Podcast Transcript

[00:00:00] Sean: G’day everyone, and welcome to the ScaleUps Podcast, where we help first time Founders learn the secrets of scaling so that they can fulfil the potential of their business, make bigger decisions with greater confidence and maximise the value that they can create in the world. And I'm your host, Sean Steele.

I'm joined today by Roby Sharon-Zipser, CEO of hipages. How are you today, Roby?   

[00:00:31] Roby: I'm great. Thank you.   

[00:00:32] Sean: Excellent. Mate, we're very excited to have you here. I can't wait to dig in today, and listeners will realise why in a moment, given the story and the journey that you've been on. And for those who don't know hipages or yourself, Roby used to be an accountant, working with PWC and Allco Finance before you had your own firm, which from my understanding really sort of taught you about building organisations from a financial perspective, which I think is such a valuable experience before you jump in the fire and build your own thing. And then you Co-Founded hipages this back in 2004. Seventeen years ago, is that right? 

[00:01:06] Roby: That's right. It's been a while.

[00:01:08] Sean: Geez mate. It's amazing. And for those who haven't used hipages before, it’s Australia's largest online trading marketplace and SAS provider, connecting tradies with residential and commercial customers.

But also, from my understanding Roby, it not only helps them get leads, but it's also now helping them optimise their business through the SAS platform. Is that right?   

[00:01:28] Roby: Yeah, absolutely. We have a product called Tradicore, which is a tool that trades can now use to help them with their scheduling, quoting, invoicing and eventually we'll provide them with insights and data on how they're going as a business, so we can show them profitability, how their marketing spend is working for them, to just make them better business operators.

[00:01:46] Sean: That's brilliant. Well, you know we've all had some amazing tradies, the way you've turned up and going; geez, that guy has done an incredible job but there's zero follow-up, poor invoicing and like everything else is signed manually. Like, wow, this person could have such an amazing business, if it had a bit of backend that actually provides great service. And to give a sense of scale, you've had over 3,000,000 people now on the platform, is that right?   

[00:02:08] Roby: Yeah, it's getting close to 3,500,000 consumers who’ve used hipages since inception. We generally post our last financial year statements and we'll have done 1,500,000 consumers who purchase a job through the platform. So yeah, like there is serious volume there, and about two thirds of them are repeat customers.

So, we put on about a half a million new customers every year.

[00:02:28] Sean: Wow, that's amazing. And what about the other side of the platform? So how many tradie businesses would be on there now?

[00:02:33] Roby: So there's 34,000 trade businesses. And there were around 257,000 trade businesses in all of Australia. So, we've got about 12% of the market.

[00:02:42] Sean: Yep. And do you have a view of what market share you'll be able to grab over time?   

[00:02:48] Roby: So, over time, we obviously want to grow the share of the market. Trades have choice, and so that's one of the reasons why hipages has diversified. Some of it is a technology solution because trades can be busy, they go in and out of the industry as well, due to injury, or they get a subcontracting job with a trade or they retire and then they decide to come back.

They move in and out quite regularly. Well, we've gone down a strategic point of view and we've decided to give them more tools to help them manage and run their businesses. So TradiCore is a classic example of what we're doing, and there's much more in the product roadmap for trades where we will be giving them a lot more tools to help them just be better business operators.

[00:03:31] Sean: Got it. So, if you could just give us a quick typical client on both sides of the platform, like who's that client, what are they typically trying to achieve and how are you sort of solving the problem for them?   

[00:03:41] Roby: So, I mean, like the story for the business, and I don't know if this is the opportunity to talk to that now, but the genesis of the business started when I bought an apartment with my wife back when you could afford a property in Sydney, this is a long time ago...18-19 years ago.

We realised that the whole process of renovating and improving a home is just a horrendous experience. It just had a lot of friction, trades are very good at their craft, but not that great in their marketing or using technology to optimise their businesses. And so, in terms of where that's evolved today, we make it very, very easy and simple to use for consumers to get a request for work to be done and what people typically find when they use hipages, either our app or go to our website, is that the speed at which you get connected with three trusted, registered, verified trades, that just blows people away. In any metro area in the 200 or so trades that we provide in Sydney, you'll get up to three quotes. You can get more if you wish, but three is what we consider the perfect match number, where you can get the quotes and compare them against each other to make a decision on the trades. We take on a lot of the trust elements. Like we check on the licensing and we check the registration, we look for some various solvency cues to make sure that they're not in administration or liquidation, that would be horrible. So, those are the things that we take on board as a marketplace. And then on the trading side, you've got a very big mix of different types of businesses. The majority of trade businesses in Australia are sole traders, close to two thirds of them are sole traders. This is one man and his van type operations. And so, what we're doing is we're making it really, really simple for those trades to get work through hipages. So we make a nice, simple onboarding process where we ask them a few questions about where they would like the work from, what type of work they would like. And then they get to pick and choose the work that we send them through the applications that we make available to them. We've also added to that more recently, as I said earlier, the TradiCore product where it's got tools to help them manage and run the business and we'll be enhancing those two things, the marketing tools that they've got available to them, but also the technology that they use to help manage and run their businesses in the future, and things like payment solutions and insurance products and procurement are all on the cards.

