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The Financial Mentor with David Boyar: Lifting the lid on business

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Episode 2. Your business has nothing in common with Gillette

by David Boyar |

The Financial Mentor

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January 25 , 2019

Because business is more than growth hacking, marketing and startup up buzzwords, we have The Financial Mentor with David Boyar. Lifting the lid on business.

In this revamped show:

  • We sit down with Futurist, Keran Mckenzie, to find out why the voice technology shown off at CES matters in the real world
  • David mentors you through the Gilette re-brand fiasco and proves why your business has nothing in common with them or their marketing
  • With Afterpay jumping from success to success David asks, is it actually good for us? 

  • The pitch this week comes from NZ startup Aider AI https://aider.ai/ who wants to be your next rockstar employee.

  • But perhaps the best part of the show is saved till last, David tracks down the CFO of failed super growth business Appster to find out why it failed.

Episode Transcript 

This show exist because there is way too much white noise in the business media because the goods and glam of words like growth hacking, marketing, tech, AI, service design and machine learning are confusing, distracting and don't actually help you run your business.

A financial mentor knows that this stuff isn't what building a business is. Building a business is hard. It's often boring. Numbers and accounting play a critical role. Whilst their gut feel is important, knowing where you are going is better. We're the people who get you there. But as news comes out, there's always things to learn.

This show follows a format I've always loved, the late night talk shows. My favourite, Conan O'Brien. Each week we'll review the big business stories, but with that critical lens of a financial mentor. I invite guest on for a chat. We have a segment with a real futurist to work out what tech is doing and a weekly pitch from a startup that's genuinely doing something new. Not just one of those startups that somebody's just done on the side. In this week's show, we talk about how Gillette's trying to change what it means to be a man.

Why I have a love-hate relationship with Afterpay and I interview and I interview Appster CFO Mahesh Gupta to find out why despite expecting revenues of $100 million in 2018, the company failed. We discuss in this show and you can check out the interview with Mahesh in the next show release. The big interviews will always be separate because hey, sometimes you just want to listen to that and you're not going to want to listen to me and the guest on this show. You can pick and choose how you want to experience the show format. The pitch this week is from Auckland startup Aider AI who wants to be your next rockstar employee. It's a great little bit. Let's get the show started.

Why Gillette has nothing to do with your business

Every now and then an ad transcends just selling you something and makes a difference on how the world works. Every now and again that something is a big global corporate brand. Marketing matters more to big corporate brands than your business because unlike smaller businesses and family businesses that are never one-on-one relationship with their customers and they kind of envy you for it. I'm all for building a brand. Often it's the reason you can sell more, charge more, and ultimately get a higher price if you ever go to sell it. But in the case of Gillette, it's all three. There isn't really a problem with that. There's also not a problem with standing for something.

In fact, unless you've spent decades building a huge barrier that stops competitors doing what you do and forcing customers to you, odds on the reason your customers buy from you is because you stand for something they also stand for. Be it cheap prices, quality product, the importance of family. Whatever your value is, it's a shared value. Gillette's "he Best A Man Can Get" phrase is iconic and it stands for something. Men being men. Boys being boys. It's the pursuit of masculinity. In its first ad, it showed a dad giving his son the keys to his first car, captions of sport fates and Wall Street go through the ad, a husband hugging his wife after what looks like a business trip.

Nothing necessarily wrong with it. It's a bit dated, but it's definitely a male dominated world that's shown. The new ad Gillette calls the current era of masculinity toxic. Here's the problem, to a huge amount of Gillette's customers, it isn't toxic. It's who they are and they don't think they're bad people for it. This brand has tried to stand for something and its customers are unhappy. The ad's approaching almost 500,000 likes on YouTube. You might say, "Amazing. How do I get that," but they're also at a million dislikes or just shy of a million. Why? Well, because the feeling of what a man is isn't as simple as a fancy ad anymore.

Marketing shapes society and great marketing makes a difference, but its core purpose is to sell more of what it's selling. Don Draper in Mad Men said that, "What you call love was invented by guys like me, to sell nylons." There are plenty of social commentators out there who can speak to the merit of the apparent toxic masculinity Gillette speaks of, but as a business move, it was bold and maybe one Gillette didn't need to take. You see, who are Gillette's customers? In the '90s, it was simple, men and boys about to become a men because a man was a man and no questions really asked, but also because the only way to advertise was to everyone.

