Welcome to Two Commas. I'm your host, Josh Comrie. The podcast is all about exits and
particularly multi-million dollar exits. The idea and intention behind this podcast is
to inform and inspire the next generation of entrepreneurs and of course those that
are guiding their business through to the eventual part of the journey of getting a
wonderful exit. Today we're honored to have a great guest with us. So we have James McCarthy.
James is now a serial entrepreneur and he started a business quite some years ago which
we're going to focus on through a bit of our conversation and then guided that successfully
for over a decade to the point of a ultimately wonderful exit. So please welcome James.
Thanks Josh. Yeah, it's great to be here.
Wonderful to have you on the show. So I always like to start with a bit of an origin story.
So my research has been digging around and found out that you've hailed from rural stock
down in the southern North Island, I believe. Originally Manawatu, I think. Is that correct?
Yeah, that's exactly right. When I was born, we lived in a place called Bunnythorpe. We
had a three digit phone number which also dates me. And my grandmother was in Hawaii
and called and asked for Bunnythorpe 803 when I was born.
Amazing.
Which they scarcely believed that that was actually a phone number.
Did you have a party line?
No, I'm not that old, but close to it. So Bunnythorpe, which is between Palmerston North
and Fielding, I guess. Famous for Glaxo Laboratories, which eventually ended up being part of GSK.
Right. Interesting.
Other than that, not much there.
We discovered that your entrepreneurial leanings came early in life and that you got involved
in cattle trading, not in a bad way. But tell us about the early forays for you and what
sparked your curiosity about entrepreneurship.
That's really interesting. So as you may or may not be aware, when you grow up in rural
New Zealand, schools will have like a lamb and calf day. And you're encouraged through
spring if you live on a farm to get a lamb or a calf and then raise it up to a certain
point and then bring it along to the school's lamb and calf day. And dad agreed to give
me calves when I was a kid. Well, give to let me buy a calf when I was a kid. And he
essentially loaned me the money to buy the calf and then funded me through the process
of paying for milk and feeding the calf and having the animal grow over a period of time.
And then after lamb and calf day, they would be sold and I would get a market price. And
all of the costs that had gone into that would be deducted, but I'd get the profit that had
been earned over that period of time. So at about six years of age, I was learning that
working on your own equity, even if you were borrowing it was good way to generate value.
That's remarkable. What a wonderful opportunity. I'm guessing that your dad was being very
intentioned around that and the lessons that might be behind it.
It's funny because when I think there was a semi intention to do that, but I don't think
it was quite as explicit as it as it now appears to me when I look back at it, because it demonstrated
something very obvious to me. For my parents, I don't think it was quite that intentional,
but it was definitely intentional that I understood that you had to pay for the things that you
were using. Yeah, for me, it kind of went another step beyond that to where putting
your own labor into an equity or an asset that you ultimately can benefit from is a
way of generating more equity.
Yeah, yeah, I love that. So did that light an entrepreneurial fire for you? And you were
then committed to being on the path of founding and exiting businesses? Or did you did your
life take a different turn at the ripe old age of six years old?
In some ways, I think it did. So I was always looking for things that I could do. Growing
up on a farm, you have a lot of opportunity to go and do things with your hands to make
things to try things. When I was living on Cobalt and road, so probably nine, 10 years
old, I used to go in and grab old lawn mowers from one of dad's friends who had a lawnmower
place and I'd bring them home, I hated it all these old bloody lawnmowers hanging around,
but I would pull them to bits and try and make a functioning lawnmower out of parts.
And that didn't turn into anything that I could ever sell. But the same philosophy sort
of continued with me for quite a while. And when I was about 16, so maybe sixth form of
school, I found this website in Japan that was selling wrecked and otherwise, you know,
not useful cars. They weren't the typical Japanese use imports. They were things that
might have had something missing or that had been in an accident. I found a 2001 Opel Astra,
which is not an overly exciting car, you know, especially in my modern context. But it was
pretty exciting to 16 or 17 year old me and had no engine, but it was brand new other
than that it had 32 kilometres on the clock, not 32,000 just 32 kilometres on the clock.
No engine, no engine. How did they get the 32 K's on there? That's a good question. I
don't know. So I answered anyway, I bought the thing and it owed me something like two
or $3,000 by the time it was landed in New Zealand. But of course, it had no engine.
And I've worked out that they Subaru actually use that same motor and one of the people
movers that they were selling in New Zealand. So I found a wreck people moving with the
same engine, bought the engine out of it, dad helped me get the engine into the car
and got it started and put it on the road, drove that car for 18 months and sold it
for 17 or $18,000. Once I'd driven it for a year and a half. And I did the same thing
over and over and over through university, I would buy cars, use them for six months
and then and then sell them. I'm trying to keep within the limits of what was acceptable
for personal use. Yes, of course. But typically looking to, you know, at least not lose any
money on them and still own them for six months. And I accumulated enough through uni to pay
for my uni fees by doing that, which is it's a great story. And I wondered if we might
go with the story given that you had all these lawnmowers around the house was that you then
put a lawnmower engine into the Opel, which some motor engineer would probably believe
was part of the problem with that vehicle at that time, but a Sabara engine very respectable.
Yeah. So you went from trading cattle to trading vehicles. And you were studying at university.
You studied an engineering degree. Is that correct? I did. Yeah, I did. It was a new
major at the time. And it was out of Massey in Palmerston North. It was called mechatronics,
which is relatively common now. But the broad idea was to take a lot of the engineering
disciplines and kind of give you a high level view across all of them. So everything from
computer engineering through, you know, software engineering through to mechanical engineering
and some aspects of civil. So we were at one point designing beams and at another point
learning how to make a compiler. So everything in between as well was something that we were
looking at. And the guy who pitched that particular major to me said, Look, this is like an automatic
gearbox. This is the mechanical bits that make the wheels turn. But it's also the controller
that decides when you need to change gear and every aspect in between. So I did that.
There were only 13 of us in the class. It was a very small major and it was all pretty
new. I was probably the most annoying person for all my classmates. Asking questions. I
was a bit of a dare I say it arrogant little shit. And I was also accelerated into the
second year of the program when I was only freshly 18 years old, which I don't know,
it leaves a little bit of social development on the table, I think. So yeah, the first
couple of years at uni were a lesson for me in growing up and not pissing everyone else
off too much. But learn to love was really it was a really cool degree to do in many
ways. But by the end of it, they want to they wanted a lot of us to come back and to do
PhDs to a lot of things. I think more than half of I think seven people in that class
ended up going and starting their own businesses. So that gives you an idea of how entrepreneurial
the people coming out of that were. And I think that high level, broader view of engineering
probably helped with that. It may also be new degree, new major, only risk takers are
going to go in and do something which is unproven. So maybe that was it. Maybe it was a combination
of both. But yeah, there were a lot of people in there that we ended up starting businesses.
And just I'm just trying to think there were at least a couple of exits in the first six
or seven years after uni.
