Carl Hartman: I'm about output, not hours. I just focus on things where I can move the needle versus doing things. Just because don't be short sighted on here and now sale. I mean just always make sure you're thinking about that lifetime value, particularly if you're in a category with growth. There's a lot of people say oh you gotta be first and I actually disagree. I think in most cases you want to be second.
[Voiceover]: Welcome to Add to Cart, the podcast that Express delivers all you need to know in the fast moving world of E commerce. Every month, Nathan Bush from 12 High and an E commerce industry expert will share the news, recent and insights that you need to know to keep you at the top of your game and of course keep your customers Adding to Cart.
Nathan Bush: Hello and welcome to Add to Cart. My name is Nathan Bush, host of add to cart and e commerce consultant at 12 high. My guest today is Carl Hartman. Now it's hard to put a label on Carl because of his varied interests and investments. He calls himself a serial entrepreneur, but I think he's a brilliant problem solver. Maybe it's one in the same thing. I first met Carl back in the days of Tomando, which Carl co founded and was CEO of. Now for those of you who aren't familiar with Tomando, it was one of the first, definitely in Australia, one of the first aggregators and intelligence for freight which helped retailers deliver effectively. There's a few in the market now, but Tomondo was the first. You'll hear more about that today and I as well as where Carl sees the future for fulfillment in Australia. Now, since the acquisition of Tomando by NeoPost back in 2017, Carl has gone on to be the co founder of Lyre's Non Alcoholic spirits as well as Shortlister, which is an intelligence platform to attract and retain talent. Now with Lyers, Carl is back in the seat of a retailer and his observations on this side of the fence are fascinating. Lyers has won multiple tasting awards and recently raised $16 million in capital to continue their expansion across 11 countries. So enough fluffing about thanks to our partner Shopify plus and Signet. Grab yourself a stiff drink or maybe a non alcoholic drink and join me on the Liars to Mando and shortlisted story with Karl Hartman.
Nathan Bush: Carl Hartman, welcome to Add to Cart.
Carl Hartman: Thanks for having me Nathan.
Nathan Bush: Pleasure. Now Carl, we briefly knew each other through the Tomando days and we're going to get there. But if I look at what you've been doing since you're co founder and director at Lyres, you're co founder and chair at Camparo Adjunct. Campano. Sorry, I can't read my own writing. Adjunct professor of entrepreneurship and innovation at uq. And you're sitting on a bunch of boards calling yourself a serial entrepreneur, which you no doubt are. What the hell does a typical day look like for you?
Carl Hartman: Well, if I'm really honest, my day actually starts with me checking the weather for forecast because I'm quite blessed to live in Noosa and the weather really will determine what my, my sporting activity of the day is going to be. So I was, I was just actually thinking I should probably make a flowchart. As in, you know, sun is shining, no wind, feel like being dry, cycle feel like being wet. You know, wakeboard or jet board winds up. Oh, kiteboarding it is. And I have been known to reshuffle some of my schedule around for a board meeting which is actually going kite surfing in the afternoon instead because the wind picked up. No, look, I think relevant to the story is post to Mando Exit is one of these interesting things where kind of have this reflection period because to an extent when you have a startup, it's your whole identity for a period of time. And I was living in Silicon Valley and lived there for four years. It was a great professional experience. But it was one of those things where I did think about coming back to Australia. I think once you've spent some time abroad, you do appreciate the, some of the finer things of Australia which you perhaps took for granted. You know, simple things like free health care and clean beaches and yeah, you'll never complain about Medicare again, that's for sure. And it was one of those things where I mean, the original thought was about Noosa angle was like I remember coming here as a kid saying, yeah, well I'm just going to live there, it's such a nice place. And also living in San Francisco for years, my peak travel year, I actually did 230 days and I've averaged 150 days of international travel a year for the last 10 years. So pretty much my entire, my whole professional career, I've just been like a serial traveler, right. And I can explain how that's led to more startups. But I remember just when I was living in San Francisco, I was just coming back, it was gray, it was cold, and I'm like, all I'm doing is traveling, coming back and the weather's not great. Apart from this, you always get a pretty magic Indian summer sort of October, which was quite nice. But you know, majority of the year. It's nice, but not amazing. And I'm like, well, next place I live, I'm going to live somewhere where when I'm at home, it feels like I'm on holiday because I foresee myself traveling a lot for the foreseeable future because that's just my pattern of existence. And I remember it was I had kind of founded Kimpono first because my biggest learning from the Tamando arc was really about people because, you know, had grown that to a couple hundred people in size, multiple countries. And you get to this point of your career where it's like, you know, the business is capitalized, it's stable, and then the bane of your existing existing just literally becomes people. It's either hiring the right people, like just finding them. When you finally find them, you've got to keep them. And there's definitely some gems trying to attract talent in Silicon Valley where you're going up with head to head with literally companies that have a limited budget. And I remember interviewing some people and they're asking what's on the menu for the week? And I'm like. And they're like, oh, I only work somewhere where there's a catered lunch. And you're like, holy shit, some people are entitled. And then, you know, you reflect on, I guess, the story thus far. And I remember a couple of times I made some absolutely shocking hires that caused lots of damage to the business on paper, looked amazing. Get them in the business and they're just not the right person. And then I had the complete inverse of that where I had some people that literally you read the resume and you probably shouldn't like even interview them, but you get them in, you upskill them and they become your next superstar. So I remember just Talking to other CEOs, just thinking, Look, I just wish there was a platform that could tell me who I should hire, who I should fire, who I should train, who's going to be obsolete due to automation. Could be something simple as a chatbot or a traditional manufacturing business. It could be robotic automation. But when you do have that situation, how do you upskill someone? And there was no God view to talent. And we did all the right things. We put in a HRS Human resource platform, we had an applicant tracking system, but all they sold for was process, not intelligence. So basically teamed up with someone, went to uni with and we cracked on, we built it and you know, that's growing, growing like a weed. Covid's been kind to it in the sense that if you're doing any advertising for staff at the moment you probably get somewhere between five and ten times more candidates and you need to I guess have some without a data driven way of getting through that you're just literally wasting time because this most HR people have so much dollar productive stuff to do with their time. And then at the same time once you've actually brought someone in business then you've got to keep them there. And people now whole career of learning and upskilling. I mean take the E Comm industry as a great example. It's like just you know, something like Magento. You wrap your head around Magento 1. Finally well then there's Magento 2 and then there's all the extensions and then there's all the add ons and I've got the whole ecosystem. There's a lifelong learning program that comes with you know, being employed these days. It's not just how you get a degree and that's it for the next 30 years. So yeah that's, that was one where I felt passionate to solve that problem because it was the source of frustration. And then I think with liars it was a similar sort of journey. And I should mention I did try early retirement in Noosa that lasted about 12 weeks and it turns out I need to be busy to be happy. I just not the sort of person that can do. I'm all about work, life balance now it's taken a while to get there but I literally just have to keep busy because it just fuels my fire.
