Martin Hosking, Co-founder & CEO, Redbubble
Know Thy Customer, Know Thy Self
Martin Hosking’s laser-focus on the customer paid off with phenomenal success for Redbubble
“Lean Startup” has become a popular phrase in the world of entrepreneurship. All founders and founders-to-be have phrases like “pivoting” and “fail fast” on the tips of their tongues.
But for Martin Hosking, lean isn’t just a fashionable trend. He’s lived it. And after applying and experiencing lean methods over decades of launching and running tech startups, the methodology has gained a more sophisticated meaning in Hosking’s mind. It is not just a clever strategy for testing markets, but rather staying nimble to truly fulfill the needs of the customer, something that drives him today.
“What I really like about lean is it puts the customer at the center,” Hosking says, adding a caveat. “You need to have lean, but you need to have a good strategic orientation. The customer doesn’t always know what they want.”
Hosking’s nuanced understanding of lean startup methodology highlights the deep expertise he’s developed over the course his career. And it’s paid off. After experiencing more than his share of 1990s dot-com boom and bust, Hosking is now CEO of Redbubble, an Etsy-like online marketplace for artists that’s become highly successful.
But as any successful entrepreneur will tell you, it’s not just smarts and experience that get you there.
Passion is the vital ingredient that needs to be present to keep a company going during the hard times and bring it out of the shadows to phenomenal success. It’s a kind of passion that can’t be reeled in or held back. It comes out immediately when you meet a true entrepreneur. Martin Hosking is a prime example; the passion and dedication he has for his work spills out from his fast and excited manner of speaking.
While he wasn’t always an entrepreneur, at no point was Hosking going to lead what you’d call a normal life. At the start of his career, he traveled the world as a diplomat for the Australian Department of Foreign Affairs and Trade. After seven years of this, he earned an MBA and then worked at the prestigious consulting firm McKinsey & Company.
Then the Internet was born, and Hosking immediately recognized its potential.
“The dot-com era came along. I saw this [and thought], ‘This is a fundamental platform change,’” Hosking tells Foundr. “This is going to change the world.”
An early adopter if there ever was one, he dropped his career at McKinsey and jumped into the newly burgeoning San Francisco startup scene with his first venture, online advertising firm LookSmart.
Although LookSmart had a fast rise and successful IPO, it quickly became a high-profile case study of the 1990s tech bubble bursting, with a class-action lawsuit contributing to its ultimate demise.
“[LookSmart] went through that whole burn-bust cycle. I look at LookSmart primarily as a failure,” he says. It wasn’t a waste, though, as he learned some valuable lessons. “Have absolute clarity about who your customer is. Have clarity on what your strategy is. [Have a] view about how you are going to make money.”
Hosking quickly went on to apply this knowledge when looking to co-found his next company.
He and his co-founders originally thought of creating a print-on-demand service for personalized materials like Christmas cards and mugs. They were looking to introduce this technology to the Australian market. But they decided to scrap the idea due to an utter lack of passion. “We didn’t want it! We weren’t interested in it. We couldn’t imagine using the site ourselves.”
“What we were really interested in is using this technology to allow independent artists to get their work out. Once we had that focus, that’s what made it exciting for us.”
From there, the idea for Redbubble was born. Redbubble is a marketplace where independent artists from all around the world can place their unique designs on a variety of products, up for sale to a global marketplace. Products include prints, t-shirts, leggings, and more. Today, the site receives 12-13 million unique visitors a month, with 2 million paying customers last year.
As with most startups, that success did not happen overnight and certainly did not come easily.
Hosking’s first challenge was securing seed funding. The concept of Redbubble, with its simultaneous use of a web technology platform and on-demand manufacturing, encompassed too many moving parts to self-fund.
Leveraging his relationships with investors in his previous venture Looksmart, Hosking was able to raise $2 million based on Redbubble’s business plan. “The great thing about marketplaces is that once they get going, they are really hard to dislodge. The problem with marketplaces is getting that first bit of traction.”
Redbubble made it through some very hard times. For three Christmases in a row, Redbubble faced crises that lost them money, sleep, and customers.
In their first Christmas, their manufacturing partner unexpectedly went on vacation, leaving them unable to fulfill the influx of holiday orders they received. Redbubble had to send one of its own employees to physically print the clothing.
The next Christmas, the financial crisis hit, and Redbubble lost money on every t-shirt that it shipped.
Thinking that they had gotten a handle on things, the third Christmas, the financial crisis accelerated, causing the U.S. to shut down its borders. “We couldn’t get through customs,” Hosking says. “Everything was delayed. January was just a nightmare as we tried to sort things out with customers.”
So what kept him going through all of these trying times? Ultimately, Hosking knew not to quit because he had the right focus, based on his in-depth understanding of the lean methodology.
“You do need to have that aspect of unrealistic passion to get there. But you need to factor in a view of what success looks like at any given point.” He talks about how finding that balance between realism and passion is key, and it all comes down to have a crystal-clear view of your customer and if you are truly delivering value.
“In the early days at Redbubble, we were confident that the thing was working because the artists were telling us it was working. They were telling us how passionate they were about it. And we had the usage stats that showed us that these people were really engaged. We had that positive feedback and enough of it to counter the fact that the customers were taking a while to start using the website with the same degree of passion.”