Wow. It's quite remarkable, given that it's a discipline, you know, broadly focused across
the discipline. That's not even a term. It's an oxymoron. But you've got a span of the
discipline. And so the discipline was not business, however. And so 50% of the people
went and then started a business. And so I personally have a belief that the entrepreneurship
studies are possibly a waste of energy and waste of time. Because it's a I believe you're
better to focus on the core requisites that would enable you to build a successful company,
which is become a great product person, a great salesperson, or a great developer kind
of person that's in the context specifically of building some form of a software related
company or something that has software involved in it. And so what you're able to do is to
get this kind of breadth of orientation, which you can then apply across a range of different
things post university. So you were doing the making money on the side through study,
you did the mechatronics degree, what was your then step in to go into business and
what was your kind of first your foray into the professional commercial world?
Yeah, good, good segue. So I'll be honest, I was pretty sick of the more pure aspects
of engineering by the time I finished all I wanted to do. So talking about the lawnmower
and bringing that back and I just wanted to go and work for Kevin or Kermie, as he was
known and fix lawnmowers for a summer and work out what I wanted to do with myself.
And my mother was horrified at this prospect. So she went and found me a job working for
someone else who needed engineering graduates. So I had a job working for a company called
Samarung McCray. The guy who started that had worked out a way to meter out the really
fine seeds that go into the baby leaf crops and masculine salads, that sort of thing.
And he'd created a really successful niche company in that horticultural machinery business.
And I just got a job, there was a sponge in the middle of the product. And it was part
of the seed metering mechanism. And my job was just to grind these sponges. It was intensely
boring. But it was a great way to be around other people who were who were thinking about
how they could improve something. And it was sort of a serendipitous confluence of a whole
lot of events. And my being there at that particular moment, which demonstrated a problem
for everyone in the room. So in 2005, Michael Ersek was flying his helicopter from Auckland
down to Queenstown. He had a Dutch guy from one of the beer companies that independent
liquor he sold on the helicopter. It was a brand new EC 120. So that's a it was called
EC is short for Eurocopter. It was kind of like the seven series BMW of the of the helicopter
world. It had all of the latest tricks on it. So in theory, if anything had gone wrong,
something on there should have worked. But they crashed just just south of Raglan. And
the first that anybody knew about the aircraft being missing was that they didn't show up
in Queenstown and not not showing up seven 800k south of where you meant to be a couple
of hours later as a massive time gap. And it was obvious to us that there was a big
problem with the way that the different technologies weren't working. The guy so Don who, who has
started Sam Brut McCray and seed spider actually, he was also a helicopter pilot. So it became
an immediate pressing problem that he was quite closely related to his wife also became
slightly anxious with the idea that he was out there flying around and she might not
know if something had gone wrong until he didn't show up later that day. So there were
a bunch of us and he said, Look, why don't you guys go and make something so that I can
see so that my wife can see where I am. And so we had a look to see if there was anything
on the market. There were a few companies, there were a few New Zealand companies even
making some things that could solve this problem. But they were all 747 type solutions to a
small helicopter problem. So massive big boxes that weighed an absolute ton. And as you can
appreciate in a small helicopter, every gram counts. So you know, 2030 kilo box that can
show you where you are isn't really that useful. So yeah, we condensed everything that we could
find down into the smallest package that we could. And we had the thing weighing in well
under a kilo. So it made sense. It was small, could sit on the dash and it just required
accessory power off the helicopter. So we'd made something that could sit on a helicopter
and track where that helicopter was in real time at a cost effective price of I think
we were paying 20 cents per ping at the time. So if you go every four minutes, that's $3
an hour, which, you know, in the context of a helicopter is not quite affordable. And
that was up against the sort of 20 $30,000 box that that costs $30 an hour, but could
track a 747. So we'd sort of, you know, change the change the game by orders of magnitude
and cost and in weight. And suddenly we had a product which was able to address a problem
that a lot of people flying helicopters, especially in the likes of New Zealand was remote areas,
bad weather, not necessarily mobile coverage everywhere you're going to be. Yeah, we'd
solved as it turned out quite a quite a gnarly problem. Quite an early problem. Yeah, yeah.
So just recap, because I'm curious about the segue into the spider tracks business. So
you're employed by someone who had a company called seed spider. And they were an enthusiast
and had some domain knowledge around flying helicopters and the lack of the solution that
might exist in there. Then there was a catastrophic event for a family and an individual. And
I distinctly remember that happening in New Zealand, because, you know, he was one of
New Zealand's wealthiest people at that stage. It was it was a big deal in New Zealand history
at that stage. And so there was a timing thing that cropped up as well. And I'm a big believer
that timing is one of the most critical factors in any business, you know, getting getting
your timing right to enter that space, and evolve the solution appropriate to customer
needs along the way as well. And then there was a desire to kind of, you know, make a
bit of a difference in a space and provide a solution that was a meeting a meaningful
need. So that to me kind of encapsulates the start journey of spider tracks is really think
you'd add to that? Yeah, so the timing thing, I can talk about,
you know, the lack of timing, if you like, and a couple of different ways. So we, in
order to make our product relied upon a brand new piece of technology called SBD, the Iridium,
which is a satellite communications network had so recently released that they didn't
even have documentation for us on how we were going to use it. And SBD stood for short burst
data. And previously, anyone who wanted to do globally available tracking had had to
use a sat phone, which made it like a dial up connection, and then transmitted over that
dial up connection and sat phone calls costs, I think, $2 us a minute or something. So
every time they needed to send something, it was a minimum $2. So in the short burst
data was costing us 10, 20 cents. And that hadn't been available even, even a year before.
If we look at if we go back 10 years, Iridium was set up by Motorola, and they spent billions
and billions of dollars putting that up in the sky, and then it all collapsed and went
into liquidation. And it was only because someone was able to buy the satellites before
they crashed them. I think they spent 50 million buying the satellites.
From multi billion dollar investments.
Multi billion dollar investment. And within 10 years, they were, they had probably 10
times that in annual revenue. So they did pretty well. But timing wise, that technology,
if not for a couple of little, you know, brave people, but a couple of cock ups along the
way wouldn't have existed at all. And all of the alternatives didn't give us what we
really believe that you needed. So for our technology to have been useful, it needed
to work everywhere.
You don't typically have a crash with this mobile coverage. Well, you don't have a crash
that matters in our context. If you have mobile coverage, someone's going to see that because
they put mobile towers where people tend to hang out. The other satellite networks were
often constrained by the need for a ground station to be in sight at the same time. So
the satellite was there, but it was only a relay point. So if you flew from New Zealand
to Australia, as soon as you left the coast, you weren't covered. So we were just, I guess,
lucky in some ways that the technology was mature enough, but not actually mature, that
we could use it when we when we came along.
I refer to that as a technology trigger. A kin case, which may have been a similar time
for maybe a little bit later, is Amazon with AWS releasing affordable cloud computing.
And then in the background, there was the advent and popularity of fiber to the door
to people's homes. And so this combination of being able to access supercomputing on
a rent basis, and then people being able to consume massive amounts of data much more
than they had been before. And so it was the perfect conditions for a whole bunch of these
SaaS companies to kind of get out of the ground and entertainment companies, Netflix, etc.
to get out of the ground. And it was really a really exciting period. It was a similar
sort of timeframe to what you were doing, albeit very different technology stack, of
course.
