David Anderson: We have a really unique data set. A lot of people can tell you about how many pats flew into Cairns or what the hotel occupancy was. No one can tell you what they actually do when they get there, apart from us. Fundamentally, it's big bang stuff. Winning cultures take curation. The grass is greenest where you water it, right. Like you have to invest in curating and role modeling from the top of the business, down what you want culturally as an organization.
[Voiceover]: Welcome to ADD to cart, Australia's leading e commerce podcast that express delivers all you need to know in the fast moving world of online retail. Every week, Nathan Bush catches up with Australian e commerce leaders to get all the insights, tips and lessons to keep you at the top of the e commerce game and of course, keep your customers adding to cart. Here's your host, Pushy.
Nathan Bush: Today's guest is committed to delivering one brilliant experience every second by 2030. Now that's a big goal. To be honest, I stretch myself to give you one pretty good experience every week here. Joining me today is Big Red Group CEO David Anderson. If you don't know it, David and the Big Red Group are the largest experience marketplace in Australia and partner with over 3,000 experience providers. Through their brands Red Balloon Adrenaline and Experienceoz. They facilitated over 5 billion experiences since 2017. Likely you've actually had one yourself. Today I sit down with David and discuss his vision for Big Red Group, including how he started the group with Naomi Simpson. We go into detail around what a $16 million digital transformation program looks like and understand how he's established a workplace which sits in the top 25% of engaged workplaces. So thanks to our partners Shopify plus and Paclio, here's our conversation with David Anderson, CEO of Big Red Group. David, thank you for joining us on ADD to cart.
David Anderson: Thanks for having me, Nathan.
Nathan Bush: Pleasure. Now, you jumped on the video chat before and you first thing you did was apologize for two big black marks around your eyes. How did you get that?
David Anderson: Well, I love to box, but last weekend I boxed a guy who had 100 pro fights and I boxed him for eight rounds and wish I'd only boxed him for three.
Nathan Bush: Are you boxing regularly? Is that just a passion of yours?
Nathan Bush: Yeah.
David Anderson: No. Look, I love all kinds of sport. Play old man's football, over 45's football, I lift a few times a week, play tennis with my son, but I love to box. It's the most. It's the hardest game I've ever played. You know, you don't play at boxing,
Nathan Bush: so I Suppose too, in boxing, you're not the CEO of Big Red Group when you step into the ring, are you?
David Anderson: No, no, no. You can. That Saturday night after the fight, I definitely had a long quiet evening with myself. And the humility in boxing definitely catches up with you for sure.
Nathan Bush: Brilliant. So we're here to discuss all the exciting things that are happening at Big Red Group. But before doing that, I bit of a tangent is that I was having a look through your history and I saw that you spent 10 years leading the IMO Car Wash Group. And it's just coincidence that I've been speaking to a group of associates around car washing businesses. And whether it's good or bad business.
David Anderson: Right. Is there good money in car Washington? Yeah, look, you know, I'd spent 10 years prior to starting IMO Car Wash in management consultancy and I'd met my now ex wife actually through that. But her father was an amazing entrepreneur, a guy called Bob Lapointe. And he'd started all kinds of concepts. And he said to me, and I thought, well, I'll have a go at entrepreneurship. And he said to me, look,
Nathan Bush: why
David Anderson: don't you try car washing? And I said, it's not quite that bad just yet, Bob. And he said, no, the best thing you can do is look, you don't have to come up with your own mousetrap. You just have to recognize a good one when you see it. And I think that's a really valid point. Right. And so for him, he brought KFC to Australia and Pizza Hut to Australia and all these incredible concepts. And so he encouraged me to have a look at this car wash concept. And so we worked with a company called IMO Car Wash Group. And I washed my first car in 2006, and then I washed 38 million cars in 15 countries, over 900 retail sites eight years later. And I think when you get to scale, yes, there's money in car washing. If you're washing 38 million cars a year, just getting an extra buck a car can move the dial. Right. So I encourage you to get on with it. Yeah.
Nathan Bush: If I looked out your window now and had a look at your car, is it clean or dirty?
David Anderson: You always think about the plumber and his house or the builder in his house.
Nathan Bush: That's good. Yeah.
David Anderson: No comment, no comment.
Nathan Bush: All right, fair enough.
Nathan Bush: So taking that, that advice around, you
Nathan Bush: know, not reinventing the mouse trap, how did that experience then lead you into the idea of Big Red Group?
David Anderson: Well, you know, I'd known Naomi for 10 years before, before I got involved with then Red Balloon. And when I finished and exited the car wash business and I was looking for some my next adventure if you like. Naomi asked me to come and have a look at Red Balloon at that time and it was in a challenging spot. But I loved the business, I loved the brand, I loved what it did. It supports thousands of small businesses which I just spent 10 years building myself with 900 small businesses effectively running a car wash network. But I never wanted car washing on my epitaph.
Nathan Bush: Right.