Hosking emphasizes that passion is a two-way conversation between founders and customers. Founders need to be deeply passionate about their work. On the same token, companies vitally need to have passionate users of their product. This passion on the side of customers will help startups survive the mistakes that founders will inevitably make in spite of their dedication.
“You’ve gotta have a group of customers who are passionate about your product. Your problem needs to be serious enough that your customers will be willing to deal with the mistakes that you make. Doesn’t have to be a large group, but they need to care deeply, deeply about what you do.”
For Redbubble, that was initially the creatives on the platform making the art. Now, with the company gearing up to go public, Redbubble has clearly struck a chord with its paying customers as well.
Top Tips from Martin Hosking:
- Bad things will happen. “You are going to make mistakes. You are going to screw up and things are going to go wrong. Redbubble has made a number of critical mistakes. Every single company I’ve ever heard of has launched things which were broken, has launched things that the customer doesn’t like, whatever it happens to be.”
- Have a group of passionate users. “You’ve gotta have a group of customers who are passionate about your product. Your problem needs to be serious enough that your customers will be willing to deal with the mistakes that you make. Doesn’t have to be a large group, but they need to care deeply, deeply about what you do.”
- Think about your company as an ecosystem. “Don’t just think about what you are doing from your perspective. Think through your decisions through the lens of your ecosystem and your customer. This will help you think about the really small number of things which will really make the difference for your ecosystem. Don’t try to do everything.”
- What it really means to go lean and how to get there
- The secrets to developing a passionate group of users
- How to be prepared when the unexpected arises
- The processes that Martin goes through in order to make sure that his business is always running in top shape
- What goes into building a successful online business
Full Transcript of Podcast with Martin Hosking
Nathan: Welcome to another episode of the “Foundr Podcast,” Nathan Chan here your host and CEO and publisher of “Foundr Magazine.” Super pumped to share another epic episode with you guys. This one is with the one and only Martin Hosking. Now this guy is an absolute weapon entrepreneur. So, he runs a company called Redbubble it’s an e-commerce platform that allows artists and creators to post their artwork up on the site and Redbubble can turn it into mugs, T-shirts, pillows you name it, so it’s a way for artists, cartoonist, designers and any sort of creative to monetize their work. And they are absolutely crushing it right now. They’ve been around since 2007. They’re on track to do over $100 million this year, possibly a lot more. And like Martin is an absolute genius when it comes to startups, growth, you name it. So, I had a really, really interesting conversation with modern and the cool thing was I actually got to meet him in person. Redbubble is a Melbourne-based startup, and I went to the Redbubble offices, interviewed him, had a ton of fun learned a lot of gold. And one of my biggest takeaways was the way that he approaches thinking about Redbubble and treating everything he does as an ecosystem in this world that he’s building. And it’s such an amazing way that he thinks.
I know you guys are going to get a ton of value from this interview so that’s it from me. As always if you are enjoying these episodes, please do leave us a review on iTunes or Stitcher or SoundCloud, wherever you’re listening to this one from. Please do share the Foundr Podcast with your friends, your family, anyone that you know as an entrepreneur. Anyone that you think might get value from this. The more we spread the word, the more we can help more people and that’s where it’s at. Okay guys, that’s it from me. Now let’s jump into the show.
Look Martin, thank you so much for having us in your amazing offices here in in Melbourne, Australia. We’re at the Redbubble headquarters. Did you call Melbourne HQ, or San Fran?
Martin: We call Melbourne HQ I guess. I used to just call it…it used to be, and we still are the notion of it. We’re actually in a single office in two rooms and so the San Francisco and Melbourne work hand in hand together. So the HQ really is split between the two officers and the board has…frequently meets in San Francisco. In fact, over the last three years probably we had more meetings in San Francisco than in Melbourne. And the executive team is also split between the two offices.
Nathan: Awesome. So, look, thank you so much for taking the time Martin, to speak to me today. The first question I ask every one of our guests to come on is, how did you get your job?
Martin: How did I get my job? The job as the CEO, I guess, or the job as founder. The job of founder is really easy to get. You go, and you start a company and you call yourself a founder. The job of CEO can be not that much different. You can sort of, when you start a company, you can really choose your title. In my instance it was a little bit different because Redbubble, I had two co-founders and so that they were Paul Vanzella and Peter Styles. And Peter was the CEO and at that stage, I was the executive chairman. After about four years, Peter decided to step away and I decided to step into the job of CEO. So that’s how I got my job as CEO. The job of founder, that one just comes to you by sort of that’s sort of a combination of dropped in your lap and you work very hard for it.
Nathan; So you started Redbubble in 2006, right?
Nathan: And can you tell us…our audience, like what is Redbubble? What do you guys do?
