Podcast Transcript

[00:00:56] Sean: G’day everyone, and welcome to the ScaleUps Podcast, where we help first time Founders learn the secrets of scaling so they can fulfill the potential of their businesses, maximise the impact they can create in the world and make bigger decisions with greater confidence. I am your host, Sean Steele and I am joined today by Ben Thompson, Founder and CEO of Employment Hero. How are you, mate?

[00:01:15] Ben: I'm very well, Sean, thanks for having me on.

[00:01:19] Sean: I am thrilled to have you here today. The name - Employment Hero, I expect will ring very common in the vast majority of our audience’s mental database. I would say, I've implemented Employment Hero in every one of the last six entities that I've led. And I would say at least 75% of the Founders that I support personally have already got Employment Hero or the others that don't have it probably should have it. So, I'm a big fan, mate. And I’ll let you tell a story, but you know, for those who don’t have a sense of the journey, I mean, you started this business in, alongside Dave Tong in 2014, and we're now in 2022, which is what, eight years. And to put in context, the scale of the business now you've got more than 80,000 customers globally, and three quarters of a million users. And five months ago, you guys became a unicorn. So, congrats on the value that you've been creating for the users and the customers, because from my perspective, anything that makes the life of Leaders of SMEs and the teams of SMEs easier, really excites me, because what it does is it actually creates value. It creates the capacity for them to do their best work, rather than doing work that shouldn't be inefficient, like Employment Hero really makes so many parts of the process that employees are dealing with every day so much easier. And so, I really love that. I'm wondering if you could maybe talk to us briefly about the genesis of the business, and then what it looks like today. So, kind of, where it started, what's the problem that you were trying to solve and how you're solving it. And what does the team look like now?

[00:02:53] Ben: Sure, with pleasure, but firstly, thank you for supporting the platform, supporting the product, implementing it into those businesses you've worked with. It's great to have advocates out there. And yeah, I think exactly how you explained it, giving people the ability to work on the right things and not worry about the wrong things, is the reason it was started, but happy to go back and sort of tell you where it came from and how it got going. So, you are right. We started, Dave and I started Employment Hero in 2014, but I had been in business for a long-time before that. I started the business or started my first business was EI Legal. It's a employment law firm, that was started in 2002. It wasn't intended to be an employment law firm. It was actually intended to be a technology law firm, and it rapidly became an employment law firm and then it led to Employment Hero. So, just to explain how that all happened, I had been working in technology and law. I was an economist first and then moved to the UK after working in the futures exchange and other things, moved to the UK and started working in, in start-ups, in the.com boom, and absolutely loved it. And decided that …

[00:04:22] Sean: As an economist?

[00:04:24] Ben: No, as a lawyer, sorry. So I was an economist and a lawyer, and was working in these firms were in these start-ups as an in-house council.

[00:04:36] Sean: Right. Okay.

[00:04:36] Ben: And yeah, so I worked at Interactive Investor International and a Ascerta Home and did all sorts of cool stuff at the time when the.com boom was absolutely the most exciting place to be. But after working in start-ups for three years, I decided I never wanted to work for a big corporate again, I wanted to start my own business. I wrote a few different business plans. I have always have plenty of ideas. Returned to Australia, um, and thought, well, the best way to get a business started is to just start a law firm, and a technology law firm make sense. It's what I've been doing. And then maybe from that, I can find a business to sort of, to go beyond that. And my father had been in HR for decades for his entire career. And at that time in 2002, he had his own HR consulting business that he’d been working on that for decades as well. And so being the great man that he is, he offered to help me out and introduced me to some of his clients who he thought might have some legal issues that I could help with. So, I went and met with all these different small business owners. Many of them are still customers today. People running service stations, subway sandwich shops, restaurants, you name it. They're basically like a representation of SMEs, and I'd meet with them and say, look, just want to understand what's the stuff that keeps you awake at night, and how can I help, and where can I be the most help? And everybody I met with basically said the same thing, which was employment is the thing that keeps me awake at night. And it's probably worth remembering that this was back in the early 2000s when there was a lot of reform going on in the employment law area, you had state industrial relations reform and federal industrial relations reform, leading up to work choices in 2007, which was a really unpopular piece of legislation. But during that period of time, employers were under a lot of pressure to get everything right. You know, any underpay claim, you'd end up in the paper. Any sort of mishap you could end up, with your reputation just destroyed. And these people who I was meeting with were just explaining that they were petrified about being an employer and getting something wrong and ending up in the wrong place. And they explained that, you know, they went into business because they were good at doing something. They were passionate about whatever it was that they started the business to do. But within months, if not sooner, as soon as you have a few employees, they recognise that you had to be a motivator, you had to be a payroll expert. You had to be an employment law expert. You had to be a recruiter. You had to be everything, you name it. There's just dozens and dozens of different tasks that fall under this title of employment. And unlike just about anything else in the economy, or any skill set, employment doesn't come with a set of requirements for you to become an employer. There's no sort of qualification to become an employer, like a parent, you know, when you get handed a child and you're told to keep this thing alive

[00:08:04] Sean: Yeah.