[00:06:01] Sean: Wow, I mean when you realise you're setting up a small business and all of a sudden you realise the number of supplies and number of pieces to make that whole thing sophisticated really, yeah, I can imagine for many trades it's pretty overwhelming. And so, how long have you had that SAS platform in place now?

[00:06:15] Roby: So, we launched the SAS platform in June. So, it's really new, but it's taken us about a year to build. We actually acquired a business that had the good bones of the technology that we wanted. And we then just transitioned it to be mobile first. So, trades are typically out on the field.

They really need to do their quoting, their scheduling, their invoicing, requests for payments, get their business insights while they're out in the field. The worst thing that you can do to a trade is to create more administration burden, more work for them when they get home, which takes time away from their family, or just means that they're just not actually doing work, which is what they make their money from.

[00:06:51] Sean: Yup. A hundred percent. Wow. So for the community, can you just give a sense of some metrics that might highlight the growth? So, you know, where was the business five years ago in terms of revenue and employees? And what about now?   

[00:07:06] Roby: Yeah, so we've had an interesting growth story. Five years ago, we would have been at around half of where we are today. So around circa $30,000,000 in revenue and actually, probably the same number of employees. Three years ago, we had over 300 employees, but today we are 210. But we've given indications to the market our perspectives because we listed on the ASX in November last year, and we’ve since upgraded that, that we would achieve revenue of $55,700,000. So that's probably where I can go to with what I can communicate. We will be announcing to the market on Thursday and Friday this week, the results. So, 26th and 27th of August is when a lot of lists of companies will communicate their results to the market.

[00:07:54] Sean: Absolutely, reporting season.   

[00:07:56] Roby: That's right. Yeah.

[00:07:57] Sean: But that sounds like you've made a significantly more efficient business because the relevance between the ratio between your fixed cost based in terms of employees and your revenue has really changed.   

[00:08:10] Roby: That’s right. I mean, we always knew it was a high gross margin business, but we were finding it hard prior to three or so years ago to demonstrate the unit economics of the business.

And so, we developed a very clear strategic plan two years ago, and we're about four fifths of the way through that strategic plan.

Strategic plans used to be about 10 years in the making. And then nowadays most organisations, if you're thinking beyond five years, you're probably thinking it's too far away. Three to five years is a realistic time frame. The aim is to try and execute on that strategic plan in a shorter period of time than the five years, but we're about 40% of the way through a plan that we put in place two years ago.

[00:08:53] Sean: Awesome. And I've got questions, I'd really love to dig in with you today. I know that you're a big fan and a big advocate of a really tightly linked strategy and execution planning. So, I'm looking forward to digging into that because I think there's so many learnings for businesses that want to scale in that regard.

Can you talk to me about the differentiation? So how did you think about differentiating this business from, as you mentioned, tradies do have choice, but how have you gone about differentiating yourselves from others?   

[00:09:23] Roby: Yeah, I think, when I go back to what we did two and a half years ago prior to preparing the strategic plan, we looked at a concept called Category Design. And most successful organisations, whether they realise it or not, are operating in a specific category, and it actually makes a lot sense.

When you walk through a supermarket for groceries, it's actually categorised. Human beings need to think of things in a category. And so, sometimes a category doesn't exist and then we create one. So frozen food didn't exist 80 or so years ago, but now it's a major aisle in the supermarket.

So, it's just an analogy here. So, what we did is we thought about the category we wanted to operate in and to answer the question, we realised that we had a bunch of other businesses that we'd accumulated over the 15 or so years, so this is a couple of years ago – 15 or so years that weren't quite working.

We were in different types of marketplaces, like natural health, and we were getting pretty broad, we were in pets, we had a generalist directory and we realised, actually the opportunity for hipages was to be in the home improvements and home services sector. And we went really deep into that and we identified that we were working in the on-demand trading economy.

And so, we technically coined that vernacular, and so we are the market leader in the on-demand trading economy in Australia. We have the largest number of consumers, posting jobs for trade services, and we have the largest network of trades in Australia. And so that made a lot of sense. And I'd encourage every organisation, even before you even start thinking about strategy, or this is sort of part of the strategy, identify what category you are actually operating in.

[00:11:01] Sean: And so, if you go back before that time, was that a view of the business that you held that actually we're in the business of marketplaces or lead generation, and that's why you sort of went across into other verticals. And this was about, hang on a second there's opportunity in this vertical with this kind of customer that's far deeper?