David Anderson: It was always about like, you know, what's the next thing. And so for me I saw the opportunity to shift the way people experience life, like to sell stories over stuff. It felt very much more purposeful for me. And so Naomi approached me and I joined the board of Red Balloon in I think November 2016. And I'm structured to acquire Red Balloon with Naomi in June 2017. The following year, having spent a few months looking at, at the business for precise that reason, you know, it was a great brand but it really needed, you know, to be brought back to life. And so I asked Naomi to come with me. She rolled over her equity into the new venture and so she joined me and she's still a shareholder today in the business and we, we set forth shifting the way Australians experience life.
Nathan Bush: Amazing. So if you give it set the scene today on where Big Red Group is now compared to where you were with Red Balloons single brand.
David Anderson: Yeah.
Nathan Bush: Back then is the vision the same?
David Anderson: Well, you know, through the first six months of the year of 2000, the last six months, 2017, once I acquired it was a turnaround situation and we had to figure out what we stood for. But, but ultimately what we saw was an opportunity to scale online for our suppliers who otherwise didn't understand how to acquire fundamentally. And if you're a, if you're a narrow beam paddle boarder and that's your art, that's your craft and or you're a 50 year third generation dolphin swimming family off the south coast of Melbourne. You don't necessarily understand the challenges of E commerce. And so for us I saw the opportunity to actually to scale and in that context in markets we thought we had two or three competitors. And with my private equity background and the car wash acquisition background and so on, I knew how to roll up and scale businesses. And so that was something that I could take on. And so over the next two or three years the first job to do was to build demand a bloody big fly trap fundamentally for our suppliers and to do that in a way that was adjacent to the way they might go to market themselves. So through the acquisitions of firstly Adrenaline and Lyman Tonic and then Experience Oz, we effectively rolled up all of the demand side consumer brands of any materiality in Anz. And interestingly in that experience what we discovered was there was actually relatively little customer overlap. We'd spent all this time competing with Adrenaline and we Both had about 9 or 10 cents worth of discount in our business because we were selling competing in market. But in reality it was only a 10% overlap in audience. So that allowed us probably to recover discount promotion value the experiences appropriately. And so through that roll up there were more synergies in that than we thought. But to get back to your question, we're about four times four and a half times the size of the business that we started with in Red Balloon today. Currently have a couple hundred people working in the business today and we're the largest wholesaler and retailer of Australian New Zealand experiences in the world.
Nathan Bush: Ever scrolled through an E commerce packaging website for fun? Nah, me neither. Until today. Paclio is putting the joy into the packaging game. So let's play a game. I'll tell you the name of the Paclio product and you have to try and guess what kind of product they are. Fairy floss Compostable mailer. Queen bee Honeycomb Padded mailer.
Nathan Bush: Here we go.
Nathan Bush: Gummy shark water activated tape. Now if my jaded self thinks that this packaging is fun, imagine what your customers will think. Paclio is also eco friendly. Australian owned and operated with same day dispatch and 14 day returns. Now that's pure joy for everyone. Check out the Paclio range of ecommerce packaging options@paclio.com that's Paclio P A C K L E O paclio.com.
Nathan Bush: When you are bringing new brands on and when you went through that period with Experience Oz and Adrenaline, what are the qualifiers that you're looking for to go? Yeah, these fit the criteria for a great big red group company.
David Anderson: In the first instance it was about understanding the brands and the jobs that they did. It's really interesting about the three brands
Nathan Bush: that we have today.
David Anderson: Our primary brands today is they actually do different jobs. And I think from an E commerce perspective it's really a big important, increasingly important, you know, around the the trust paradox and building trust as such to ensure that you do the job right. And so Red Balloon is a gifting brand first and foremost. About 5% of all experiences bought. Sorry, 5% of all gifts bought in Australia are experiences.
Nathan Bush: Oh wow.
David Anderson: Red balloons. Four and a half of the five. The job isn't for me to try and get the extra half a point jobs to try and increase experiences as a category of gifting. Right. So for us as a business, our marketing activities there are all about how do we increase the consideration of an experience as a gift. And you can instantly see how that sits completely adjacently to the Narrabeen paddleboarder, because he's not shopping in that place at all. So, you know, it's really important for our suppliers to understand I'm not trying to nick the fish off the end of his rod. And so the same in Adrenaline. Adrenaline is very much a single person getting out there, wanting to experience adventure in Australia. As we shift our brand position this year and we're actually, we're going to relaunch the Adrenaline brand a bit later this year. It's exciting work, but that's all about wanting to be the Patagonia of experience. You bought the North Face jacket and you wear it to Martin Place and back on a Saturday. That's not really taking it on for the purpose it was designed for. And so we want to explore that and take that brand for further.
Nathan Bush: Right.