Martin: Okay, so Redbubble is a marketplace for independent artists and designers to put up their stuff. They put up the designs and images onto the site and when a consumer orders it, their product is created. So nothing no product comes into existence whether it be a t-shirt or an iPhone case or a piece of wall art, until the consumer orders it. And that’s sort of a process called print-on-demand. So it’s a way of independent artists and designers from all over the world, creatives, to get their work out to a new audience who are interested in that work. Where it came about was originally the concept we were thinking about bringing just that technology print on demand to Australia and you know, print-on-demand, the first useful print-on-demand was for personalization. That’s where you sort of you’ve got one…pictures of your family on mugs or on Christmas cards or whatever. And that was the site we were starting to think about launching but we decided that we didn’t want it, we weren’t interested in it. We couldn’t actually imagine using that site ourselves, but what we were really interested in is bringing along this technology to allow independent artists to get their work out.
So the first customer for Redbubble was those independent artists or independent creatives to get their stuff out there. And once we had that focus…so it’s the same technology, almost the same website but just a different orientation. But that was what made it exciting for us and then I think that made it exciting for other people as well.
Nathan: So you started in 2006, self-funded, venture-backed. Tell us about that, like…
Martin: Yeah, the funding… Marketplaces are great. So, Redbubble’s the marketplace and the great thing about marketplaces is that once they get going, they’re very hard to dislodge. The challenge is actually getting them going. And so there’s been a few marketplaces have come out of Melbourne, some which will be familiar to your audience places like in Bartow [SP] and 99designs and then other things which may be more familiar to the Australians. But the problem with marketplaces is getting that first bit of traction. And we were lucky because I had a background with…I’d been in the original dot-com era so had a company called LookSmart which had done reasonably well for some investors. And they were prepared to back me. And so we raised…off the business plan, we raised in the Australian context, a reasonable amount of money, $2 million off a business plan and that allowed us to get that initial traction.
Redbubble then became self-funding relatively quickly. We had a…the first few years were a little bit challenging for us and we raised some additional money from private investors. We had that first sort of sign of traction, that first growth which the investors were looking for. And then after about 2010 we had what’s called negative working capital. Now what that means is that we were collecting the money upfront and then we were distributing to others and the real advantage that gives you, it allows you…the business to become self-funding. The contrast to that is companies which are…some companies which are great businesses have got very long sales cycles, so you’re having to invest a lot of money up front in those companies and that can be very bit challenging for an entrepreneur, having what’s called positive working capital. Which sounds like a good thing. It’s actually a bad thing. Positive working capital is…means you need to have a lot of money in order for the business to become self-funding.
Nathan: I see so you mentioned LookSmart, so that was your first company? You founded it, co-founded it?
Martin: I was part of the founding team there at LookSmart, yes.
Nathan: It was in Melbourne or…? You did some time in…overseas, right?
Nathan; So tell us about that.
Martin: Well my very first job was, I had a job as a diplomat, it was the Department Foreign Affairs and Trade. And so served over overseas with Foreign Affairs and Trade for seven years. I came back and had a couple of years, I did an MBA and had a couple of years with McKinsey as a consultant, the international consulting firm. Then when the dot-com era came along, I saw this, I sort of said, “This is really…” This was in ’95. And I said, “This is…technology is just going to change this..the world.” It’s not even a technology, it’s a fundamental platform change. It was going to change the world. And so I wanted to become involved with that.
And so LookSmart and a couple of friends had just started what was sort of the predecessor company to LookSmart and then I joined along with that and we…was with LookSmart right through to 2001 and spent the last three or four years in San Francisco with LookSmart.
Nathan: I see. And that company exited…?
Martin: That company went through that whole boom-bust cycle. So it had…it was, you know, like a lot of companies in that…in the original dot-com era. You know, it was a company which was looking for a business model other than just taking money from investors, and never really found it. So it was, you know, like the legion of companies which didn’t make it out of the dot-com era. I think of LookSmart primarily as a failure. I learnt a lot of it things but the three things which I did learn which may be relevant to your audience, and which I’ve really applied to Redbubble, was you need to have absolute clarity about who your customer is. It’s…starting a business and not knowing who your customer is…you’re serving, is really hard. And it’s amazing how often people do this. They have a technology and they think, “Oh, we’ll find a customer for it.”
So clarity about who the customer was. I wanted a clarity about what the strategy was. And the strategy in this context is, you know, what is the big environment which you are operating in? And in our context, it was print-on-demand technology. That’s the strategic context which I thought was going to be meaningful for Redbubble and finally you need to have a view about how you’re going to make money. There’s still Silicon Valley companies who haven’t got clarity on that third thing. They…you can make it work for a while but eventually the music stops, and you need to know where the money is gonna be.
Nathan: And you know it’s funny I you… you wouldn’t know this but when I first started Foundr…so, I’ve been running Foundr for two and a half years. When I first started Foundr, I was looking for answers and I went to a talk at Melbourne University, and I heard you speak. And that’s where I first heard about Redbubble, and you were talking about the concept of lean. It was at a lean startup event and I was just starting to find out about lean. How have you used the lean startup like the lean I guess methodology of lean manufacturing to Redbubble and how has it allowed you guys to excel?