Nathan Bush: How many hours a day would you be working now compared to when you were like at the peak of busyness?
Carl Hartman: Look, probably, probably not dissimilar to tell you the truth. It's. But I'm about output, not hours. I just focus on things where I could move the needle versus doing things just because I mean that's probably the main difference to being a post exit founder versus like when you're a first time founder you will every hat and you'll do everything just because it needs to be done. Post exit you're like, it's almost like this self reflection. You're like I'm really good at this so I'm good at raising capital strategy, you know, thinking what up we should be doing next. You know, make me do a 30 page sort of plan and make sure Johnny Jim Jams has done item 26B. Look, there's just people that are way better suited for that in terms of both personality and skill set. So just I think just playing to your strengths, right? And Just make sure every day you get up you deliver value, whatever you're working on. So yeah, back to the lives thing, it was interesting. I was doing a lot of business in places like London and New York, and particularly London. I mean every meeting after 4 o' clock you just get given a beer in the hand. Like you just, all the meetings just migrate to a pub and whether you ask for a pint or not, there's just one that's given to you. And I remember just thinking to myself like, I just can't drink every day. And then every so often I'd say, I'll just have a water. And then people would give you hard time saying, I thought you're Australian, what's wrong with you?
Nathan Bush: And originally from Queensland, you should be
Carl Hartman: basically a functioning alcoholic by that definition. And it's just like if you're constantly traveling, you're always at the front of the plane. To be honest, it was a combination of you're constantly tired from travel too much, just socialization which comes with lots of meals and booze and you'd end up, I think putting on the weight, not feeling great. And remember just thinking to myself, I just wish there was drink that looked like a real drink, tasted like a real drink. No one actually knew I was having like the lower, the no or low alcohol option. And you know, obviously if you take out ethanol you got a lot less calories which is definitely good for the waistline. And at the time even the, the original non alcoholic beers on the market were just awful. Right? Obviously even they've come a long way. And it was one of these serendipitous things where I came back to Oz. I joined the board of a maid of mines company which is a full stack fulfillment business. And he was mark, he was working on these, the liquids that I guess now are liars. And I remember just thinking, I think the original plan was to sort of spin up like a venture studio model and bring these things to market quicker than the big booze companies could. But I think my head was just like, holy bejesus, this is big. As in let's not give away the ip, let's have a good crack at this ourselves. And we incorporated the company, did a quick lap around the world and I think by the end of that first one it's like distributors in six countries, forward order commitments and you know, we knew we're on to a winner. And yeah, I mean flash forward a year, it's now the world's most highly awarded non alcoholic spirit brand. It's just, it's almost just non contested in terms of I think we're 50 something awards. I think a couple of people have some low single digits but you're not quite the breadth we have. I mean in fairness we did launch with 13 varieties which does help win the medal count when literally every product you have wins an award. I mean they're all. It's like if people go what's your favorite? It's like trying to ask your favorite children. And yeah, Amoretto the other day won a 98 points in a spirit competition. I mean that's the highest score any non alcoholic spirit got. And remember last year was controversial. We actually thought we'd be cheeky and enter it in a double blind tasting with against real booze and we actually won a double gold. And then they had to go look at their, their rules to say can they award a double gold in an alcoholic category. But there was nothing about minimum percentages. However, this year they've actually calculated they've created dedicated not out categories because there's a bit of protest on that one. But hey, hey.
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Nathan Bush: You're a bourbon drinker, aren't you? Like that's your, that's your drink of choice. How does the Liar's Bourbon compare to your bourbon of choice?
Carl Hartman: Look at. Well yeah, my bourbon of choice is a Pappy Van Winkle which is designed to be have on the rocks without anything spoiling it even just pure neat because it's so complex. But look, if you make an old Fashioned or any of the mixed drinks with, with our spirits, they are designed to act and taste and feel exactly like the reference spirit of its category. So ours is a lot in style to a Jack Daniels makes a great Old Fashioned. Obviously it's not designed to be drinking neat and that's simply because when you take out ethanol, ethanol has obviously a lot more molecular weight and it obviously burns as well. So it's, it's not, it's a different mouth feel. We've Got as close as possible with science. And look, it's won lots of awards. So it's, it is very good. And to be honest, if you follow our recipes on the website to a T, most people find them indistinguishable, apart from the obvious burn of alcohol. Um, but we have used different things like, um, different chili and pepper compounds, um, to try and sort of emulate it, um, without it being overbearing.
