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The Foundr Podcast with Nathan Chan
560: The College Dropout Who Built an $11 billion Toy Empire | Nick Mowbray (Best of Foundr) [VIDEO]
00:41:48
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- [00:00]
Nick Mowbray
We didn't really have a big idea or really any business plan. We'd scraped together all the money we'd ever made and we went to China. We started and we lived off nothing for seven years. We just worked 24, seven, seven days a week, every day. We basically just scrapped and fought and kept getting knocked down and kept getting up because we were so competitive that we really wanted to work out how to win.
- [00:20]
Nathan Chan
He's one of the co founders behind Zuru, a backyard idea turned global toy empire. Through bold innovation, industry disruption and relentless global expansion, the company was set to achieve over 3 billion DOL dollars in annual revenue in 2024.
- [00:34]
Interviewer
He's built a multi billion dollar year annual revenue company. Can you talk us through how that is possible?
- [00:41]
Nick Mowbray
Part of our DNA is we have this mentality around a 2% improvement a week and improvement compounds and quickly you become really good at something. It's the reason, I guess in a short time we can grow to the size we have.
- [00:52]
Interviewer
Were there times where it was so tough, Nick, where you thought this is too hard?
- [00:56]
Nick Mowbray
One of the things that you have to accept about being an entrepreneur is, is you're always going to have problems. You're always going to have buyers. We just had like problem after problem after problem. You know, on those first two products we got sued and we had no money, literally we had no money for the sales and lawsuits. And so you work out how to scrap and hustle and find a right way around it. That was the mindset always when you don't have a choice, you've got to find a way.
- [01:19]
Nathan Chan
Hear the stories, learn the proven methods and accelerate your growth and future through entrepreneurship. Welcome to the Founder podcast with Nathan Chan.
- [01:33]
Interviewer
I want to go back to the very beginning. Like you started zoo with $20,000 which you know, you borrowed from your parents, right? Eighteen. Eighteen years ago, right?
- [01:45]
Nick Mowbray
Correct.
- [01:46]
Interviewer
Yeah. So take us back.
- [01:47]
Nick Mowbray
Yeah, I mean we, so I, we were sort of doing this on and off through, you know, school holidays when we were kids. And then Matt went to unit. My brother's Matt, he went to university, study engineering. He dropped out I think after six months. Didn't tell my parents, but kept kind of working, coming back to making this hot air balloon. And so he sort of started to make it a little bit more professionally. He set up a little production sort of facility on my parents farm, dairy farm, in a place called Tokoroa. And I was a little bit younger and then, and then Matt sort of moved from there up to a place in Hamilton at a slightly better Factory and then I went to university for a year, studied law and commerce, didn't actually make it into second year and that was sort of struggling to make this hot air balloon in New Zealand. And he said to me why don't we, why don't you come to China? We'll go to China and we'll see if we can manufacture the hot air balloons. And sort of through my school holidays I was always working on it as well to keep selling these balloons. And in my summer holidays in that first year of university and because I had a maid second year I was like, didn't really have too many options and I was like sure, let's do it. So yeah, off we went to, to China. We'd sort of scraped together all the money we'd ever made. Matt had you know, a little bit of money from you know, selling some hot air balloons already and we kind of asked mum and dad for a little bit of money the bank and Mum, dad and they were always pretty supportive of us so a small loan I guess and we went to China and the, the. I remember the first night we landed actually in Hong Kong and, and we were going to get a hotel but we realized how expensive it was in Hong Kong and so we went back into the airport and thought we'd just sleep in the airport the night but the fluoro lights were so bright. We can't sleep in here, we don't need any sleep. So we went into the bushes outside Hong Kong airport and then we got attacked by mosquitoes all night but we slept in the bushes. And then we went up into a little place called Shantou middle of nowhere in China, probably about three hours from Shenzhen which most people will be familiar with. And that's where we first set up and we got this little tiny apartment. It was on the eighth floor, no lift. It was probably 30 bucks a month to rent. I remember every time we needed to get water it was like this eight floor journey to go and get some water and come back up and, and that's kind of where we got our start. And from, from, from there we realized that Shanto wasn't the right place and we moved to Shenzhen. Then we moved to a place called Huadu a little little town outside of Huadu called Function the Daodao. So imagine northwest to us and we had, we, we set up this little tiny factory was basically like a tin shed beside a river and function da and my cousin Simon had come over as well. He'd sort of been working with us a lot early on And Simon welded our first production line. Literally, we couldn't even really afford much. We were really making every dollar stretch far. And from there we started sort of making our hot air balloons. We had a couple of Chinese staff on board at that stage. We had a, a, you have to sort of cook for your Chinese staff as well. So we had this little old Chinese lady who would cook in a big sort of pan sitting right beside the toilet on the ground on the concrete floor next door to the factory. And she cooked like rice and a vegetable every day. And we'd sort of eat the same food as, as everyone else. It was, you know, I think we were budgeting like one RMB or two R&B per meal. So you know, 30, 40, 50 cents per meal. And that's kind of what we lived on. Yeah. And I think the way to maybe, maybe the best way was know those first two or three years we were so frugal that we wouldn't even go to say McDonald's. And the equivalent of the Big Mac combo in China was probably $3 Australian or you know, $2.50 US even. That was a treat. So I remember the first two years celebrating Christmas at McDonald's with my brother. And we always had this little trip because we were so frugal. We'd like eat half our fries and then go back to the, the, the, the, the counter and complain that they'd only give us half fries so that, that reserve us more. So we really were like to the extreme in terms of like not spending any money.
