Cloudflare TV

How I Launched This Company

Presented by Aliza Knox, Adam Jacobs
Originally aired on 

How I Launched This Company explores the path of entrepreneurs and innovators in the Asia-Pacific region. From challenges faced to lessons learned, we will join them on their journey as they share how they got to where they are today.

Join us this week as we meet with Adam Jacobs, Co-founder of THE ICONIC, and Hatch.


Transcript (Beta)

We're here for another segment of Cloudflare TV, how I launched this company.

And we're really lucky this week because we have a serial entrepreneur who's gonna talk about two different launch experiences.

The Iconic, which most people in Australia know, it's such a big brand name.

And Hatch, which many people in Australia know or are getting to know.

And of course we have an audience that's global here.

So before we get started, Adam, can you tell us about both of these companies, what they are, what they do, and then we'll dig into how you founded them.

Yeah, sure. Well, thanks for having me Aliza. It's really nice to chat and be in conversation.

So the Iconic, which was the first company I was a co-founder of, is Australia's largest online fashion retailer.

The Iconic sells shoes, clothing across men's, women's and kids' wear.

So if you're in Germany, it would be the Zalando of Australia or the ASOS.

If you're in the States, it would probably be maybe the Nordstrom Online.

If you're in South America, it would be the Depeche and founded in 2011.

The second company Hatch is much more new. I co-founded it just over two years ago and it's a digital employment platform to match young people to jobs.

But the way that the matching works is quite different. Instead of looking at their education or CV background, we look more at their transferable strengths and motivators and behavioral traits and personality styles to help them find work.

That's a great fit for them and help them join teams that they might really enjoy and find meaning in.

Does that mean on the, just to get a little more understanding of the business, does that mean that on Hatch, you may not need to have skills or, I mean, sorry, industry knowledge specific skills or are these sort of psychometrics in addition?

Yeah, it depends on the role that you're applying to.

And some of them will require specific experience or skills and some less so.

The way we think about it, so Hatch's mission is for all people to find meaning in work, which is a very sort of broadened and grand mission.

But really what we're trying to do is help people find environments they're gonna feel alive in and they're gonna love.

We think of skills as almost a hygiene layer. When you're thinking about who's a fit for a job, the first thing you're gonna do is make sure they have the relevant skills.

But there's still a very big pool of people you're considering after qualifying their skills.

And we're more interested in once you've qualified the skills, how do you figure out who's right for the job?

And my learning, particularly through my leadership role at The Iconic is it's often much less about what they look like on paper and how long they've spent in those different skill areas.

And it's much more about who they are as a person and what their strengths profile looks like and what their growth potential looks like and what they're really motivated by and interested in and what their stylistic preferences are.

Those things are actually way more predictive as to what type of a job's a good fit for someone.

That's interesting. All right, before I ask you more, because I'm really fascinated by that one and I love the idea of helping people find work that's meaningful to them.

How did you get to these two places? Were they just ideas you dreamt up?

What did you do beforehand? How did you come into this?

Yeah, two really different paths, actually, in terms of the two different companies.

So before The Iconic, I was in strategy consulting. I worked in BCG, a firm that has a global presence and joined in Sydney, but transferred to Copenhagen.

And myself and a couple of BCG colleagues were approached by some German venture capitalists who were really interested in e-commerce with the idea of moving back to Australia and founding an e -commerce company because the Australian scene in 2011 was barely developed in e -com.

There was really no strong local players.

Australians were only really shopping from international websites. It was just, the timing was there.

And it was funny because I hadn't thought of myself as an entrepreneur.

To be honest, I still don't think of myself as an entrepreneur. That label feels uncomfortable to me because it sort of often attracts people who want to be an entrepreneur just for the sake of it, as opposed to there's a problem or a business they're particularly passionate about.

But when I was approached with that question, I all of a sudden was really interested in the opportunity of building a company and had this fork in the road moment in my life where I'd actually only left Sydney six months before and was planning to be overseas for years.

And it just got into an MBA that BCG was sponsoring. So I had this life plan figured out.

And the idea of quitting the firm and moving back to Australia was not in line with that plan, but went with it anyway because I felt it was such a unique and brilliant opportunity.

The second path to Hatch was totally different, which is my seven or eight years experience in building the iconic taught me a lot about how you build high-performing teams and how you hire the right person.

And also about the role that young people play in helping companies move towards the digital economy.

And I wanted to take all of those lessons and build a second venture that was more squarely targeted at a sense of social impact.

And the impact we wanna have is to help the next generation find work they're gonna love and find meaning in their careers.