Nathan Bush: Yeah, it's a fantastic idea. And I've heard you talk about people using lies as like a wedge drink between alcoholic drinks to keep their night in order and keep them on track. What are the other use cases you're hearing around why people go to liars rather than the traditional alcohols?
Carl Hartman: Look, I think it's just about giving people options. I mean, the whole thing with liars is about enabling mindful drinking. We have a bunch of demographic where they're not drinking and that could be for religious reasons. It could be due to current circumstantial reasons, I. E. Pregnant, breastfeeding and so forth. I mean, they're the obvious ones. To be honest, I'd say our, our biggest demographic is people that just trying to be healthy. And the interesting thing we saw through lockdown was, was very much around two types of, yet a simultaneous lockdown almost all around the world, which was unprecedented. And there seemed to be two groups of people, like group A, which is, you know, very much they just got into the day drinking. They might have been on some type of, you know, wage subsidy scheme, hating on life a little bit. Then there was a massive, massive group being like a second group which was saying, hey, this is a health crisis. I'm going to take the time to sort of just focus on myself. And look, I personally fall into this category. I've gone from traveling. I think the minimum I've ever done in the last 10 years was 100 days. And I've got routine for the first time in my professional career. So it's literally. I was half joking at the start of this recording saying, hey, check weather. But I literally do that. I'm like, I said, I find an hour a day, just start the day. Particularly in that part when lockdown said you're only allowed to go outside for grocery shopping and exercise. And if someone does the grocery shopping, you're left with the only reason to leave the house legitimately was exercise. I was like, oh, challenge accepted. And you start running every day and turns out in your 30s that's not something you should do every day. So then you start Cross training with the bike and turns out that your ITB will get aggravated if you do day on day off intertwined cycling and that without stretching. So then you start to put cross training in and before you know it you're like, oh, maybe I'll just do a triathlon. I've never done one of them before. Just compounds, right? But it's interesting, there's so much data that's come out saying, you know, what I found is actually what half of society basically did where they all got on Strava, they started competing with their friends. I mean I'd love to see Strava's user growth over the last six months. I think they would have had a, probably the best year ever. And then so many people are so goal driven, so they're like, okay, well I might just start training for whether it's a triathlon or people start feeling good about their health. And then I think the macro effect here is you start to become, you make a lot of progress, you start to feel better. So you start to question your relationship with alcohol. Like do I need to drink every day or do I start to, to do wedge drinks? And you know, in my case, I always love to be social. But you know, midweek, if you're training early in the morning, you may not want to have alcohol and be hungover because then your, your probability of training just decreased a lot. If you are going out there like living on the Sunshine coast, you know, you drive, you drive everywhere, right? So that limits to how much you could consume. But I mean take for example we've, we, we with, we've got an aperol equivalent which is called Italian spritz. You can either mix that with a non alcoholic Prosecco or real Prosecco. The real Prosecco brings the ABV down from 22 and a half percent to 4 and a half percent. So based on the content of the drink, you've got something that's not even half a standard drink where the original recipe is 2.2, 2.2, you have one you can't drive home right at 0.5. I mean as a guy, you could literally drink four of them an hour and still drive home, you know, and then probably two every subsequent hour. So you can either use that in a wedge drink format and sort of prolong, say a social outing, or you might just say, hey, I'll have the non out version and hey, you can drink unlimited of those and stay out as long as you like. So what we found has been, been a really interesting sort of use Case that's popped up is say restaurants that are doing lunch trade. They're getting people up from buying a sparkling water to maybe two or three cocktails. And might not sound like much, but that could actually translate to a 30 to 40% revenue increase which particularly at the moment when their businesses have been so negatively affected through lockdowns and Covid. And if we give them a boost, I mean the data shows for itself, right? And I guess that's probably what's made Liars differentiated effectively. A lot of the early movers in the space were all craft and new flavors, which you kind of have to be an expert mixologist to really recreate the flavors and drinks people know and love. Whereas with us the whole idea was just to to make it as easy for the bartender is reaching for a different model. So like they all know how to make the top 50 SKUs off the top of their head, right? So we're talking espresso martinis and negronis and so forth. If all they have to do is like, okay, if I'm making a non alcoholic negroni, I use the Liars London Dry, I use the aperitif Rosso and I use the Italian orange. It's one for one. Or they might do low proof and they might use their house gin and out to aperitifs and they again they bring the alcohol content down to make it a more sustainable is probably the right word drink. So I think because the cost to serve and the speed to serve, which are really important things in the on trade are basically the same. The adoption rate for our product has just been chalk and cheese compared to pretty much everything in it. And I mean the measurements we've gotten so precise. If the recipe calls for 30mil, ours will be 30mil. Some of the other alternatives in the category are like 50 or 60. So both the cost to serve gets higher because they're a similar price point to us, if not more expensive if they're craft. But it throws all the recipes out and the bartenders get frustrated. And then I think just to build on this, what we saw through lockdown was the home bartender explosion. So everyone's at home, home. They're somewhat, I don't say bored. I mean, let's just say people had more time on their hand with, with commuting coming back. So they're like, oh, I've never made a cocktail before. So we saw a lot of the early data and we started to all our brand ambassadors who we paid to go to bars and restaurants, we just pivoted them all to do free Zoom master classes. And it means probably the best thing we could have done from an econ perspective. So even if you bought a 45 bottle, we would give you a free Zoom masterclass. And you know, we found we were educating people about the category where they want one bottle. Next thing you know they're buying a whole case of different variants and they're saying what else can we make? And, and we've really invested into our community and I think that's we have been fortunate that we were well resourced, we could do that. But like if you think of this from an LTV perspective, sure, I mean your first sale might be negative if you add up what the cost is in terms of people's time, but we can see in terms of repurchase and loyalty and we can calculate an ever growing LV TV and we're like, wow, this just explodes the lifetime value of the customer. And I think, I mean that's definitely a lesson would love to share to everyone is, you know, don't be short sighted on here and now sale. I mean just always make sure you're thinking about that lifetime value, particularly if you're in a category with growth. Because if you can become the category captain. Yeah, like this is something which may change their trend forever. Right.