David Anderson: And so. And the Experience Oz brand is a fantastic brand that we acquired from a fantastic entrepreneur called Ben Mans. And, you know, that's. That's a tourism brand. That's a. I'm pre planning to go to the Gold Coast. I want to. I want to get my tickets. I'm in the Gold Coast. The kids are driving me nuts. I need to do something in the next six minutes. And so, very different job. Right. And so for us, what's really important in an acquisition strategy is to understand the adjacency of the brands that we're acquiring from a consumer perspective. Increasingly, though, of course, you know, activities. Well, not, of course you wouldn't know, but activities. Australia is about 2% of the world market. It's about a $1.8 billion ticketing market of experiences and activities. The big world out there, $180 billion worth of ticketing globally. Right. So for us, I think increasingly our thoughts go to, well, how do we build internationally as opposed to continue to build domestically? Now, beyond that, I think culture is really important. Alignment is really important. Chemistry is really important. When I exit the car wash business and I came in to do Big Red Group, the things that were really important to me were to find people that you like working with. I get to choose every day to come. Having people you actually like working with is really important. And so chemistry is super important. And that's as much an issue for me to consider as it is the type of business we're acquiring these days. Revenue multiples as valuations are dead. Yeah. It needs to be EBITDA accretive. It needs to tick boxes in terms of just meeting fundamental commercial sense. So I think there's some of the things I think of. That was a long answer.
Nathan Bush: No, they're great considerations and I love that last point that you made around. It's got to inspire you to turn up the people that you work with every day because, you know, you're still there as CEO after six years of, you know, building this, plus the other businesses you've built. I could imagine that at this point you probably don't need to be a CEO if you didn't really need if you want to be there. Right.
David Anderson: You know, I feel very fortunate. Right. I get to choose what I do every day. And I'm not sure everybody, I know that not everybody does, but I get to choose this and I want to do it. I love it. I love what we do. Is there a better challenge than building a business? You know, and I think for me, the opportunity to do that with people you like and to take on a challenge where you can actually do something good at the same time, you know, in gifting experiences, it's a few less Tonka toys in the bottom of the ocean.
Nathan Bush: Right.
David Anderson: Like, we get to kind of fulfill on an ESG promise. We get to make an impact more broadly in terms of, you know, one in five Australians have some form of disability.
Nathan Bush: Right.
David Anderson: And our ability to be able to offer a solution and information that allows our suppliers to access that 20% is phenomenal. Right. We do a lot of work with disability Australia. We're doing a huge amount of work about just pulling out into the open. Inclusivity experiences are for everybody. And my opportunity is to actually do something about that or our ability around social connection and native Australia and our commitment to net zero and so on. And these are really important things that I get to take on on a day to day basis. So it's not just the game of E commerce for me, which is. Which is a hell of an interesting game. It's good fun to be in. But actually we turn up because we like working together and we like the impact that we can make.
Nathan Bush: I love that. I mean, for me, when I think of what you're doing at Big Red, group experiences like snorkeling or hot air ballooning or V8 laps come to mind. But you were mentioning there things around social inclusion and disability. What are some of the experiences that you've seen recently pop up from your 3,000 partners that have really surprised you to think that oh this is great that this is now available?
David Anderson: Oh look, I think we recently, Ben actually drove this out and we recently put our first wheelchair accessible hot air balloon up onto the Gold coast with a wheelchair accessible bus to get them into the field or had to and back again and so on. And so I think they're examples of just taking what would be traditional experiences and opening them up. So it's less about seeking to come up with a solution that's specific for a certain type of disability and more about just total inclusivity. I'm more interested in making sure everyone can do everything beautiful than the other way around.
Nathan Bush: Great. Now you mentioned there that you've got big goals. I saw on your website that your goal is to enable and deliver one experience every second by 2030. You're currently sitting at 18 seconds. My sources tell me that's right.
David Anderson: 18 seconds. 18.4 seconds right now.
Nathan Bush: 18.4 seconds. That's very specific.
David Anderson: Yeah, well, you know, data is super important for us like in any e commerce business and so, and we've really invested in our data platforms. Hopefully it tells you more than just how many experiences I served in the last 12 months. But 18.4 was the number at the end of, at the end of May. So you're right, we've served over 5 billion experiences, you know, since we started the business in 2017. One and a half million in the last 12 months. We continue to grow that number. From my perspective, as I was saying before, the challenge for us is the Australian market is not big enough to get to one second. Right. So we are probably 50% of the trade market here in Australia today. We think the Australian market's growing at probably 15% a year, give or take, but we'll never get there at that rate. And so we have to think about how we grow our business adjacently. And so the solutions that we have for that are to think through how can we wholesale our solutions. So whilst we spend some time talking about our retail e commerce brands, we also a huge amount of work to be able to wholesale and the post Covid world. That's really interesting and important. Most large OTAs Online travel agents want to have an Australian offering but at 1 or 2% of their market they're not particularly interested in putting people on the ground to contract it themselves. So it's a great opportunity for us to be able to wholesale. We also are really interested in how we can, you know, we're talking about fish on the end of rods for suppliers and I know it's a cliche, but we also think about how we can give us our suppliers or experienced operators fishing rods. So how do we white label our technologies for their own direct online business, which is, which is a really interesting and fast growing part of our business. And the final piece is, you know, and I think a lot of marketplace companies are taking on this challenge. We're trying to transition from a pure play marketplace into a platform business. And that migration to platform then allows us to think more globally about how we can deliver our one a second. Right. So I think ultimately that's a $6 billion business. We're not quite there yet. We're at 18 seconds. So I've got to get my foot down.