[00:08:05] Ben: Just don't mess up.

[00:08:06] Sean: And good luck.

[00:08:07] Ben: Yeah, good luck. And that's it. And then although they do put you into a mother's group, at least they put the partners into a mother's group, but with an employer there's not even a mother's group. It's just, “You're an employer now. Don't make any mistakes.” And the rest of it, you have to figure out yourself. And so I sort of reflected on that, that everybody had said the same thing and they all felt the same anxiety. And it occurred to me that 98% of businesses are SMBs, you know, and that's not just Australia, that's around the world. You know, SMBs are where 70% of jobs are created. It's really the, I mean, you would've heard the term, it's the engine house of the economy. It's moms and dads, opening small businesses and employing lots of people. It's really where wealth starts, where opportunity starts. And in fact, it's 48.5% of global GDP, other wages that small businesses pay to their employees. Yeah. It's no one really stops to sort of think about the fact that most of the money on earth that goes around and makes the global economy work is at its heart, is the wages that small businesses pay to their staff. You know, we'd be lost without them. So, when a 100% of the people I spoke to all said that they were petrified about being employers. It made me think; well, what would a world look like if these people felt confident about employing people, not apprehensive. And what would the economy look like if every SMB was proud and confident about every job that they could create. How could we make it easy for them to be in that situation? And that led me from employment EI legal, the law firm into creating Employment Innovations and really the idea there, which is my second company was; well, how can we centralise all of our employment? Like all of the services that SMBs need, could we create? What we used to call the ultimate HR department for a small business, could we create that ultimate HR department, like a hub and spoke and then have businesses tapping into those services. And so we created Employment Innovations and we scaled that business. It's still running today. It's great business. It's growing, still growing really quickly. And it operates across Australia and now into New Zealand and it does services like payroll bureau, employment law still, HR consulting, migration, basically everything that every small business needs.

[00:10:56] Sean: Yeah.

[00:10:56] Ben: And so that business grew and was doing really well. And then one day I sat down, well, one night and read this article called “Why software will eat the world” by Mark Andresen from Andresen Horowitz. And it described in a couple of pages that in the world, in the early 2000s, technology had advanced so far and become so accessible that if you were in a services business, the chances that somebody would digitise your services business and replace it with a SaaS company, software as a service, as opposed to human driven services was very, very high. And the ability for me to create a software business had never been so easy. You know, AWS was starting to form up at the time. You could have hosted services. Code bases were changing. Really light coding frameworks were around. And so, I just walked into the office the next day and noticed that we had two people whose job it was, was to photocopy documents, put them into manila folders and ship them to our clients all around Australia. And these were welcome packs, a tax file declaration, a super choice form, an employment contract, you know, the stuff that every business needs to employ somebody is 100% common and here we are printing it and posting it around Australia and cardboard boxes. And it was like, that is like the easiest decision to make. That's where we're going to start. We'll digitise onboarding, contracts, everything that it takes to employ somebody and that was Employment Hero. So that was how it started. And not long after getting it started, Dave and I stood at a whiteboard and said; well, what else would we, you know, we've done onboarding, what else would a small business need? And we still have that whiteboard. I think we captured at eight different product areas that the platform would need to have, including payroll and actually on the whiteboard was key pay because I had invested into key pay at that time. And so we were building our payroll solution. We were building our HR platform and that was the very start. And as you said, now, here we are. Eight years later, we have actually just about 900,000 monthly active users on the platform. We'll be over a 100,000 employers on the platform. We're in Australia, New Zealand, Singapore, Malaysia, and the UK. We have opportunity to go into other countries as well, which I'm sure we will. And honestly like, with every day that we've been doing this, we've learned more about how to help employers. And then more recently we've really learned that employees are the next big opportunity to really help employees make employment more valuable to them is something that's incredibly important, particularly with high inflation and low buying power. There's a lot we can do in that space. So, we're working hard on a bunch of new initiatives around employees, as well as employer.

[00:14:13] Sean: Yeah. Right. And would those be sort of new products or services that are still sold through the platform? Like, you know, I guess you've built a sort of B2B business where you've got employers attached to the brand of Employment Hero, but then of course, you've got all their team members, all these users on the platform. So, you've got, I guess, a really strong association, but they're assuming that somebody else is paying for this. Are these things that would become opportunities for employees to engage with in a B2C model, or is it still sold through the employees in terms of the extension of the employees?

