paper boxes so that we could send them as one package and use the extra space that you get given from your carrier to optimize your logistics. So that’s the sort of stuff that was where my brain goes. But one of the co-founders comes from a design thinking background.
Danny was at IDO working in their non-profit consultancy as a design thinking consultancy and really applied that human-centered design approach to how do we think about the customer experience. We mapped out what are all of the moments that we interface with the customer. And again, I think this has sort of become like standard sort of practice now, but doing this stuff six, seven years ago was a bit abnormal. And then we thought about what are all of the moments where we have the license to interact with someone so we can interact with someone a hundred times, but most of those times are going to create friction in the process, which will actually not be enjoyable for the customer. So how do we give them a frictionless experience that they can really fly through our store and get what they need and have fast delivery, but then insert moments on the edges of that, that if they want to explore them, they can have the delight sewn through that. The way that we sort of think about retention is I guess using those moments of delight afterwards without bothering the customer too much.
Ed (24:15): Right, ramming it down their throat.
Simon (24:17): That’s right. Yeah. So, we don’t send typically more than one email a month. When we started, I remember email marketers saying, someone signed up to your email list, they’re giving you the right to email them as much as you can. And we were just like, no, that’s not the right way of thinking about that channel. We don’t want to be annoying for the customer and give them a negative experience, nor
Ed (24:35): It is a way to build a relationship that’s hopefully built on trust for many months and years to come if they know that that’s what they’re in store for.
Simon (24:42): Yeah. I think the other part of it is realizing that the social impacts that we have, that’s actually what we can use to make people feel great about being a part of our community and being on this journey that we’re on together. We can tell those stories and tell the successes that we’re all having as a result of the amazing purchase that they’ve made with us, which ultimately helps to create this most recent like 5.35 million donation that we made. every single purchase is playing a role in that. Bringing the customer along for that journey and inserting those messages at the right point in time is sort of how we think about retention.
Ed (25:37): In terms of scaling the business more generally. I can’t think of too many online D2C companies based in Australia that have meaningfully succeeded across not just two, but in your case three continents. How did you think about actually building out your business knowing that Australia wasn’t a massive market, it could sustain the business to a certain degree, but for you to reach your maximum potential you were going to have to go overseas. How did that play out? And from a strategy point of view, what advice would you have for other entrepreneurs in terms of that international expansion?
Simon (26:12): Yeah, so I think the important note here is the journey that we are on. The goal that we have as a company is to make sure everyone in the world has access to a toilet by 2050. So that’s what our whole team rally around and all of our strategies ladder up to that 30-year goal. So, when you look at that on the first day of the business, you know that you’re going to have to go global in order to hit that goal. for us, it was never a question of should we go global? It was a question of what is the right time to do it Again, we were really lucky. Three co-founders Jehan and myself, we met in Melbourne, Danny, we actually met in the US and so we had an American co-founder in the business and Jehan stepped out of the business for seven years and went and did strategy with YouTube in LA so it was in America as well.
We had myself in Melbourne, Jehan in LA, Danny in New York, which allowed us to initially build a distributed team. So, we were very comfortable working across time zones and then when we were ready gave us the feet on the ground to go into this second market quite quickly. There’s a couple of things there. I think initially we said, well is Australia the right market or is the US the right market? And we used our crowdfunding campaign to test those two out. So, we launched into both markets and said, let’s choose the market that has the most success. We saw it was twice the amount of sharing of the original crowdfunding campaign in Australia and three times the number of conversions compared to America. So, for some reason the marketing resonated better with the Australian audience, and it was converting better on site.
We focused on the Australian market for the first three years to build up our capability, get used to production, build out our team and then when the time was right, we went into the US the decision to go into the US was also a question of, well, is the US the right market here or should we be going into the UK? Let’s focus on the English-speaking markets because our marketing can resonate there, our assets don’t have to change. And we ultimately landed on this decision of if we go into the US when the going gets tough, we’re going to say we should have gone into the UK. If we go into the UK when the going gets tough, we’ll say we should have gone into the us the grass will always be greener, so let’s go into both markets at the same time and then we’ll know whether we’ve got a geographical problem in one country or a systemic problem due to the nature of launching internationally because we’ll see it in both markets.