Nathan Bush: Is the vision there that you will open up Australian experiences to wholesalers all over the world or do you think that you'll also be selling international experiences?
David Anderson: So I think we are already opening up our platform now. We have a full development API for people to be able to consume our catalog, be able to book, be able to look at inventory, etc. Etc. Today and we have 20 or 30 international OTAs who are effectively selling our products inbound. For Australians, tickets out of the Netherlands, you know, is one of our partners, for example, for the Dutchman coming to Australia on holiday. You know, people talk about Australia in Europe as being the procrastination destination, right? Like they're going to come once. Yeah, there's no lifetime value for me and the Dutchman coming to Australia on his one trip. So much better for me to find a wholesale solution at a CAC that makes sense or a split that makes sense and share that and focus more on LTV for our domestic audiences. So yes, we're wholesaling for sure. The other side of the piece is how do we provide our platform for other marketplaces internationally to be able to serve their markets as opposed to us necessarily moving up to be kind of buying Red Balloon UK or something. I think we more think about a platform solution to support other marketplaces. I think what we found is in Australia, because our marketplace is comparatively so small, we have to be much more nimble, we have to be much more cleverer about how we operate that marketplace to make sure that we can squeeze every lemon. And you know, and you know, when you're in a much bigger town, you can be quite lazy about that. So I think what I'm trying to say is our platform is much more sophisticated than most of our international competitors today and we think we can leverage that.
Nathan Bush: Yeah. It sounds like, from what you've told us so far, that you're putting a lot of infrastructure behind the technology stack that you're building there so that it can service this scalability. And obviously with the number of acquisitions that you've brought on, there would be a lot of work to make sure everything speaks to each other and performs efficiently. Do you pass a lot of that data and that insights onto your 3,000 suppliers to help their business? Is that one of your key benefits for suppliers?
David Anderson: It's one of our key ambitions for our suppliers. Yeah. I mean, I think we have. We have a really unique data set. A lot of people can tell you about how many Pats flew into Cairns or what the hotel occupancy was. No one can tell you what they actually do when they get there, apart from us. Yeah, it's super valuable data. And I think our objective is to be able to provide Cairns operator with his ability to look at his product and understand relative conversion rates for, like, companies across Australia, like price points in region, like price points in segment, and also start to provide some insight as to what they should be doing or could be doing to improve the performance of their shop or funnel on site as a result of what we're telling them, whether that's price, whether that's imagery, whether that's content or otherwise. Right. So when you're offering platform solutions, you win when. When they win. And I think that's kind of that. That alignment is really good.
Nathan Bush: I could imagine that data also in its end state could become pretty powerful and a business asset for people like tourism bodies. As another offering that you could sell on. Yeah.
David Anderson: Have you read my strategy paper, Nathan?
Nathan Bush: I'm not sure.
David Anderson: We do have great relationships with what we call the RTOs and the STOs, the Regional Tourism and state tourism offices, and also with Tourism Australia, who themselves obviously collect data. But yes, we. We hold a very unique data set for them and I think it's really valuable. You know, it's not just about its commercial value, it's also about providing a voice for a highly fragmented sector of the travel industry. You know, airlines get a lot of publicity, the hotel chains get a lot of publicity. What we have is a highly fragmented. Thousands of small. 80% of our businesses that we support employ five people or less. It is a highly fragmented cottage industry. Right. What we're trying to do in providing data solutions to government is less about its commercial outcomes and more about providing a voice and insight and transparency to government around policy. And I think we have a role to play there as the largest aggregator in market. And I spend plenty of time in Canberra and plenty of time trying to meet the RTOs and SEOs to push that case forward.
Nathan Bush: You'd have a pretty good view over tourism as an industry, both from your internal data, but also all the people that you're speaking to as well as your 3,000 plus partners. What's the mood out there at the moment?
David Anderson: Look at the end of March. The reality is that there's a two speed economy in Australia right now. And so those that can afford to go overseas are going overseas. We're actually 96% back to pre Covid outbound for Australians. So we were almost back from an outbound perspective for Australians today. Amazingly, in the current economic environment, huge numbers off to Bali and so on and so forth. The opposite is not true. We're only about 77% returned. And so what you have is effectively a gap in demand. And we're not seeing the same level of inbound as we are seeing outbound. And furthermore, we're not seeing the same level of inbound from countries which really spend when they're here.
Nathan Bush: Okay.
David Anderson: So our suppliers are facing some existential pressures. You know, fuel is 50% more expensive than it was pre Covid staffing is really difficult and if you can find staff to work on a Saturday, you're lucky. And then on top of that they've got pressure on GP and they've got pressure on demand.
Nathan Bush: Yeah.