Nathan Bush: Because that was going to be my
Nathan Bush: next question to you is you guys were fairly early on the no. Or the low alcohol trend. What was the launch strategy there? Was it to get bars and clubs using LIES as their preferred no alcohol spirit or was it to get customers to ask for lyres specifically?
Carl Hartman: Well, pre or post lockdown because let's
Nathan Bush: go back to the start.
Carl Hartman: So I'd say yes. I mean we're actually not the first. There was obviously some early movers in the category like Seed Lip and Cedars both back from by Diageo and Pernod Ricard respectively. But I'd say we're the first to do this at serious scale and it took us a year. Obviously we've been venture backed which has allowed us to do it, but we're now the most widely available in terms of number of countries. Current counts 30. But literally check back every month because we just keep opening more even in the middle of a pandemic. We were fortunate that we did a lot of travel pre border shut. So we'd already built a lot of these relationships I think and we've in the last 12 months we're up to 11 Ecom countries and we've got a few more to go by. The end of the year. So yeah, hopefully this, this time next year it'll be about double in both sort of distribution count and E Com account. And we have to actually do individual domestic sites and domestic in fulfillment because cross border for us is actually quite difficult because of regulation. So you've got things like the FDA or the tga. You've got all these different things when you're in the food catego that we have to comply. And it could be something as simple as the liquids the same but it needs a different label in some cases like the Middle east and China. Requires reformulation. Yeah. Like we're talking minor little tweaks.
Nathan Bush: Yeah, yeah. Given your background in logistics and fulfillment, was there anything that surprised you when you got into. Into liars?
Carl Hartman: Oh look, I think anyone that's ever had to deal with the FDA and the U.S. i mean. Yeah, that's an experience.
Nathan Bush: So you're classified, you're classified as food, not alcohol obviously.
Carl Hartman: Obviously that's right. Yeah, yeah. So basically if you're over 0.05%, you're right, you're. You, you go through all the alcohol control measures. If you're under, you're. You basically are in the food category. And it's just some of these regulations were written like 80 years ago. Right. It's just the way things are. Like we're going back to prohibition level rules. So anyways, you just got to comply with standards and labels and measures and you know, in some cases it's like Canada, it must be in English and French otherwise it's non compliant. So anyhow.
Nathan Bush: All right. I thought if was anyone who would have had it nailed, it would have been you.
Carl Hartman: Oh look, we were quick to I guess spin up lots of 3pls and the right model and we know the right strategy to put in terms of make optimal conversions. I mean, yeah, we get a head start there. But yeah, not with, not without it. I think it's the first time being on the other side of the fence as a retailer. Right. Which yeah, like it's a little bit more complicated than a T shirt, that's for sure.
Nathan Bush: Yeah, absolutely.
Carl Hartman: Yeah. So I think the original strategy was, you know, sign a distributor per country, focus on bars and restaurants, which obviously in the sector is of kind called the on trade. Then you do sort of off trade retail and eventually you do B2C to build a longer go ramp a long relationship with your brand. But obviously then the world changed and we were very fortunate that we had a very robust E Comm strategy from day one and Then when we got a bit scary there for a while where our primary revenue stream just kind of got paused, so we had to just pivot and put a lot of energy into E commerce and we fast forward tracked all the launching of our sites and you know, we went deep with Amazon, one of a handful of brands Amazon's taking global into all countries through their Launchpad program, which, you know, we definitely, definitely recommend for, for listeners. And it's in some, some sometimes it's just a simple thing like getting set up on the UK with all the, know your customer stuff is a pain and it's painful and being able to talk to someone, someone like Amazon is worth its weight in gold because you've probably just taken a six month onboarding into like a month, right?
Nathan Bush: Yep. Can you give us a little bit more detail around what that Amazon Launchpad looks like and how you partnered with Amazon?
Carl Hartman: Yeah. So Amazon Launchpad is a program that allow. So obviously Amazon has more SKUs than I ever knew even existed and obviously to get cut through there. Launchpads are programmed to help, I think, highlight some of the new SKUs. So they do lots of different things. It's from having a dedicated like new portal site which actually gets some pretty high traffic, particularly in the US where it's fairly well established, established. So people literally just go on to Launchpad and go, I want to look at new stuff. Right. It's helping create new categories within the search taxonomy so your products are found, it's EDMs, it's events, PR, like all sorts of stuff. So ultimately Amazon wants to have more unique SKUs than anyone. That's why probably the program exists. But I guess the added value for you as a merchant is helping get that cut through. And in our case, we launched on Amazon before we had our own site ready because our own site took time and Amazon, we just had to to deliver some pallets of stock into FBA and let the Amazon machine do the rest. Right?
Nathan Bush: Yeah. Was that also a testing ground for what markets and what products are really going to shift quickly online or you
Carl Hartman: kind of knew that already. I think we had a pretty good understanding and research. It probably just helps highlight that. And we keep getting surprised actually because, you know, we think we understand the market and then all of a sudden people latch onto one particular skew. Like for example, we found out that a top Australian restaurant's using our absence in a new cocktail. And absence isn't exactly the number one best selling variant in the world in terms of the spirits category.