So that was actually three years worth of thinking about the problem of playing around with business model ideas, of talking to members of the ecosystem in both Australia and the States in terms of employers and students and investors, and eventually getting to the point where we felt like we had a business model to test.

So it was much less opportunistic and much more deliberate.

And I think when I reflect on those two different backstories to the two different companies, what it says to me is there's no blueprint for success.

It's not like all the successful companies in the world were founded in a similar fashion.

In fact, all my friends who are entrepreneurs have got a completely different backstory and path to where they are now.

And I think that's quite an empowering- They didn't all build it in a garage somewhere.

Every time I read one, we built in a garage.

They did not. I don't think I've spent time in a garage.

Definitely Hatch started in my living room for the first year. There was up to eight people in my living room before we actually got an office, but never a garage.

But no, there's not one way to do it. They were my two paths, but everyone's got their own path.

Really interesting. And so you still don't feel like an entrepreneur, even though Hatch is now the first one you were kind of asked into, but Hatch, you came up with yourself.

You still don't feel like an entrepreneur?

No, maybe it's an imposter syndrome thing. I mean, even when you said in your introduction, a serial entrepreneur, I got a little tingle up my spine.

I get really excited by solving problems that I feel are meaningful problems to solve.

You know, the iconic, what it's really done for the retail industry in Australia is revive a domestic industry that was being lost to international players.

And it's brought talent and technology and revenue back into the local Australian market.

I felt that was a really important thing to be done in the last 10 years.

And I'm really proud of that. And that was a problem I was excited to solve.

How do you create a better domestic online shopping experience?

You know, Hatch, this problem of how do we figure out what work is right for us in our lives?

Like we spend so much of our life at work and a large portion of the professional world are actually not loving their job.

And I don't think it has to stay that way.

I think we can actually find work that's a tremendously great fit for us all the way through our life.

So, you know, both of them are problems I'm excited about.

And I think I'm more, I define myself more on like wanting to solve those problems than this idea of being an entrepreneur.

So you talked to me when we were getting ready for this a bit about the technology and the different technology stacks in the two different companies.

And I know we didn't ask you to share any secrets, but I think since we are a technology company at Cloudflare, and in fact, you know, the iconic is a Cloudflare customer, which we're very proud of.

Can you tell us a bit about how you thought about technology? You don't have to go too deep, but we'd love to hear how you actually created the foundation for these businesses.

Sure, sure. So in the case of the iconic, we're talking about building an e-commerce company at scale in 2011.

And the technology space in e-commerce in 2011 looks super different than it does in 2020.

You know, there weren't many established third party pieces of software or solutions that you could sort of take off the shelf and start iterating on and testing with.

So we basically built the majority of our tech stack from scratch. You know, we hired a big team of PHP developers.

Whether PHP was a strategic choice at the time or not is debatable because it's definitely a hard market to recruit talent for.

But we built, you know, the core e-commerce shop system and, you know, both the front end and the back end ourselves from scratch and then use third parties as much as we could where it made sense across our tech stack.

And then over time, you know, parts of that stack have then moved from in-house custom build to third party where we find it doesn't make sense for us to run it in-house.

But a lot of the core technologies is most of it really, I think, is still in-house.

For Hatch, really different scenario.

I mean, like we founded Hatch in 2017 and there was a lot of great technology available at the time.

So we had a decision point around, well, what do we build ourselves versus what do we leverage what's already in market?

We decided that we wanted to still build the core product experience ourself.

So it's effectively a Node.js with React on the front end stack and the core experience we made because we wanted to have full flexibility over how the user journey worked.

But then we sort of use a lot of third parties through it. So for example, Hatch uses a lot of video interviews and we didn't want to build our own video interview tech.

So we partnered with a company called My Interview and that's been really successful.

I guess another example would be, of course, in how we do all of our customer communications.

We've used a lot of third party tech there.

But generally speaking, I'd have to say in both cases, we acknowledge that in building a technology company, you want to keep your core technology in-house and that was a starting point.

We then looked for third parties around where it makes sense.

So it seems like one of the core parts of Hatch is whatever algorithm you're using to match individuals with jobs.

Would that be fair to say?

And is that something you're building yourself? Yeah, that's correct. Now, we talk about it as a technology process rather than an algorithm.

And there's a couple of world views out there around how do you use technology to match people to jobs.

One of them is start with machine learning. Just process a lot of CVs and use natural language processing and keyword matches to scrape data off them and find patterns in what predicts an outcome.

That's not a bad approach if you're looking at like volume recruitment.