David Anderson: So we play a really important role there, both in terms of providing technology solutions that allows them to get to the lowest possible cost to serve, but also in terms of our ability to actually find customers for them. And so a large part of us building our wholesale inbound solution is about us being able to promote content and seek to get the Dutchman to come to Australia versus go to the us Right. And that's a big part of what we try and do.
Nathan Bush: What's the barrier for Japanese, Chinese tourists into Australia?
David Anderson: I think it's just, I think it's just reticence of return. You know, for a long time, you know, visas were an issue outbound from China. There's a big political landscape there, but that I think is returning. And the Japanese, you know, they're just a slow returning nation to go outbound. I think, I don't think there's anything, let's call it systematic inside of Australia. That's the issue it's just a function of external macroeconomic environment.
Nathan Bush: Just pull another macro factor on, hey,
David Anderson: just add another twig on the burning fire. Yeah, but it is a challenge, right, that we think a lot about. And so in our tech transformation moving back towards that, we do think about how do we set ourselves up for those markets which will return. But we also think increasingly about how we address the domestic market which is indeed out holidaying. And, and in that two speed economy I would call a lipstick economy, if you look through the last 20 years, through the GFC, through any recessionary moments, more people trade down to do something with the family than trade out. You may not be taking the big holiday, but you are still going to go and do something. You might buy your dad a beer on Father's Day, but you always buy a gift for Christmas. These are things that happen in the Australian psyche. And so for us, making sure that we're turning up in the right place with the right products at the right price for the domestic audience is a key focus for us. You quite rightly point out that we've grown partly through acquisition, like, for like we have good double digit growth in our brands, but the headline growth is much greater than that through acquisition. And the downside of that of course is you end up with massive technical debt. You acquire multiple stacks and so at some point you have to bite the bullet. And so that's kind of where we're at right now.
Nathan Bush: Now I read that that transformation program is a $16 million transformation program that will make the eyes water of a lot of merchants who are listening to this. What does a $16 million transformation program look like?
David Anderson: Yeah, it makes my eyes water.
Nathan Bush: You said it was from boxing
David Anderson: as a privately held company. And there's the owner with Naomi's a shareholder and Ben's a shareholder. You have to dig deep on these things. And so we're backing it because we know it's the right thing to do and we know that we can make transformational change as a result, we cannot deliver the level of relevance for our consumers. Off our legacy stacks we're on today. We cannot get the level of consistent data insight that allows us to make better decisions. Off the legacy stacks we're on today and we're running three technology stacks, which makes monolithic in some instances, which makes our ability to create and move in an agile way, our offer forward almost impossible. And so we have to take the work on in that context. We really are going soup to nuts. We are adopting effectively cloud native services. We're building Our own core platform. One of the interesting things about our marketplace is that as opposed to hotels, for example, hotels, you can have a double room, a single room, a suite. In our world, there's 150 different types of businesses. So if you're selling chocolate making classes, it's very different to if you're jumping out of a plane from 14,000ft and everything in between. And so we have a very, very complex fragmented supply landscape. And that means from an order management system perspective, it's very hard to buy commercially off the shelf. We actually think that's part of our unique IP is we really understand that reservation technology environment. We rely on the order management environments. We've built that and we're building that ourselves. It's a composable infrastructure. Headless is really important to us from a backend perspective. It's with, you know, thinking through a low cost to change outside of our core platform. We are buying Martech, you know, kind of best of breed Martech. We're not trying to build that. So we know, we know our limits, as it were.
Nathan Bush: What have you bought off the shelf?
David Anderson: We use segment for our CDP and for our tagging environments and that's been going really well. And we use marketing, cloud and Interaction Studio to drive our personalization outcomes.
Nathan Bush: Yeah, correct.
David Anderson: So it's fundamentally what we're doing from Martech perspective. And most of the other platforms, as I've said, sit inside our own purview. So we built our own pim, build our own order management system, building our own headless front ends. Don't ask me the code. No, but anyway, because you are doing
Nathan Bush: all of that custom, does that mean that it does have to be one big bang project rather than an incremental rollout over time?
David Anderson: Look, this is, you know, this is the third year or one year transformation. We've been down a couple of blind alleys on the way here and I think that's okay. By the way, what we learned was a strangler FIG approach or ability to transition through a number of interfaces to allow us to move in a migrate. But it was really in the end too hard for us. So yes, we're doing three really big drops. There will be iterations in between clearly. But fundamentally, yeah, it's big bang stuff. The data architectures were too different, the transitional interfaces were expensive to do, didn't make any sense. And so ultimately we started off that way and ultimately we came back off that, that principle and moved towards a big bang approach.
Nathan Bush: 2023 might be the year that you have to unravel everything that you know about loyalty. New global research from Shopify showed that Australian customers are highly likely to switch brands in order to save money. And here we were thinking loyalty points will keep us together forever. While the battle for customers hearts will be driven by pricing in 2023, they will not sacrifice customer service in the process. 2023 might be back to basic retail but it doesn't mean that the opportunity is any less. Treat em lean and keep em keen. I say to view more resources to help with your 2023 planning and see how Shopify can take your e commerce business to the next level. Visit shop shopify.com au today.