One big ad in the paper that everyone read. One big ad during Seinfeld. Then maybe some sports sponsorships, but markets aren't simply defined by one tag anymore. Your customer's not as simple as saying it's one part of a complex network of humans not when Facebook lets a marketer advertise to ridiculously targeted attributes of a man.

For example, I can target an ad this finitely to a gen X male who got engaged two years ago with an anniversary in the next 30 days, who's a tech early adopter in a family-based household, who's a small business owner who returned from a trip two weeks, he's an expecting parent with very liberal or very conservative use, who likes baseball and not cricket and who's connected to Kevin Bacon. Yes, the last one is real. People and customers don't like being told what to do or who they should be. They want to be who they will be and they'll buy from people who are like them. Gillette has nothing in common with your business. Their brand's worth $17 billion. It sits at number 32 on the Forbes brand list.

They've got over $6 billion in revenue and the brand idea is around one idea of what a man is. If you can go so targeted on your Facebook marketing, why create such a big bold statement? Who are Gillette's customers? Well, I don't know. But given the amount of YouTube videos of men flushing Gillette razorblades down the toilet, they're probably not the work guys who care what waste ends up in the stomach of dolphins and whales. They're probably guys who just want to really close shave.

AfterPay - Is it actually good for us? 

Let's take a look at Afterpay. The company is a monstrous success, The entrepreneurial flare to take something old. Lay by. I remember doing it at Target.

At a brilliant customer experience get a near perfect understanding of the buying habits of their core customers, millennials, is the stuff of startup success dreams. The company's put on 2.5 million customers in Australia and over 650,000 and a half in the US. If you're a retailer, you probably offer it to your customers. I have a love-hate relationship with it or do I love to hate it? I'm not 100% sure just yet. Hopefully talking about it will help me sort it out. What I love is the entrepreneurial flare, to take something well-known, add some tech that gives you an idea of credit worthiness of the borrower and create revenue model that cost most of the clients much less or in most cases actually nothing.

Bravo. This innovation has seen rapid growth and huge valuation increases. It's doubled in value in the past year, but is it all good? No. Because it's teaching millennials really bad financial habits. That it's okay if you can't pay for something now, Afterpay it. They can Afterpay, well, I could Afterpay haircuts. I can Afterpay purchases of fast fashion, things that are worthless the second I walk out of the shop with them. In Australia, the company skirts rules that are designed to protect consumers from taking on debt for things that they can't really afford or shouldn't be able to afford. That law is called the National Consumer Credit Protection Act in Australia.

There isn't really such a thing in the US because Donald Trump recently repealed it. The act requires credit lenders through a full credit check on borrowers and a few other rules. Afterpay has opted into some of the rules, but not really the big one, the credit check. Their argument is that the rules haven't exactly promoted good practice in the existing banks and that their tech does a better job at assessing credit risk. Let's unpack that. In Australia, banks don't really actually track a huge amount of information about you, the borrower. I'm an ex-business banker. I worked for three years in the National Australia Bank.

Especially compared to the US where a credit report tracks lots and lots of data and different data points about you and your buying behavior. We have a new credit reporting act in Australia. If you overdraw your account or if you pay a credit card late, the credit authorities find out about it, but this is really largely a new innovation. Many of new fintech lenders in Australia use this as a point of difference. It's how they're able to speed up the time it takes you to get a business loan after you apply for it. Through a fintech it can happen in 48 hours. Most business owners or growing business owners have been through a process with a bank where it can take up to three months to sometimes get to a no.

Fintechs for the most part have worked with governments and most are waiting for new regulation to come. Many of them even welcome it because it regulates an important part of our new economy. But Afterpay, they're fighting it. They say they should sit outside the existing regulation and they use tricky language to even suggest they're not a lender at all. The company founder and CEO Nick Molnar said it's a retail tool, not a finance product. He'd be saying that because 80% of their revenue comes from charging the retailer a processing fee, not charging fees to the end users of the product. They don't charge interest. They charge late fees if you're delayed.

25% of the revenue came from this through June 2018 and that was down to 20% by December 2018. The rapid growth has come at a cost. The company this week faced rogue mission into alternative lenders. Consumer groups accuse them of profiting off the most vulnerable and many investor groups see better value at a company trading at a 100% times 2020 earnings. Right now it's making a loss. Rapid growth always comes at a cost. All eyes will be on the company as they need to transition out of the growth phase where it's generally okay to trade at a loss and into a company that generates real returns for shareholders.