And that most people would say that’s like strategy suicide for us I believe that was like one of the smartest decisions we’ve ever made because the going got tough and we were looking at both markets, but it was tough in both markets. We definitely would’ve said we’re in the wrong market, we should have gone to the other one. But seeing it happen in both markets, except we’ve just got to keep our head down and stick this out, and eventually we hit critical mass and then everything just started to snowball. And now those markets we sell more outside of Australia than we do inside Australia. And one of those markets will end up being bigger than Australia in the next couple of years. So, it’s been a crazy ride. The one thing I will say there in terms of advice is that the America market is like just different enough to the Australian market that you really need to have a team there to make that market work. So, there’s no going in gently. You can’t test the water and try and build it remotely. We firmly believe that you have to have a team there in order to speak the right marketing tone, to be able to pick up the phone and talk to a customer in the right time zone to solve all those problems in real time. And yeah, as a result, our LA office is actually bigger than our Melbourne office now which has taken us three years to kind of build up over time.
Ed (29:43): That’s probably a good segue into people and culture and maybe we can start on scaling the people and culture across geographies. So, in terms of scaling these offices, how have you thought about maintaining the culture within the business that is so strong? And we’ll touch on that in a bit.
Simon (30:02): Yeah, that’s a huge challenge. I think there’s a couple of things there. One is that we were originally a distributed team, so everyone was working from home and then we realized that particularly for new starters, it was really hard to work out who the other people were and people who’ve started new jobs in Covid will be familiar with this problem. I think must have been four years ago, we flew the whole team to Melbourne, and we had a one-week offsite which ended up being called our IRL because it was the only time that we were all IRL together where we bonded for a week, launched our new strategy and solved a whole bunch of problems. And for us, once everyone flew home, we realized that the connectivity in Slack after that was like 10x what it was before.
Face to face was incredibly important for building the relationships that were necessary for our business to function. We committed to do two things instead of hiring anyone anywhere, we said, let’s hire only in Melbourne, Los Angeles, Manila, and then we have people dispersed over China who travel together and that way we can bring those teams together to have the face-to-face time when they want it, but they’ll decide how much time they want. So, Melbourne said, we only want to see each other one day a week LA said we want to see each other three days a week. Manila, the traffic’s terrible. So, they said once a month’s, great. And then we said, let’s also bring everyone together every year for a week regardless of how big we get. And the next year we took everyone to Cambodia to see water aids work in the field and really connect into the impact of the business to launch our new strategy. And I think we took 32 people and 16 of them got food poisoning. So was a bit of a bonding experience as well.
Ed (31:42): that is usually the case when there’s group sickness in any kind of travel pack. I guess I’m curious to understand the culture of your business is born out of the mission and when you’re attracting employees, I’m sure the mission to them is as important as it is to you when hiring, whether it be in Melbourne or LA are you optimizing for skill or are you optimizing for the mission and their passion for it?
Simon (32:12): The mission and the passion of it, that’s a deal breaker. If that’s not there, then it doesn’t matter what the skill level is. So that one’s kind of binary outcome in a way. But we look across all of our values, so give a crap is the one that you’re talking about there, but there’s four other ones as well. So go big, stay scrappy, kimbot, which is Tagalog for kind of shake your ass and get shit done whilst having a good time. And yeah, a couple of others. the idea is that in all of our interviewing we are kind of assessing people against those values to see if we think that they’ll be a good fit and they’re the binary deal breakers and then everything else skill and everything else is obviously important, but it depends what role we’re going into. So, in some instances we’ll be looking for pure talent and in other instances we’ll be looking for a mix of experience and talent in order to propel us forward. But yeah, the values are a binary outcome.
Ed (33:09): And you spoke to the values, and you spoke of stay scrappy. Do you think this speaks to the bootstrap nature of your business that it it’s such at the core of who you are as a person and the team around you that you’ve built that that is such an important value to the business?
Simon (33:27): Yeah, I think it probably does. I mean like the beautiful thing about bootstrapping is it teaches you very clearly what are the very important things to focus on. What are the key metrics that we have to get right, or this business will it’ll tip over and yeah, end up bankrupting itself. Staying scrap is an important piece of getting things done whilst also making sure that everything else is moving in the right direction. So having to do them quickly. The flip side of that is what we call scrappy debt. That’s when you’ve been too scrappy and you’ve now like got all these systems that don’t quite work, that you’ve gaffer taped together, and you have to get someone to go back and undo them all to make them all work more smoothly.