Nathan Bush: What did you mean by strangle a fig approach?
David Anderson: You're asking. I mean some ways you're asking the wrong guy. But I think the issue here is that what you think about strangling a fig is it moves through over time, right? It wraps around and moves. That's the idea of it. The idea is you can decommission features over time as opposed to having to just cut through the whole thing in one go. And so we thought we could take a strangler figure approach which was to say, well, maybe we can replace just the PIM functionality across our three brands but keep everything else as it were or a certain functional feature over time and we could replace as we went along. But ultimately the level of transitional interface, what you got to do to make that a reality, didn't work for us.
Nathan Bush: And I can imagine this isn't your first digital transformation project. If you could give advice to anyone considering a digital transformation project in their business, from the lesson, say from the last three years, what comes to mind for you?
David Anderson: So change management is very important. So taking the team on the journey is really important and it's amazing in a vacuum the stories that will be created and so what does it mean for me and why are we doing it and what are the outcomes and what's my role in it? Really important. I think second issue is to recognize whether you are capable of running and changing the business at the same time. In our case we discovered we were probably a little bit too big and a little bit too small. I think if you're five guys in the garage, you can pivot left and right easily. Yeah, when you're 10,000 people you can have a whole change and transformation team and you can invest in that approach. When you're a couple of hundred people, you're actually pretty busy running the business. And we've used the phrase changing the, you know, changing the engines in the airplane mid flight, which is a, you know, I've heard many times, but it's really challenging to do that. And so finding the right strategic partners to come and work with you to help you through that hump is important. So we work with Cognizant. They've been a good partner. They've allowed us to create capacity and bandwidth in our business. They've allowed us to build an effective distributed model. I think the next part of that though is to recognize in the transformation what's your core ip and to ensure that you are building to retain that IP in your business. And so recognizing your knitting, really investing into that part of it, ensuring that you're building that IP and you're retaining it, you don't demonstrate too much key man risk, you don't outsource too much of it is part of the important process of decision making. I think the other thing I'd say is that if you can't get it done in 12 months, you're probably biting off too big a scope.
Nathan Bush: Okay.
David Anderson: It's exhausting for an organization and I think if I was to start this again, I probably would think about it in smaller bite sized chunks.
Nathan Bush: Does that mean you chunk it for six months? Assuming it's going to take 12 months.
David Anderson: It's obviously not your first digital transformation either.
Nathan Bush: No, but I like what you were saying there around the 12 month blocks, I think that's really smart. But also around thinking about how your retail business is going to operate at the same time, because I've been on, I've had experience in both is like I've run projects trying to using operational teams but then I've also been the person brought in to do the project work. So the operational team can continue on day to day. Yeah, you can't kind of have both, right?
David Anderson: Well that's certainly been our experience. It's very trying to do both and I think that creates a lot of tension, friction, frustration and the lack of engagement. And if you're not growing as a business, the first thing you should check is the engagement of your team, right?
Nathan Bush: Yeah.
David Anderson: If you don't manage those activities that change well then that's, that's going to be a likely outcome.
Nathan Bush: You mentioned their change management and I think people either understand change management or they throw it around as a term that they go, I think I should say change management and I'll say that we do the right things but there's actually no structure or formal process behind it. How have you structured change management within Big Red group for a project of
David Anderson: this size, well, under the program director, he has a change team and their job is to understand the stakeholders involved and to do a change assessment. That is to understand what's going to be different in their worlds in the as is in to be and to recognize the capability or training needs in that, but also to take them through the grieving process of change. So I think that's one piece of it. Another is comes back to the fundamental culture of the business. As a high growth business, you're constantly in a state of flux and change. You're constantly probably taking on too much. You biting off more than you can chew. Your grasp is beyond your reach, whatever the right phrase is. And so I think also making sure that your organization feels comfortable in that uncertainty and is supporting that uncertainty, it can be a real tax on employees and businesses if you're not careful. And so the other part of that then the only answer to that in my experience has always been honesty, transparency, humility, owning your outcomes, having courageous conversations. There's not rocket science to these things. Most people understand that shit happens from time to time. And if you're really upfront about what you're trying to achieve and why you're trying to achieve it and you take on courageous conversations up front, you don't see it under the carpet. If I thought about things moments in my life, I'm most ashamed when I didn't have that conversation. And I think your ability to do that and to be really straight about it is what makes it digestible.
Nathan Bush: I think toughest conversation you've had over
David Anderson: the last three years in work. You mean we can go wherever you want? I think toughest conversation is with people that you care deeply about in their professional lives where you need something different from them and you eventually demonstrate the consequence of the lack of change.
Nathan Bush: Yeah. Yeah. I just finished reading the Hard Thing about Hard Things by Ben Horowitz and one of the points that he made, great book. And one of the points that he made is that the people that are right for your business might not be people that are right for you in two, three years time. And it's not because they've done anything wrong, but because the business has changed and the business will always evolve. Their role isn't the same role as what it was three years ago. And I think the same goes for technology change. Right?