[00:14:42] Ben: Yeah. Without just describing too much, it's all coming soon, but, it is B2C opportunity to engage directly with employees. Because employees don't stay with just one employer, right? They want to move around throughout their careers, and maybe a better way to describe conceptually what we've recognised as an opportunity, it is pretty easy to tell you where we're at. Basically, the last eight years have been spent digitising employment, taking what was done with paper and Manila folders and filing cabinets. When we started our careers, that's how HR was managed and we've spent eight years digitising all of that and putting it into a platform. And so there's no paper anymore. You don't need to have any paperwork to be an employer. The next eight years, or however long, probably forever is actually thinking; Well, now that it's all digital, how would you manage employment in a purely digital environment? Because so much of what we've done in the past and the way that employment's managed today, even digitally, reflects the way that it had to be done before it was digital, not the way it should be done now that it is digital. And, a good example of that is the fact that around about 32% of people get paid monthly in arrears. That made sense when invoices and paperwork was how you had to, you know, you had to post somebody an invoice, you had to wait for them to receive it, then pay it, then post it back with a check, then bank it. Paying people once a month made perfect sense in 1927, probably. It doesn't make any sense in 2022. You know, people can be paid in real time. And they should be paid in real time, frankly, like, you don't get to go to the grocery store and buy all your groceries and every day, and then tell Coles and Woolies that, "Oh, I'll fix you up the day I get paid in a month from now.” You actually have to live on credit until you get paid. And that's led to a world where the average employees using expensive after pay, credit cards, direct, buy now pay later. They're getting billed for late payments and overdrafts and all sorts of things because of this redundant employment or a payroll cycle. That's just one example of many. An employment contract, even an employment contract is so antiquated. You know, it's got the date and the in the top right-hand side and the employer's address and everything. Ultimately, it's just a set of terms and conditions. And we all move around the internet and the world every single day. It just ‘click and accept’ these terms and conditions like why isn't employment just ‘click and accept’ to start working here. Like there's no reason for it. So, if you sort of imagine what employment could be, when it's done entirely digitally on one common platform, then it there's a world of opportunity out there, and that's what we're working on now.

[00:18:19] Sean: I love that. You know, you made me sort of chuckle out loud there, and when I was remembering that actually only five years ago, I did a pretty major acquisition. And I remember walking into one of the offices. I had three walls full of filing cabinets, which was all the employee files. And I was like, what are these? They're like; well, that's the employee files. I was like, what do you mean, they're in filing cabinets with like a lock and key? They're like, yeah. And I was like, yeah. Even five years ago Yeah, but you know, when you see those opportunities to now think, you know, you imagine now somebody seeing that five years later be like; okay, guys, like we probably need to move with the times, but to your point, you guys are spending your time looking at the things that are already antiquated, but maybe aren't yet like that tension of the consumer is already, you know, the consumer's feeling like this is such a waste of time. Like, why is this happening? But the employers are usually far behind what the employee, or in this case, sort of the consumer wants.

[00:19:16] Ben: Yeah.

[00:19:17] Sean: That's really interesting. That's exciting. And you know, when you consider the number of employees versus the number of businesses, that's a really pretty significant opportunity you guys are going to go after. That's very exciting to see what comes.

[00:19:29] Ben: It sure is. I mean, we manage about 50 billion worth of payroll on our platform today and each individual on our platform. So, there's nearly a million employees or 900,000 employees on the platform, but today, each of them are still buying with the power of one, you know, just one individual spending their salary. They have very limited buying power, but you know, with our platform, we have the ability to actually sort of consolidate and aggregate buying power and put that power into the hands of the consumer for the first time ever. So, you know, 50 billion and nearly a million people, that's a lot of buying power. And with real wages being declined for 15 years and even more so today with inflation running at whatever it is in Australia at the moment, 6% or 7%, now is the time to really lean into helping employees make their pay go further, we've got all of the tools that we need to make that happen. And we're just super excited about that stage of the journey. And that's just one of like half a dozen really exciting projects we get to work on. So yeah, lots of fun.

[00:20:49] Sean: Well, it kind of feels like this is maybe, without jumping this is almost like master plan too, right? Because if you know, I saw a presentation you did a while ago where you talked about four big things that you had done as a CEO that enabled the success of the organisation, which were, you know, writing your master plan based on first principles, building and maintaining an operating rhythm, finding the balance between…I'm adding this word, but relentless curiosity and healthy paranoia. And then, you know, having the right support network as a CEO in terms of being able to get inspiration and perspective and support and so on. And this feels like all kind of master plan too, because it sounds like that original whiteboard. I don’t know if that was what you considered the master plan, but it sounds like you've delivered on a pretty significant proportion of what you originally set out to do. And this might be master plan two for the next bastion?