It's a company I'm keeping a very close eye on and there's a great ethical question, is there a social good that needs to be done for a company to be successful? There's so much attention around triple bottom line reporting. Does Afterpay fit into that category? I'm not so sure it does. I'll be keeping an eye out on it this year.

Futurist, Keran McKenzie on CES 2019, BIG DATA and Voice Tech

David Boyar:                 Joining me for the next part of the show is Keran McKenzie. Keran, I need to introduce you to listeners because you're a fascinating man. You have a long career as a futurist. What we want to do in this part of the show is talk about future trends and what they mean right now. I'm really excited to have you, mate. Welcome.

Keran McKenzie:           Well, thank you. I'm not sure whether to be flattered or insulted. I mean a long career makes me sound older than I really am, but hey, it's great to be here and exploring all this stuff with you as well, my friend.

David Boyar:                 The purpose of this segment is to say, well, what does the future mean today? There's only one thing you have to talk about this early in the year and that is CES.

Keran McKenzie:           Absolutely.

David Boyar:                 The Consumer Electronic Show over in Las Vegas, was it?

Keran McKenzie:           It is in Las Vegas. Absolutely.

David Boyar:                 CES comes out at the start of the year. It sort of sets the trend on cool tech gadgets for the year, but there's also a lot of nonsense, mate. Like when I think back of CES past years, I can't tell you what the the most famous product was part from past CES's because it's just so absolutely massive, but everywhere I go I hear about AI, voice, robotics. There was a lot of that at this year's CES.

Keran McKenzie:           Yeah.

David Boyar:                 What did you think and what does it mean to us?

Keran McKenzie:           I'm the same. CES has rapidly become this just behemoth of events and everybody who's anybody is there. Of course, from this distance, we only ever to see what we ever see online. I mean being there and walking around the booths is different to the sort of distance away from it. You're right. There's so much happening. I'm always saying this year, 2019, is almost the year of ables. We saw wearables, nearables, deliverables, findables, foldables. There's all these ables that are being released, but I think mostly this year CES was, to be brutally honest, kind of boring. It was much of people going, "Hey, this cool stuff we showed you last year, we're actually selling it this year." Okay. Cool.

David Boyar:                 Our abilities caught up with our marketing messages.

Keran McKenzie:           Yeah. Yeah. It is a bit of that. I think your discussion there around AI, voice, robotics is also in that same mindset. We're actually at a point now where AI, voice, robotics, augmentation, etcetera, are becoming mainstream. That's really quite exciting. We're starting to finally see these things become practical. I mean you and I and others have had this conversation about, well, why would I use voice and why do I need these things in my life, but we're starting to see the application of it in real usable places. Having said that though, we did see a new one during the week. Who was it?

                                    One of the manufacturers of bathroom equipment shall we say decided to voice enable one of their toilets of all things using Alexa, which kind of strikes me as odd.

David Boyar:                 I don't get it at all, mate, because I go to the toilet to get away from the world, having been at peace and time with myself. I don't need to be connected to the internet while I'm in there doing my private business. What you said about everything being ables this year is really interesting, isn't it, because by putting able at the end of a word, it becomes a verb, a doing word, which means this technology is doing stuff that we can play with and engage with rather than just be a box that sort of sits over there.

Keran McKenzie:           Yeah. You did right there. I mean we've seen things change, right? I mean the first is the physical change. A company called Royole, who probably nobody's ever heard of before, are the first people to commercialize a foldable phone where you can actually fold the physical screen and fold it in half. Yes, you've seen that action happening. The other part though is something that in the product world we've sort of known of a little while is this shift between consumers and producers. Traditionally at CES, which was the Consumer Electric Show, we're being told, "These are the things you'll consume. These are the things you'll buy."

                                    But the reality is these things are actually enabling us all to become producers and we are producing data and loads of it. The thing that's changing, of course, is we're all becoming very aware of the value of that data. Now we're seeing voice, AI, robotics, augmentation bringing that data to life for us. All of those services, all of those tools build on that data. What's exciting is to start seeing how you ask for that information, how you see that information, how it's represented to you around you on a daily basis using some of these amazing tools.