Martin: Yeah. Lean’s interesting and it’s sort of like a lot of ideas which get a lot of traction quite quickly. It’s…clearly it’s filling a segment and like some ideas though, as and while it gets tested, you find out what’s working about it and what not working and how it applies to your individual situation. The key…there’s a number of things which are critical about lean but the thing which I most like about it is it puts the customer at the center of how you think about developing things. You test something, you trial it and you trial it with a customer as soon as you possibly can. And the feedback…and you’re trying to understand what the feedback is which you’re getting from that customer. That’s the great thing about it and that notion of a quick cycle where you learn, test and you refine back into the cycle.
So that’s what I really like about lean is the idea of having the customer at the center of what you’re doing and genuinely trying to hear you know that customer. And people will say that the customer’s at the center but they’re actually not trying to…they’re actually still trying to talk to them or tell the customer they should be doing something other than what they wanna do. And I’m always surprised by you know, even really big companies. I mean just to give a quick one before I finish the conversation on lean.
You know, Google decided to launch Google+. Users didn’t need Google+. They already had Facebook. So, you didn’t need…you know, the customer was not at the center of that huge strategic orientation and they’ve really struggled to make it work. So even very big companies can make this mistake, but there’s one thing I’ll say that you do need to factor into lean and it is that the customer doesn’t always know what they want. And they don’t always have a view to the future as well.
And so you need to have…you need to have lean as a way of testing what you do but you need to have a good strategic orientation. Okay, let’s assume this now, and in the context of Redbubble for example, the customers, you know, our customers are beginning to understand what is now possible. They’re beginning to understand that they can get the products into their lives which have got objects which are meaningful on them. But if you’re really use…if you go into a behavioral mindset of actually not thinking about finding that stuff, actually you didn’t know it was possible to buy, you know a T-shirt for your grandchild with the, you know, image of Pluto the planet on it. You know you don’t get into that mindset.
And so with what we’re…what there…there is a component of listening to the customers underlying needs, having a strategy which is based around that but also getting ahead a bit, of that and there’s a bit of a tendency I’ve seen in some lean research, is it actually devolves into, “What’s the lowest common denominator response from the customers?” And not getting into it to genuinely try to think, “Oh, how can we take it beyond what the customers think is possible, to what we know could be possible?”
Nathan: Because that’s something that actually… it’s funny you say that because I interviewed Steve Blank, I interviewed like it’s a few months ago but then there’s that other side of the table like what you say like that’s something…that’s something Steve Jobs, he always used to say is, “Customers don’t know what they want until you show it to them.” So it’s a very fine line, I guess, that you have to…
Martin: Yeah, I think…I don’t think they’re in contradiction to be quite honest, because you know Steve Jobs was quite right in the sense that customers until you show…but he had a sense of what the customers felt was important. And you could test those ideas, you know, “Do the customers want a simple interface. Is this interface working for them?” And you know and in the case of Apple for example one of their core customers is that they are their first users of their products. And they use them ubiquitously and they use them because they want to use them and so they’re constantly testing them on themselves. That’s a very good way of thinking about your first customer.
In the case of Redbubble, we were our first customers. I’m always very skeptical of companies which are trying to make something for somebody else. We used to call it, “Don’t be a vegan making hamburgers.” Like you’re not going to know how to do that thing well. And for startups particularly you know, if you really trying to imagine something…making something for somebody else who’s not you, it’s really hard. You know, some products you know I don’t get for example, or didn’t get, I probably get it now, Snapchat.
Nathan: Snapchat, ah.
Martin: You know, that’s an example of a product that they did get it. They understood how that…what the use case was, because they were that use case you know and that’s an example of making a thing for yourself in the first instance and gradually making it more relevant to it to other people in successive waves.
Nathan: I’m curious you…I read somewhere that Redbubble had some hard times?
Nathan: Can you tell us about that because the life of a startup founder isn’t easy. Take us back, you know, take us back even to like an actual point in time, a memory, a story a new experience that was really tough and tell us about it.
Martin: Yes. Well I can tell you we’re coming up to Christmas now and I’m not sure when this is gonna be aired, I guess about now. The Redbubble Christmas… first Christmas was a bit of a shock to us. We’d sort of forgotten about it, we forgot it was going to come until about October or November and then somebody said, “Oh, Christmas is gonna come. We’d better think about what we’re going to do.” So in our first Christmas we’d just launched T-shirts as a product line, but our manufacturing partner decided to go on holiday, you know, about a week before Christmas. So all…we had all of these orders for products which we couldn’t actually ship and leave, and we had to send our…one of the…the person who had been working with some of them, went over there and was physically printing their own…the T-shirts for the customers in response to that.
So that was an example of that was a tough Christmas. The second Christmas actually managed to get worse in some ways. Because and it was during the peak of the global financial crisis but the global financial was just beginning to hit . And we had…when our manufacturing in Germany and the Euro was tech…was doing very well and we lost money on every single T-shirt which we shipped because of…they were costing us more to manufacture than we could actually sell them for.
So that was bad and then third Christmas we thought things were getting better because we thought we could manufacture, and then we thought we could manufacture profitably. And but the only thing we hadn’t accounted for the is the GFC then truly hit and America shut down its borders and we couldn’t actually get through customs thing. We couldn’t get things through customs, and so everything was delayed and so every Christmas, January was just a nightmare as we tried to sort out with customers and comp them and give them vouchers and try to recover those customers. And that’s…you know, that was it because it’s a very complicated system.