[00:21:37] Ben: Yeah. Well, it's master plan three, because we had a sort of intermission there. We had master plan two during COVID, and it's still, we're only fraction of the way into master plan two. The master plan one had five stages and you're right. We've ticked each stage of master plan part one. I wouldn't say that we've done it, you know, we're not all A+ grades on each level. But we've dealt with the key things we wanted to achieve in master plan part one. Master plan part two, I think is really important. And just if I might just quickly explain it, because I think it's important for employers and business people to sort of get their head around. Basically, COVID forced us into a period where remote work was compulsory and it triggered that that transition from primarily office-based work to exclusively remote-work. And when that happened, I reflected on what it meant for society. I mean, I always wanted remote work, but it was hard to sort of get it embedded. And what it really means is that, socially and morally, it's a far better situation to have remote workers. It means that, parents, carers, people living with disabilities, people that have chosen, or maybe not chosen to live in regional and remote areas. They've all been excluded from the workplace. You know, if you couldn't get on a bus or get in your car and drive to the office five days a week and 40 hours a week, sit in that office, you were not going to be considered for a huge proportion of roles. And now that we've got this ability to work-remotely, we can include all of those people in online work. And that's just better. It should be done. The fact that people are debating, how do I get everyone back to the office, it just blows my mind. Those people are actively choosing to recruit people from about a 20-or-30 kilometre radius of their office. Their talent pool is like less than 1% of the total working population in Australia. So, they're saying, I think we're going to be better if I can recruit from a tiny little talent pool and I can force them all to come into the office. And I'd prefer to do that than to include all of these people who are highly educated, highly capable, desperate for work and willing to work remotely, they would prefer not to do that. So, I just think we have to preserve remote working for all the reasons I've explained and then educate people to realise that if you do adopt remote-work and sustain remote work, your talent pool becomes the literally the world. You know, we have 600 people. Just over 600 people working for Employment Hero today and they reside in 17 countries around the world. It wouldn't be possible for us to have recruited 450 people in the last two years who are all like hen’s teeth, you know, highly skilled, full stack developers, unless we had adopted this open employment remote working arrangement because we've been able to go out and find incredible talent, incredible engineers, incredible marketing people, all sorts of different people, but we couldn't have done that without remote work. So, we want to maintain remote work. We want to help businesses understand…

[00:25:25] Sean: Ben, sorry, whilst you're there, I think it'd be really fascinating if you could share a few insights as to what are some of the things that practically have really been super important in your ability? You've obviously gone out with a, with a policy of trying to attract the best of the best from wherever they happen to be. But there's still plenty of employers out there who are really struggling with a. You know, do I go completely remote? Do I do hybrid? Or bring people back into the office and there's all the range in between. What are some of the things that have really helped you succeed in continuing to build culture and be productive and enable sort of efficiency and effectiveness in a remote first model?

[00:26:07] Ben: Yeah. Well, we had the advantage of already practicing the Rockefeller Habits, which I know that you are very familiar with. So, Rockefeller habits, or the scaling up system, you know, it's a guy called Vern Harness who's a business consultant and trainer, has gone around the world for decades, teaching people these habits. And one of them is a very rapid cadence, strategic cadence in the business. So, every 90-days, agreeing on what is the one big thing that can move the needle for this business more than anything else. And how can we execute on that one big thing within 90-days to keep this business moving forward? And so, we've been practicing Rockefeller habits since 2000, when I had 10 employees in the company, we have never missed a quarter where we have, what I call, it's a bit of a bastardisation of the Rockefeller habits. I call it the golden question. What's the one thing we can achieve in the next 90-days that will take us as far as possible from where we are, towards our BHAG. And one of the common terminology that we use internally is velocity towards BHAG, V2B it's like, is that going to increase our V2B? Or is this decreasing our V2B it's a touchstone in our business. And so, when sort of, I mentioned all that because when you have that framework in place and that cadence in place and something like COVID happens, it's very easy to say to the whole company; All right, something massive has happened. In order for us to maximize our velocity towards BHAG, we need to achieve, we need to go remote. What does it mean to go remote? How can we do it as well as possible? And so, we spent, at least one quarter of it probably over the last two or three years, we've probably spent, two or three quarters becoming good at remote first working asynchronous communication. I recall one of our themes just a couple of quarters ago was async or swim and…it was great. So basically, like asynchronous communication, you can't be globally remote unless you can be asynchronous in how people consume the information and, and communicate in the business. So, you know, we spent 90-days just rehearsing how to be asynchronous, how to do it really well, what does it mean? So, we built our confluence pages and now everything in the business starts with a paging confluence, and anyone who joins the business can read everything that they need to learn whenever they need to read it. You don't need to attend a meeting to communicate something, because it's already been captured and presented in the best possible way. So yeah, how do we do it? Like what's made us successful in that is, A) Having the foundations of a higher cadence business strategy that gets reviewed at least every 90-days. Sometimes we'll actually pivot mid-quarter if we think that we're off track and that we could improve even more. And then once you've got that cadence in place, then you can focus on doing the right things. Well, and so for us, pivoting, from being a predominantly remote, sorry, predominantly office-based business to being exclusively remote, we've done it really well because we've focused on doing it really, really well.

[00:29:38] Sean: Yep. That's really nice. And we could spend plenty of time unpacking all of the rhythms and the operational rhythms around scaling up and the Rockefeller habits. I'm interested, however the third point in that presentation that you had talked about, this sort of balance between curiosity and also having a healthy paranoia. Can you just talk about how that, how do those sort of two perspectives show up in the business in a practical way?