We’re constantly going through this process of accepting how much scrappy debt we’re willing to take on with a project and then working out how we’re going to overcome that scrappy debt in the future. So, some projects where you don’t want any scrappy debt if you’re implementing a new ERP like a huge accounting software system, you don’t want scrappy debt there. But if you’re doing new product development, that is a great place to have scrappy debt because you need to move quickly and get something out the door to see if it’s going to work. And if it does, then you’ll come back and fix it. If it doesn’t, then it doesn’t matter. We think about staying scrappy as being in a way intention against go big, which is the let’s really like hit this one out of the ballpark and make sure that we get it exactly right.
Ed (34:52): There aren’t many CEOs or founders that have a perfect Glassdoor, and you and your team are one of them. So, culture to me speaks volumes as to what the business is trying to do and the people that you are now employing obviously value it as well. Let’s talk about the initiatives that you’ve put in place. I saw a couple of weeks ago out of the blue you gave your whole team a week off because you saw the early signs maybe that covid and the isolation that many were going through might have been affecting their mental health. This is something that you have actively prioritized. How do you think about these issues as to how it is going to affect the long-term durability of your business?
Simon (35:39): Yeah, I think that’s a really good question. I think understanding the long-term impact on the business I think is hard to do unless you’ve been through some challenges yourself. And then when you have, it’s acutely obvious what the long-term implications will be. I think we are, in a way we’re lucky that we’ve got an exec team who have pretty much everyone’s been through those challenges in different ways, in different times in their life or had people around them who’ve been through those challenges. And as a result, we realize the importance of, and we also not just realize the importance, but we think a lot about how we are going ourselves. How’s my productivity at the moment and why is that? I think through Covid we started checking with our team every week, surveying them to see how they’re going.
So, we just made a scrappy kind of survey in Monday, which is our project management tool. And that got sent out every week asking people how they were going this week, what their performance was like in their eyes whether it was easier or harder, how hard things were at home and why just checking in to make sure they were safe and supported and if there was anything else that we could do. And we found that when you looked at how that performance or productivity was tracking over time, it was getting lower and lower and lower and we were all ourselves saying, I need a break, but borders aren’t open. So, we live in Victoria, it’s cold, you want to go travel somewhere warm if you’re taking holidays in winter and now, we’re in a five-kilometer lockdown, so you can’t travel at all.
So, the decision of whether to take personal leave or not in this time, the incentives are really turned on their head because it’s hard to justify taking that leave if you can’t do something special with that time. We realized that productivity was down, people needed a break more than ever before, but they weren’t taking it partly because they felt like they were going to let their team down and partly because it was really hard to go anywhere. And so, we said, what if we just give everyone basically an extra week off? We’ll say you can take one day of leave and we’ll give you four days of leave for free, but it has to all happen in this two week window, which is two weeks away from now, so that 50% of the team can be off in one week and 50% of the team can be off in the other week and therefore we can get the rest that we need, but also have a week with no meetings through the whole business so that no one’s feeling like they’re letting each other down.
That was this big experiment that we rolled out. The initial results coming out of the other side of that was this massive step change in productivity. We’re going to do a deep dive that we’ll end up publishing on LinkedIn now that it’s a few weeks further on, but anecdotally, like myself, my productivity’s gone through the roof, I feel so much better. The ROI on that, like giving the team four days of leave is an absolute no brainer. I can’t stress enough that it was just a great initiative, and every company should be thinking about it.
Ed (38:34): There’d be a lot of leaders out there that would only be seeing the cost of that and they’re forgetting that on the flip side, there is this, initially this intangible benefit, but as you say, you can start measuring that ROI over time and it’s significant. So, to take that risk is actually just a wild piece of leadership that you should be very proud.