Nathan Bush: It's not your Tuesday night drink, is it?
Carl Hartman: Not your Tuesday night drink, no. But again, you start to see some of these knock on effects where you might have, say, a venue of influence. They do something amazing and then people go, what a cool idea. And they can spread like wildfire. And yeah, even some of the Asian markets that skew is really popular where it's obviously going to markets like the US and our Bourbons is a bestseller. We go into the uk, our gin's a bestseller. You've got your obvious sort of cliches. In Australia, it's anything that makes a nice summery, refreshing drink particularly. So rums, gin, bourbon, all the spritzers sell really well. Yeah, Australia's a bit of a mixed bag. And of course we've got the Espresso Martini, which is the most popular cocktail skew in Australia, would you believe.
Nathan Bush: There you go. What I love about Lyres is obviously the product stands on its own two feet based on all the awards that you won and the success that you're having. But the branding of it's phenomenal as well. Like every time you look at a bottle or look at the website, it just draws you in. There's so much to look at and explore.
Nathan Bush: Did the marketing come first?
Nathan Bush: Did the product come first?
Carl Hartman: First?
Nathan Bush: How did that come about?
Carl Hartman: Yeah, so the liquids came first and then it's like, okay, we've got to come up with a brand. I mean, basically we took inspiration from the Australian Lyrebird. So a big part of our brand identity is being as close to the original base spirit or the spirit of origin as possible. Mark and I are both Australian, so we're like, okay, we need a nice Australian connection. Because Australia, when it comes to, to products, particularly food and beverage, has a really, really good reputation globally. Particularly if you're exporting. If we, I mean, we manufacture here, we and we export to Asia. If it's perceived as a premium Australian product, I mean, that's the promised land, right? So we said, all right, well, Lybird, it's, it's nature's ultimate mimic. So that the Lybird can hear anything from Mozart to, to a chainsaw and recreate the sound. And we're like, that's where we're going mean with playing on this whole mimicry angle. So then we thought, well, a lot of the terms. So take gin for example. That's a protective term. So we can't actually use gin on the bottle because, you know, we're not, we're not a gin. Right, because gin has to be Made to a very specific, specific, you know, standard and, or bourbon, I mean bourbon, you know, you must use ex Kentucky mash, whatever it is. So that, that's, that's. You need to come from a region. Right. So, and, and so on and so forth. So, and we look, we've always played by, we do see some emerging businesses, you know, just saying, oh, we're a gen alternative. I'm like, you're going to get sued. The question is just how long until someone sort of throws a rock. Because don't forget you're in a category with hundreds of billion dollar sized spirits companies that won't sort of be very forgiving if they feel that there's erosion of their core, you know, their core assets. Right. So, so we figured. Okay, so how do we start to tell the story? Well, we, we got to find this, this, the spirit animal, as in. So we're playing on the word spirit and the spirit of origin. So for example, the London Dry, which is our gin, it's got a pigeon because obviously pigeon is the most popular creature in London.
Nathan Bush: So it's that, that connection without actually having say, to say the word. The, the visuals and imagery. Yeah, imagery kind of does. It's fantastic. And did you guys put that kind of that sequence together yourselves, that thinking or was it kind of. Did you give a brief to an ad agency to do?
Carl Hartman: Yeah, so we were quite fortunate that I guess where Lyers was incubated came out of brandlink and we've got the award winning Kinetic Agency as part of that stack. So it was very much done. I mean, so BrandLink is a group that basically helps all FMCG customers go to market with everything from logistics to brand to launch strategy. So we had that capability in house and then obviously Lyers was I guess birthed out of that stack. So yeah, we did have an army of people behind us on day one that helped with that. But yeah, I mean the guys at Kinetic did, did a brilliant job and I mean they're all part of the Lyrez family.
Nathan Bush: Yeah, it's great. I mean you can see all the building blocks coming together to create this beautiful product. Right. So it's a fantastic story. Yeah.
Nathan Bush: I want to take us back, if
Nathan Bush: it's okay with you, to Tomando, because a lot of our E Commerce listeners would have either worked with Tomando or even worked with you yourself back in Tomondo day. So Tomundo started up in 2009 as I understand. Give us a bit of insight on how you came up with The Tomando vision. In the end, it really was the early days of E commerce then, right?
Carl Hartman: Yeah, yeah, yeah, totally. I mean you start to think of early days of ecom. There's like myself, Paul Greenberg, a few, a few other of the old of the OGs. But yeah, so look, I came up with that actually when I was in university. The iron is so Marco did lies with. We actually both worked at JB hi Fi in our university days. And you start to look at how intertwined fate must be that all these threads somehow like, you know, form together over. Over decades. Butterfly effect or something like that. But back then, if you think back 20 years ago now and plasma TVs were all the rage, what would happen is people would come into the store and say, look how much to get this thing shipped. And what would happen is we would go consult with a person in the storeroom, they'd have a magic piece of paper on a wall and it 50 bucks or 100 bucks, whatever it is. And everyone was commissioned back then, right. So basically the way that worked is at the end of every week you had to submit your commission and it worked both positively and negatively. So if you made money for the company, they're effectively at rev share. If you didn't, you had to deduct it from your commission because you sold something under the cell. So long story short with that is pretty much every time we try to charge for delivery, we got it wrong. And I was like, wow, there must be a better way for this. It was just something that was in the back of my head. And then after sort of uni I worked in the early days of News Corp, looked after the retail portfolio, saw all these merchants going online and basically what they were doing was just copying the American strategy. Putting free shipping, hoping for the best, and then freaking the hell out when their first order is from like Thursday island or regional wa and just taking a bath. In some cases, it's not just negative margin, it's like the shipping cost is more than the products. Even worse worth, right? So I was like, oh, this is a pain. And then sort of went from there. It was early days of Domain sort of really learned firsthand how to build something to market there. Just watching Domain sort of be a challenger to realestate.com and execute a really tight product strategy. And I think they've probably innovated far more at a product level than some of the incumbents there and just, you know, just chipped away as a challenger. So sometimes there's a lot of people say oh, you got to be first. And I actually disagree. I think in most cases you want to be second because you mentioned uni before. I give a lecture a couple times a year at UQ around entrepreneurship and obviously the average age of students. Now we probably start to show age, but I throw up the example of altavista and I get this puzzled look. I'm like, has anyone ever heard of this? And they're just like, no idea. I'm like, well, this was the first search engine when I had my dial up Internet connection in and you try to make a modem sound and they've never heard what a modem sounds like.