[00:30:07] Ben: Yeah. So, in terms of a healthy paranoia, it’s maybe not be that healthy, but you know, I started the business. I started the business and I've been on a the smell of an oily rag and I've bootstrapped most of the time. And that may sound ridiculous, because people go, “Oh, hold on. Employment hero is always doing cap raises and it's a unicorn and all these types of things, you're not just bootstrapping.” That's true. But we did bootstrap for the best part of 20 years, you know, from the law firm into Employment Innovations, starting Employment Hero, it's always been bootstrapped. Cash flow has never been plentiful until recently. And so, I couldn't get anything wrong. I literally couldn't afford to make a mistake. And that's probably true for 98% of small business owners. You don't really have the option of like making big mistakes. You don't survive. And so, I would arrive in the office or at my desk on a Monday morning and would be thinking, how do I make sure that this week is as good as it could possibly be? Like, what are the things that I have to do to avoid any existential threats? It seemed like a Monday was like always the existential threat day. And I would then sort of plan my week around overcoming existential threats. And then during the course of the week, you're sort of making sales and doing marketing and building product and everything else, and gradually over the course of the week, you'd see lots of good things happening and you'd get to Friday and you'd be like, my God, this has been a really successful week. And so you finish all of stick and the future's bright and everything's out there, but for some reason, come Monday again, I said, it hit the chair. And it's like, oh gosh, it's starting again. What do I have to work on? Like, what are the threats? How do I overcome them? So that's just been my rhythm every single week is starting fighting for my life and celebrating whatever we've achieved in that five-day period, on the Friday afternoon. And it just keeps you hyper focused on doing the best you can every single day. I don't know whether that's just me and my makeup, but that's the paranoid part of the story. And in terms of curiosity, that is my makeup. You know, my parents called me “Mr. Why”. Like a lot of kids I'm sure, but, you know, I had to understand why things worked the way that they did. I had to understand, I still have to understand, the background of something, the underlying principles of things, like, why does stuff have to be done that way?
And I will dig, dig, dig until I get to the first principles of just about anything that I'm interested in. And that is just an unending curiosity. And that then, I think that is just one of the most important things for people in business to be as curious and get right down to first principles. In fact, I don’t know if I can take a minute just to explain what I mean by that because it's one of the… yeah.

[00:33:38] Sean: Well, I was going to ask you that question, because that was the first item on your presentation was that, and my question was, what did you mean by first principles in the context of your master plan?

[00:33:48] Ben: Yeah. And look, just to be transparent with people, I'm sitting here wearing a SpaceX cap, I'm obviously a Elon Musk fanboy. I've watched what he's done with Tesla and SpaceX and all sorts of things. And I take a lot of inspiration from it. And one of the things I've learned, and one of the most powerful things I've learned from him is that first principle's thinking. I probably was doing it, but I didn't know what it was, but it's really hard to teach. And so basically just to describe it. So, first principles is, understanding the elements of anything down to the lowest possible principles. To put that into perspective, employment, you could just break employment down and say; well, you know, what is employment? Well, you know, it's recruit, it's payroll, it's all of these different elements that we have… Hold on. Sorry, just getting a phone call. Yeah, it's just all of these, you could spend a decade studying employment and not get to the bottom of it. You'd have to be an employment lawyer. You'd have to be a systems architect. You'd have to be an engineer. You'd have to be an HR consultant, but if you dig deeply enough and you understand the history and the underlying issues driving any particular topic, then what you get is the ability to take those foundation stones and put them together in ways that no one else ever has, because everyone else just takes what they see, i.e., that people get paid once a month. And they're like, well, that's the way it is. That's reasoning by analogy. People get paid once a month or people get paid fortnightly or people get paid weekly. If that's where your level of understanding is then that's all that will ever be. But if you understand why somebody gets paid the way that they do, and what would be possible if you understand the whole payment infrastructure in the economy and the fact that actually, if you understand the payment infrastructure you could put payroll together in different ways. And you could pay people in real time, then you have the ability to design something that's completely unique, entirely different. A great example, just to finalise the sort of explanation is, is somebody says, “I'm a baker. I can bake bread.” Well, there's two different types of bakers. Somebody may have seen somebody do it. They've seen how you bake bread. They know that you grab some flour and some water and some sugar and some yeast and you mix it up and you stick it in the oven and you've got bread. Other people would go to the extent of going; Well, I know that if you, there are like 20 different types of wheat and where they're growing and how they're growing affects the qualities of the wheat, then the amount of protein in there. The way that it binds and the way that the bread feels. And they know that the soil that the wheat was groaning gives it certain qualities. And so, when they go to baker type of bread, they're actually thinking like; well, I want to choose the right wheat from the right soil, with the right amount of water in it. And then I'm going to blend that with all these other things that no one's ever thought of before to create a new and better type of bread. So, there's just a very different and that new better type of bread might be something that makes that person a multimillionaire, because it just done something entirely new and different, but they had to start from first principles to achieve that. So yeah, that's the difference between reasoning by analogy and thinking from first principles.