For example, large-scale operations teams, but we think it actually reinforces biases in the system of hiring around what CVs get looked at and what don't that we actually want to correct for.

So instead of starting with a machine learning approach where your training data set already has inbuilt biases, we've decided to take the other approach, which is we are doing a lot of the process through humans, manual processing of data points to build towards a training data set that's big enough that we can then start implementing some machine learning on top.

So what that actually means in practicality is the technology we're building, the algorithms we're building, we use ourselves.

If we have a matching science team in-house that's built its own tech platform to help assess and match people to jobs.

And over time, we'll present that more to an end user, but like at the moment, we're actually using it internally so that we learn what works and what doesn't work.

That's really interesting.

It seems almost the opposite of what I expect with a tech company to start with humans doing it and not machines, but it does make sense because if we know how to do it right or if you know how to do it right, then you can train the machines.

Yeah. So go ahead. Maybe just expand briefly. Like I think that a mistake I often see in sort of early stage companies is they first ask the question of what can technology do and then their second say, okay, well, that's going to be our solution.

We take more of a human-centered design approach, which is what do we think the right solution is and then what role can technology play to help bring it to life?

And the reality is that AI and robotics, you know, machine learning in general is not yet smarter than humans are at assessing candidate information when it comes to whether that information is a good fit for a job.

It's fine when it comes to like really basic screening questions like are they in the right geography or do they have this particular qualification?

But if you're looking at whether their experience maps to a requirement of a job and that experience is quite nuanced, there isn't any AI out there at the moment.

You know, people will tell you there is, but you know, we don't believe there's any AI out there at the moment that does that better than an organizational psychologist or someone similar who's qualified to really think through the problem.

So that's why we, you know, we talk about having a human -led technology-supported approach to matching people to jobs that over time should become a technology-led, human -supported approach.

Well, we know that there's no good algorithm and that people don't even do it right because we see people come and go in jobs, you know, and especially when they come and go quickly, it suggests that, you know, maybe it wasn't the right fit to begin with.

So I'm sure you're right. It's really, really fascinating.

So tell me, I think, you know, everyone on this program, well, basically, you can't get through this program without talking about COVID right now.

We've all been affected in different ways and I don't mean about being in lockdown in Melbourne and not being in lockdown in Sydney, which you're lucky to be in that situation, but the businesses.

And so I don't know if you can speak to the Iconic.

I didn't ask you when we were thinking about this, so if that's not a fair question, don't answer, because I know you're not super active there now, but you might still buy clothes.

And then I'm very curious about what this means for the labor exchange and for Hatch, because this has probably got to be the hardest year ever for young people graduating from university to find a job.

I know that last year, many people had jobs that were then shut down.

So how are you going to help young people or have you transitioned to something else instead?

Yeah, so I mean, you know, some really good questions.

And what I might do is share how Hatch handled COVID-19 because as an early stage startup, a major event, crisis event like that, you know, throws any business office tracks.

So I can share how we handle it and then what we think it means for young people going forward and the role we intend to play.

So to situate you in, you know, early March this year, Hatch was about to move out of a beta period to a public launch with an offering of, we make it easy for you to place top university graduates and students in your team, you know, through our matching approach.

And, you know, COVID happens. And of course, the last thing companies are thinking about are hiring interns and grads.

You know, that very quickly gets moved to the bottom of the priority list.

So it doesn't make sense for us to launch anymore.

We're on a runway, you know, that runway is going to extinguish at some point.

And so we needed to figure out, like, how do we not only survive, but how do we sort of iterate our strategy through this major crisis?

And what we did, and our action, I have to say, was actually quite contrarian compared to most startups.

Most startups will take the conventional sort of black swan sequoia paper advice of cut your costs, talk to your team, you know, batten down the hatches, just try and extend your runway.

We did the opposite. We said, look, we don't, we've got, you know, a really brilliant set of assets here in our team and our capabilities.

The first thing we don't want to do is cut costs. We actually want to think about how might we use those assets to be helpful to our customers during this time.

So I called 10 of our closest customers who are large employers like JP Morgan or Qantas Airways or Woolworths, which in Australia is our largest supermarket retailer, and asked them the question, look, what's going on for you and how can we help?

And what became really apparent was there was this huge dislocation in the labor market where thousands of employees were being stood down from certain organizations in the travel and retail and hospitality sectors.

And thousands of jobs all of a sudden were created in other parts of the economy where they were needed in supply chains, for groceries, in government contact centers, in e-commerce, where all of a sudden there was so much demand.