David Boyar:                 A foldable phone is interesting because I can sort of get a big screen without having to fit an iPad into my jeans pocket, but this idea of us being producers and being a big part of what the machine outputs is really interesting. For those of us that work that out and make it work for us are going to wean in. I think that seems to me part of the problem with this. It's fine to have AI and voice and robotics, but if I don't know how to use it, I don't get the benefit. I mean I've got a Google Home in my place. It came free when I bought my Google Pixel that's why I've got it. The number one thing I ask it to do is tell me the time.

Keran McKenzie:           The voice systems at home here, the number one thing they get asked is what's the weather today. You know? We, as creatures of habit, we stay within our comfort zones. Those simple questions, that's fine. I also think we haven't seen the killer app in these tools yet. I think we're starting to explore them, but I haven't yet seen an app that's absolutely flawless where I'm going, "I've got to have voice in everything I need." I don't talk to my TV yet. I've got some LIFX bulbs, some Philips light bulbs and things, but I don't really talk to them and say, "Alexa or Siri or Google Home, turn the lights on and off." It's faster and simpler and just more muscle memory for me to flick a light switch.

                                    I think maybe in the business world we will see these killer apps start to come in a bit more. I'm fascinated by a company out of New Zealand who are exploring how you have a conversation with business data, being able to have context of a conversation flow through the way you interact with business data and actually use natural language. I think that sort of stuff, that application is coming, but I haven't yet seen the killer app for a home environment.

David Boyar:                 Would be surprised if I said I talk to my TV?

Keran McKenzie:           A little. Maybe a little worried for you too.

David Boyar:                 Because it's so frustrating when I go into Netflix and I have to type in ... Like the way you type in is a very bad user experience on some of these things. If I want to watch a show that I haven't show, so it doesn't come up straight away, it takes ages. On the new Apple TV, I can just click the button, hold it down and I can tell the TV what I want it to search for. It saves a lot of time while I'm sitting on the couch doing nothing with nothing better to do. I actually don't know what time it's saving now that I think about it.

Keran McKenzie:           Well, yeah. How many times you have to repeat it and do something else? I must admit I do speak my password into the Apple TV quite regularly because it takes a lot faster than typing it in. However, having said that, now my kids know my password, which that's not the greatest security in the world. But what I mean by talking to it more was just general sort of conversation, turn on, turn off, change channel, that sort of stuff. We can talk to apps within Apple TV, but you still can't ... Well, some TVs you can change channels and stuff, but I don't do it that way.

David Boyar:                 How much of this voice activation is just us being lazy and wanting to shave a few seconds off a mundane task that we don't have any other choice of doing like typing in my TV show into Apple TV? How much is actually going to better our lives and let us experience something we haven't experienced before?

Keran McKenzie:           Well, I think there's two sides to that coin. There is absolutely the laziest nature coming through here. As humans, we always look for a lazy route. As Bill Gates says that famous quote, which I'm not even sure if it's actually him, but he says, "I'll give a job to a lazy developer because he'll find the quickest way of doing it." There are scenarios, you and I were discussing one the other day, with a grandparent of a real application of how this voice tool could help someone who's arthritic or suffering from vision impairment where they can still have a sense of identity and person.

                                    See, when you get older, right, your reliance on other people increases, but they can also play on your psyche. You can feel terrible about becoming a burden on people. I can see how these sort of voice applications actually are giving people back ... This is what strikes me about technology is when technology gives people back a sense of purpose, a sense of identity, a sense of value in their day-to-day lives. I think there's two sides to that coin, right.

David Boyar:                 That example was my nana, Nana Betty, is turning 89 next year and doing really, really well, but some of her sort of auxiliary features are getting a bit harder to use, arthritis in the hands, eyes aren't what they use to be. Readings become challenging for her, but she loves reading. What we're exploring for her is getting an Alexa, which at your recommendation comes free with a subscription to Audible, so that we can set up and control the book that gets read and she can just using her voice, which she still has and is very strong, play me Tim Winton and it's up to the page that she's up to. It's in a naturally read voice so she can still experience and still enjoy it.

                                    One of the things I sort of see, yes, there's a lot of things that are making disabled people and elderly people, people who don't have full function over their motive faculties, making their lives easier. That is brilliant use of tech. But one other thing, mate, that impress due was the amount of innovation in gaming.