David Anderson: Well, I think it's really one way point and that's been the case in our journey over the last four years. The people that were with us at the start of Red Balloon were fantastic, but didn't have the skills or understanding to run the business as it is today. And I think it's not a prison sentence. Right. Like, you know, you, you do get to move through and move on and take, take what you can from each chapter. And that's a, you know, and I think that's really great for the employee or great for the person that comes and joins for part of the journey. But you don't have to be on the, you know, the train all the way through and do that. And sometimes it makes sense for people
Nathan Bush: to step off in saying that. I did read that Big Red group is one of Australia's top 25% most engaged workplaces. Yeah. Which is an amazing award. What does that mean? What does that look like for you?
David Anderson: So I put it down to probably three things that I think are important around that. First of all is curation. So winning cultures take curation. They take, you know, the grass is green is where you water it, right. Like you have to invest in curating and role modeling from the top of the business down, what you want culturally as an organization. And I think one of the things I talked earlier on about, for me it's always about relationships are important to me. Creativity is important to me, winning is important to me. And I think if you can own that as an organization culturally, then it can flow down. So I think the first thing, curation is really important. Culture, therefore, is just a set of behaviors that support that. And then you just need, you need systems that, that recognise those behaviours and also in how you hire and promote as well to ensure that not only the team you've got understand and recognize the behaviors that we want as an organization, but also you want to make sure that the people that are joining the organization understand that too. And so our approach around transparency, particularly around strategy and performance, is an important part of that. And we really. I'm extremely transparent as an individual. I try to be with the whole organization. The final thing is we've always honored community and connection and in this case, we get to eat our own dog food. We get to do lots of experiences as an organization to create those boundaries of connection. Social capital is incredibly important and it's what you learn outside of the kind of the nine to five of the day job that creates that outcome for you. And so I think they're the things that are really important. And when we don't honor those three things, that's when we lose a step and when we take ourselves back to those basics we get the outcomes we want.
Nathan Bush: When you talk about systems to reward and measure performance, what does that look like?
David Anderson: We run quarterly goal planning. We run a ready recognition rewards platform that allows you to recognize your peers and then they have points that they can use to redeem for different things. Typically we hope experiences, but you can get other things as well. And we also try to align our STIs, our short term incentives or annual bonus plan around performance and the performance measures in that are not just financial outcomes, but actually reflect on how did you turn up versus the values in the business?
Nathan Bush: Good. I love them. Great examples. Really tangible things that others can take into their business. One other question that I had, and it's kind of looping back to where we were in the conversation when you mentioned that you own four and a half percent of the 5% gift market there, which is phenomenal. And I know for a fact that I have at least three big red group vouchers sitting in my desk drawer next to me waiting to be used.
David Anderson: Thank you.
Nathan Bush: So phenomenal. And we use it a lot in our business is a big part of the business model. People like me who just don't get around to redeeming.
David Anderson: Look, when you buy an experience about on red balloon, about 80% of people are buying a voucher because about 85% using that site are buying a gift. But on Experience Oz, there's less than 1%. It's all a booking. So the vouchers you're really talking to are typically on Red Balloon. They might be on adrenaline. There's about 750,000 Australians today who have some form of currency in their sock drawer alongside you. And we think of that as currency. And you can use that whilst it suggests something you can do, you can actually use that value for anything you like on the marketplace. And we over the last couple of years have extended through Covid, we extended the lifetime of those vouchers to five years.
Nathan Bush: Oh, wow.
David Anderson: To give you the maximum amount of time to realize and to find it in your sock drawer and use it. And we feel like after five years you probably had the opportunity to use it. And at some point we have to therefore realize that voucher or break that voucher. But you know, it's a much smaller part of the business than you might imagine it would be because ultimately this only works if we're delivering customers to our suppliers. Yes, yeah, yeah. And so we want the marketplace to work, man. You've got five years to find your way to do so. Nathan, how far, how long have you Got left.
Nathan Bush: I think I've probably got a good
Nathan Bush: three or four years almost.
Nathan Bush: But what I loved about it when
Nathan Bush: I first got it, I'll tell you a story, is that someone got me a V8 racing hot lap and I couldn't think of anything worse. I'm not a motorcar kind of guy, right? And I was like, oh, what am I going to do with this? Like, yeah, who am I going to give this to? And then I went on the site and had a look and I was like, oh, you can use this for anything you want. So I was. I've already planned my snorkeling trip, so I'm going to go out and do a bit of struggling instead.
David Anderson: I love that.
Nathan Bush: But fantastic for. Especially for people who might not know that. Well, really great gift idea. I have to ask you, what's your next experience on the list? I can't imagine you've. Or have you tried everything that you sell? Come on.
David Anderson: I haven't tried everything. You know what? You know, Ben tells me that there are whales in the ocean and every time I go out on the whale boat, I never see a whale. Like it's, you know. Do you ever have that thing that you were held down in the car by your brother in the back of the car? Oh, did you miss that horse? It's the same thing, you know, my neck snapping left and right. Everyone shouts whale. So I probably, I probably would probably take Ben up on the Sea World whale Cruises experience and try and get close back to nature.