Yeah. When I think about the, you just made me think a lot about how we went about building
the first pieces of software, we were debating amongst ourselves, do we build cloud base?
Do we build a website basically? And back then, there weren't words like web apps. And
there certainly wasn't any AWS. But yeah, it was about the same time. And there was
a lot of change in that market. Yeah. I'm just thinking about all of the things that
we had to build. We had to build our own billing system. Stripe didn't exist. We had to work
out where to host the thing. AWS didn't exist. And then shortly after that, we ended up hosting
in the US. But it was still we had to buy a server, a physical piece of hardware that
our stuff would run on. And we had to manage that ourselves. And then within five years,
all of that had changed.
I remember seeing Gary Vee speak at a conference and he uttered something which I do believe
in. He said that one of the core functions and responsibilities of a entrepreneur is
to be a problem solver. Because you're confronted every day with a new problem, or hopefully
not the same problem, otherwise you haven't resolved it properly in the first place. And
so one of the core things you have to get great at is to find creative, cost effective
solutions that you can generate quickly to all of these problems that you're coming up
with. And so there was there was a myriad of those things that you had. So I'd like
to talk about scaling. And so understand that you had a you're operating in an industry
that was quite antiquated and quite slow to adopt new technology was very safety conscious
industry. And so the new things that turned up had to be validated and go through a period
of time before they would be accepted by the industry. And you had to go to the States
to attend a whole lot of trade shows and you're investing all this money and all this all
these resources of which you had a very limited amount to gain presence. And there was a point
where you got some kind of inflection and some subtraction. So tell me a bit more about
the growth path and talk to that story and any others that might be relevant.
Yeah. So I'll go right back to the first sale and and talk talk about our first five units.
So we we made the unit that Dom was flying around the country with and then some people
said, Hey, look, I think I'd like one of those as well. So we started building them in batches
of five. And we decided that we should try and talk to more people in aviation than just
one by one. So we went to an air show up in Auckland. And that led us to a trade show
in Australia called Avalon in 2007. Avalon was primarily a military type show, but we
ended up with a whole lot of people from all types of aviation across Australia, and the
Department of Sustainability and Environment, I think it was DSE, in Victoria, they were
responsible for some firefighting type work, and they wanted to know where their firefighting
assets were all aviation based, of course. And they said, This is exactly what we need
many 20 of these things. And you know, because I've built about five of them by hand, there's
a team of three of us soldering these things and the workshop by ourselves, shaking with
an order for 20 of them working out what we're going to do. At that point in time, it was
costing us more to make them than it was, than we were selling them for. But the subscription,
you know, we had that loss leading model, the subscriptions going to work. And so we
went home made these things and shipped them off and very quickly realized that this was
completely unsustainable. If we were going to scale the business, we needed to be able
to make something that wasn't as intensive as what we were doing. And across that year,
so 2007, you know, you know, for just a reminder on context, beginning of the GSC, was it Fannie
Mae and Freddie Mac, I think they were both collapsing when I was at a trade show in the
UK. And that was all that the news was about the world's going to have no money in a minute.
So it was a very interesting time to be trying to start and scale a business. And I went
to Oshkosh in Wisconsin. And it's one of the largest air shows in the world, primarily
aimed at recreational flying, not at commercial and stood there in the in the absolute pissing
rain outside because we couldn't get a booth inside trying to flog these things off of
three and a half thousand dollars each or something, and didn't sell any, didn't sell
any at all. It was it was quite depressing. I think one trucker from somewhere up in northern
Ontario bought one to afterwards to try it. Anyway, we we we generated a bit of interest
as a result of all of that. And about three or four months later, we got an email from
someone at Cessna who said, Hey, look, we really like what you're doing. We want to
buy some and we want to sell them through our reseller channel. We think this is the
future. And of course, pitching a giant tent over this thing is pretty bloody amazing.
Cessna is a reasonably substantial business, a multi billion dollar organization.
Yeah, so Textron, who I'm not sure that they even still own Cessna, but they were they
were huge. And Cessna is by number of aircraft in the world, the largest aircraft manufacturer.
Obviously, they're not Boeing or Airbus, but they they make the or they at that time had
the largest number of aircraft flying in the world. Most amount of wings, we'll call it.
Yeah, yeah, the greatest the greatest number of propellers. And we didn't even know how
to react to something that that was that exciting. We showed up like a bunch of amateurs and
in Kansas and did a demo to them. And they actually loved it and bought 125 grams with
the product, which was more than all of the seed capital that we had at that point in
time. And then we had to work out how to make the bloody things. All of this demonstrated
to us and really hit us in the head with the reality that what we were doing wasn't scalable
at all. It couldn't be hand making these things. So we started working out how to make them
and how to how to have injection molded enclosures that we could make for $3 each instead of
CNC machined aluminium enclosure enclosures, which cost us 250 bucks each. Anyway, if I
if you want to talk about scaling, I think it's important to jump forward two years.
So 2009, we went back to Oshkosh. 2008, we decided it was a waste of time. We're going
to go back, went back in 2009. And this guy came cruising up to the stand and said, So
we're here two years ago, I wasn't going to buy your product. Okay. Interesting way to
introduce yourself. I needed to know that you were going to survive. So it was that
very early lesson, especially in the States, in a conservative industry that you've got
to prove to us first that you're going to be around. And it was a very horse and carty
type problem to overcome in the US. So a lot of our early success came as a result of working
out some kind of crafty way to overcome that. And I'll credit Bruce my other business partners
for for doing a lot of leg work in the US to convince a particular market that we were
worth betting on. Yeah, we we found that the tourism industry, especially the helicopters
that flew people into the Grand Canyon had a really strong use case for our product and
needed to know when the helicopters were coming back. They had a big safety mandate as well.
A safety issue in the tourism industry would be able to lose to them. So making sure that
they were operating safely, and they knew where their aircraft were, so they could schedule
the next group of people for the flight became really important. And we ended up selling
into Sundance helicopters and that precipitated nearly I think, every single tourism operator
based out of Vegas that was flying to the Grand Canyon within a year or two that all
that all fitted their fleet out with our stuff.
Did you become like a competitive value add to those businesses? Do you think?
Absolutely. The the the emphasis on safety was huge. And the ability to demonstrate that
they were actively doing things was important. That's amazing. Were you I'm imagining by
now four or five years into the business, you're starting to see some competitive pressure
as well others were recognising the opportunity and kind of building their own technology
or did you still have a reasonably clear playing field?
It's interesting talking about the competition because we at that point was still probably
the newcomer. You've referred to the fact that aviation is pretty conservative. A lot
of the aircraft that we were putting our stuff into 10, 20, 30 years old and based on 50,
60 year old designs. A lot of the competition was still selling what I would call legacy
type hardware based on the old way of doing things. And even though that migrated slightly
in how they were doing things, I still wouldn't have described them as a true competitor.