So this Christmas we’ve got…I’ve got a dashboard we show you all the production partners, with all of the things which are…where they are, and all this stuff. One of the challenges though, is you look at it, I look at it now and I say, “Well it’s like, wouldn’t it have been lovely to have that?” You know, and then so it’s, “Of course it would have been lovely.” And your…and startup founders, we’ve talked about they’ll have boards who will say, “Oh, do all of these seven things.” Or 70 things more like it and choosing the things to do which are actually meaningful is a real challenge which you have. Because you can do so… well, you can…got a lot of choices and you’ve got very limited resources, you know. I used to think of it as, you know, when I was younger we used to…I had three brothers and we all used to always play the game of sort of whether you could escape from being tied up by your brothers and they’d tie you up and different things and you used to just to find a way of undoing it just slightly to get a little bit of leverage to undo these knots. And this and I used the think of that was what it was like as a startup, finding a little bit of leverage, you know a bit of space to make the thing work. You know, “Should I be investing in PR or should I be investing in online marketing, hire a new web dev team?” Those are really difficult choices for a startup.
Nathan: So, you know, during that period, what kept you going? How do you know when to give up how do you know when to pivot or change up the strategy you know, if the business model is not a viable business model, how do you work that out? What kept you guys going? Like it sounds like they were being pretty tough if like you said it was like how you described some startups where they’re you know paying to acquire customer they haven’t you know had any margin.
Martin: Yeah it is difficult, and I think that pivoting was a favorite word for a while then. I think its fallen out of a favor a little bit now though, has pivoting and the challenge for us for any founder is that you know, it’s a balance between passion and focus and you…but you have to have some realism in there as well. And I meet founders who have been going at the same thing for five, 10, 15 years and I think to myself, “Really, it was time to hang up the boots a few years ago.” You know, you really this is you know I get it I get it that you’ve got the passion and the focus, and somebody’s told you that’s exactly what you need, to be a founder, and it’s absolutely true, you do need it. You know, you do need to be…have that element of unrealistic passion as well to get there, but you do need to…you have to factor into that a view about what success looks like at any given point and that means that you do need to say you know, “What are the ways in which I’m going to think about success?” And it will change. You know, in the early days of Redbubble we were confident that the thing was working because the artists were telling us it was working. They were telling how passionate they were about it and they were, and we had the usage stats which showed that these people…group of people are really engaged and deeply engaged and wanna upload work and want to continue to upload work. And so we had that positive feedback and we had enough of it for it to counter concerns which we may have had on how the consumers who took a while, for the consumers to find a site with the same degree of passion.
So there’s that positive elements and I think that there’s…what’s really important for their founder here…founders to be doing is sharing their experience with other people who are more experienced and looking for the gold there in that pan and other people with more experience will say, “Yes, things don’t seem to be going well…along well but this data here suggests that you actually genuinely have some real traction with some people who are really liking it.” If you don’t have that stuff, if all you’ve got at the end of a period of time it’s…whatever period of time it is, just you know… something which you yourself are just liking or you yourself think…then I think you have to be pretty honest with yourself as well and there’s and it’s hard to be both honest and passionate because passion is almost the emotion that operates against honesty but you do need to find that within yourself to almost have a binary view to think with to maintain the passion, but you’ll also be able to look at yourself and say, “Okay but is this genuine? Is there enough data coming in here to suggest this is going to be viable?”
Nathan: Yeah because I think it is a really fine line to know when to keep going and when to give up and it’s a hard one to know, you just don’t know. You can persist really or, you know…
Martin: And I think it is you know, talking to people…I don’t…there’s lots of people who’s not worth while talking to, to be honest. You know, your mum’s not a good one, you know, your mum’s going to tell you you’re a genius probably. And this is the best thing that…it’s the best thing she’s ever seen. But, you know, there are other people who are good at to…who you can talk and say, you know, “This is how I would expect this thing to be looking if I was expecting the thing to work.” And the trouble with…you know, founders, we get into becoming founders because we have the capacity to be unrealistically determined you know, or to be, you know, have that determination to go beyond what is normal, but how you make sure that you actually balance that with a little bit of insight into yourself, into what’s actually going on, is important.
Because yes, you also can give up too early and you can, you know…and you see things that, you know, when…we all…I remember back in the day when Mark Zuckerberg was offered a billion dollars from Yahoo for Facebook we all thought he was mad for not taking it you know. But he had the capacity to see what was possible within that and probably also was conscious enough of what the data was telling about how his users were actively engaging with it and could imagine a future in which much more people were engaging with this you know. Right now with…in the case of Redbubble the future is really easily to imagine where most people under the age of 35 own a Redbubble product of some sort and are repeatedly shopping. Of course I can imagine that future, it doesn’t require a lot of imagination, with 15 million images, you know, in a few years’ time, but with 30 million images, everybody on the planet should be able to find something which is relevant to them on Redbubble.
So that future is easy to imagine so it’s quite relatively easy to imagine how you go from where we are now to a much more significant company. But you have to sort of have that balance of seeing what’s the data is saying and see what that data would say to you about the future.