[00:11:18] Roby: That's right. I mean, we were trying lots of different things and we were getting quite distracted with lots of different types of industries, and you know, you try things and some things are unsuccessful and you take learnings from that. But what we did is we realised that we were the leader in the on-demand trading economy, and we should be amplifying that and go harder in that.

And that helped set us up for developing our strategy, which I guess we'll talk to shortly, but in terms of the category work, we realised as well that no one was going out boldly saying; we are only in the trading sector and really went deep into the trading sector. So, what I mean by that is, when we started to look at it really closely and do research into the sector, we realised that Australians do 70,000,000 home improvement or home services jobs per annum. We also now know that there's over a hundred billion dollars’ worth of work generated by the 257,000 trade businesses in Australia. There are other players that do marketplace and lead sourcing work for trade businesses.

But no one is categorically saying they are only servicing and specialising in the on-demand trading economy. And that's what we're doing.

[00:12:27] Sean: Yeah, I love that. And you know Roby, in probably the last five interviews I've had with Founders who scaled, every single one of them without fail has had a moment where they have been going broader and have started to become less and less something to someone, and every single one of them has actually really niched down on a really tight category in a customer type that they thought, there's a big enough addressable market.

We need to serve these people better. We need to understand them better. We need to deliver stuff that nobody else is doing because everyone is saying yes to a lot of stuff. And every single one of them have enabled big changes in scale through that. And I think that's so relevant, whether you're at 5 mil, 10 mil, 50 mil, it's relevant all the way up, right?   

[00:13:06] Roby: Absolutely. I think, the challenge that a lot of organisations like us have is that you start to create a board, you get investors, you start to have to manage a lot of different stakeholders and everyone has an opinion. And I think the thing that when you're at an early stage business, you're so thankful that someone gave you money to invest in you and believed in your vision, your story. So, when they give you these ideas, you very quickly say… oh yeah, yeah, we'll try that. Or we'll consider that. We'll think about that. And you try and please everyone. And I think the lesson that… and I guess what is great about these type of podcasts is that you get to listen to people that have been through a lot,

who've got a lot of war stories and have got, what I call the ‘scar tissue’ of all of those experiences. And I think to sum it all up, it's okay to say no, you can say no, and you know, you can do it in a nice way. You can't be rude to people and all that, but it is all right to say no, because if you did everything everyone wanted, there's only a finite number of resources that you have available.

And eventually, you spread yourself too thin, as you said earlier, and it just starts to fall apart and you risk damaging what you set out to do from the very beginning.

[00:14:16] Sean: Yeah. A hundred percent. And, you know, you end up with just smaller and smaller margins. You mean less and less to anyone specifically, and you just get more and more generic and yeah, I totally appreciate and have been in many situations where all of those opinions, and all of those stakeholders and shareholders are like; well, there's a growth mandate here, you guys need to achieve X and Y. And you're like, oh, okay, well. Lots of people have got lots of influence here, but actually, the job of the CEO is to go… no, this is who we are. This is how we're going to get there. I've got conviction. Our team knows what we're doing. We've validated there's an opportunity and we're going to go hell for leather and we're going to have to say no to lots of stuff. So, you guys are going to have to back me or get out of the way.   

[00:14:53] Roby: Yeah, absolutely. I mean, we could do a whole other podcast on that in terms of just war stories and all that thing. I mean, I think what ends up happening is you end up accumulating a lot of technology debt. You end up accumulating a lot of product debt, you end up in customer debt. and the thing is, you know, it's like a professional organiser.

I'm just making this up as I go, by the way. It's like, when you bring something into your house, you should probably take something out. Just otherwise you start building up a lot of clutter. So, what are you decommissioning? What are you stopping to do when you start something new? And if you got to think hard, if you're going to start something new and you're going to stop something that you're already doing, what is it that you're stopping?

Because there could be significant revenue generating or the core thing that you're actually doing. So, really think hard about it. And also, it's really hard to turn things off once it's set on.

[00:15:41] Sean: Yeah, absolutely. Well, you alluded to war stories in there, rather than start there, and you've talked about one of them already, which is really this kind of niching down and fully understanding which market you're going after, scale enabler. So, key decisions or key moments that really changed the dial on your growth trajectory, where would you start there?   

[00:16:00] Roby: So, the history of the business is quite long. So, I won't go through all the nuances of that. I'd probably make a few triggers, I think, and then actually the more recent stuff. So, the things that we did two years ago have really been the accelerators for the business. And so probably we can go a little bit deeper into those things, there's four or five things there, but historically raising capital, getting news as a major strategic investor certainly helped lift our brand, increased our credibility in the market and that was definitely helpful. And so not always a strategic investor has to be genuinely strategic is a good thing. In our case, news definitely moved our brand awareness from low single digits to mid-20 digits in terms of awareness in the market.