Nathan Bush: Come out and say, okay, boomer.
Carl Hartman: Like not quite a boomer, but, but, but you know, if you, I mean you'd probably be old enough to remember altavista, right? It was sort of like Russian roulette. You type something in and you just don't know what you're going to get. Sometimes it's an adult site, sometimes it's something with cats, sometimes it's actually the thing you're looking for. It was kind of the fun of the Internet and I think that actually spawned on the simpler time the I'm feeling lucky button on Google. That existed for a while, right? But interestingly enough, you know, sort of AltaVista. Then there was Yahoo, then there was Google, really. And then everyone thought Google was crazy. It's like, oh, search engines already exist. They just did it so much better because they had I think the prior art to draw from and I guess a way to sort of refine, you know, the model. And I also give the example of. I showed the most popular phone when I was in university, which was the Nokia 8310. You know, the one blue screen because it had, there was the first one that had a blue screen and anyone that was cool had the blue screen. And then you show up the iPhone example and say you would have never thought in like 20 years ago when Nokia had like 75% market share that they would be like, everyone just thought they were untouchable, one of the best tech stocks in the world. Then Apple just basically ate everything all because what started with the ipod, that metamorphosized into the iPhone. And then ultimately it was so much more than a device. It actually changed the way way that we interact with information. Right? I remember pub chat. Like in universe you can just make up stories. You can't do that anymore because someone will call or they'll ask Siri or you know, they'll basically just get On Wikipedia. I mean you got, you've got, I mean all the world's information is now truly democratized.
Nathan Bush: You can still, you can still run for US President though.
Carl Hartman: The fake news exactly doesn't fit your narrative. No, that's fake news.
Nathan Bush: Think Shopify plus is just for simple retailers. Well, let me tell you, JB hi
Nathan Bush: Fi is no simple business.
Nathan Bush: But when their old site crashed for two hours during Black Friday, doing nothing was simply not an option. Shopify plus was selected as their E commerce partner to help facilitate the fast growing $5 billion retailer. However, with over 200 dispatch locations, a reliance on a web of APIs and the ability to handle triple growth, it wasn't an out of the box implementation. But the results spoke for themselves. JB hi Fi cruised through a record Black Friday and Cyber Monday in 2019 without a hitch, have reduced average page load time by 15% and were even, even able to redeploy three techies whose job it was just to watch the servers to make sure it didn't go down. JB hi Fi and Shopify plus not just smashing prices, but smashing E commerce. To read more of JB hi Fi story and see other case studies, visit the customer section on shopify.com au forward/plus. I also remember too in those early
Nathan Bush: days one of the biggest things was on the other side is that couriers basically just inherited all this E commerce volume overnight. When they were like originally they were just taking parcels from businesses to businesses, right? They weren't set up for E commerce.
Carl Hartman: Well I think, I think you nail it there, right? Like so in the early to nano days it's like we would go speak to the carriers about E commerce. They didn't care. They're like, it's like not even a percent of the market. Like no. And then in fact when we first started we had had to hold the rates with the carriers because that's the only way that we could trade with them because they didn't have APIs or anything. So in many cases we had to educate world's couriers of okay, e commerce is a thing you need to have developer documentation and APIs and hey, if you can't do that, we'll be a partner, we'll do some of the heavy lifting for you and just drove the whole industry forward. So you know, it's so obviously I, the deal we did in 2015, that was the beginning of the exit and then that wrapped up 2017 and you know, like I can say openly like that definitely would have paved the way for so many people that came after like you know, in the Australian example it's the folks like Sendal and Ship it where sort of Sendal did the, I guess to Mando Model 1 which was the whole selling of rates making it sort of aggregated for SMEs and sort of doubled down on the carrier thing. And then shipit obviously did the second to Mando model. So I think it was one of those things with Neopost buying it. The CEO at the time had a big vision for shipping strategy. Then he retired. A new CEO came in and wanted to go back to basics. So definitely this is not the only time that this will ever happen within a business business. It's, I guess the best analogy to give is sometimes if you sell people a Ferrari doesn't mean they know how to drive it right. And can wrap it around a tree on as they drive off the, the parking lot. And look, big companies change strategic direction whenever they have a change of leadership. And that is just something that happens. And I think, I mean there's lots of eyes on Adobe with Magento right now to see where that, where that will end up because you know, I guess I've been through, through the industry long enough to watch, you know, Magento version one, then Magenta under ebay and then now Magento under Adobe. And you know, who knows where that goes.
Nathan Bush: We've still got things like I think Emarthis was recently bought by SAP. Totally SAP don't have a great history, but you never know what could happen out of it. Do you remember the day that you went, oh this baby isn't mine anymore? And what were your feelings like around that? Was it joy? Was it sadness? Was it because this is something you built from scratch?