Nathan: Yeah there’s a lot that I’d like to unpack. The first one is you said around drawing from other people’s experiences, and I think that’s so true. Especially in the like you know Silicon Valley, the reason that they…I think they have that cluster, is because they have that experience there. Who do you learn from? We’re here in Melbourne Australia, you know, we’ve got some really cool, you know, really big tech startups like 99designs, Atlassian [SP] in Sydney. Like who do you learn from? Who are you drawing experience from?
Martin: There are a group of people here it’s getting a little bit bigger. So there’s a Dean Bartow which is down the road.
Nathan: Oh, yeah, he’s great. I’ve interviewed him too.
Martin: Yeah, so that…there’s those folks and then there’s the original marketplaces which came out of Australia of the realestate.com. So those marketplaces and you know and it’s actually easy enough to say, you know, “I know, you know Collis at 99designs and I know Lee Jasper of Bacon and Eggs and I know Mark Harbottle down at 99designs and Paul Bassett over at, you know so you actually know these people. You know, I don’t think…you know, do I talk to them on a regular basis? Occasionally I do. Collis and I have a sort of relatively similar but not competitive products, so we can actually talk about what their experiences and what how he thinks about it. And he’s insightful there. I think probably the most important thing for me though is the board. You know, the board comprises you know Stephanie Talanius who was earlier…at eBay early on and has got a lot of experience of how eBay scaled.
My chair is Richard Cossie [SP] who’s scaled number of different companies. And so having an experienced board and then we’ve just had Greg Lockwood who’s invested…he’s done investigating marketplaces for…through his fund for many years. And so he’s got experience there as well so I think that that for me probably the board’s the most important thing and in getting a good board which you’re genuinely reporting to early on. I’m actually quite in favor of it, to be honest. I know a number of founders shy away from that and they sort of think that, “Oh, the board’s gonna be heavy and I’ll have to whatever.” I had a board from the very start which we was there and making sure it’s being lightweight early on. It’s almost an advisory board. Well, a not really an advisory board, more a sort of engaged board who actually can help you with very specific things is a good thing to do. So they were probably my most important, the breadth which they bring to that as well.
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So you think founders should definitely, you know, once they get a bit of traction, things seem to be going well you’ve kind of got that market I guess that maybe some form of validation, you think founders should look to set up some form of a board, like advisory board, yeah?
Martin: Yeah I would do a board earlier on, earlier rather than later. I think it potentially introduces discipline into the company and it may be a good way of getting an investor involved, have them on the board provided they’re a good investor. Don’t get anybody…I would say sort of avoid getting onto the board people who are going to be you know, excessively…I wouldn’t have a board of accountants or lawyers, it’s not that I don’t like accountants, but I don’t think they add a lot of value to an early stage company. A board which is comprised of other entrepreneurs who have done it before. And I know that you know, a number of us in the Australian context, are now getting involved in other startup boards as well, you know, it’s one of the things people tend to do as a way of giving back a bit.
Nathan: Yeah that’s right. And what are your thoughts on funded, you know, self-funded versus raising capital?
Martin: I think it’s really about horses for courses, to be honest. You know, there’s some businesses which can…you can self-fund, they’re the luckiest of them all, or the cleverest. You know, Atlassian managed to self-fund, really and I know they are self-funded. We couldn’t self-fund just because there are too many moving parts. You know, we had physical products we had to deal with. And so self-funding wasn’t impossible but we didn’t have to raise a lot of money. The thing which I am skeptical of…so, I think that a number of good ideas have been killed in Silicon Valley through too much money and it sounds a little bit, you know…I know in Silicon Valley people think of the idea of raising 40 or 50 or 30 or some huge million dollars to be an achievement in itself. It’s not, you know, raising money is not a success. Raising money is just that you’ve just raised the bar of what success actually looks like for you as a company. And you know the problem with raising a lot of money early on is that you have to go and spend that wisely and I know good companies which have failed as a consequence of just raising too much money and probably the best example is fab.com. You know, I don’t know whether people remember Fab I thought it was a great…good idea I thought it was a really nice idea around having high quality curated designs. They raised $200 odd million, tried to spend it, tried to pivot a number of times and you know, they took a good idea and they killed it through too much money. And that’s quite common.
Nathan: Okay look we have to work towards wrapping up. A few more questions, three things I want to cover still. One it seems like you’ve built an amazing culture at Redbubble. How do you foster that culture? What are some things that you guys…that you would recommend to founders, especially like, you know, someone that has a small founding team? What are the kinds of things you can do? If you don’t have the money like you guys have got amazing offices. You know, you do amazing stuff. Like what can you do if you don’t have much money like to build an amazing culture in your company?
Martin: Oh, the culture is not about money. You know, you could have hot and cold running dinners. You could have, you know, drinks on a Monday morning and it wouldn’t make any difference. Your culture…it’s not going to improve them or your culture. Your culture is really about how people relate to the purpose of the company primarily and I think you’ve got to have coherence around what the purpose…what is it, the thing? And by purpose, I don’t mean making money or getting to the next funding round or whatever that is. What is the thing, what is the reason why this thing existed in the world? And then you’ve got to recruit for people who believe in that purpose and you won’t get a good culture if there is a lack of sync between the two.