And the question came to us of, look, your technology matches students to jobs not based on their CV but based on their transferable strengths and their personality and their behavioral styles.

Could you use the same approach for stood down workers?

Because a pilot right now can't fly airplanes anymore. But that pilot has got operational skills and customer service experience and leadership experience and those things could be employed in totally new ways.

So we created what we called a COVID-19 labor exchange.

About 200 major businesses joined.

They represented about 200,000 displaced and stood down staff between them.

And we actively helped to redeploy people from jobs that had evaporated to other places of the economy where they were needed, even though they had zero experience in those areas.

And our process of matching, it's a anonymized and structured process that looks deeper than a CV.

And what we found through that experience was it's not only applicable to students at the beginning of their career, it's actually applicable to anyone through their career who might be pursuing a different type of work.

So that initiative, whilst temporary, delivered us more revenue to our business in two months than our entire company history to that point to start up.

So it was two years beforehand and has positioned us to be able to generate learnings of how to operate beyond the student space in a broader employment market that will now inform our strategy going forward.

And of course, we're able to help thousands of people through COVID-19 who were out of a job and needed one fast and were able to redeploy very quickly.

So that has been the most amazing period for us, very rewarding.

That's incredible and seems to be doing good as well as building the business.

So congratulations. You mentioned 200 companies that participated.

Were the 200 companies participating all the ones who needed outplacement assistance or did you, were there some, I mean, clearly you've placed these people.

So where were the companies that were looking for individuals?

So the 200 includes both supply and demand. It was a closed marketplace where a company could sign up either because they had to stand down staff or because they needed very quickly hire staff.

I would say, you know, roughly speaking, 150 were standing down and 50 were hiring.

And certainly not everybody who was stood down, you know, we've been able to redeploy.

It's probably like a 10 to 1 ratio because there's obviously a lot more unemployment than there are jobs right now.

So what we were able to do was like introduce speed. You know, the speed at which we could put someone in a new job meant that instead of being out of work for four weeks or eight weeks with, you know, a mortgage and with family costs and with anxiety, we were able to put them into a job within one week or two weeks.

And that, you know, really was the big value add. And the value add to the participating employers was just it removed so much administrative work for them where they had to figure out how do we find these people?

How do we help right now?

You know, our matching as a technology platform, our matching approach just sort of took all of that admin away and made it really seamless for them.

So just to go a little bit deeper, do the people who are looking for jobs fill out some sort of form or questionnaire?

And then do the people on your team read this and match it to something at the other companies that are hiring?

Yeah, so it's a two-stage matching process. The first stage is people who have been stood down, they opt in.

And if they opt in, they complete some general information that allows us to understand a bit about their background, their experiences, their skills in a very structured way.

That helps us to know what type of jobs might they be fit for in sort of broad categories.

The second stage is once there's an actual job live that they might be a fit for, we match them and invite them to apply for it.

And if they do apply for it, then there's more detailed information that we capture from them to help us assess whether they are indeed a good fit for it.

In the labor, so contrary to what we were talking about earlier around how we match young people to jobs, which is sort of like, I guess the jobs are one-off professional jobs and looking for one person to fill it.

The labor exchange were often bulk jobs.

We need 20 contact center staff. We need 100 operations teams in this fulfillment center.

And so actually, there was much less human or manual intervention from outside in that matching process.

And we automated a lot more of it because it was a slightly different use case where it could be automated more.

I want to switch and talk to some of the hurdles. You sound like you've had tremendous success in both cases and COVID turned out not to be a hurdle, but something that really actually helped propel more progress.

But you talked to me before about some of the challenges you've had.

And I know we've had other founders on here.

And I have promised as an inside joke to mention Jonathan Baruch, who said to mention he's been on here.

How are you keeping up with him?

But I know that we've talked to many of the founders have talked about people.

And I know that is something you can talk about too.

But I was interested, you talked about some outsourcing decisions you made early on at The Iconic that you mightn't do if you did over.

Can you tell us a bit about them? I think they involve logistics. Yeah, I mean, I think the first big challenge that we came up against at The Iconic, we came up against lots.

Any growing business will come up against an innumerable amount of challenges.

But the first big one was around our fulfillment center and logistics.

And when we started the business in late 2011, we had an initial decision around how do we handle the warehousing and fulfillment side of the business?

The founders were all ex -strategy consultants. We'd never done any kind of e-commerce warehousing before.

So we thought the smart move would be to outsource it to a third party logistics provider who had the experience and the network of infrastructure to support our growth.

And so that's what we did just before Christmas 2011.