- [05:38]
Interviewer
What was the big idea? Like what space did you think you guys could fill the market when you move there?
- [05:43]
Nick Mowbray
We were super naive, I think is the only way to explain it. We didn't really have a big idea or really any business plan or we hadn't really thought through the space we could fill in the market. We were just going over there to try and make our hot air balloon and we didn't even know there was such a thing as outsourcing or contract manufacturing. That's how naive we were. So we literally physically like set up our little factory over in China and, and just scrapped away. And then I guess we got better and better and better at what we did and we started to learn more and more and we sort of started to shape what we wanted to do, you know, but it took us, you know, a fair few years and now I would say it's very much like a hockey stick. Those first few years were very slow going and now it's very, very fast sort of fast going. But we really, you know, scrapped it out from very, very, very small beginnings.
- [06:33]
Interviewer
So the hot air balloon, whatever happened there and what happened next?
- [06:36]
Nick Mowbray
Yeah, so the balloon. Well, we didn't know. I mean, these. Just listen up to listen. We didn't know that the hot air balloon couldn't meet any of the toy safety standards globally. So we couldn't really sell it to any mass retailers. We can only sell it to sort of specialists. And so we were sort of selling this hot air balloon. We had a few customers and we didn't really. We were so naive. Again, just to illustrate it, we didn't really know what IP was or patents were. And we'd seen sort of this night Frisbee, and it was this Frisbee with fiber optic and LEDs, and you can play this Frisbee at night. And then I saw this sort of money bank. It was called a money Gobbler, and it was in the shape of an animal. And you could put the coins in the mouth and wind their way down to the stomach of this money bank. And so we made these two products that we kind of seen and we just started making them in our factory. And I went to New York Toy Fair. It was a big expense at the time. Even you get the tickets. I stayed in a hostel called Big Apple Hostel in New York, and I'd sold them to a distributor called Schilling. And we had them on shillings booth. And I was on the booth sort of on the first morning, starting to sell like, you know, our money gobbler in our night Frisbee. But within about the first hour, this guy comes screaming onto the booth. Of course, we've breached all his patents. He has a whole company called My Highs that specialized in making these for, you know, a decade. And. And we had no idea. So Dave says to me, you got to take the Frisbee off the, you know, off the stand. So I take it off stand. I'm like, oh, well, I thought Dave. I thought the first guy was crazy. Then this lady comes screaming onto a booth. And she had been making these money banks the same as what basically copied for years and years and years and years. And she went even more crazy. So I had to take that off the booth. So within the first day of our first toy show, I had no products to sell. And I went back to. Went back to China, sort of tail between my legs. And I said to my brother, man, so you heard of this whole ip, like, patent thing. I think we have to really start, like, innovating our own products. And, you know, we had all of these lessons. So to explain just how naive we were, we were extremely, extremely naive.
- [08:26]
Interviewer
When did things really start to feel like you're working and how long did that take?