And there were a few smaller competitors coming up from beneath us. And to be honest, there
was one out of South Africa and two others out of New Zealand, which I found really interesting.
That New Zealand seems to create its free companies all trying to solve the same problem.
But at that point, I think it would still be fair to say that our largest competitor
was nothing. I was doing nothing. There was no legal requirement, no mandate. There was
nothing compelling people to do other than the benefits of the product itself.
So more often when we lost a sale, we would lose it to people deciding not to do anything.
It said in enterprise software, particularly that inertia and the alternative of not acting
is often for people a more attractive option because it actually reduces risk in a number
of ways because you're keeping the status quo as opposed to taking a risk by doing something
which could be perceived to be the thing that pushed you into a trajectory or a path that
you didn't want to be on. And so it's interesting that was the same in aviation.
So I'd like to start moving here and talking about the exit itself. So if we jump forward
a few years to when you started to ponder the future for the business and the future
for you as founders and shareholders of the company, so what was the thing that kind of
precipitated the start of that journey of pondering the exit?
So it's a piece of relevant context. I actually stopped working on a daily basis in the company
in 2015. So that was seven years, give or take six and a half years before we exited
and probably five and a half years before it became a relatively consistent discussion.
Why did you do that?
I've been there 10 years. And if you subscribe to some of the Jim Collins methodology around
your own hedgehog concept, I think my hedgehog concept is very strongly tied to what happens
right at the start. And once things become about the processes and lots of reports and
layers of reporting that help a business grow, I don't think I'm the right person to run
the company at that point. So I stepped away.
I view the world as being as a founder or as a CEO, there's phases of the company, which
suit a different skill set and a different personality type. And so to me, what I'm hearing
you say is that you're a start build person, as opposed to a change or a operate person
or potentially a sell person. Some of those things can be blended together. And occasionally
have people that are able to be polymaths or apply skills across a range of different
contexts. But I like you and actually a start build person. So I can really relate to what
you're saying there.
So I had gone and I hadn't been a part of the company. I took two years where I wasn't
really involved at all other than to get the odd update and to have a chat with the guy
who had taken over from me. But I put myself back on the board in about 2017. And coming
through COVID, the number of people that were tapping on the door saying, hey, we'd really
like to buy you, it just became too hard to ignore. And we didn't think as a board, we
didn't think we were probably ready to try and sell the company for the value that we
thought we were generating at that point in time. But if we if we look back at it, the
shareholders were ready to exit that been on that journey at that point in time for
1516 years. The company was the market was ready. And the company was actually it was
ready to sell, we just didn't necessarily think that we were going to realise all the
value that we'd created recently. Sorry, I'm not sure that I've answered your question.
It's okay, we'll circle around it. Yeah. So the there was a range of factors that led
you to go now is perhaps the right time, there was a good degree of interest, you felt like
you might have extracted a pretty good degree of value from the company at that stage as
well. And there was a desire from shareholders, investors to perhaps see a bit of a return
on that. So there's some pretty compelling reasons. So people were expressing interest.
And so knocking on the door, what did you do then? Was it assemble a deal team? Was
it retain advisors? How did you go about kind of starting to cobble together a deal that
ultimately was able to happen? Yeah, we've been having the conversation with shareholders
for a couple of years before that point. And we'd already talked to I think, Regan Holt
from PWC had done a bunch of work on valuations and, and a potential strategy. So we'd already
had that piece of work done. At the point when we decided, okay, we're going to do this
now is the time. The board put a bit of a subcommittee together with the CEO, and we
said, okay, let's pick who we think are the most likely buyers for this company. And let's
go to them and actually get a non binding indicative offer, and talk through with the
shareholders what this could look like. Because the shareholder expectations were all over
the map. There was a you know, multiple of two between the lowest and the highest. Wow,
that's a spread. So you know, there are some expectations that you need to manage. And
there was a lot of work in front of us that we probably didn't realize was in front of
us at that time. We after we'd gone to these people and said, look, why don't you give
us a non binding indicative offer, they obviously needed a whole lot of information. Luckily
for us, we were relatively well prepped for sale. So we had, well, I wouldn't say that
we had a data room, but we'd had at least a high level brief that we could send, send
out. And people were pretty good at giving giving indicative offers on a relatively short
turnaround. And the thing that surprised me is especially given the differences and the
three potentials that we've picked out one being a sort of a long hold PE one being more
of a local and short hold PE firm and one being a more of a trade sale type purchaser.
All the evaluations were relatively close together. Nothing what you know, too far outside
my expectations, and all of them above what I thought the minimum value for the company
ought to be. So that was at least a good start. And then we went to shareholders, put the
options out, got some feedback and the shareholders took the advice and we decided to go ahead
with a with a process with one of these one particular buyer, or name is Arcadia, because
it's easy just to talk about him by name. Arcadia's deck to us had had a very optimistic
four week process for weekday. And I think even Paul would now acknowledge that that
was probably a little bit optimistic. But I can talk about some of the funny moments
through the process, including them not realizing that New Zealand shuts down for all of summer.
But they in early November told us that they would have the deal sewn up by Christmas.
Wow. Anyway, the the board sort of put the CEO at the time in charge of this process
and we kind of sat back and answered questions and wanted to see what would happen. A terrible
idea. Terrible idea for lots of reasons. And I can talk about where we ended up and what
we should have done.
But probably not quite a good time to do that actually. Look, the ultimately you need someone
who's connected enough to the decision makers and the decision making process connected
enough to the business and the information within the business and ultimately who's going
to sign the warranties that person needs to be leading that process will need it in our
case to lead that process. If I think about all the relationships, so I was leading that
process. If I think about all the relationships that I had, and had to manage, there were
four shareholding groups, but within those shareholding groups, different groups of different
shareholders as well. So probably about 15 people all told on the shareholding side that
you needed to have a relationship with and bring along on a journey. There was obviously
the buyer. And within the buyer, there were a whole lot of different people. There was
our own legal team. And then there was the company itself and the people working in the
company. And that includes the board who were ultimately going to carry a degree of responsibility
for making sure the company achieves its objectives. And that is a hell of a distraction. And if
you get the CEO who wasn't a founder shareholder, he wasn't centralized based on an exit, but
he wasn't a founder shareholder with a huge stake in the company. If you take that person
away from the things that they're going to be doing every day and throw this job at them,
for a start, they're going to have an overhead of consultation with the people who can generally
make the decisions, and they're going to have no time for anything else.
So the risk therefore is if the deal doesn't go through, you've probably started to slip
in your earnings and your ability to execute upon the strategy. So such an important thing
to keep an eye on where the business is going and the deal that's on the table in front
of you at the same time. So just to be clear to recap, sorry to interrupt, the many moving
parts relatively standard situation when you've got a mature company, especially with a multitude
of shareholders in that company as well. And so you were external to the business and you're
back on the board. So non operational, but not exact director. And so you took responsibility
for taking on some of that and the CEO took some responsibility. Could you talk to that
a little bit more for us, please?