Keran McKenzie:           Yeah, exactly. That could have caught me off a little bit. Gaming over the last couple of years has become, well, in my mind, a little but quieter, but very mobile. We've seen tons of conversation around apps on phones, apps on TVs and bits and pieces there, but I've seen at this time a bit of a resurgent particularly around technology for gaming. HP, for example, have launched massively into the OMEN series. They've now got massive big complex computers and beautiful big high resolution screens and graphics cards. We're talking about $6,000 plus, US dollar plus for hardware. Razor have bought out a laptop system that is all components.

                                    You can actually pull the keyboard off and pull pieces apart and things, but it's a laptop effectively as a desktop environment. Again, it's a massively expensive system. The reason that's kind of exciting for me is that gaming historically was always the driver for acceleration in CPU performance, new sound cards, better graphics cards. That sort of physical stuff was driven by gaming. It's exciting to see that come back because what that means for us is in a few years time we're going to have much more of this sort of dedicated AI chips and dedicated stuff that's happening to facilitate better rendering, better games, better AI components in our business life and our day to day life in their normal laptops.

David Boyar:                 What's really interesting for me there is how the laptop, which for years raised the bottom on price and weight, is becoming sort of really specialized on what you use it for. I don't need a high end gaming laptop. It's not just something that I need. I've got like [inaudible] for my gaming needs personally. But for most of the business work that I do, at the other end of that premium where the tech innovation actually happens, I'm going to pick up a Google Chromebook for less than 500 bucks. Running a cloud-based business, that's going to do 90% of everything that I need and that is most business people.

                                    Most businesses could have run off a laptop that was built five years ago. It's just the battery has kind of run out.

Keran McKenzie:           Yeah. Yeah. Battery, the interesting thing is as this gaming technology goes harder and harder on the CPUs and everything else, they're also really pushing the efficiency of power drain on batteries and the life and the recharging. In fact, I saw a tweet. I tweeted the other day because I've seen a number of car companies saying they're going to come out and enable full charge of a vehicle in 15 minutes.

David Boyar:                 Wow.

Keran McKenzie:           I'm thinking we can't even charge our phones in 15 minutes. If you're thinking gaming computers that are drawing massive power, the efficiencies they're going to get from batteries and that's where these Chromebooks and these iPad Pros or whatever it might be, these lighter touch devices are going to last so much longer because that application of technology will trickle down to us in the mainstream.

David Boyar:                 Keran, what does this mean for those of us who are in business right now?

Keran McKenzie:           Look, it means that technology has to become everything you do. You have to be, and you and I have talked about this for a long time, my friend, you have to be embracing and looking ahead at this stuff. You have to be saying, "Is there a more efficient way of doing what I'm doing in the business? Am I prepared to start to change some of my processes? Am I going to look at how I can have a device in my office where I can say, "Hey, device. How much profit have I made today? Is David coming on roster today? Have I got the right inventory and stock?""

                                    Rather than having to spend time in your computer, you should be able to ask key questions of your data in a day to day question in life. You should be constantly exploring what that tech means for you.

David Boyar:                 We will try to showcase some of the pieces of technology going to help that on this show in the future. Keran, thanks very much for coming on. You'll be back on. Hopefully this is going to be a regular segment. I really hope so, mate, because I love chatting to you and getting somebody with your expertise opinion on the amount of media that you get about things like this. This is really critical. How do we get in touch with you on socials, mate?

Keran McKenzie:           You can find me on Twitter @KeranM. That is K-E-R-A-N-M. You can find me on LinkedIn. It's just plain old Keran. Those are the two main places I hang out online.

David Boyar:                 Thanks, mate. We'll see you next week.

Keran McKenzie:           Awesome. Thank you, my fried. Talk to you soon.

AIDER AI - Your Rockstar Employee

David Boyar:                 In 2019, it's very hard to not be aware of startups. When you're talking startups, it's hard to not hear two words, voice and AI. Joining us for the pitch, our newest segment, is Brendan Roberts from Aider AI, a startup out of Auckland, New Zealand. Brendan, thanks for joining us. 

Brendan Roberts:          You're welcome. Thank you very much.

David Boyar:                 Now, you have a really cool product. I've had a look at it. I've tried to have a play with it, but unfortunately I've got a Google Pixel phone and I think it can only get it on iPhone at the moment, so I'm going to borrow my wife's phone and see if I can have a play. I'm not going to talk about it though. It's over to you for the pitch.