Simon (38:54): Of. Yeah, thank you. And I should say like the ROI is there in productivity, but it’s also there in in our team knowing that we have their back, and we will go above and beyond to make sure that we are doing what we can to try and make their lives easier and better and higher quality. That work life balance for us has always been really important and that was why we were distributed originally. We said people can work from a co-working space if they want to, but they can also be at home if they want to, if that’s what’s important to them. Making sure that we’re getting that balance right in favor of the employee is how we’ve always thought about it.
Ed (39:31): I think the last thing that we have to touch on is the covid impact on your business. And we’ve talked about the impact on the people and how you’ve tried to resolve that. You were at the forefront of the panic buying in Australia and around the world over the toilet roll that was sold out through every store, through online, you name it. To be able to balance this once in a lifetime opportunity for business growth and this outrageous tailwind with the realization that what you’re selling is actually a public need and during a global pandemic and a social meltdown, which was what was happening at the time, you actually needed to find a way to solve it and solve it quickly. Can you just take me back in time to probably mid-March, just the roller coaster of emotions that you went through and give a sense of the crazy that went on inside the walls of Who Gives a Crap?
Simon (40:29): Yeah. happy to. I think you said something really interesting that you said what you’re selling is a public good that people need, and I think that what we’re actually selling is an experience and so I’ll come back to that, but that’s really important in how we think about situations like Covid. Yeah, taking you back to February, I think it was the end of February, we’d seen the run-on toilet paper in Hong Kong, the run on toilet paper in Singapore, Japan. And we were like scratching our heads going, whoa, like how, like bizarre that would never happen in any of the markets that we’re in. And then I remember that last weekend of February, I was looking at daily sales over the weekend going, oh, that’s interesting we’re doing some really strong sales over the weekend. And then on Monday we did a 2x day on Tuesday we did a 5x day on Wednesday we did a 12 x day.
And on Wednesday social media was just flooded with photos of empty shelves of toilet paper. We have a channel in Slack called Social Mentions that pulls in all of the social media mentions. Normally we’d get 50 or whatever mentions in a day you could sit in that channel, and it was an infinite scroll, it was just going up and up and up because everyone was saying, if you need toilet paper, why would you buy from anyone else? Get it from Who Gives a Crap it’s sustainable and they donate 50% of their profits. Our customers just sent us viral in that moment. Our site traffic went through the roof. Some of our systems started to break because we were pinging the Shopify API too many times every minute, it got pretty intense and we were like, we’ve got to make sure we don’t run out of product for our subscribers and our businesses.
Let’s see how long this goes for. I think we woke up the next morning and it looks like we’re going to do a 30 to 40 times day of sales, so more than a month in a day. And we said, that’s it, we’ve got to turn it off because we need to make sure that we’ve got stock for our subscribers. So, we turned everything off. I think at our peak we were selling 28 rolls of toilet paper every second, which I think would’ve made us the largest highest volume retailer of toilet paper in that day nationally in Australia. And then we turned on an email signup so people could find out when we were back in stock, we thought we’d get a few thousand signups for that email list, and we ended up with more than half a million people on there.
So, a mind-boggling number to deal with from an inventory perspective because you were never going to have enough product to be able to email everyone at once and say, hey, we’re back in stock. Come and buy some product from us. I think a couple of things there, our team at that moment went, this is our moment. We’ve been training for this, we’re a distributed team selling toilet paper online, 2020 is our year. We’re going to crush this and if we get this right, the impact that we’re going to have, the donation that we have at the end of the financial year will be massive. So, let’s get our heads down, let’s work really hard and figure out how to crack the nut of getting toilet paper to the most people possible. And in that moment, we also realized that we were selling an experience, we weren’t just selling a product, so we had to think about how we managed that email list in a way that was going to be really positive for all of these new people that were coming in contact with our business for the first time.
So, we did some fun stuff, like we took out an ad in the SMH and the Age, a full-page ad saying we’re sorry if you run out of toilet paper, we have two here’s an ad that we’ve printed in a toilet paper kind of pattern so that you can use this in case of an emergency. And then we got our heads into how do we get toilet paper to the most people possible. We worked out that basically our constraints were inventory, customer service volume, and our warehouse and carrier volumes. So, we repacked our big 48 roll boxes into 2 24 roll boxes. We could double the amount of inventory we hired and trained 25 freelancers in a week so we could triple the number of customer service inquiries we could deal with. And we went to our partners and said, what’s the absolute maximum limits that we can push you to every single day for the next eight weeks in order to get the most volume out and how many staff can you hire to help us lift that volume?