[00:16:44] Sean: Primarily because of their distribution platforms…

[00:16:46] Roby: Yeah, the transaction that we had is we use their advertising products and things that we would never have been able to consider to do, we were able to do.

It was a very generous contra advertising package along with a lot of cash capital that they injected into the business that allowed us to accelerate our growth trajectory. They came into the business in late 2015-16 financial year. So, that was a good decision. I think going back even a little bit more, I got the chronology wrong there, but one of the things that we did as well back in 2012 was a major pivot in our core business.

So, we originally started as a directory and we changed the entire business model and moved to a ‘request to quote’ type service, where we actually turned the traditional classified directory model on its head and made it more convenient for consumers to tell hipages what they wanted to get done.

And then we enabled the connection with trades that were available in the area that were already vetted and registered to approach the consumer. So, it removed an inefficiency or a friction that was in a traditional process. And that was a major change for us. And we saw accelerated growth, which then got news excited about what we were doing and they invested.

And then more recently ...

[00:17:59] Sean: And while we all accept these days that might be standard practice. Although that's sort of normal at that time, that directories were just ultimately popular and that wasn't really a model.   

[00:18:08] Roby: No, that's right. I mean, look, the time had changed by 2012. Google had won that race effectively and Yellow Pages was declining. We really needed to change our business model. Our growth has started to plateau and so we needed to find a new way and ‘request a quote’ type service was a really simple way of doing things differently to weigh Google and social media… Social was just getting started back then as well. But Google really was the powerhouse. It still is quite complicated to set your product up, and it's getting very expensive. So, in terms of return on investment, the type of product that hipages offers with our lead sourcing product, is the most efficient in the market.

So, you know, we have a competitive advantage, and so we leaned in hard on that.

[00:18:53] Sean: Got it. And so when you think about some of the challenging periods and you talked about some of the war stories, what have been some of the most challenging periods for you on this journey?

[00:19:06] Roby: Some of the most challenging is… I've got to think about that one. There's been a few. I think as any business, and if a lot of the viewers are in early in terms of their cycle. The cycle of the start-up or the scale up is a bit of a roller coaster. And I think, you have growth and you're investing and then so suddenly growth slows down a bit, and it happens. It happens, especially if you've been in it for awhile, and to let people go, to make them redundant in those different cycles is always a challenge. And I think that was probably one of the hardest things to do. You take it really personally, because these people are your friends. They counted on you, but sometimes you just have to make those decisions because you need to do it for the betterment of the business and to get it through its next phase of growth. So, to join the dots, that's the risk. When you start trying to do too much, you don't do things properly, or you go too broad. You start accumulating that, and you have to make sometimes tough decisions which can really affect you. So that was probably one of the more challenging things to do in the last 17 years…

[00:20:25] Sean: When you think about that, what would you take out as a lesson for that, that you think Founders that are still in that sub 10 mil, but perhaps they’re growing quite quickly, what are some of the lessons, if you had your time again at that stage, you would have done differently?   

[00:20:39] Roby: So like, I really wish the way we do our strategic thinking nowadays, which is a facilitated process, the way we do our strategic execution plans and the way we do accountabilities and responsibilities in the business, if I could have my time again, I would have done those things, 10 or so years ago. Probably where a lot of the viewers scale is out today, and we can go in. We can probably unpack that a little bit more as I'm sure we will, but so yeah, to do those things properly, I think definitely would have avoided a lot of those things and helped you as a CEO or a Founder make decisions.

[00:21:20] Sean: Yeah, absolutely. Well, let's jump into that framework in a moment. One other question about, I know some of the material changes that you made, that sort of shift from a transactional model to a more subscription-based model. Tell me a bit more about that and what was the genesis for that, and how did that occur?   

[00:21:38] Roby: So, what we found was, as a transactional business, so people would buy, trades would come and buy a lead from us, but they could just buy one lead, five leads, ten leads. They get busy with work and then they would leave us, and then come back again. It just made the lifetime value in the unit economic calculation very, very difficult to work out and also made it hard for us to invest in things like our brand and technology and engineering.

If we had a lot of uncertainty around the revenue stream. And so, one of the things that we looked for globally was, what were some of the models that were working well that removed the uncertainty, but allowed for a predictable stream and subscription sort of winds down every time. So having a subscription product where a trade business pays us a monthly fee, commits to a service for up to a year, and then those result in inclusions in that subscription. So, it's not unlimited all you can eat, different tiers of subscription give you different levels of service and value. And so, we decided to create a very comprehensive subscription package. And I'm very pleased to say that the majority of the businesses and customers of the 34,000 customers that hipages has, around 31,000 of them are actually on a subscription product, and we would like to have all of our customers on a subscription product by the end of the financial year of 2022, those things resulted in significant step changes in the business.