Yeah, so Dave was running the process to begin with. And we actually got to a point where
we thought it was all going to fall over. And part of that came down to Dave not having
the ability to make make the calls on behalf of shareholders and then go and pitch those
to shareholders that realistically you need. And so we kind of had a first half and a second
half and the first half was unsuccessful, not because of any anything to do with Dave,
but just because it was the wrong people trying to run the process. So I think the other thing
is I was naively trying to step back because I thought it wasn't my place to be doing it.
I was already wearing plenty of hats and didn't think that wearing the let's lead
the exit hat was the right thing for me to be doing, especially given my lack of
operational knowledge of the business at that point. That was a big mistake. You need to have
that person involved. And so I picked up the ball and ran with it at that point. And it was
I look, it was a hell of a task to get up to speed.
I knew the business. I broadly knew how the business ran. A lot of the older stuff I knew
very intimately, of course, but I hadn't been operational for seven years.
It's a long time.
And, you know, to give you some examples, you have to warranty all sorts of things about the
business, you have to warrant that, you know, software meets a certain specification or has
done a certain way or that there's none of this or that there is all of that. And I knew
that I had to do that. And when you're involved with the business, and you've got a high degree
of trust with the people doing the work, extracting that information is a lot easier than when
you actually don't know who that you don't know the team on a personal level anymore.
So you have to go in there and trust but verify for yourself. So there's a there's a huge amount
of speed. And the problem with that time is that the more time you give a buyer, the more time
they're going to spend looking at things, and the more questions they're going to ask. And we ended
up in a relatively drawn out process. It took another two months after I finally stood up and
did what I should have done from the start. And that time just gave them so much time to ask a
whole lot of questions, which I don't think serve them or ask particularly well. Yeah,
you there's a notion and sales as there is, you know, selling a company that time kills deals,
and it's tends to erode rather than increase value. Yeah. So I'm curious, you may not have
reflected upon this, but you weren't heavily involved in the start of the journey, you said it
was a game of two halves, if you like a deal of two halves. And then you became really heavily
involved. I'm guessing that you either were the largest or you represented the largest group of
shareholders. So you know, the largest vested interest in that deal, and your founder of the
company as well. And so you know, super important to be able to see the right outcome for all of
the different stakeholders that you served, or which these many, you know, that the company,
the customers, the shareholders, it's a complex entity by the stage. Have you reflected upon the
difference that you may have been able to make through becoming much more active in that deal?
Like for example, could the deal have gone off the rails? You mentioned that may have been a
possible outcome at that point. And or was there a potential increase in the EBIT multiple? Or was
it just getting the deal done in better terms? Or you know, what influence do you feel like you may
have been able to have on that deal? I think the deal would have fallen off the rails of
if I or someone representing the largest shareholders hadn't gotten involved.
That's basically what it comes down to. Yeah, that's fundamental.
One of the things that I talk about as being a real,
probably one of the hardest things was just the decision fatigue through the process. And
when you can make the decision and know that you've got the backing of a majority of shareholders
behind you, and you will have to discuss some things, and negotiate some things. But when
you've got the ability to make those decisions, and just keep moving, you're far better place to
stop that time just blowing out. So that was probably the thing that I brought to it was the
ability to just make a lot of decisions without too much consultation, and then go back and sell a
package to the shareholders instead of going back piece by piece and asking questions along the way.
Yeah. Consequently, my mind goes to that does two things. On the one hand, it means you're
on the one hand, it means that you can accelerate the deal process. And on the other hand, you give
confidence to the acquirers that they are dealing with the person who's actually kind of responsible
for shepherding this thing through. And it feels like it's a cohesive entity and a smartly run
entity as well, to a degree. Absolutely. I think the other one thing that one piece of context,
which is probably missing from the discussion at this point is the fact that Arcadia was a brand new
fund at that point in time, first deal or one of we were first basically first equal, I think we
and another company closed within a week of each other. And so not only were we learning about this
for the first time, but even though the principles at that firm had a lot of experience, this was the
first time they've done it in their own fund. So there was a and this was also the first time
they've done it in New Zealand. So there was a lot of legal and cultural and just novice type
learning around the whole process that needed to happen as part of the journey for each of us.
Yes. And that definitely impacted quite a few things. I'll give you examples. There were there
was workers comp in the in the spa, when it first landed on their desk, and no matter how many times
we went back to them and said, you need to remove this workers comp reference, because that's an
Australian concept, not a New Zealand concept. The little things like that, that just took a lot more
work than than than it really should have. And that was just an experience thing. I didn't know
that I needed to say, Hey, look, just strike this for these reasons. And they didn't know that that
wasn't a thing in New Zealand. Yeah. So that thousands of little pieces of learning like that.
Once you've done them once you kind of understand it. But when you've never done it, you have no
idea you're right. Yeah, I'm going to discover what the notion of that construct is, and then
work out what you want to do and then sell it to some other people as well. So again, more complexity
that comes into the deal itself. You don't need to mention names. But I'm curious, did you have
advisors that were working alongside you in this in this journey? And to what extent they make a
difference? Yeah, so there were actually I have a note of the people that I've talked to. And I
looked at that this morning and prep for this. There, there were a half a dozen or so people
that I would talk to and ask questions about how their process had gone. And they were kind of
informal friends, if you like that, that could mentor me through the process. And then on the
formal side, we engaged PWC legal, and I'll shout out to Elena Kim, who did a fantastic job at
helping me through the process. Great. Thanks a lot. I can't, I can't mention enough how having
a good legal representative helps you quantify what the risks are going to look like. The counter
to that is that your lawyer also doesn't have a the context, the industry or the company context
to help you interpret every aspect of the risk, they can tell you what the risk looks like from
a legal perspective, you need to apply the real world element over the top of that. And so having
a good lawyer who can break that down for you and give you examples of when or when not risks
is going to exist is invaluable. And Elena, she did a fantastic job at that. And she was also
incredibly available, which when you're trying to work across one of the guys was in Australia,
some of them were in Florida, some of them are in Toronto, when you're trying to work across
what's that 10 hours of time zones, it's really important that people are available, but
ungodly hours. It's a bit of conjecture. But to what extent do you think that you're able to
positively influence the deal from the outset of what the heads of agreement was through to
ultimately what ended up being? Was there a difference in that marketly, by the way,
and either in terms of the multiple or the terms that were attached? I think I was able to positively
influence it. And so far as we got the deal across the line, we were we were really happy with the
price that we got. And I think part of being happy with the price that we got was making sure that
we had a buyer who was happy with the price that they bought it for as well. Takes a lot of risk
out of warranties and everything that comes afterwards. We negotiated quite heavily on
the way that the post sale looked. So where we did change the shape of the deal was in
things like networking capital considerations, making sure that we weren't leaving a whole lot
of cash in the company, making sure that we were tidying up imputation credits properly so that
we weren't leaving a whole lot of unrealizable value inside the company. We did quite a
quite a bit of good stuff, which made a material difference to the outcome for us.
We had quite a short holdback time and the holdback funds were all held on deposit in New Zealand.