- [08:30]
Nick Mowbray
It was slow. And then what we started to do is we're still sort of learning how to make our own products and, you know, what would work and what wouldn't. And that was taking us a while. So I was learning how to hustle and get big retailers on board. I would effectively ring all the big retailers on email and hassle them every single day. And I was sort of starting to get some, you know, bigger distribution channels. We had a couple of products, but what I was sort of doing was I was going to the US and there were a lot of companies, toy companies there, that were making products just for the US market but weren't taking them internationally. So I was negotiating multiple deals for much better toys than we were making at the time and then taking them internationally. So we had a product called zvs which went really well. And we had a point called Schnooks which was an idea out of Australia. And that started to go really well. And it was really allowing us to sort of develop all these distribution channels more internationally. And at the same time we were starting to develop more of our own products. We developed, you know, a brand called Night Sports and we started to get distributions of the U.S. it wasn't a great product line, but we were sort of paralleling it and, and opening up distribution that way. And then I, I guess Schnooks became a relatively big hit. And Girls. And then after that we had our first sort of major hit probably. Well, no, we had, we did a deal with David Beckham to make a, a Tamaguchi product which went into Walmart was. Which is when we made sort of our first maybe big money. It was a disaster at retail, but we still made quite a bit of money. And then I guess our first major hit was, was Robo Fish. And that took us to like $100 million in revenue. And that was probably five or six years in. And from there we just got better and better and better and have just. The momentum keeps growing. I think as of June last, as of June, MPD data out of the US we're sitting now just below Hasbro, Mattel, Lego, Pokemon, then Zuru. So, you know, it's been a pretty quick sort of hockey stick growth and that growth has really compounded quickly.
- [10:24]
Interviewer
What's your background around entrepreneurship and how confident were you that when you moved to. To China. This was the right move for. For both you and your brother.
- [10:35]
Nick Mowbray
I would. There was no confidence. It was maybe more competitive nature and a drive within us to build something worthwhile, mainly because we didn't want to fail. And so I always say the hungry line runs faster. And we were really, really, really hungry. We had really no choice to succeed. So every day we basically just scrapped and fought and kept getting knocked down and keep getting up and scrapped and fought because we were so, I don't know, competitive that we really wanted to work out how to win. And I always say one of my favorite sayings is you either win or you learn. And I would say that we did an awful lot of learning in those first four, five, six, seven years, but we always took those insights, you know, and we always consistently worked out how we could be better every day, how we could improve.
- [11:18]
Interviewer
It took you about five years to like, you know, hit the big product, $100 million. Like, what. What were other challenges leading up to that that you could share with our listeners and viewers?
- [11:31]
Nick Mowbray
I think you've got to have the right mentality. So the hardest part is just starting, but the next most important part is making sure you don't flatline. And so part of our DNA is we have this mentality around 2% improvement a week, and improvement compounds. And quickly you become really good at something. So if, you know when you go into something and you're going to continuously, relentlessly work out how to improve. So we have the saying that we suck now compared to where we are in the future. So I want to be able to look back on one year from now and say, we weren't even good today. So it's this constant mindset around continuous improvement because improvement compounds. So if you see standards or higher standards, even for the little things, you get these marginal gains and those marginal gains combine compound. So our mindset is always, always, always be trying to get those insights and trying to relentlessly improve the feedback. You actually, the journey is like the hockey stick. You improve so quickly that you'd be surprised and suddenly you become the best in the world or something. And it's almost surprising how quickly you can. You can do that. So the, the power of compounding.
- [12:36]
Interviewer
And where did that come from, that mindset?
- [12:38]
Nick Mowbray
I think it's like a burning desire within you. It's. I always say probably the number one trait within an entrepreneur is competitiveness. If you have that drive and you really, really, really want to win, then you're going to find a way to win. And and in order to win, you have to keep improving. You can't flatline. It's like a sports team. It's like anything, right? Like to be really great, you have to continuously, continuously improve. And so we just look at every little detail and say, how can we be better? How can we be better? How can we be better? And today, even as a, you know, big business doing, you know, billions in revenue, how do we. How do we set that standard within a wide. Within our wider company? So we have a thing called Brains Trust within our business. And what Brains Trust does is it's basically a mechanic. And it was actually a John Lassinger, Steve Jobs mechanic, but it allows you never to flatline. And so basically, a group of experts in any one area every four weeks, on a regular cadence, actually judge and critique and challenge the work in every area in our business. And so what that means is that every four weeks, we're challenging the work and trying to make it improve. So when you come back four weeks later, it has to have improved and all those challenges have to have been met. And so oftentimes it's a debate, and there's like healthy debate, intention, but it means that we can never flatline. And I would say as a percentage, most companies, most people flatline. And so flatlining is the enemy for us. We always want to continually get better.
- [14:01]
Interviewer
Has there been a time where you guys ever had flat. Have flatlined in this journey?
- [14:06]
Nick Mowbray
We've never flatlined. I can honestly say. Will you get substantially and not just a little bit? We improve significantly. It's the reason, I guess, in a short time we can grow to the size we have, especially given we've never had any outside equity or loans through banks or really borrowed money outside of that first loan from our parents. And part of that mentality is that relentless focus on improvement.
- [14:34]
Interviewer
I know you said that as entrepreneurs, we love to compete, but have you got. You and your brother always had this insane drive? Were you born with it? Is it something that was cultivated?