[00:37:37] Sean: That makes a lot of… well, I was going to say it makes a lot of sense. It's obviously very, as you said, it's very hard concept to pack into a very short timeframe, but I get, you know, when you think about that, you're getting right down to, you're getting past all of the assumptions, all the way down to some really core kind of hypothesis that could be put together in different ways to actually make something new. I love that.

[00:37:56] Ben: Yeah. I think engineers do it well, and lawyers maybe, because you're learning about, you know, when you do a law degree, you learn from Plato, you learn philosophy all the way through to contract law or whatever. But yeah, there's a few industries that I think teach that type of thinking really well, but they're a minority and most people are just…

[00:38:18] Sean: Seems like a missed opportunity in training, right?

[00:38:22] Ben: Yeah, absolutely.

[00:38:23] Sean: Yeah. Wow. And so, it feels like it's even a kind of missing ingredient, innovation courses and stuff for leaders. If you could get leaders questioning in that way, you'd get some pretty interesting innovation from the inside, rather than just looking out to see what's there.

[00:38:38] Ben: Yeah, it just unfortunate. Sorry, just to finish that. So, unfortunately the people to do it, you have to be born curious, you know, you have to be willing to keep digging until there is nothing left to dig into, and that you have got to the very bottom of whatever it is that you're studying, and that isn't something you can teach.

[00:39:01] Sean: Mm. Yeah. Okay. So, there's an innate curiosity that's got to be there in the first place. I've got lots of questions about the journey and there's lots of stuff that you've done strategically with the business, which I I'd love to unpack. But I know our time is also short. I'm really interested about your journey. What's been the most difficult period you faced as CEO in the business?

[00:39:24] Ben: Look, based on a recent memory based on, I would say there was a period, not long after we had started Employment Hero where I was bootstrapping the development of Employment Hero, I'd invested into key pay. So, a lot of my free cash flow was gone. I had power to motivate, which was another start-up business. And I had employment innovations, which was really feeding everything, and the law… So, everything was very tightly coupled and very on the edge. And then the laws all changed. The employment laws changed. It was change of government, change in legislation and obviously the law firm, and Employment Innovations, everything sort of stagnated, just because people didn't understand the law yet. And so cash flow just started just dried up. And we literally were on the cusp of losing everything. Like there we, nothing would've survived. And I told this story recently and I called my wife. And she said, she actually listened to the story. And she goes, no, you didn't. I was in the car with you. And I'm like; really? And she's like; yeah, we were driving to work and you turned to me and said, “Hey, don't know if you realise this, but we don't have any money. And she's like, what do you mean we don't have any money? I'm like, well, this has all happened. All these things have happened. Like cash flow is completely dried up. And I don't know how we're going to get payroll together for next month. You know, we got to find 50 grand from somewhere, or we're not going to be able to pay people.” And she also reminded me that, um, when she got to work that day, when we drove into the car park and went up stairs to the office, her first job, which we'd agreed on in the car was to call about three or four people who we'd recently recruited and rescind the employment offer. And she said that was just incredibly hard. And you know, one guy was a young guy, early twenties, and his mother called my wife and abused her and said, how can you do this? You know, he's resigned from work, and completely understandable. Like he wasn't happy. So yeah, that was a pretty difficult time. And it's certainly a very difficult day. But we had to get everything together. We had to cut costs. We had to bring in invoices, you know, we had to bring forward payments and delay others. And somehow, we managed to thread the needle and we got through it. And that's not an unusual day for most people in that own their own business. Right? I say, I give that story out and you see executives from large companies go, oh my God, how could that be? It must be so stressful. And then you see mums and dads running the local deli going, that's my life. Like it happens every week, you know, so I feel like, yeah, it’s pretty bad. But yeah, there's been many times since when we could have lost everything as well. It's just that one in particular, that story seems to come up the most.

[00:42:37] Sean: Yeah, it really resonates. And I'm sure it resonates with a lot of people who are listening to this podcast today. You know, you would've gone through, you've obviously been through a lot of things, and no doubt you've had lots of your own mentors, you know, people who have inspired you over time. When you think about, what are some of the pieces of advice might be one or two things that have stuck with you through this period that have actually been sort of pivotal into, in how you've been able to get the company to this stage, you know, pieces of advice that just kept coming back in different situations where you like; geez, that was such good advice because that's actually really saved me or helped me numerous times over?