[00:23:13] Sean: That's interesting. And I like the link that you've made there, which some people might not have picked up, which is, in the absence of that certainty, when you're thinking about how much it costs you to acquire a customer and how much you're going to have in terms of lifetime value, it really impacts the decisions that the business gets to make about, what do I invest in next because I don't have that assurity. And so, that's actually whether a subscription is a good idea or bad idea. It's not really about that. It's going; hang on a second. What is my capacity to invest and through that capacity to invest, I can improve the value to that customer or that client over time?   

[00:23:42] Roby: That's exactly right. And then you'll see when we go into some of the strategic decisions we made, we could only really do that when we started to get a little bit more comfort around the certainty of that lifetime value of the customer, which comes from a subscription product. It's very hard to do that. Well, you can do it from a transactional product. It's just more uncertain.

[00:24:03] Sean: Yep, absolutely. So, let's talk about this strategy and execution planning, because it sounds like there was a reasonable shift and also a methodology that you've really been implementing. So, I'd love for you to unpack what is it that sort of changed? What is it that you're doing? And what's working about that?   

[00:24:21] Roby: Absolutely. I'm glad we're getting to talk about, this is the real meat and potatoes of what most organisations… I think in modern organisations that want a good framework to work on should do. So, I think that category design work is really important. It really helps you understand where you are positioned in the category that you're operate in. It allows you to do your SWOTs - Strengths, Weaknesses, Opportunities, and Threats in the space. Really get a good grasp of it. And you can bring your leadership team and your management on that journey. I think, the next thing that's really important is to develop a clear vision of where your product should go. So, clear vision about what you are doing as a business, what your values are as an organisation, what's your purpose, the why, that helps with communication, telling your story.

I'm learning more and more that storytelling… storytelling, not in a fictional sense, in a non-fictional sense to make it real and come to life about what your product will look like in the future is super important.

[00:25:21] Sean: Are you finding that as important for… you're obviously in a public listed structure, right? So, you've got storytelling and lots of different spaces because you've got a leadership team that you've got to get on board, you've got shareholders and stakeholders, and then you've got customers. Where have you found that sort of embracing of storytelling and the importance of it, where are you finding it's having the biggest impact?   

[00:25:40] Roby: So, most listed companies will have institutional investors behind them, and so I think with regards to that, it helps with the institution. It helps with the analyst. It helps with telling the story to the retail market as well. Painting a picture of what the world should look like with your products or services, definitely brings clarity.

And then when you articulate how you're executing on that product vision, the story starts to come to life. You start to see the shareholders believe in what you're doing, and then they follow that with their money in terms of investing in your share price. Obviously, you have to deliver on the results.

If you don't deliver on your goals, you will be punished. So I'm pleased to say that that certainly, what we've been doing on our quarterly announcements to the market since listing, but yeah, it definitely plays a big part of that. If I go back to the next phases of what we've done is I think there's a concept of accountability and responsibility and working in cross-functional teams.

So, we've introduced a series of cross-functional teams. For the benefit of the audience, across functional teams, so you'll know your HR department or your people and culture, as we know it today, you'll know your finance function, your engineering, your data, your service, your sales, your ops, you'll have various functional teams, but what a cross-functional team does, is it takes a cohort or a slice of each of the streams and creates a team of about 8 to 10 people, made up of people that are actually going to execute on some of the strategic work that you want to do as a business. Functional teams have their responsibility, but you're taking out people from different streams to work in cross-functional teams.

So, for example, at hipages, we have a marketplace growth team, or we would have a tradie team. So, they would focus on a specific set of problems and have a set mission with set goals that ladder up to the corporate goals. And those teams have autonomy to think through and do design sprints and solve problems, work up a solution that has a IRR calculation behind it to justify the investment that we want to make in those streams. They have to make sense, and we then present those to our board and management team, and they then get approved, and then that becomes a part of our execution plan. Just to touch on accountabilities and responsibilities, cross-functional teams also have usually a C-suite that's accountable to myself. So, the CEO, and they're almost like the sponsor of that particular cross-functional team. And then they would have a lead, that is responsible to the delivery of that mission. They will bring the team together. They actually do the work.

And in our organisation, typically it's the VPs or the heads of departments that are the ones that run those cross-functional teams. We have about eight of them in our business, and you know, when we first started depending on scale, you can start, and I've seen businesses that are at about 5 to 10 million with two or three cross-functional teams, because you don't have that many resources, but I would say something like the CDA, we'd have 40 or 50 cross-functional teams,

as an example.

[00:28:47] Sean: Yep. And then what sort of training do you provide to your team? Fundamentally, it sounds like you're using a kind of agile methodology in these teams, they're kind of working with very clear goals and parameters. They're working on sprints. So, they're probably doing short burst activities with really quick adaptation, but they've got sponsorship, almost like any other project team. How do you train people into that model to help them succeed? Because not everybody's working across functional team, how do you train the team to succeed in that environment?   