- [14:46]
Nick Mowbray
I. I think we just grew up in a very competitive environment. I wouldn't say how parents made us competitive, but we've always just been competitive. I mean, we compete with each other. We competed. We just always been competitive. And I think you just kind of born with that, like that competitive fire. And I. Yeah, I think it's hard to manufacture that, to be honest. And I just think it's the most important trait and in an entrepreneur.
- [15:10]
Interviewer
And when you look back, like, what do you think you guys got really, really right?
- [15:16]
Nick Mowbray
Yeah, I think I think what we got really right is we were sort of disruptive in a sense, right, because we went to China really early. It was when China was just good at manufacturing. And we've built effectively the whole organization, a lot of the organization out of Asia, out of Hong Kong and Shenzhen. And we were getting China when it was sort of moving from just being a manufacturing economy to also being really great at building stuff. And there's a lot of smart people in China that work really, really, really hard. And, you know, a lot of our automation team, engineering team, design team, merchandising team, are all kind of based there. And that's been a huge advantage for us and being disruptive all the way through to how we sort of build and design automation. A lot of our competitors outsource their production and still produced or hand produced on production lines. For example, our X Shop brand, we produce 42 million dart blasters a year, 15 million water blasters, and we make them from a plastic granule to a finished product in packaging without any people. That's really disrupted versus our competitors. And we've only been able to do that because of what we've set up over in Asia. And so I think we got that really right. I also think we really, really, really understand how to pick trends and get on them fast. If you look at our record, you know, whether it was a bunch of balloons and I'm one summer toy in the world, whether you look at its mini brands, which is currently the number one selling toy in America, or, sorry, last year it finished number two and number three, it just got hit by Hot Wheels at the end of the year, which has been perennial and number one for, you know, volume and dollars. But again, like getting insights, some trends. If you look at a brand like Ray McCorn's How We Got on a giant mystery surprise egg trend really early, how we won that we were first to pick the fidget trend. So we signed Fidget Cube off Kickstarter, which kicked off the biggest trend maybe in toy history. And so I think we've been really good at picking trends and what's coming and being on those super early and picking great concepts and great ideas and sort of being really relentless around constantly trying to gain insights and action those insights. And so we have an approach around sort of fast fail and fire bullets before you fire cannonballs. So it's really, really having a strong thesis and having a strong insight for something and then firing a bullet around it and if it works, firing a cannonball. And I think that's really been our approach in our toy business, very much in our consumer business as well.
- [17:33]
Interviewer
What advice would you give to founders that are looking to create a new line of product or looking for a trending product?
- [17:40]
Nick Mowbray
What's, what's your take running an e commerce company? It's really important that first before you pick the right category of goods for e commerce because there are lots of examples of e commerce companies that have grown in scale, but they always lose lots of money. For example, Koala mattresses. Your cost of customer acquisition is so high and you're only selling them a mattress maybe once in 10 years or 20 years and then you have to try and sell them add ons. It's very difficult to build a profitable e commerce business in certain categories. The category has to make sense. Maybe you're building brand online, but it has to have a high margin, low freight. Once you acquire a customer, they'll keep coming back. So for example, shoes make a lot of sense as an e commerce business because you can really build the brand image in a, in, in the ecosystem online and control that also it's a high margin, low freight category. And once you win a customer, they might keep coming back and buying, you know, shoes from you for a long period of time. Sunglasses are another good one. So there's certain categories that make sense for e comms, certain categories that don't. I would argue that fmc, most companies that are an FMCG and start an FMD or consumer really, really struggle, they all lose a lot of money. Whether it's, you know, Harry's or Gossier, they all end up going into retail at scale because they can't build a profitable business. Direct consumer. When you've got Walmart shifting billions of products every single day and you're trying to acquire a single customer for a single category for a single product. Take Harry's raises. That scale that you're competing with is almost impossible to beat. And so you see them with glossier, they're now going into Sephora or you see Harry's, they went into Target and Walmart. Now that, you know, got scale at retail. So really when you've got, you know, you've got to be really specific about the category first and make sure it makes sense. If you're just running an e commerce business and if you're in a category like fmcg, then you've got to be very, you know, smart around making sure you use scale retail in order to build a profitable business. So that's probably a lot of the mistakes I see people going to the online for directing something products and that was a lot of money. And that's. I see that almost every day.
- [19:50]
Interviewer
You guys have only ever borrowed that $20,000 from your parents and now you've built a multi billion dollar a year annual revenue company. That's highly unusual. Can you talk us through how that is possible even from a cash flow perspective or even a scale perspective?