Carl Hartman: It's a bittersweet. So I think when you, when you do exit, it's like you just kind of hope someone, you know, leans in the right way to give it its full potential. I think the hard part as an entrepreneur watching from the sidelines, you're just like, oh, I wouldn't have done that or I would do this or you know, like you kind of want to almost jump back in. But I think from, in my case I had a sort of a three month period where I'm like, I'm just going to try doing nothing for a while while. And then that concluded with me sort of investing in about a dozen companies and starting to myself. So yeah, that, that, that experiment was not successful. But, but I think, you know, it's your mind starts to like first you got this identity crisis. And then it's like, okay, what is the thing I want to solve next? Because I kind of was, you know, part of the reason for exiting. I was sort of done with shipping. I look kind of learned all I can and you know, you start to get a bit tired doing the same thing. And it just so happens it's like, all right, well I, I guess helping people, finding meaningful work and help probably the most important thing for companies around talent because that's everything right now particularly. It's even just been exacerbated with COVID because it's interesting seeing companies that hire well for culture right now are absolutely thriving because the whole company can work remote. Those that haven't and have a micromanagement culture or like this office hours 9 to 5 mean they're just not doing too well. And I think all of a sudden new, new ways of building teams and managing teams and thinking about talent. I think that the whole, like there's going to be some long lasting macro trends that emerge post Covid. I mean just as an example, the amount of people I've met in the last few months, just, just different. Seeing executives from tech companies, other very successful entrepreneurs that are all on the Sunshine coast now because they're just like, well, well, I don't have to go to an office every day. The team wants to keep working remote. So there's been heaps of companies that have said, well, you can work remote forever basically because this is working, because they've done the right thing. So they're like, well, I'm going to leave the city and go live in Queensland when the weather is better and I get a lot more house for my dollar.
Nathan Bush: Yeah. And I think we just, we just lost all our Melbourne listeners right then.
Carl Hartman: Oh well, look, we feel so, look, I mean in these situations someone always gets the short straw. But I can tell you the. I know a lot of Melbourne that have either rented or bought a house and said, yeah, I'm relocating. Yeah, because hey, I mean, if you're going to be stuck at home, do a two week quarantine and go live in Queensland for six months. I probably actually caught up with more Melbourne friends in Queensland in the last six months. Because if your circumstances permitted it, particularly if you're homeschooling your kids, I mean nothing says you have to stay there because the borders are still open if you're willing to quarantine. It's just you've got to have, I guess the ability to do that. But, but look, I mean my neighbor up here actually normally splits his time between Noosa and Melbourne. He hasn't made it up obviously, you know, riding it out with a family. But I was surprised he just didn't just do the two week quarantine because he would normally spend the winters up here. But there's a lot of people in Melbourne that actually have their holiday house up here, whether they buy or rent. So I do think you're going to see some long lasting demographics shifts because it used to be that cities and attracted talent because that's where the cluster of employment is. The whole game changes if you can work remote. And it hasn't been just say the Sunshine Coast. It's been from some of the empirical real estate data I've seen it's like north and south coast of Sydney. It's places like Ballarat, Mornington Peninsula in Melbourne because obviously Melbourne had a hard lockdown. But I know some folks that were fortunate enough to have beach houses and that's exactly. They just changed their driver's license, said I no longer live in Melbourne.
Nathan Bush: Yeah, yeah, exactly.
Carl Hartman: If not right.
Nathan Bush: And I think it's been long enough
Nathan Bush: now that people go, oh this isn't a fad. Like we've kind of settled in into our ways of working and sure there might be a little bit of a rebalance at some point. Do you think also we're going to see businesses relocating out of those major cities to follow their employees?
Carl Hartman: Yeah, absolutely. I mean there's like nothing that says you have to pay all these massive city based rents. Right. I mean I jokingly said a while ago it's like with Kimpono because I mean we're most of the staff in Brisbane, we've got contingent in Sydney. But I've said why don't we just all like go to the Sunshine Coast? Because normally you've got two flights a day to Sydney, it's all you need, you can do day trips. And then I jokingly said it the other day and like oh could we? I'm like well we got leases. Yeah, yeah, yeah, like, but look, I would not be surprised. And you know the interesting thing is because I think the thing that I still think is important about offices is like I definitely execute better when I am by myself and no one talks to me because I get through more stuff, stuff. But you can't replace the collaboration that happens by bringing everyone to an office. So still, I mean I've gone to the office as we've been able to through this whole period because I like to get on a whiteboard and draw and have everyone in the room. And if you're doing things like, I don't know, strategy or financial modeling or things that require multiple perspectives, I think doing that over zoom and stuff like that, it's just too hard personally. Get drained after 45 minutes. Whereas, you know, give me a whiteboard and some pens and we can be there three hours. Yes. Like if. As long as there's coffee but.
Nathan Bush: And non alcoholic spirits.
Carl Hartman: If you're doing financial modeling, you might need some real booze at the end of that.
Nathan Bush: That's right.
Nathan Bush: We've got to wrap up. But one question that I was really
Nathan Bush: keen to hear from you is that it feels like we're at a bit of a crossroads with shipping at the moment. You know, we've got a lot of people turning to ship from stores 3 PL we've got Amazon people owning their own warehouses. A lot of curbside stuff from an. You're not even an outsider anymore, you're a retailer. So what are you, what, what do you think about the, the big transitions that people need to make around setting up their fulfillment models right now.