Nathan Bush: If there's anyone that can bring whales out, it'll be Ben. You'll find.
David Anderson: Yeah, exactly. Yeah, exactly. So I think whale watching only because I've done it a thousand, ten times, but I've never actually seen a whale. So I want to go out and see a whale. That would be my. That would be my next experience.
Nathan Bush: You're going to kill me. I've seen Wales twice over the last three weeks. Once in Newcastle, once on the Gold coast, but I wasn't out on the boat, so I wasn't that close. But yeah, great one. And for context, for people listening, as I know Ben as well, so, you know, obviously experience. I was a great business there, the
David Anderson: Gold coast, great business and great. And a great entrepreneur and a great human being. So, you know, that's a good example of us acquiring a company and in part because the chemistry was right. And Ben today runs our product architecture. He's responsible for the product outcomes for the $16 million transformation we're currently in the middle of. So he doesn't have time to be out on a whale boat right now
Nathan Bush: and he thought being an entrepreneur on the Gold coast was hard. Now he's in charge of a transformation project.
David Anderson: Yeah, that's right.
Nathan Bush: Now, David, you've given us a hint of what's to come and to hit that one experience every second. What's next? If we look at the next 12 months, what's next for yourself and the Big Red Group?
David Anderson: We're focusing on finishing out this transformation. We've got to get that right. And we're six weeks away from release one, but we're still nine months away from release three. Right. So number one focus for us as a business is to deliver that transformation and to move us from a marketplace business to a platform business in the process. We want to be in a world where we're thinking about our business in product lines and platforms in 12 months from now as opposed to projects. And we want our domestic business to be the great example as drinking our own champagne on our own platform. Over the next 12 months, we're also going to continue to focus on the wholesale opportunity. We've never seen such interests, if you like, internationally inbound for solutions there. So we'll push on with our wholesale business, we'll push on with our industry business. So we're launching our booking engine platform platform which allows our suppliers access to our tech. So really pushing out products that come out the back of our transformation. We're in the middle of. In parallel to that, as I hinted before, we can't get it done in Australia alone. So we're increasingly thinking about what our international acquisition strategy looks like and I'm spending more time thinking about that M and a strategy to try and get us overseas.
Nathan Bush: I love it. Some big thinking and it's not like you're following the footpaths of others. You're creating your own path. There's David, if we've got listeners listening to this and they want to get in touch, maybe they are running their own experience or maybe they are looking for an opportunity inside the Big Red Group, what's the best way for them to get in touch?
David Anderson: We're always looking for amazing talent and so if you want to work on some leading edge tech or you want to work inside of a leading edge data platform, or you want to help us try and acquire the next greatest experience, we'd love to hear from you. You can reach out to me on LinkedIn. I'm pretty easy to find there.
Nathan Bush: Beautiful.
Nathan Bush: David, thank you for joining us on
David Anderson: ADD to Cart you're very welcome.
Nathan Bush: I'm glad we got that car wash question out of the way early. It would have bugged me the whole
Nathan Bush: time if I didn't ask it up
Nathan Bush: front, but it's definitely a money making business. Here are the three other lessons that I took from my chat with David Number one the one off Dutchman. That might be a book title. Ideally we want lifetime customers in E commerce, but that's not always realistic. David recognized this, especially with the Dutchman who had his one off bucket list trip to Australia and that was okay. He didn't want to miss out on that customer. So he has built the wholesale model giving the fishing rod over to help facilitate this without losing focus on on his core business of looking after the lifetime customer. So a great lesson and you don't want to lose one off customers. Just make sure you've set your business model up right to be able to service them with the right amount of effort. Number two Trading down, not out David mentioned that Australians when times get tough, they trade down not out. That means that they won't totally give up on what's important to them, but they may replace it with something cheaper for the time being. So if you're in a situation where the economy is really hitting hard on your best sellers, consider is there a cheaper option that you can offer just for a while and target this towards your lapsing customers so you don't lose them completely. And number three operations versus projects. Not everyone is going to do a 16 million dollar transformation project, but for every project, whether that be a new wish list feature, a warehouse move or total technology transplants, you need to seriously consider whether your current team can play their role while maintaining the operational momentum. This is not a decision you can kid yourself on. The last thing you want is cash flow drying up or unexpected issues while your team take their eye off the the day to day ball and start
Nathan Bush: rolling out transformational projects.
Nathan Bush: To get the highlights of today's episode, head on over to add to cart.com and sign up for our free newsletter. Each Tuesday we will send Monday's episode summary links and discount codes for you to go next level on. And if you're looking to explore your next E Commerce opportunity, come and Visit us at eSweet. We're a dedicated E Commerce talent agency connecting the best E Commerce talent with the fastest growing brands in Australia. Head on over to esweettalent.com where you can download the free E Commerce Salary Guide and sign up to our weekly E Commerce job emails. Thanks for listening and until next time, Keep those customers adding to card.