- [20:09]
Nick Mowbray
You know this whole like raising capital and raising series A, B, C, D, F, Z to me is like a little bit. I look at businesses like Oatly and all the hype around Oatley and the market cap on Oatly for every dollar that Oatley ships, it loses $1.42. It works on 15% gross margins. To me, FMCG is different to these tech multiples. And it just puzzles me how these companies operate like this and how they're valued so highly obviously that a lot of them have recorrected through this period or this last sort of six months. But to answer your question, we, we started and we lived literally off nothing for seven years. So even when we were making tens of millions of dollars a year, we still lived on like, like literally dollars a week. And our business structure is set up very differently. We use the scale big retail, Walmart, Target, Tesco, Carre for and we only ship in toys to this day we still ship fob. So in the early days we had our retailers paying 30% deposits to us and then they would pick up the goods from us directly at factory or at port and then they would pay the balance. And so it meant that our retailers were effectively like funding a lot of the goods. We were very low risk. And still to this day in our toy business we actually don't ship and hold and pay for our own domestic inventory. We run a very lean inventory model. And actually in the whole toy market this was very disruptive. All our competitors still ship domestically all around the world and they put it into their own DC's and country and distribute to retailers from there. We don't do that still to this day. And so we were able to in the early days get our first big deal where we ended up making sort of a million dollars was on the stave of Beckham product with Walmart. We came out, we made a million dollars, we really looked after that million dollars and that helped us fund the next level and the next production. And so it's that same as compounding improvement. It's amazing how fast compounding goes. Amazing. If you take like I think it's like 32 numbers and you compound them, you know, suddenly you've got a huge, huge, huge number. And so it's the same thing here. We really, even when we were making lots of money, we still lived off nothing, we still spent nothing. And we still had this cognitive approach of how do we build our business and to make profit. So even when we had toys that weren't really selling through at retail and we were bad at making toys, we would still hustle to sell enough of them to enough countries, to enough big retailers that would pay deposits and ship them fob that would still make profit. And then we'd do another product and do the same thing. So eventually when we got good at making product and we were getting reorders and we were becoming more successful, we were just becoming more and more and more profitable essentially. And that compounding effect has allowed us to grow. Even if you take our diaper business, you know, we started that with, with basically nothing three years ago. That business this year it will do, you know, over $200 million from a standing start three years ago. And literally to build that brand was less than a few hundred thousand dollars. Of course, we took money from Zuru to help fund production runs and to like to fund the order growth. But outside of that, it's very lean.
- [23:18]
Interviewer
You talked about in the early days, the terms, you have favorable terms where effectively retailers are funding the production and that allows you guys to be cash flow positive and not have go in the red and then get into cash flow problems. How did, and you said it was quite disruptive. How did you, how did you switch the retailers to agree to those kinds of terms?
- [23:47]
Nick Mowbray
I didn't think we always like, we didn't always like flip it to be fair, like we did with a lot of distributors. Sometimes we had to hustle with our district because we also had some distributors in those early days. And we would always make them pay a deposit and always make them pay as soon as we ship the goods, because we had to, we had no real choice or the retail partners as well. And they weren't all on those terms, but we would often negotiate terms. But I think the main thing was, is just the shipping fob the fact that our retailers took ownership of the goods from us at port in China. Whereas most people buy the inventory, put it in the warehouse, ship to their retailers, they have ownership of that inventory. We didn't have any of the ownership of inventory. So, you know, that really, really helped us. And then we've kept that model to this Day, which, you know, as a top 10 toy company, literally none of our competitors have that model. And so it's really a last to continue to run the lean operation. I take, for example, our UK operation. We have about, on the toy side of the business in the UK, about five people. We do about two and a half times less turnover than Mattel. Mattel is number one in the market in the UK, but they have over 200 people, I believe, in that UK office. And we have five, but we're only doing sort of two and a half times less revenue. So we're able to run a relatively lean operation in comparison to a lot of our competitors because of how effectively our mobile.
- [25:07]
Interviewer
There's no doubt, like insane growth. You guys, one of the largest toy companies in the world. What have been some unexpected challenges that you could share along the journey?