For Redbubble it’s relatively easy because our purpose is actually clear and it’s actually also, you know it’s easy to embrace the idea of bringing individual art and creativity into everybody’s lives. That’s an easy purpose to embrace and supporting independent artists and so we recruit for people who identify with that. And so we have arts related events. And we have artists in residence and all of those sorts of things in our offices which reflect that sort of diversity. Just taking now that…but if your purpose of the company, you need to be clear and then you need to get people who are aligned around that purpose. So, you know, in the case of Snapchat, you know, I wouldn’t…if I was recruiting for Snapchat and I don’t get Snapchat or didn’t get Snapchat until relatively recently, I wouldn’t have in a person in the office he wasn’t using it, who didn’t have a good use case for that product. You know, if in a case of Aconex which is a company down the road which provides a software solution for construction and building projects. They interview for people who think that that is an important thing to do. They understand why this is important, why collaboration is important. Atlassian, who we talked about, working in teams is fundamental to how they think about that so Atlassian does not recruit people who don’t want to work in teams and there’s some people who don’t want to work in teams. You know, you have to have… So that’s at the core of how they think about things.
So I think you have to have the purpose and then you recruit around that and then a good culture will begin to emerge but a good culture is not something which you spread on the top of a company like a thin veneer after the event. It’s something which has to exist at the heart of it. And I’m always…I’m surprised that you can actually get good cultures even out of relatively tricky ideas by bringing a different a…like a different view to it. So, Zappos is an example of that. Zappos is renowned as having a great culture. They deliver shoes. You know, it’s not like…this not…doesn’t in and of itself sound like I mean, a cool idea. But the way in which you know they’ve thought about that it’s about the idea it should be more than shoes it actually should be the full experience of shopping here and creating something, which is then…and then they’ve embedded that in the organization so that’s how you think about it and make sure you embed that purpose in the organization.
Nathan: Okay, two more questions. One, what sacrifices have you had to make as a founder to get where you are today? Like you know, Redbubble, are you able to talk like predicted revenue?
Martin: Yeah, I can give you some sense of where Redbubble is.
Nathan: Yeah, because you guys, like as far as, you know, I suppose kinda like in one way, you guys are doing really well. Like, you guys are doing great.
Martin: Yeah. So this year Redbubble, the sales through the website will be over $150 million or thereabouts, you know, around, in the range of $150 million. You know, probably another statistic though which is probably more meaningful is that you know artists on Redbubble this year will earn more from Redbubble than they’ll earn in grants from the Australian Council, total of all grants in the visual arts in Australia is about $23 million. So artisans on Redbubble will earn a lot more than that through Redbubble. So you know, it’s making a more meaningful contribution to artists and creators than the Australian Council is doing for the visual…for the grants in the visual arts. You know, those are meaningful important numbers.
You know, in terms of the scale of the site, you know we’ve got I guess, this month you know, have 12, 13 million unique visitors a month to the site. So that’s…I think it makes it bigger than…I don’t know many other Australian properties of that sort of scale and you know, two million odd customers shopped with us last year. So, you know, the thing is operating at a certain sort of scale but these things don’t happen overnight and the one thing I guess on this point and it also relates to your earlier point, one of the things is to recognize that people until relatively recently, used to think of companies as taking, you know, 10 years, 20 years, 30 years to start getting traction, getting good. It’s only very recently people have said, “Oh, it needs to be successful in three or four years.” The number of companies which genuinely truly get to success in a shorter period of time than five years is very, very limited.
The venture capital community loves those companies. We as founders have to be very wary of that idea because it’s very disruptive to how you think about what you’re doing. You think about the thing long-term, recognize that you are gonna be doing this for a while and don’t…you know, don’t actually try and put in the 24-hour day. Sometimes you have to put in, you know, it’s the 15, 16-hour days for a period of time. But if you are doing that for a really long period of time, you’ve got a problem in your business model. And if you’re asking that of a lot of your staff , then there is a problem. So, recognizing that things are going to take time, be comfortable with the idea that, “I’m going to,…” You know, the biggest problem with starting out with a…going on a marathon is if you start off as a sprint, you know. And by the time you’ve got to the first hundred yards, you’re wondering how to run the last 26 miles, you know. But if you started off as a marathon you’re actually going to get there.
And so for founders in particular who…and recognizing that your interests are not aligned with the interests of the venture capital community or the people who may fund you early on, who want to get in and out as quickly as humanly possible. You’re going to be here, doing this same thing probably for more than 10 years. So take that attitude towards it and build your life or in a way which allow…and enables that to be. And then you’ll actually begin to…it, the thing will work and you’ll actually be able to do the thing relatively smoothly. I find it quite, you know, disturbing and almost distressing when you see, you know, founders who have just had a bucket load of money poured into the thing and suddenly they have to operate this thing at hyper speed. You know, and this is…you know, that’s what’s the problem with Fab and you could go run through the list of good companies which have been over-funded and have to operate in order that they’re no longer running the agenda for themselves. What they’re actually there is to prove whether or not this amount of money can be spent as quickly as humanly possible in order to generate an outcome for an investor.