We outsourced it. And the next six months were a real learning curve for me.

And I actually might show you some images while we're chatting just to sort of bring the story to life a bit.

Can you see my screen? You see that image there?

Yes. Are those a lot of shoes? Yeah, these are a lot of shoes. So I'm going to show you four pictures, which were the first four warehouses for The Iconic.

This one was our in-house warehouse. This one is actually the back of our office, our very first office in a part of Sydney called Surrey Hills.

Small operation.

We're shipping about 50 to 100 parcels per day with our own staff. And this was the point when we said, you know what?

We're seeing growth. Customers are coming.

We need to outsource. So we outsourced to our first third party logistics warehouse, which is this one.

It was about four times the size. This warehouse, we were shipping out something like 1,500 orders per day at max capacity.

We thought it would last us about a year.

It lasted us about two and a half months. I think our forecasting wasn't fantastic at the time.

Our growth rate was a bit faster than we expected.

It was a very challenging warehouse because we had data integration issues between our shop system and the logistics company's warehouse management system.

And so what you can see in front of you are our staff one by one trying to resolve data issues through each of these boxes so that those boxes could be received into inventory.

This isn't inventory we're looking at. This is just the, what we call the inbound.

Very expensive, very inefficient. And within three months, we had to move.

So we moved to a second warehouse with the third party within their system.

You can see it here. Is this a different third party? Same third party, yeah.

So this one we moved in. So the first warehouse you saw, we moved out in December 2011 and moved into the second one you saw.

This third one, we moved in early April 2012.

So this is about four months into the journey. Much bigger, again, four times the size.

I think we shipped out about 3,000 to 5,000 parcels per day capacity.

More efficient, but super expensive because we were constantly, we were doubling the company every month.

And so we were constantly wanting to drive process innovation into the operation.

And the third party logistics provider didn't want to do that at all.

They wanted to bake in reliable margins and repeat and repeat.

So we had this big sort of conflict of agenda where we weren't aligned in what we wanted to get out of this operation.

We wanted to optimize.

They wanted to stabilize. We had an argument when we ran out of space after three months.

So the exact same problem happened twice, ran out of space. And they shut us out of the warehouse.

They literally locked our security passes off overnight.

And we had to stand off for like three or four days. And that was the point I thought the business wasn't going to continue anymore.

You know, two more days of that.

And, you know, we would have gone, we just, we wouldn't have been able to recover.

So we had a crisis negotiation and we're able to resolve the issue by deciding to basically walk away, which gave us three weeks to find an entirely new warehouse operation and build it from scratch and run it ourselves.

Because at this point, we decided that warehousing was a core capability and we wanted to do it in-house.

And after three weeks, we then moved to our own operation. And that's what you see here, which was again, four times the size.

And I think the capacity, this one chipped out about something like 20,000 parcels per day.

And the point being from, you know, this first one in the back of our very early office, which we ran ourselves, to the two third party logistics warehouses, to this fourth one, which was again, our own warehouse was a six month journey.

You know, that's a lot of change for six months.

And, you know, several times in that journey, we nearly didn't make it.

But the very important lesson I learned from that experience was, you know, in-house your core capabilities.

We wanted to be great at delivery speed that relied a lot on our warehousing processes.

We couldn't rely on a third party to deliver that.

We had to do it ourself. And the second learning I learned from that was just the importance of having an incredibly passionate team to manage through all of those obstacles we came up against in those six months.

That's a really fascinating story.

And it sounds like a very stressful period. And the amount of growth is in six months is really impressive.

You were sharing some learnings and this seems to happen.

We just like the time goes, it's been really, really fascinating listening to you.

We've got one more minute. So do you want to wind up with your biggest learning out of either or both companies and what you think is important for entrepreneurs or the future?

That's a big question. One biggest learning.

Or some advice. I think we talked about some advice you had maybe for the next generation.

I think a piece of learning I picked up through this my journey so far, a piece of wisdom I picked up is that the status quo isn't there for a good reason.

It's only there because that just happens to be the way things have been done so far.

And we often have this idea that like people with more authority or knowledge or power are setting the status quo for really good reasons.

And I think the reality is that like anybody, like anyone on this call can investigate the status quo and question it and challenge it and suggest an improvement.

Whether that be at a business model level, whether it be in a day-to-day process, you know, whatever it may be.

And I've learned time and time again that we can quite easily improve on the status quo simply with persistence and scrutiny and hard work.

Thank you so much, Adam. I just want to make sure you don't get cut off. Folks, thanks a lot for tuning in to listen to Adam Jacob.