- [25:19]
Nick Mowbray
Yeah, I mean, in terms of challenges, I think we just had every challenge along the way. You know, I touched on some of them earlier. Right. Like we had in those early days, you know, on those first two products, we got sued by one of them and we had no money, literally, we had no money to defend ourselves in a lawsuit. So I was. There was a Boulder, Colorado company, and I was going to Colorado, going around all these law firms, saying, hey, how do we defend ourselves? And every sort of lawyer in the firm was saying, well, it probably cost you a minimum of million dollars to defend this. And so you work out how to scrap and hustle and find a right way around it. And I, And I remember I found this lawyer, his name was Chad. Get his last name. But I, you know, I kind of pitched Chad and sold him on the fact that we're going to win this case and that, you know, he could help us and sharing it and, And I'd do most of the work. And we just had to, you know, have him sort of look over it and put his name to it. And we found a way to do it really, really cheaply. And that was the mindset always. We didn't. When you don't have a choice, you've got to find a way effectively. And so we just had like, problem after problem after problem, like, you know, going through. And you know what? Still to this day, one of the things that you have to accept about being an entrepreneur is you're always going to have problems, you're always going to have fires. It's how you solve those problems. I tell you, early on, I used to get really stressed about them, and today they're almost like a given. Right. So it's like, calmly, how do we, like, work through this to solve this issue?
- [26:37]
Interviewer
You have this relentless mindset. Obviously your brother's the same. Have you ever thought or about giving up? Were there times where it was so tough, Nick, where you thought this is too hard?
- [26:50]
Nick Mowbray
You know, honestly, there were so many hard times in China, but it never seemed like an option. There was nothing in me that was like going to give up? And I had. We had all sorts of experiences in those early days in China. I had some, some pretty dark sea experiences. I was 18 in China and my mum was desperate to get me home. In fact, the person, one of the people I first went over there with, like, you know, lasted about three or four months and, and went home. It was tough, you know, I. We were going a little bit crazy. Like, we, me and that were like literally the only Westerners in the place we were at. So we didn't see any other sort of people that spoke our native language, you know, for. For like two years. And so we're going a little bit crazy. So there were, you know, lots of tough times. I remember my brother once we'd moved departments at the stage and we. We were in this apartment. We were on probably the 20th floor. I think we were going a little crazy. And I had a desk kind of near the door into the apartment that I was working on. And I called out to my brother and like, there was no answer. So I looked around the apartment. I was like, he hasn't come out the door past me. So I'm looking around the apartment for him. Nowhere, nowhere, nowhere. He's climbed out the window to the floor, one floor down, and he's just lying on the Windowsill, you know, 20, 20 stories up, reading his book. So he's climbed down one floor and lying on the neighbor's windowsill just reading his book. So I think we were starting to go a little bit, a little bit crazy at that point. But like, that's kind of like an illustration, I guess of, you know, we were just, we were just like that point scrapping and kind of like trying to keep our head above water.
- [28:21]
Interviewer
I guess a lot of people when they were 18, they're not going to China to try and launch businesses.
- [28:29]
Nick Mowbray
I mean, I still like had probably on those early years, didn't have so much my share of fun. But again, we just didn't have any money, so I'd still like go and do things. I remember I was, you know, I'd eventually was spending a lot of time in, in Hong Kong and I was living in my little showroom. My showroom was probably 3 meters long and I had a table in my showroom and I had some old shelves that I've found from another old showroom. And I used to live under the T table. So unwind. My macro was the only, that was the only spot that had enough room to sort of lie down and sleep. And I live in my showrooms. We literally like we were living still off like no money. I'd wash in the public bathrooms and I remember going out to a bar with some of the rugby guys. I was sort of playing a little bit of rugby in Hong Kong and, and, and, and I had this budget to live on per month and I believe it was 800 Hong Kong dollars a month which is about you know, 120, 130 US dollars. And I'd made the mistake of sort of going to a bar with the rugby guys and they'd like put the round on me and it was literally half my monthly budget at a Hong Kong bar. It was like 400 Hong Kong dollars. So I had to spend like literally half my budget on, on this one round of beers and, but that's how like we just had nothing, right? We, I remember like being broken for, for the next few weeks, thinking I'd speed most of my budget on this one round of beers. So I don't know, that kind of gives you an example. So this first few years here, there wasn't a lot of, there wasn't a lot of partner going out or doing the things that most 10 year olds do. It was, we just worked 24, seven, seven days a week.
- [30:00]
Interviewer
Love to talk about leadership. You've got a team of you know, 5,000 worldwide. How, how do you even stay on top of that number? And what's your approach to leadership and has it changed as you've scaled?