So with a new fund, that made us feel that many shareholders feel quite safe. So the structure of
the deal and the risk that we considered lay in the warranties were areas where we negotiated
quite hard and I think we did quite well. And I think if we talk to Paul from Arcadia, they're
really happy with what they bought and they're also content that they didn't buy a whole lot of
risk or a whole lot of issue. There haven't been any warranty claims. It's a good outcome for both
sides and I think that speaks to the integrity that we built into the deal.
I love the approach that you've taken there, which you didn't use the words, but it was essentially
a win-win kind of deal. And so I think often people from the outside can look at a company
exit and kind of hope they're going to screw the other person on the buy price. But I subscribe to
the same model of thinking, which is that it's got to be a deal that stacks up for everybody
and one that you can walk away with a sense of pride that you've done the right thing. But you've
also achieved an outcome which is a positive one for Acquira and also all the other stakeholders
that we've talked about earlier on. Absolutely. And I think one of the big
realizations that I had in this process that I was naive to as a founder and a founder who had
gone and tried to raise money from the likes of VCs and other people in the intervening period
was that people buying companies need to buy companies. They need the companies to buy as
much as the companies want to sell. They don't make money by not buying companies. So they're
out there in the market looking for things that are worth buying. And if you've got something
that's worth selling, there's so much potential for a win-win as you've termed it. So that was
one of my big aha moments in the process. Actually, these guys need us as well as we're
going to be able to do. They need us as well as well as much as we need them.
It's a really powerful realization. I think a lot of people from the outside feel like,
especially when they're going into the deal for the first time, if it's their first exit,
and that they might be beholden in some way to the buyer. And that there's some, you know,
because it does feel like you need to jump through a lot of hoops when you're going through a DD
process. And it can feel quite arduous to people if they're unprepared for that, if the data room
compliance has been a little bit lax along the way, whatever it might be. And so reminding
oneself that this organization that's sitting here is here for a reason. It's because they need to
buy a company like us. And so let's make this as easy and positive as possible for them.
Yeah, yeah, absolutely.
Yeah. Just reflecting on the deal, it's always good to, you know, hindsight is a 2020 vision.
So were there any kind of, and you may have touched on a couple of these, or it could be
something different, but were there any missteps or mistakes that you made along the way that now
you know looking back that you could have done differently?
I think the major one was just getting the right people in the room from day one.
I think we probably, we didn't fully believe, but we probably put a bit too much belief into the
fact that it was going to be a quick and easy process. And what we overlooked there was the
fact that a buyer, if they're not content with something, will just manage that risk using
warranties. And because I didn't have the in-depth day-to-day knowledge of what those warranties
actually looked like, the work had to be done to quantify what those risks looked like. So
if I'd been involved in the way that I ended up being involved right from the beginning, and if I'd
probably, I don't know, I don't know how I could have got up to speed on the warranty requirements
more quickly. I'm not sure that there is a way. I think if you've been out of the business,
there's just time. You need to spend the time to get to know the people to ask the right questions
and work out whether the risks that are present and your warranties are worth taking.
I didn't ask this question, but I'm making an assumption which is dangerous. So was Spider
Track started with the intention of taking it through to an eventual exit? Or did that come up
along the way? Or was it when Spider Track started to raise some capital that took me through that aspect?
Yeah, it's a good question. There wasn't the explicit language that you would have about it now.
I think that's the first thing that's worth saying. We kind of agreed on a handshake that
eventually this is something that we probably would sell. But we'd had a few shareholding
changes along the way. We'd had some disagreements which had led us on different paths and we'd
bought one shareholder out. So it's fair to say that the initial intention, whatever it was,
had been muddied by the things that had happened in the intervening period. We've raised some money
along that journey as well. And K1W1 were the investor at that point. And they obviously have
a mandate to invest on the basis that they will exit at some point. As a young investor of that
ilk, the only way you see a return is from an exit event. Yeah, exactly. That said, we were never
aiming to be operating in a constrained market. This wasn't a VC led company that was going to get
50% month on month growth forever because the market is just tiny. The number of aircraft,
the whole industry is worth about $3 or $4 billion. That's every aspect of the industry.
You're not looking at a total addressable market of hundreds of billions of dollars.
So it's a totally different ballgame to where your early stage angel and VC money might typically
be going. That said, I think it was understood that we were going to exit to someone at some
point in time. And that would be a major return of capital to the investors and the founders.
You mentioned that you think that the investors, the other shareholders were pretty happy with the
results that happened along the way, which is a great outcome. So not always is that the case.
So I'm curious, and don't share if you're not comfortable to do so, but what kind of level
of return did some of those investors see? Like perhaps the best investor story they saw,
you know, 20, 30, 40 X of their number or whatever that thing might be. Is that something
you can share with me? I'll share with you what my IRR was. Great. Thank you. So my IRR on my
time and my capital that I put in was in the early 30s. Yeah. Amazing. Yeah. For those unfamiliar,
would you like to just break down on a very simple concept as to what IRR internal rate of return is?
Yeah. So it will, if we look at it this way, if you put a dollar in a year later, you'd have $1.30
and then a year later you'd have whatever 1.3 times $1.30 is and you compound that over
the time period. Yep. Got it. So in other words, that equates to 30% compounding interest per
annum. Correct. Yeah. That's a great return. Yeah. Yeah. Yeah. And my family who ended up being
in the order of two thirds of the shareholders by the time we exited, they were more than happy
with the exit that we got. Yeah. Great. Yeah. Well done. And I think part of it, it's worth saying
as well, a lot of angel and VC funded companies run along losing a lot of money without any
ambition or plan to return cash flows along the journey. And that hadn't been us. We had paid
dividends along that journey as well. So we'd been cash flow positive and paid dividends,
as well as generating a capital base and the asset that we had. So we returned money to shareholders
in two different ways. Yeah. Yeah. Great story. So you were part of a founding journey as a
young person, graduated from university, working in a job, everyone collectively spied an opportunity
and then kind of drove that thing through. And there was a lot of lessons and experiences that
you had along that journey. I'm curious, this is a kind of a three part question. So I'm going to
ask each part individually so it doesn't get too complicated for either of us. So what were those
key kind of bits of growth that you had to go through over that journey as a young person at
university to enable yourself to function effectively as a leader inside that high growth
or that growth company? I mentioned probably an hour ago now that I was a bit of a pain in the
ass. Let's just use that phrase when I was at university. And it's fair to say that managing
people and forming good relationships with people wasn't a strength that I came into this business
with. And I definitely had my training wheels on for the first five years. And that was probably
the area where I needed the largest amount of growth in order to have a chance of success
through that. The realization, so you're an EO member, I'm an EO member. I came into EO
on the tail of being in an organization called CQ for a decade. And I remember my first meeting
at CQ, it's a forum like experience, there are eight people in the room. And everyone has just
given their update. And I just remember sitting there thinking, well, I'm nowhere near as fucked
up as anyone else. But in reality, I was equally, if not more fucked up than everyone else. I just
didn't have the tools nor had I spent the time reflecting in order to understand how much growth
potential I had in front of me. In other words, how naive I was to what I needed to be able to do
in order to grow the business that I was running and to just be a functioning human.