Carl Hartman: Look, I'll put my live set on here. The biggest challenge at the moment is supply chain disruption. Disruption. I think the first question you have to ask yourself is where does your product come from? So case in point, right now there's some, there's been some strikes and stuff in Sydney ports. There's retailers with containers of stock that are just sitting there waiting to be open and there's this knock on effect for inventory. Right. I mean I think for so long the world's operated on just in time because you can just fly. Like worst case, just eat a bit of margin. Air freight it two days. Happy days. Right. That doesn't exist anymore because with restricted borders and flight volume being at 20% of what it was a couple of years ago, air freight is expensive. There's no capacity. It is like people are overbidding people because there are things that are more essential things like PPE equipment and foodstuffs and stuff that we need for the world to keep spinning. So discretionary goods can get bumped. Unless you're prepared to eat a lot of margin which may actually be just commercially not viable. Right. So consequently all that volume then flows onto to see and then seize that capacity. So you've got to think about like triple redundancy in your supply chain right now. So our original plan was I will manufacture everything in Australia and we'll just, you know, we'll air freight it where we need to and we'll see freight where we have the time. And then it's like just getting enough glass bottles, that's a challenge. Just because I mean we have, we have a problem at the moment. We just like no matter how much we make, we sell. So it's just like we literally just can't keep up with demand, which is a good problem to have.
Nathan Bush: I was about to say some people don't call it a problem.
Carl Hartman: No, but it's a challenge, right, because you got to make sure that you've got ample stock of raw ingredients and bottles and then you've got to have freight capacity and there's all these moving parts. So like if you don't have someone on that, you know, pretty much full time owning that, it's going to be a challenge. You know, in our case we're thinking about how do we serialize this and you know, manufacture in multiple points, which we're, we're doing now, we're doing in both Europe and North America. So we got three points of presence. Because then you start to like shorten your, I guess your overall procurement ch. Because if everything has to come to one central point and then go out to the rest of the world, well, if you can stockpile different stuff, if you do have border restrictions or port strikes, like the world keeps spinning. So you do. It's almost like I'd say you have to look at supply chains now like you would your tech infrastructure where you know, If Data Center 1 goes down, Data Center 2 is there to catch.
Nathan Bush: It's a fantastic analogy. I love it and I love that that term, the triple redundancy there for what you're looking at.
Carl Hartman: I saw that double's not enough anymore.
Nathan Bush: I saw for the first time Apple have started doing ship from store, which they've never done before. So even in the US where ship from store hasn't traditionally been a huge focus, even that's starting to come into play as one of the redundancies there, which is I think is fascinating.
Carl Hartman: Yeah, well, you can understand, I mean Apple, I actually went to an Apple store the other day. I had to get a new, they've got these new singles sort of bands. So I, I, I, I kiteboard and every so often I have a stack and I lose the Apple watch in the, in the water and I'm like, oh, lucky. The thing's got a heart rate thing that flashes green. You can find it relatively easy. But they've got these new bands that don't fall off when you do high intensity sports. I Was like cool. But to get in they got, you got your temperature check and then you got to put your mask on and then they got to sanitize and there's this whole like check in procedure to go to the store. I can get why they're doing that because it's like, it's not, I mean look, they're being responsible and they're complying with policy. But I found it, I did this at the Chermside store. I'm like, all right, I'm in a state with no community transmission, with shut borders. Like so literally I'd say, I mean there's always a risk, but the risk has to be so close to zero. But they're like, hey, it's just a global sort of carte blanche policy. They've done so interestingly enough, obviously if they think of the flip side of that, not everyone's going to want to go through that customer experience. So if they can ship from store, well then that starts to enable a customer satisfaction level that previously because their whole store has been set up as destinations, they can, their stores exist to bring people in, but they have to almost become their anti trend with the current sort of circumstances of the world. Right?
Nathan Bush: Yep, absolutely. There is so much more I'd love to talk to you about, but we have to wrap up there. Carl, where is the best way that people can learn more? Obviously we can visit the Lyre site, visit Shortlist. Where can they contact you?
Carl Hartman: Probably LinkedIn's always pretty good.
Nathan Bush: LinkedIn.
Nathan Bush: Nice, good stuff. And I think we've got a Special offer from Lies for New for first time orders. We have 20 off your first order. We'll put all the details in the email and on our social. So thank you very much for that. We're keen, keen on trying, trying that. Carl Hartman, thank you very much for joining us on Add to Cart.
Carl Hartman: Thanks for having me.
Nathan Bush: Oh, listening back, back on that episode, there were so many rabbit holes that I wanted to go down with Carl. 50 minutes just wasn't long enough to cover all the things that I wanted to talk about across shipping, the future of work and a little topic close to my heart in drinking. But one thing that really resonated with me from an e commerce view at least, was Carl's triple redundancy approach to fulfillment. His analogy around web server redundancy for fulfillment was spot on. Now, as Covid's shown us, inventory management and supply chain reliability can be upturned at any time. It's crucial that you don't put all your eggs in one basket. Now this doesn't mean you have to offer warehouse plus three plus ship from store. That'll get really expensive and really old really quickly. But it is important that you have options. So while you may fulfill primarily from your own warehouse today, what happens if borders close again? What happens if you have a surge of demand? What happens if your biggest fulfillment partner
Nathan Bush: goes out of business?
Nathan Bush: It's so important that you have backup options that are clear and ready to roll out should the need arise. Now, if the lies story really caught your attention or you just want to justify drinking absinthe on a Tuesday, head over to addtocart.com we have a really good special 20% off coupon for you in the show post. If you're looking for more ecommerce news, case studies and research, sign up to 12High's High5 newsletter. Every week I read all the e commerce news and send you five things which I've found which will help grow your business. Visit 12high.comauhigh5h I G H5 to sign up for free. Thanks for listening and until next time, keep adding to cart.