- [30:13]
Nick Mowbray
Yeah, big time. So our core team kind of outside of factories. Most of our factories are automated, but some of them aren't. But our core team is about 1500 globally, you know, across our, across our offices. And I guess my approach to leadership has definitely changed over that time. I would say I've learned a lot and I'm still definitely learning because I'm more of an entrepreneur. I'm not necessarily great at the process and the structural side of stuff, but what I would say at a, at a top line and part of our DNA is, you know, leadership is super, super important, like having that big vision and like really motivating people and you know that, you know A big part of what I do is, is focusing on talent and what we call talent density. So really getting the best people on the bus and putting the right seats the bus and driving the right direction. There's another Jim Collins one for you. But that part is really, really, really important. I also strongly believe in meritocracy. I think it's very hard to manage a lot of people if they're not hungry to succeed and they're not aligned. Their individual success is not aligned with the company's success. And within any company there's a certain amount of people, I'd say 10% of people that really, really, really truly shift the needle. So aligning those people's interests to the company's interests and making them really strong leaders, that filters down and filters down to growing more teams. So we actually say that in every position now in our company we want to, you know, hyper specialized people so only the best can become generalists. So if you're not the best hyper specialized in an area and, and we also believe in experts, leading experts. So we don't believe in managers or management. The best should always be on the tools and leading the team. They know how to, they know how to pick the best talent in that area because they're the best at what they do. And that's really served us well. So we really have like a very flat structure. We're completely unbureaucratic as a company. We want to move fast, we want action, insights really quickly. We want to have a fast fail kind of approach to what we do. We want our leaders to be, you know, on the dance floor, not on the balcony. We always believe they should be in the weeds at all times because that's where you get the most insights. No one is above anyone else. You want to be, you know, getting your hands dirty all the time as well. And so I think this sort of DNA for us has developed over time and we want our leaders to sort of demonstrate I guess all of these, these qualities and I guess our leaders as well, their job is to set really strong frameworks for people to work within and then really push that relentless pursuit of improvement and marginal gains. I think, you know, setting those being really drive the cadence of our brains trust meetings and drive improvement as a big part of sort of leadership within, within our company. And I think, you know, part of my role and part of how that's sort of changed as a leader within our business, as you get bigger and bigger, what ends up happening naturally is that you become more and more complex As a, as a business, it just naturally gets more complex. So my job is to make sure that we simplify our business, that we streamline our business, that we're rationalizing what we're doing and we're keeping everyone on the same page within those sort of strong frameworks that we set and within the vision that we set. And so that's often really hard because complexity is actually quite easy to do, but simplicity is often quite difficult. So my job is challenging. The team say we're going into a new category and they want to develop seven SKUs. And I'm like, okay, with seven SKUs, how many more dollars in sales would that give us than four SKUs? And they might say maybe 20% more revenue. What about all the current detailing time, the tooling time, putting it into production of those three extra SKUs, could we use that resource somewhere else? Could we get a better return on investment, return on time using that resource elsewhere? Will that streamline our sales team to only selling those four SKUs, rather than selling, you know, one or two SKUs to all different buyers globally, which gives us less economies of scale on the manufacturing side, does that align our marketing team? So the marketing team are getting behind less SKUs and doing a really good job rather than me fragmenting their marketing and their messaging. And so my job is always like putting those challenges forward to really rationalize the team to make sure we're getting the best return on investment for that resource and the best return on individuals time. And so I'm always challenging everyone within our team. I'm saying like make waves, not splashes. If it doesn't shift the needle, don't do it. And so my job is like really sort of driving that as well. And I would also say one of the big things I've learned about leadership is when you're an entrepreneur, you're always doing, you're always on the tools, always on the tools. And I'm still always tools. The reason I care in Minneapolis right now is because it's where I learn the most. You know, I'm always with retail, I'm always asking questions. But one of the big things that you know that, that as a leader is I think this question, and this was something that was, you know, actually I learned relatively recently, and this question of asking everyone whether it's a customer, whether it's people in your team, you know, whether it's other stakeholders, what does success look like for you? What does success look like? And it's a really powerful question. What does success look like, and then how do I support you to create that success? And I think that was, you know, as a leader. That's a, that's a question now I use all the time in lots of situations. What does success look like for you? What does success look like tomorrow? What does it look like in a year? What does it look like in five years?
- [35:37]
Interviewer
In 2018, you created, you expanded to Zuru Edge. Can you tell us what the thinking was there?