We did all of those things and then started to slowly email that email list just the right number of people to max out the amount of orders that our warehouse could ship every day. We did that nonstop for eight weeks and eventually cleared that whole backlog and amazingly we were worried that we were probably attracting a lower value customer who wasn’t as aligned to our philosophy of business, but amazingly MPS was through the roof it was up sort of 10 or 15 points. So, getting that experience right and communicating to that email list about what we were doing, how we were going, how long it would take, was a really important part of nailing that early experience for our customers that ultimately has meant our cohorts have got stronger, which is just an awesome outcome.
Ed (45:19): Yeah, and it shows you what’s possible under some duress and adversity to ensure that the values are held to, and that you can still delight the customer and in a time of need. It’s amazing.
Simon (45:34): The silver lining though is that we got to June 30, and we locked our donation on June 23, and so we’re like, great, we can go out to press with a number, let’s see if we can get some publicity around this. And we were up like $5 million, like amazing outcome. And literally three hours after we locked the number, the second round of panic buying kicked off in Victoria and we’re like, oh no, all of our forecasts have just completely gone out the window. We had to donate an extra $250,000 right at the last minute just to get it to the right number at the end of the financial year.
Ed (46:10): Well, you touched on it, but only lightly in and around inventory needs. And when your supply chains in China essentially, and you’re in Australia and there are logistic frictions during a global pandemic, how did you optimize for that with your relationship with your suppliers? Because there is a problem that needs to be solved very quickly and very effectively.
Simon (46:34): Probably the best thing that we did in that scenario was Covid was obviously impacting China before anywhere else. As soon as that happened, our minds went to how are our suppliers and how are our team members? Every day we were checking in with them how are you guys going? Is there anything we can be doing to help? We communicated early and we communicated a lot through that period and that meant that when we came out the other side, we were able to secure all of the available volumes. So, we were able to sort of take our production up to 150 to 200% what a regular month would look like, which ultimately meant we could ship more and more orders when everything landed in April and May. That was again, coming back to that long term view of building great relationships and working together and everyone participating in the benefits that come out of that in a way that’s positive, but fair meant that we could not use but fall back on those really high quality relationships that we’d spent many years building to get the best out of everyone.
Ed (47:40): And if there’s one or two lessons to emerge from Covid that you could pass on, what would they be?
Simon (47:47): I think like from Covid, the biggest one, particularly when all the panic buying kind of took off, we had this realization that everyone was worried about toilet paper. But when we turned our mind to our beneficiaries in the countries where we support people, there’s people who don’t have access to soap, to wash their hands, let alone toilets, let alone toilet paper. I think for us it was really about how do we have more empathy for what’s going on around us in this moment with our team, our suppliers, our beneficiaries, and our neighbors as well. Our customers, they’re getting often big 48 roll boxes of toilet paper. Someone next door probably can’t buy any at the supermarket. How do we have empathy to try and calm things down in this state of panic? Empathy is just such a key part of any business and being a manager. I think in Covid in particular, really having a lot of empathy for what was going on was probably the biggest lesson.
Ed (48:46): It’s a wonderful thing to hear you say. I guess to wrap this all up in a bow, your community impact has been nothing short of immense. And I’m really curious to know, what are you most proud of when it comes to the journey that you and the business have been on in regards to how you have created such a wonderful impact for so many?
Simon (49:09): Yeah, it’s a great question. I think it’s a really hard one as well because the social impact side of things is obviously really important. But I think that as founders, we would probably say that we are most proud of the impact that we have with our team and that almost 90 people work for us on a full-time basis. Knowing that every one of those individuals they get by in life because of this thing that we’ve created is a very proud moment for us. And hopefully more than that, they enjoy the hours that they spend at work, which I think is a luxury that not everyone has. So, I think that’s probably the thing that we’re absolutely most proud of.
Ed (49:47): Well, done Simon. It’s been an absolute pleasure to spend this time with you. As I said at the top, it’s a business that just resonates so greatly with me and so many, and it’s been great to be able to uncover some of the secret sauce.
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