Yeah, wonderful piece of reflection. EO Entrepreneurship Organization, for those unfamiliar,
global organization in which James and I both are part. So the next question, the lead on from
that is that, so you went through a full lifecycle evolution, including succession planning, so
moving yourself out of the business, which is a wonderful piece of awareness to have of what
you're enjoying, but also where your capability set lies, hedgehog concept, as you mentioned.
And so you've now moved on and started a new business, Cradle. Cloud PBX is kind of a space
in which I think that would be a descriptor. Give us a quick pitch on Cradle. But the thing
that I'm really interested in is how did you, upon starting that business, what were the key
things that you applied that were the hard fought and won lessons from the Spider Tracks journey?
So Cradle is a Cloud PBX, as you've talked about it. We talk about it as a Cloud phone system,
and the goal is just to help primarily accountants have better, more meaningful conversations
with their clients. We do that by giving them context, right? So we pull data out of their
practice management tools and surface that data when they're on a phone call. So they're not
talking blind, they know who they're talking to, they know when they last spoke.
We've made a fair share of mistakes and and mis-turns in Cradle as well. So I won't
sit here and claim to have it nailed and have it perfect. A couple of key things come to mind.
So the first one is that, and it speaks a little bit to one of the questions you asked about,
was the intention from the get go to sell this company? I did a lot more work making sure that
the on-ramp and off-ramp for anyone who was involved was clearer. So we weren't reaching
points where founders or early stage investors were going, I want my money out or I don't like
you anymore, how do I get out of here? And we didn't have a mechanism for it. All of that stuff
was defined. This is how you get in, this is how you get out. And that has been really valuable,
and we've used it in a lot of different ways. So we've used it in a lot of different ways.
We've used it in a lot of different ways, and we've used it and not ended up with any degree of
animosity. Which has been a really fruitful piece of learning. I'm not necessarily sure that this is
something we didn't do at SpiderTracks, but we've been much more explicit about it at Cradle in that
we don't try and build things if we don't have to. There's lift and shift opportunities everywhere.
Part of the reason that we had to build things at SpiderTracks was the immaturity of the
SaaS space. We had to build our own billing system. We had to build,
let's use the billing system as an example. So you need to be able to bill your customers,
and you're selling them something. So you work out what your billing model is going to look like, and
you build a system around that, which every week, month, year, whatever it is, invoices them for
what they've used or what they're going to use. Stripe didn't exist in 2006. Well, if it did,
it certainly didn't exist in New Zealand. So we had to build that from the ground up. And we spent
hours boiling the ocean and came up with the most complicated thing in the world, and then people
from marketing and people from sales and everyone's having their input. And what we didn't do was just
pair that scope down to the absolute bare minimum. So we went from a database query, which spat out
a whole bunch of numbers, which we then turned into an invoice manually each month to the most
complex billing system where Ruth, bless her, came into the door of where the dev team were
working at the end of the day, and she's German. Is this billing system actually going to work?
I love the German directness. And it was the right question. And we probably should have listened
more to that question and understood the anxiety sitting behind it because we built a monster and
it's still getting used today because it was far too complex for the job we were trying to solve.
We over-engineered it to death. Now at Cradle, we use Stripe. And if Stripe can't do it, we don't
offer that billing bill. Sorry, that's not how we do things. These are the choices. And all that we
do is we send units across to Stripe and then we use their system as best we can. So one of the
learnings there has been just don't build it. Build as little as you can. And I think there are,
I can think of many different moments throughout the history of Spider Tracks where we probably
should have stopped and thought, do we really need to build this thing? There's a couple of
philosophies that you've unearthed there. Things that really resonate with me, terms that I would
use would be buy not build. And so that's an ethos that can be quite present in companies,
or it can be the alternative, which is a derivative of not in my backyard, NIMBY,
which is not invented here. Which means that if we didn't make it, then it's not as good as it could
be. And that's the luxury of a incredibly cashed up company, one that has an invention mindset,
and that perhaps isn't necessarily focused on the outcomes that they're trying to deliver to as
well. The other thing that I'll call out is the fit for purpose as well. And so over engineering
and ending up with a whole lot of scope creep is something which is a real risk for anyone that
has a tinkering engineering producty mindset. It's very, very easy to end up in a situation
where you build a Frankenstein, you build a monster when something really simple could suffice.
If you cannot buy it, if that's your mentality, and you need to build it, then build the simplest
thing you possibly can for this point in time. There's a terminology that one of my previous
co-founders Gareth Cronin talks about, which is the last responsible moment, which is kind of,
still being responsible, but we're doing it at the time that is appropriate for how we're going to
deliver and roll this thing out. So there's kind of three notions that you've surfaced there and
why is it perhaps put some words around. So I think another one, another, you know,
to borrow from Sir Peter Blake would be that doesn't make the boat go faster philosophy.
And are we doing this because it's fun and exciting? Or are we doing this because it's
genuinely going to make a difference to our customers and the value of delivering them?
Yeah. And we also, I, and maybe it's a combination of all those things, or maybe it's the last point
about being the last responsible moment as we avoid building things that we can do manually
whilst doing them manually doesn't take up a ridiculous amount of time.
Because often the cost of automating or building a system is what is a magnitude more than just
doing it manually for a while and seeing if you actually need to do it in a year's time.
Because a lot of things turn out to be bad ideas, right?
Right. I was emceeing a panel with Bob from Cami a couple of weeks ago, and there was this
beautiful simple masterclass on automation that he had as they were going through a COVID-fueled
rapid, you know, unbelievable explosion of growth. And he said really simply that the founding team
would apply themselves wherever they possibly could across the function. And then so they
understood clearly as a group what needed to happen across the business, what the different
responsibilities were. And then they would, once they got to a stage where they were breaking,
they would automate. And then, so not hire, but automate. And then once that thing started to get
a little bit creaky and groany, they'd reevaluate it again, and then hire someone to sit alongside
that. And so it was the simplest way of looking at how you go about building systems and automation
and behind the scenes to support the efforts of the humans, because automation is not necessarily
always the right answer. It's not the panacea. It could be that another human or a part of a human
could be right, or that we don't do it at all. You know, it's another way to think about it as well.
Yeah, exactly.
If there was like two or three, you know, things, you know, virtues and philosophies,
you know, things that were just paramount to you in business, James, what would those two or three
things be?
I like to use the word why. Why are we doing this? Why is it like that? I think having a,
maybe a curious mindset is something that I'd like to see in myself and in other people. So
why things are the way they are, why should we make them different? So having that curiosity
is something that I value in myself, I think. I think my dad hated it when I was growing up,
because he used to ask that question a lot. When it comes to what we're creating,
I've always, I strive and we as companies have, is it striven or strived?
Strove, I don't know.
Whatever that context.