[00:43:15] Ben: Well, there's two things that initially spring to mind, but the first one is when I literally, within weeks of starting the business, the advice I got from my dad, he saw me sitting there I'd started the law firm. I actually was, you know, borrowing a desk in his office and I was cold calling people and trying to get a bit of business coming in, but doing it bit half-heartedly and, and he said; Hey, let's go and grab some lunch, go for a walk. And on the way to this restaurant or this little takeaway place we're going to, he said; “Hey, I just noticed that you you're sort of sitting there. You're trying to get the business started, but I just don't feel like, think you've got your head around what it's like to own your own small, like your own business yet.” And I'm like, “oh, I think so.” He said, “No, no, you've spent the last 10 or 12 years in corporate sort of world. And he said, the difference is when you're in the corporate world, you're looked after you like an animal in the zoo. People come around and they give you your food every week, which is your pay-check. You know, they give you a nice environment to work in and you just have to do enough to, and you'll be looked after. You can't completely stuff up, but as long as you don't absolutely stuff up, you pretty much just looked after by the enterprise around you. And you sort of forget that that's what you are. You're an animal in a zoo. And certainly, no criticism to anyone watching this on where you are and what you do. But when you start your own business, you are out on the Prairie. You you've got to hunt your own food, you've got to catch it, skin it, consume it, and then you got to do it every time. You've got to be constantly like aware of your surroundings and how you're going to make a dollar and how you're going to grow and how you're going to keep things. And you've got to realize that every other animal out there is trying to do exactly the same thing and they don't give a shit whether you live or die. And that's what you are now. You're in the jungle and you are still behaving like you're in the zoo. It's a subtle difference, but you got to understand the difference. And it sort of clicked with me honestly, I got back from that lunch and sort of sat down at my desk and like, yeah, actually that's a different mentality when you are your own boss and you're on your own business and you've got to be a bit more aggressive and a bit more paranoid maybe, that's maybe that's the way some of the paranoia came from. So, that was one super good piece of advice that has stuck with me. And the other one is surround yourself with people who understand that environment. You know, like if you are in small business, you're own your own. If you're in business, you own your own business. You know what it's like to have that experience. I just mentioned about being in the car and not knowing how you're going to make payroll the next week, or know that a competitors come out with another product like yours and that it's going to potentially jeopardise your existence. You know what it really feels like to stress about these existential threats that could just wipe you out. And then you go to a barbecue on the weekend and you meet with all your mates and they're all in like nice jobs and they're on a salary and, and they, oh, how you doing? And you're like, yeah.

[00:46:39] Sean: Like the zoo.

[00:46:39] Ben: Like, oh yeah, you know, like things are okay, you know, blah, blah, blah. You can't tell them that you need to raise 50 million bucks or you need to… too many examples to mention. So, you want to find people who actually know what you are worried about and experience the same things. And that's where groups like entrepreneurs, organisation, EO, or YPO - Young President's Organisation, are just worth every cent that in membership fees, which is 5,000 bucks or something a year, because every month you get together, you get put into a forum when you join one of these organisations and that forum get to know, they meet every month without fail. And they share, they can't do business together. So, there's no conflict and they share the stories of what's happened to them that month. And the highs and the lows, the top 5%, the bottom 5%. And by the time you go around the room and you edge give a five minute update on what's happened in your month, you have more perspective on where you are in the world and how you are feeling than you ever get outside of that environment, because you could have walked in there thinking that you were shooting the lights out, and then somebody says; oh, and by the way, you know, we just became a unicorn. Or you could walk in there thinking that, it's the worst month of your entire life and then somebody says, I'm divorcing my wife. You know, like, and it just puts it all back into perspective. So, I think being a member of an organisation that gives you exposure and perspective on what you are doing is something that I have never regret. I've been a member of both EO and YPO for the best part of two decades. And I can't recommend it highly enough to anybody who qualifies. So, that, know where you are, know that whether you're in the zoo or you're in the jungle, and then surround yourself with people who understand what you're dealing with, and that you can trust. They're the two pieces of advice I'd give.

[00:48:54] Sean: I love that. And you know, we've had many Founders on the scale that's podcast who've been members of YPO, some have been in EO, some have been in club of United business. Some have been in a range of organisations, but to your point, you got to check your neighbourhood, right? Like you got to look around at who's around you and go; well, where am I getting my perspective from? Where am I getting the kick in the ass? When actually I'm being lazier or I'm not paying attention to something that I should be? Sometimes you need to be taken down a peg, sometimes actually you really need to be lifted up. And if you don't have those people around you, being a business owner can be a pretty lonely place sometimes. So, yeah, couldn't agree with you more. And Ben, we're right near the end of our time. And I've got one last question for you. I do this segment with all our Founders and it's called "Above All Else.” So, I want you to imagine if you go out, you know, I don’t know how much longer you're going to keep driving as hard as you are in the businesses that you build, but let's say you're in your yearning years, right? Like you can, it's a bit later on in life, you built all the businesses you wanted, you've created all the impact that you really hoped that you'd have the potential to do when you get a phone call from the global CEO of the world's largest community of first time Founders, you know, tens and tens of millions of them. They're all super hungry for information from successful Founders. And she says; “Ben, I would like you to finish this sentence. Above all else, what are the three things that are Founder must get right if they want to scale?” What would be your three things that above all else, a Founder really needs to nail if they truly want to scale their impact?