[00:29:16] Roby: So, I found very enlightening the way Google does their work. So, there's the whole concept of OKR and all that. I don't want to talk about the OKR methodology. That's different, and that is important obviously, when you set goals and you measure and monitor those goals and that feeds into what we do in terms of monitoring metrics. But what I liked was I read a book “Sprints” which is a design sprint process and the cross-functional teams use those design sprint learning. So first of all, in terms of learning or training, everyone should read that. The methodology is very clear, it works. In fact, it works even better in a COVID environment because there's technology out there such as mural, I probably said that wrong, but there's technology where you can collaborate and you can actually use all those things they talk about in a virtual world or virtual environment. And we've been finding that's been very helpful for us. So, it's a really good tool.

[00:30:19] Sean: And so, what have you learned through this process? We took an example of that. So, the link from my strategic goal that you might have down to one of these cross-functional teams and how much time is the cross-functional team working on that specific game? Is it 20% of their role that they're sort of allocating to this?

Or is it a 100% of their role embedded in the cross-functional team? How does that play out?   

[00:30:40] Roby: So, they were all going to be some people in that cross-functional team where that's their job. So, they're 100% working on that thing. So, often it's the engineers, it's a product and an experienced person. If you start to have finance people or people in culture or service or some of the marketing, what you'll find is that they can't actually allocate their full time to that cross-functional team. So, they come in as experts, which is also talked about in the design sprint, in the sprint process, that would be varying anywhere between 20 and 50% of their time. And some of those supports people like the marketing people, particularly marketing, and ops and finance would work in two or three streams as well.

So, you know, they are stretched a little bit, but we found that that actually has delivered excellent results for us.

[00:31:30] Sean: Yeah. And how have you found that's impacted employee engagement? In my experience in implementing cross-functional teams, it's been a huge lift, like the level of insight they get into other parts of the business that they don't otherwise get because they're in a functional area, can be incredibly illuminating.

And often I always think, there's no moratorium on good ideas. And they often come from places that you're absolutely not expecting. And because of the cross-functional nature, you get this really interesting sort of melting pot. How have you seen it turn up in terms of employee engagement?   

[00:31:58] Roby: So, I'm very pleased to say, I don't know if you heard about this. It was an opportunity for me to do a little plug here, but we literally just won last week, the number two best place to work in Australia.   

[00:32:08] Sean: Well done!   

[00:32:08] Roby: Yeah, so we were really pleased with that, it’s a fantastic result, we were there five or so years ago.

So, it just demonstrates the fact that the inclusiveness, the ability for people that work at hipages to participate in strategy development. It's not top-down and we dictate what happens. It's done in those cross-functional teams and also functional teams where they are given opportunities to give us views, give management and the board their views. They're at the coalface.

So, they know what problems the customers are having, so those ideas are really important and that feeds into developing strategy. So again, I guess, really that's manifested itself in all the people at hipages, we had something like 88% of our people participate in that survey, which is very high. And they gave us a fantastic employment NPS score, and also the rankings from best place to work put us at number two in all of Australia. So really, really good results. So, it definitely works.

[00:33:13] Sean: Absolutely. And so how long have you been implementing this model for?

[00:33:19] Roby: So, we started the model two years ago. It was in April of 2019. We sat down and we had to solve a number of major problems that we were having in the business at the time. We weren't growing. Our cash burn was too high. We needed to sit down and work through it and we needed a framework to help us achieve that.

And so this mobilisation methodology execution plans with cross-functional teams delivering on the goals of the business has really been a game changer for us, and has resulted in us growing our top line, keeping our costs down, and ultimately lifting our brand awareness in the market and rolling out new products and features. Subsequently to that, we also listed in November, as I said earlier in 2020. so it's been a phenomenal game changer for us as a business.

[00:34:18] Sean: Yup. Absolutely. In the last four years, that was precisely the way that we built our culture. We had cross-functional teams operating and there were quite a number of them. Sometimes project based, sometimes working on medium to long-term strategic aims. But I noticed that it was like a massive role expansion opportunity as well for people who quite often wouldn't get access to that sort of intel or could be kept relatively narrow in their focus and their level of people taking ownership and really buying into the business because of that access to influence.

And even if you are in none of the cross-functional team and the person beside you is, and they're a marketing coordinator and it might be a frontline resource, you're like, wow, these people are really getting involved in some serious stuff, like real influence on stuff that really matters to the organisation.

I think it's quite a spectacular change in operating models. And also, people really haven't heard of it. So, when you think about the old model of the world, where we used to have a sort of strategy and then there was execution planning often done quite separately, or they weren't anywhere near as tightly linked.

Now you've got a really incredibly strong link all the way from a strategic goal, all the way down to what's happening in that cross-functional team on a daily basis. 

[00:35:32] Roby: That's right. I mean, It's sad to say, but we were one of those organisations three or four years ago. And obviously, it was reflected in our employment engagement scores and things like that, which obviously is now changed, which is great. But yeah, I think everyone needs purpose when they come to work.