To ensure that what we're doing is more simple than what people are currently doing. So, and it's a
little bit Steve Jobsy, so I'm, I'm nervous to say this, but simplicity is something that I really
value. And that I love to see in our products. I love it when people can just sit down and use
them intuitively, because all the thought has already happened. And I think that's the
doing and making products like that, that I personally get a lot of pride and delight from
from what it is that we create. We're gonna have to, you're gonna have to cut this out, because
you're gonna hate it. But I think having integrity in business is really important. And that comes
back to you talked about having a win win with your with whoever it is that you're going to be
having a win win with your with whoever it is that buys your company. But you need to think of
the integrity and the value that you're generating for your customers as well. I think it's important
to see that what you're doing adds value to their business. And then you don't have to sell anything,
you just show them how it's going to help them. So that honesty, your integrity and purpose,
I think is really important. And if you're solving customer problems, and you're doing it in such a
way that they can see the value and you are delivering genuine value, there's integrity to that.
Yeah, I don't hate it. So what I dislike about the word integrity is when it becomes a
trope. Yeah. And it's overused or misused. And so what you've talked about there is integrity in
product integrity and design integrity and customer relationships. And so that kind of really gives it
a strong grounding. And I really like that. And I think there's nothing wrong with aping Steve Jobs,
you know, one of the greatest entrepreneurs of any generation, especially the last couple of
generations. What I would make that mean is that build beautiful things simply. Yeah. Yeah. And the
last or the first thing that you mentioned was the curiosity. It's such an attractive virtue. And I
think not often enough respected or admired and other people, you know, we like drive and we like
determination and we like resilience and these sorts of things. Well, certainly, you know, I do.
But curiosity is one of my main values. And I have to remind myself of that sometimes that when I
think that I know, perhaps a better thing to do would be to approach something with curiosity,
because if you don't have curiosity, then it makes it very difficult to learn. And it's also,
it can be quite repellent to people if you always have the answer to things, you know,
the Sheldon from the comedy show, you know, kind of persona where the know-it-all personality is not
very attractive personality. So they really resonate with me. I really like them. Two more questions.
Do you have an alternative career that you didn't pursue? So the thing that if you hadn't gone into
the space of being a founder, being an entrepreneur, being a company builder and taking it through to
a year and exit that thing that is the... I wonder what that path would have been like or the, I really,
if I had all the time and money in the world, what I would dedicate myself to is this thing over here.
So is that something you've pondered? And if so, what would the answer to that be?
Maybe I don't even need to ponder it. So 2005, I was immediately post the Michael Erce crash.
I was helping dad out here, business installing irrigators, and I was standing in a paddock.
I'd applied for a job with George Western Foods in Sydney. George Western Foods owned Tip Top,
the bread brand, not the ice cream. And I made it through their graduate application. And they
wanted me to come to Sydney. I flew to Sydney for a job interview, went through a whole lot of
psychometric testing, which was interesting, described me as abrasive. Ended up getting
interviewed by the CEO at the end of the day. And afterwards, I got the train back to somewhere
and stayed in Formula One at Sydney Airport and then flew home. Anyway, the CEO, as he had
gone to shake my hand at the end of the interview, grabbed his PDA, bless him, and looked at it.
And he was just looking at it while he shook my hand instead of looking at me. And I convinced
myself at that moment that he was not interested in hiring me. And I also don't understand why the
CEO was interviewing graduates in a company with I don't know how big George Western Foods is,
but it's... Thousands, right? Thousands of employees. Yeah, that didn't seem to make sense to me.
Anyway, I convinced myself that he didn't want to hire me, I wasn't going to get that job. And also
I didn't want to work for that company, if that's the way that the tail end of an interview like
that happens. So I land back in New Zealand and make my way home and the phone rings. And as I say,
I'm standing in this paddock helping dad and sore irrigators. And they say to me that
they'd like to offer me the job. Was it the CEO? Or is it his HR team? No, it was the HR team.
Right. And so then I have this huge conundrum. I've just spent 24 hours convincing myself that
I'm not going to get it and that I don't want it anyway. Although I've gone to all this expense to
fly myself over there. And the woman on the phone tells me that I've got flights booked with my name
on them already. And next week, I need to be up in the Blue Mountains. And there's this onboarding
experience that's going to happen. And I so then I have to work out whether I actually want that
job or not. I have to go through the whole process of reevaluating what I want to do with my life.
And do I want to go and work for a big corporate? And I do often think about what would happen had
I taken that job, I turned it down. It's quite empowering turning down a job. And also it's quite
valuable being the gift of thinking it through properly by having decided that you don't want
it. And can you get yourself back from that? I don't want this through to maybe I do want to try
this. Yeah. So yeah, I didn't take that job. Yeah. Yeah. I wonder what I would have done with my life
if I'd ended up making bread in Australia for 10 or 15 years. I know. Pardon question for you. How
do you identify? So by that I mean, professionally identify, but also if there's some personal things
that you wanted to drop in there, you know, husband, hopeful father, son, entrepreneur, you
know, what are the what are the things that when people think of James that they might go, how does
this guy identify in the world? What would those be? When I was younger, I think I would have had
much more clarity about an answer for that. Part of my life is going from being, you know, a closeted
gay guy in Palmerston North and then with stints in the US. And trying to hide that quite strongly
for a period of time and identify, you know, creating a strong identity that reinforced that.
And the journey from there to where I am now, and what that does to your identity is really
interesting. And I'm not sure that I've fully landed on a new one sentence identity on the other
side of that. There are things that are really important to me that will always form part of my
identity. I grew up on a dairy farm and I really I strongly identify with the creativity that comes
when you have to find a solution to something, but you don't have all of the things that at your
fingertips that you might like to have that creativeness and inventiveness, that creativity
and inventiveness. As you know, I love my cars and it's somewhat orthogonal to one of the other
things that's really important to me, which is the fact that we live on a planet and we treat it like
it's going to get a wash in three weeks and we'll be fine. So yeah, there are lots of conflicts and
conundrums in my life around how I view myself. And as I get older, they seem to
I don't necessarily get clarity. It just becomes a more complicated question to answer.
This way I can think of to describe that. There was a, this is going to date me again, there's a
Star Trek movie where one of the, I think it was one of the voyages or the
something gets sent off and ends up coming back and wants to hear a whale on planet Earth, but
there are no whales left or something. So they have to go back in time and find a whale. I feel
sometimes like I'm Voyager and there are just bits that keep getting tacked on and it slowly
changes what your identity is. That's a weird analogy to give you.
Oh, I think it's a pretty good one. So I like the reflection. I can't really explain it.
I like the reflection. I can't recall the phraseology of the quote, but it was something about
as a younger person, you have certainty about who you are and it's not right. And as you age,
you realize that you're actually kind of a mix of different things and boxing yourself into one
place isn't necessarily all that helpful or necessarily all that accurate. And so look,
synopsis for me, I've really enjoyed the conversation today. Thank you. It's been in terms of a
conversation, very reflective. So I really appreciate the deep thought that you put into
this, the preparation before coming along today. Really insightful in terms of the business journey,
but also the lessons about exits, which is really powerful and super helpful. And I love the way
that you approach thinking about a problem and then articulating it. So deep gratitude to you
and thanks for coming on us today. Thanks for having me. Thank you.
you