So what they’re actually there is an experiment on the part of…they’re part of somebody else’s A/B test, you know, as a…you know, in essence, you know, they’re part of somebody’s market testing. As a founder, this should not be an experiment for you. This is something which you’re trying to sort of bend the arc of the universe and so you got to…you commit to doing that over a period of time. And if you do that you’ll bring…have the right attitude towards it and also you’ll survive.
Nathan: Okay so I’m curious, you guys have been around for nine years or ten close to ten?
Martin: Yeah, coming up for…well, it’ll be ten years next year but the site launched…the launch of the site’s the 2nd of February next year.
Nathan: Okay so you guys have been running the marathon, you’re doing very well, but I’m sure that there must be some key things that…and this is kind of like my last question and it kind of ties into some action items that our audience can take away, like what are some key things that you’ve done to take Redbubble to where it is today that makes you effective? Like what are…? Give us maybe three things that really have been the key to your success, made you a really effective founder and some actual things that you think every single one of our audience can take away and look to implement. Or, even if it’s just a mindset, you know.
Martin: Yeah I can actually give you some practical things. The first thing is, you are going to make mistakes. So you’re going to screw up, things are gonna go wrong and Redbubble has made a number of critical mistakes. Every single company I’ve ever heard of has launched things which have broken, has launched things which don’t work or things that the customers doesn’t like, whatever it happens to be. So what allows you to survive those mistakes because some mistakes will kill you as a company and some mistakes won’t. The thing which, as I’ve thought about it over the years, the most important thing when you just think about mistakes, is you’ve got to have…and this may tie into your earlier question about how you know the thing whether it was going to work, you’ve got to have a group of customers who are passionate about this. It does not have to be a very very large group of customers.
There’s a…some of the ventures I know, there was an interview where I think Sequoia was talking about a hair-on-fire problem. People have got a problem which is large enough for them to be able to suffer through that they have to deal with. And the mistake is to think, “Oh, everybody has to have that hair-on-fire problem.” No, they don’t. They do have to be a group of people who are passionate about you and they will forgive you your mistakes, you know. And so, you know, if you’re going at your thing for a reasonable period of time and you have not found some customers who are caring deeply, deeply about what you do then you’ve got a problem. And it’s not good enough to have a lot of customers, a large number of customers who care a little bit about what you do because you’re not making enough difference into their lives.
All of us, the world out there does not care about your success, remember that as a founder. They don’t care, they don’t want you to win. That’s not their purpose in life so you’ve got to find a group of people who’ve got a problem which you’re solving their problem for and if you’re solving that problem well enough they’ll forgive you your other mistakes. And so that’s a measure of whether, you know, whether or not it’s a good time to give up. If you make a mistake and it’s critical then probably you don’t have enough people who are passionate about you.
So that’s the first thought which I’ll leave with people is make sure you’ve found those customers who really care about what you are and what you’re doing. And we found that in the creatives very early on. The second thing which I will say in this as well as to know whether or not the thing is gonna work or not, to take away is… And this is, I think applies to everybody but I…maybe not all instances but to think about what you’re doing more as an ecosystem than a set of features or a set of products. And then what I mean by that is that, you know, you’re getting out there in the world and around what you are doing is creating…is a group of people who are beginning to think this is important. Those may be your customers and our clients…in our instance, it’s the customers, it’s the creatives, it’s the fulfillment partners and there are other people involved in that ecosystem including your own employees. And thinking about how you nurture this thing to make it actually begin to work better and trying not to introduce things into the ecosystem which are destructive and I see a number…again, I’ve seen a number of websites over the years and you see these…you see examples of this most recently with Reddit, you know. Good ecosystem working well, they made some changes into the ecosystem which caused really serious problems and caused them to lose…they thought it was good in their interests. It was not in the interests of the ecosystem as a whole.
And so thinking about not just what you’re doing from your perspective but you’re also showing some empathy for what the ecosystem as a whole is doing and this will come to my third thing. Once you’ve identified your customers who are passionate about it, you’re thinking about how those customers work in an ecosystem as a whole, then you actually want to think about, “What are the really small number of things which are going to make the most difference to benefiting that ecosystem?” This is where some real insight comes in, you know. It’s very easy to think of, “Oh, we should be having a PR campaign.” Or, “We should be spending more on paid advertising, we should introduce it.” What are those things which most benefit that group of customers with a hair-on-fire problem, most contribute to the health of the ecosystem? And then those are the things which you would do. And don’t try and do everything, don’t do all the other things because you will have a group of people who are we talking to you, but you’re bored.
They all have experience and they all have probably had super sites which worked, which…or ecosystems where they’ve done it and what worked for them, whether or not that was, you know, spending money on a booth at, you know, Comicon. That may have worked for them, that doesn’t mean it’s gonna work for you. And so you’ve got to think through…and the lens to think through it is the customers and the ecosystem. And then you will start to identify, “Oh, we need to…that what we do with the website is the most important thing.” Or, “We should be paying or we should be recruiting more creatives.” Or, “We should be launching a physical product” But thinking about those things which most contribute because then you would have a chance of success.
Nathan: Awesome. Well look, thank you so much, Martin, that was fantastic.
Martin: You’re welcome.
Nathan: Absolute pleasure. Awesome.