I think, uh, more and more people are not just… I mean, you need to get paid. You need enough to survive and live and be competitive. But people are also looking for more than just financial rewards, they're looking for purpose when they come to work for an organisation. And the way we let people fulfil that purpose is to allow them to be part of the strategic process.

[00:36:08] Sean: I agree. And so just to finish off on that, what's something that you've learned about that process, maybe mistakes you made in the way that it was implemented or how fast, or you get learnings about how to make these things work better and better as you are a couple of years in, what did you learn through that process of maybe things that you tripped over or things that you wouldn't do again, if you had those two years again?   

[00:36:28] Roby: Yeah, I think, when I reflect on all of those things, there's a few things that come to mind. I think communication is really a key. I think you can't not communicate enough. Like if you think you've communicated enough, you probably haven't, you probably need to say it another three or four more times.

I think the format of those communications need to be appropriate for the audience that you're doing it for. So, when you talk to investors, the strategy communication needs to be maybe more concise, but then to help join the dots for board, it's very detailed, but in a format that they can comprehend and digest it because there's only so much that they can digest. Then with your leadership team, extremely detailed, they need to be across it, particularly with your C-suite or your very senior people. And then for your employees, it needs to be simplified and engaging. So, for example, one of the formats that we started with was, every member of those key cross-functional teams would stand up and present what they did last month, what they did that month, but we didn't change it up fast enough.

So, it got a little bit stale and boring. So now what we do is like these fireside chats and it's a little bit more fun. We poke each other a little bit, a little bit more engaging. We get to know the people that are actually executing on the strategy of the business.

You're allowed to be open. So, a bit like a feed comes in where people in the zoom sessions can send their questions through and the moderator or the host actually can ask questions. That's really engaging way to do it. In fact, the next level of evolution of that communication would be to actually bring in real life customers to tell us what they really think.

And that's talking about putting people in the hot seat. So, I think that's something that we'll probably do for our next stage of communication.

[00:38:25] Sean: Yeah. I remember actually in my management career, the most impactful meeting I've ever attended, it was one where we had 17 leaders, and the business was succeeding. Everyone thought we were heroes, everyone was super juiced, and the general manager of the division brought in a customer who'd been a customer for 20-30 years, and had been absolutely poorly serviced and it really impacted his business so much that he had to actually let go four or five staff. And it was the fault of this collective group of 17 people. And we had it handed to us by the customer face-to-face, and everybody walked out like; wow, okay, we've got some real work to do. Like it was a complete light bulb moment. I think, it has to be facilitated well, but can be incredibly powerful to get the customer in there.   

[00:39:13] Roby: Yeah. I mean, most organisations, you should be speaking to the customers, but I just think, having someone in real life in front of you telling you like, yep, that makes a massive difference. You really start to think about things very differently.

[00:39:26] Sean: Game changer. Can I ask you one question if you take yourself back to… because many people who are still sub 10 mil be going yeah, that's great, this is a bigger business. And you know, it was a while ago that they were sort of at my size. I'm actually still trying to figure out how do I get out of this gig of like doing everything, you know, chief of everything, trying to figure out who my key hires are going to be, how do I get out of this model where everything's still sort of coming to me. What guidance would you give people based on your experience about how to make those first steps to get themselves out of the way such that they can start to build an organisation, not just a business?

[00:39:58] Roby: Yeah, I think, when I reflect on my time and I’m hesitant to say this because I keep saying it, but it's been a while. If I was to say one of my biggest learnings is I didn't delegate sooner. I think delegating is the key to success. Let's be honest. Founders are typically not really that good at anything.

It sounds funny to say that; you're kind of average to good at a lot. You're good enough for a lot of things, but you're not awesome at any one particular thing. You're above average on most stuff. And most Founders would appreciate when they say that. If they were to unpack the layers and beat the chest and ask themselves the truth. The truth is, I was a good accountant, but I don't think I was a great accountant. I was smarter than the average bear in that regard, but I needed to get really, really good CFO. And then you can start to delegate that stuff. I don’t worry about it because they’re the dealing with it and I think that the advice I can give for the 10 and 20 million, is find the two or three key roles that you know that you're doing an average job on and start to delegate and get the best person you can afford and then delegate the work to them.

And then keep doing that over and over and over again. Eventually, you'll start to see growth. You'll start to see different ideas come up and ownership, real ownership, and that accountability and responsibility starts to take effect, which is where you want to be.

[00:41:29] Sean: A hundred percent. Yep. Very wise words. Roby, we are starting to get very short on time. I'd like you to go out into the future and think about what does this business look like three years from now? Like what do you expect us to be looking at in 2024?   