- [35:44]
Nick Mowbray
The toy market is. It's a big market, but it's very, very fragmented. If you walk down a toy aisle, you'll see every peg is a different skew. And that skew is literally 60% of the whole entire toy aisle changes every year. And so toys set you up. You almost have this healthy paranoia in the toy market because trends move so quickly. You work in every manufacturing form, whether it's roto molding, injection molding, electronics, plush selling, you working at scale, at pace, and recreating so much of your product line every year, which almost sets you up to go into other categories really, really well because you're so paranoid all the time to stay ahead of trends and everything that you almost set these systems to become really great at scaling in different areas really, really, really quickly. But the problem with the toy business is, you know, we can grow to a couple of billion revenue in toys. And you're like, but after that, it gets really difficult to keep grind just because of the size of the market. And so I started to have this thesis that we're really good at building, you know, factories and automation and being super efficient on the back end and being disruptive. And so that's a core competency within our business. But I look at some of these other categories and I look at diapers, and it hasn't really changed in 20 years. And you know, Pampas has, you know, 30 meters of the same skew that doesn't change year to year. I'm like, how commoditizes this category? But also I started to create this thesis that, you know, there's a change in a sort of a modern consumer or new age consumer and Gen Z a millennial in terms of what they're demanding from brands. So there's pillars within brands that are really demanding now. And they don't necessarily want to buy the same brands as their parents did. So they're demanding sustainability pillars, transparency pillars. They're just demanding new things. They have less trust maybe in traditional brands. So you've got the rise of this new age consumer, but you've also got the rise of, you know, AI and machine learning behind ad targeting. So you've got digital advertising which is highly optimized, where you can really target a specific, specific message and learn through data what specific message resonates with that specific audience. So you've got the rise of a new consumer, you've got something a really efficient way to effectively reach that consumer. And then also in a lot of these consumer goods categories, you've got a lot of monopolies and duopolies. And like Elon Musk says, when you've got a monopoly, you get pretty lazy. When you got a duopoly, you're lazy. When you got a monopoly, you get really lazy. And a lot of them have a lot of entrenched capital around the world and they're sweating that capital really hard. And oftentimes sort of like Tesla, you come in with a whole new approach and build all your factories fresh and you know, use all the latest technology that's evolved around the world. You can actually come into a category and be relatively disruptive. So I guess that was my theory. And these categories that we've gone to are much bigger than the toy market. Can we bring that same level of being on trend, that same level of disruptive, disruptiveness from a, from a factory and manufacturing standpoint and that same level of disruptiveness through digital and leading on new platform like TikTok to, you know, bigger consumer goods categories. So that started us out, which I started with, you know, Rascal and Friends diapers in New Zealand was the test thesis. We took 32, I think we're up to 36 market share in our biggest supermarket group down there within one year, second biggest brand in the market. Treasures went out of business after that year. Maybe not a great story, but it just showed the power of our model. We went on to launch in Australia. We won Kohl's non food Supplier of the year award within our first year of launching there again. And the category category, the category director there, Carly said, you know, was incredible. And the award that we're taking a staggering market share in a short amount of time. Kimberly Clark on Huggies they started issuing surveys to mums across both markets, sort of working out why we were taking this market share. And within under two years we were according to now some data already second inappies in Australasia. We went on and we created that same success in Walmart Canada taking over 20 share. We've recently signed Coco Melon and articles for our Walmart US launch and sort of launched it all around the world countries and all the biggest retailers. So that was, that was sort of the thesis proved at that point. We were like, wow. And on the back of that we built, you know, a 60,000 square meter factory in under 10 months, which is all state of the art. And, and I guess, you know, that sort of proved our thesis that we could go into these categories that, you know, if you look at the baby category, you know, Pampers, which is Procter and Gamble and Kimberly Clark, which is Huggies, have dominated it for decades and that we could actually go into these categories with these big, big players and actually be disruptive and, and that set us on the journey and now we're building up, you know, our personal care, hair care category. Of course, Monday here can be a huge success globally. Number one haircut around in the world on TikTok. It's been disruptive. Every market it's launched and it was in the UK last week, it was just launched in Asda, already launched in Tesco and Boots and as I said, it was already out selling. Pantene, which is the market leader, did the same in Australia. And so we can, we can really be disruptive in some of these categories. And so, yeah, we're sort of focusing on five core verticals. Household cleaning, health and wellness, personal beauty, baby here and of course pet food and pet care. So it's been a, it's been a very fast journey, I think 42 months or something since we started it and, and, and, and it's absolutely the fastest growing sort of FMCG consumer goods sort of company in the world now.
- [40:56]
Interviewer
Incredible. Well, Nick, that's a wrap. Thank you so much. That was an incredible interview. Congratulations on all of your success and thank you for just sharing so much. Incredible experiences, lessons learned with our community and look forward to continuing to watch your journey.
- [41:14]
Nick Mowbray
Hopefully there are, you know, lots of good lessons in there, a few, few good stories as well.
- [41:18]
Interviewer
Hey guys, if you love this episode, make sure to check out this interview with Scooter Broad on how he identifies talent that could go on to find wild success like Justin Bieber and Ariana Grande.
- [41:30]
Scooter Braun
Justin Bieber was the most talented, gifted kid I'd ever met. It was so insane how great of a singer he was, how soulful he was, what he could do on the drums, naturally taught himself with guitar, drums, like he was a phenomenon. And we met at the perfect time in both of our lives.