[00:50:25] Ben: I would start a business with a real purpose, number one. It's hard to attract and retain top quality employees, but it's almost impossible if you don't give them a reason to, to engage in your company. And the difference, you can feel the difference between a business with purpose and a business without one, you know, one is just energised and it radiates and the other one is, terrible. No one wants to be there. So, if you don't know what the purpose of your business is, discover it or create one. And as the CEO and Founder of that, you that's your mission, you've got to beat that drum day in and day out and communicate that to every person that's anywhere near the business. So, that's a super important thing. The second thing I would say is, get an operating rhythm. Operating rhythm in your business is a competitive advantage. Like, over the decades that I've been in business, I've recommended Rockefeller habits to hundreds of… well, yeah, hundreds and hundreds of my peers and said, you know, this has worked really well for me. And I've watched them try and implement something like the Rockefeller habits and fail. Are just too hard or got distracted or people didn't come along for the journey. So, if you can do it, if you can actually implement something like Rockefeller habits, it's a massive strategic advantage because when you are threatened by something or when you have an opportunity that you can go after, I can, you know, not click my fingers, but I know that I can take this company 650 people. I can focus them on that one thing I could start that today. And I know that we would execute on it and, and we would do it within months. Others would probably just be like, let's see that threat and they'd go; oh, well, that's a shame. Like we can't do that. So, make sure that your business is capable of being directed and manage with that level of cadence. And then third thing as a CEO, don't be afraid, like this probably comes back to the master plan idea, you know? And it's probably related to purpose as well, but I've tried to manage businesses by asking by just sort of saying; Hey, here are the things that are happening in the world, and maybe we could go after them in one way or another. What do you guys think and, you know, get everyone's input. And then I've also tried just writing a master plan and saying; this is what I've seen. This is the vision. And this is how I think we can achieve it. And having that clearly articulated vision and direction is by far away the best thing, the best way of doing it. And you know, I sort of hold back on that, because I don't want to tell people exactly what to do, but it makes sense to tell them what to do if you've really thought about it and you've articulated this vision and where you can get to and how to get there. And that's where having master plan part one, part two, and part three in our business, just gets shit done. So, that's probably my last piece of advice would be yeah. You know, understand what you're doing all the way down to the first principles. And then when you really truly understand, and you can write a vision, you can articulate the vision for the business and then get people, the right people around you to execute on that vision and things will definitely happen.

[00:54:58] Sean: It's where the magic starts happening. I love that. And you know, consulting is good and people, you know, you want people to have a voice, but ultimately they also need leadership. And that's exactly what you've just explained to us. Ben, thank you so much for spending your time with us today. I mean, you've been on such an incredible journey. I'd love to just really acknowledge the way that you've built Employment Hero. And I love the genesis story about actually where it evolved from. So, you know, because people can so easily fall on the trap of going, oh, he started this business eight years ago from zero and now it's a unicorn and I can do that too. And, or I could never do that. You know, whichever way they take it, it's like, no, no, you can hear the depth of thought that's gone into the first principles, actually understanding the space before you got anywhere near Employment Hero becoming the business that it is today. And it's because of that depth of understanding and real insight into actually what the problem was and unique ways of solving that and making the lives of those customers easier. You've unlocked a lot of value in the world through the business that you've created and your team in the way that they've executed it. So, you know, kudos to you guys, incredible job. And thanks for sharing some of your learnings with us today. How would you suggest Ben people want to kind of follow along with the employment hero journey or kind of learn more about where the business is going in the future and sort of stay connected to it? Where would you send them?
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[00:57:03] Ben: Well, firstly, our website, so www.employmenthero.com. And there are heaps of resources out there. Honestly, when I say that I created this business to make employers feel proud and confident of what they do. That's all we're committed to. And if you need anything as an employer, if you're looking for literally any piece of content from employment materials to contracts and policies, just go to the website and we've got it there, you can download it, and you can stay up to date with what's going on in the world of employment, wherever we operate, that's probably the easiest way to do it. Otherwise, if you are up for some silly banter and memes on Twitter, you can follow me @BNThompson on Twitter.

[00:57:55] Sean: Brilliant. Mate, thank you so much. Well, folks, I hope you enjoyed the show today with Ben Thompson. Ben, huge thank you from me, and from our audience. Before you go today, if you liked what you heard, please subscribe on your favourite podcasting channel. It's the best way to obviously get new content, leave us a review, tell us what you thought about, Employment Hero and the episode with Ben today. We'd love to hear it. And we read every review and we love them. So, if you want to catch us on the socials, it's @ScaleUpsPodcast on all your favourite socials, but you've been listening to the ScaleUps Podcast this week. I'm your host, Sean Steele and a huge thanks to Ben from Employment Hero. Thanks a lot.

[00:58:30] Ben: Thanks for having me on, Sean. Cheers, mate.

[00:58:32] Sean: Thanks.

[00:58:33] Ben: Speak to you later.