[00:41:44] Roby: Yeah. So, we've got some really cool material coming together right now. I'll give you the pitch that we gave to the creative guys internally and externally. So, I imagine a world where you wake up in the morning as a consumer and you want to have your… I don't know if you're a morning shower person, most people probably should have a shower in the morning. You have a shower and there’s no hot water. Remember, we’re in the trades and home improvement space, so this is where the story comes to life. And your hot water is out, you know you need a new hot water tank. You go onto the hipages app, using some sort of voice command and you say ‘hot water replacement through hipages’ and hipages kicks in, organises the plumber that's already verified and checked. Locks it in, you agree on the price there and then, and you go to work, you'd probably let them in through your keyless access password - one time password, you let the tradie in, but you come home and you have a shower and you go, ah, bliss. And you know, that's a hassle-free, haggle-free experience.

And if you want to tell that story to the engineers in the room, probably there are going to be a few engineers on the call or on the podcast, or you can say the IOT inside the device of the hot water tank triggered an alarm in hipages, and you just authorised for the plumber to come out and do the replacement for you.

So, you can take that next level. And if it trades, we can see a lot more automation, a lot more seamless. Managing their cashflow, giving them insights, just getting rid of a lot of that administration burden with good quality work coming through from hipages. That's a feature that I like to be a part of.

And we're definitely working our guts out to make sure that that becomes a reality.

[00:43:23] Sean: Love it. Well, I think that's an exciting future, both for the consumer and for the tradie. Final question I have for you is a segment that I run with all of our scaling Founders. And that is, I want you to go right out now, actually to your yearning years, you know, to the stage where you've achieved all the stuff you want.

I mean, you probably can see the next three to five and there's so much to get done there, but to go right out and think about the stage of life where you've probably started or grown all the businesses that you wanted to, you’ve still got heaps of value to add. You've got an incredible mind. And the CEO of the world's largest global community of first time Founders, tens of millions of them around the world who are just all hungry for information, trying to figure out how to really scale their organisation and not just have a business. She gives you a once in a lifetime opportunity to finish a sentence, which will impart your wisdom into this group of first time Founders. She says, I want you to finish the sentence “Above all else, the three things that you must get right as a Founder, if you want to scale are…?” What would be your three things?   

[00:44:27] Roby: Know your purpose, have a clear vision and have a plan with goals.

[00:44:33] Sean: Beautiful. Thank you so much, Roby. I'd like to acknowledge you, I mean, you have been in this game for 17 years and there are some accountants that make it as Founders. And there are many that actually don't quite make that transition, but I love the business that you've built and you've been through some really challenging periods, but you've also reinvented the business model numerous times. You've doubled down on actually understanding your customer. And as a result, you're delivering more value in the business that is really taking itself to the next stage. So, I love the way that you've built this organisation now where the level of empowerment has taken a huge step up because of the level of influence people actually now have on the execution and their understanding of the strategy and the ability to influence how it evolves. So, I think that's a wonderful business to be part of and a great journey that you're going on. How can people get in touch with you or follow along with what you're doing or with what the hipages is doing?

[00:45:26] Roby: So there's a few… first of all, thank you for that. You don't often get compliments or acknowledgement as a Founder, so I'll take it. The way you can connect with me is via LinkedIn. So my profile is easily found there. Just look me up. And yeah, you can email me on [email protected].

And I'm always happy to take an email or a call and to help people out. It's important for everyone to know that if you're feeling pain or you're not sure, or you've got that polarism of being up and then down. Someone's been there before, they know the way out and they can give you a hand to get out of the ditch.

So, be confident that there is always a way, be resilient.

[00:46:11] Sean: Thanks Roby. And I think that's a beautiful way to finish off with this. Folks, I really hope you've enjoyed the show today. Huge thanks to Roby. A couple of things before you go, obviously, if you've liked what you've heard today, and you've got value from, which I think would be pretty hard not to have got value from what Roby's had to say today, please leave a review on Apple Podcasts, helps other people find it and really gives a huge boost to our team that worked really hard to get this to you. If you'd like to know when new episodes are going to drop or when there's free tools and resources, you can jump on the website scaleupspodcast.com.

You can leave your email there, or you can send it a message via SpeakPipe. So, if you've got a question for someone like Roby or myself, or you'd like me to handle a question about scaling up on a future podcast, or if it's directly for Roby, we can get that question over to him. Just jump on the website and you can SpeakPipe there.

If you like the socials, you can find us on @scaleupspodcast on all your favourite socials. But remember, as Roby just pointedly said, the only thing that can actually guarantee that you won't scale is, giving up. So, you have to stay unshakeable and your faith that you're going to get there. And you have to remain incredibly flexible in your approach.

And you've got to hold those two things in your hands at exactly the same time, which is hard, but it's required. You've been listening to the ScaleUps Podcast. I'm your host, Sean Steel. Look forward to speaking with you again next week. Thanks so much, Roby.   

[00:47:26] Roby: Thanks, Sean.