Brendan Roberts:          Thanks very much. Android will be next month, so we'll get you as an early tester.

David Boyar:                 Awesome.

Brendan Roberts:          Yeah, thanks very much for the intro. You say the words AI and voice and actually that's a lot of what we've set Aider up to do. We are an AI business. We're a voice business. I think of ourselves as a conversation business. What is Aider? Aider is a digital assistant for small business owners. What we're doing is we're digitizing your next rockstar employee. Somebody that you've hired that really starts to understand your business because they've got access to the systems in your business or you use them. You trust that person. You work with that person business they also understand a broader context of what's going on in your business. Information from the outside world as well.

                                    We're trying to digitize that. If you think of them as that rockstar employee, you can ask them questions like what is my top selling product today, how much revenue have I made, do I owe anybody any money, who owes me money, who's scheduled to work today or what's the weather going to be like tomorrow? You can start to ask questions. That's what I mean by a conversation business, whether it's voice or messaging. You can ask a digital assistant these questions and Aider will answer you immediately. But not only will you expect your rockstar employee to able to answer your questions, you want them to become proactive.

                                    Aider does become proactive. We look at what's going on in the business. We look at what's going on in the big wide world and we start to tell you things about your business that you may not yet have thought to ask. Aider might say, "Did you know the weather's going to be pretty bad tomorrow and you've got too many people working? Maybe you want to think about letting somebody off for the day or saving some money that way. Did you know you've just had your best ever sales day or you've had the highest website traffic day today?" But then also we take it one step further and like any many good rockstar employee, want them to start to do things to take actions.

                                    You can ask Aider to do things for you. Aider might say, for example, "Brendan hasn't turned up for work today. Would you like to notify your standby list?" You can say to Aider, "Yes, please. Let the list know," and Aider can go and execute that instruction and notify your standby list until someone's claimed that shift and come back and tell you, "Hey, don't worry about it. Look, Brendan's not at work. Someone's coming in to work Brendan's shift." That's what we're building. It integrates with your apps that you already use in your small business.

                                    If you use Xero or QuickBooks, if you use Google Analytics on your website, if you use point of sale like counter or vend, if you use a rostering app like Deputy, payrolls, etcetera, etcetera, most small businesses also have social media like Facebook or Instagram or Twitter, so Aider plugs into those. But then some of the external data sources like weather and traffic and events and things like that, so you would expect your digital system to understand external things that might impact your business. We're focusing on retailer and hospitality first.

                                    That's why the apps that are in our ecosystem right now, and we only launched mid-December, focus on retail and hospitality, so point of sale and rostering and that kind of thing. That's where we are. That's what we've done now.

David Boyar:                 Brendan, fascinating. This is my next rockstar employee.

Brendan Roberts:          That's what we're trying to build, yeah. It's that person that you can trust and you can work with. The thing about Aider as a rockstar employee is that some ... It's like any new employee. They're learning. The more you use Aider, the more it learns about your business is working and the data and what's going on in your business, the language you use, your internal vocabulary. It's also going to get better in time because of all of that. It's right now integrated to a range of all different apps and all of that app ecosystem will continue to grow and the capabilities will continue to grow because it's the early stage.

David Boyar:                 This sits on top of a lot of the cloud-based apps that I've already got in my business. It pulls data out of that. It tries to connect the dots between the two of them to create insightful ... It's like that data analyst, business intelligence type person. That's the rockstar that you're trying to create. What if the data in my core underlying app isn't correct?

Brendan Roberts:          That's a really good question. If the data is not correct and that's what we will see, we will see whatever data is in there and then we will probably surface that. You, as the business owner, would probably realize that. We'll go, "This is one of the things we've learned." If we tell you something that's going instinctively feel wrong to you, "Your sales is $10,000 more than usual," you'll probably go, "Well, that doesn't sound quite right," and you might go in and have a look at that. But also again over time and we've got our first one of these algorithms is we pick up outliers and we will tell you those outliers in real time as well as we see that.

                                    If something like that happens in your sales, we'll say, "Hey, this is really strange. On a Monday you're usually X number of dollars of revenue on average and this one spikes, so you might want to look at that." or the opposite of a spike, a trough. You might say, "Something's going on here. You might want to look at that." Most of the apps we integrate to have real time data. Some of the apps might need people to come in and do things in. Maybe your accountant, your business advisor needs to go in and do some stuff in Xero, etcetera, just to keep that data real.

David Boyar:                 Startups, the big question about them is always are they going to be around for a long time? Are you funded? Are you looking for funding?

Brendan Roberts:          As I mentioned, we're pretty new. We're a startup as they come right now. Launched late or mid-December. We're funded. We've got investors from New Zealand and Australia and one from the US. We're funded for this calendar year 2019. Our goal right now is to get product market fit, to learn some lessons and some patterns from the market from customers, but from partners as well. Learn some of those playbooks with the intention to do some further capital raising in the middle of the year. We've got a fair bit of interest out of the US from some pretty decent investors over there. Our goal, like I said, is you can never be too funded. Well, I guess you can't be too funded.

                                    We take enough to get ourselves going and to learn some lessons. We'll start to look at probably a seed round maybe middle of the year.

David Boyar:                 It's funny. If you get too funded, only two things have happened, either you've raised at a valuation that was too or you've given up too much equity. Either way it's not good for you as the founder. Mate, thanks very much for coming on the show.

Brendan Roberts:          No problem at all. Appreciate it.


Why did Appster fail? Special interview with Mahesh Gupta, Appster CFO

Click here to listen to the interview

Here's a great question, why did Appster fail? Appster is a phenomenal story. They went from 80 staff to 400 in just a few years with one to keep for co-founders who seemed like they had the golden touch. The company employed most of its staff in India and was essentially an Indian development company that marketed to customers all over the world, predominantly in Australia. Founders aimed to turn over $100 million in 2018, but just slightly missed that mark. By December '18, the company was in liquidation. There's only one question, why did it fail and maybe a little also quite important question, how? I've tracked down the company's CFO to try to find out what the company did wrong and I learned a lot.

Mahesh Gupta is based in India. I found him through a connection on LinkedIn. Essentially the company failed to see why it was losing too many leads because they were too expensive. Why? Well, we often companies perform better when they're smaller because getting big require enormous amount of cash to equal back into the business. This can often be celebrated, but it's on the expense of balance sheet safety. The reason you put cash back in is to one, keep those leads coming in, and two, build the systems that breed efficiency as the company scales. Appster failed on point two.

You can check out the interview in the next episode of this show. They didn't build development systems. Despite building hundreds of apps, everyone ended up being bespoke and even worst being delivered at a fixed price. If a company change their mind, wanted revisions or took time to respond was at Appster's cost. This seems to be a decision made by the founders who had appointment to revenue and appointment to keeping a fixed cost. Perhaps also their customers were startups. They didn't have huge amount of cash for out of scope and unbudgeted work. Meanwhile, other developers came to jump on the fascination of people wanting to start their own tech company joined the market.

As platforms like Fiverr and Upwork increase legitimacy, quality and attracting more talent, they started winning Appster's quite fraction of the cost because they didn't need to invest in growth or systems. Because Appster didn't, they didn't build the competitive advantage you'd have when you're a big labor intensive business. There are a lot of lessons in this interview. You should go check it out. In it you'll learn why it's important that your CFO has influence in your decision-making. We're proponents at Sequel of outsourcing your finance function, particularly a lot of the grunt work.

We think that you should have the financial decision maker that people who you're relying on to help you grow business by your side. Appster didn't. The CFO is in India. Whilst technology competent and extremely experienced, when he saw the writing on the wall, he wasn't able to mentor the businesses through to troubled waters ahead. He couldn't get the influence in the boardroom needed to make decisions that the business required. You find out what reports founders Mark McDonald and Josiah Humphrey relied on to make sure their company was growing and performing properly, what financial information they've got essentially.

You'll see why the decrease in Australian public prices reduced Appster's potential client pool or at least why Appster decline happened. You'll see the difference between cash flow you can expect from a startup client versus an enterprise client and why that changes the cash cycle in your business. You'll see why you should price and how long it takes for your customers to make decisions while you are servicing them and why the bloody hard work needed nowadays and some genius marketing let to Appster's growth in the first place. Heres what you won't learn though, why did Appster choose the liquidation path?

This is a company that had a lot of good things going for it. Why blow it up? I don't have an answer for this, nor can I see how a company that takes 50 to 60% of its total project phase, often over $100,000 upfront, and when your payroll, your major cost is payroll, which is based out of India where there is great wage arbitrage, I don't see how that company can run out of cash. Check out the interview.




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