How I Launched This Company

Hi, I'm Aliza Knox, head of APAC for Cloudflare. Welcome to our latest installment of how I launched this company. Today, we have our star Jonathan Barouch, who has built a company called Local Measure, based in Sydney, Australia, but which is actually a global firm now. So Jonathan, lovely to have you on. I think many people have heard of Local Measure, but maybe not everybody. So as a start, Not everybody. Not everybody. Yes. Yeah. Yeah, I'm sorry. Can you start by telling us what the business is? Yeah, sure. I mean, look at it simplest form, we're a customer experience business. And, you know, the reason we started the company, and I suppose the overarching vision is, we still think too many companies look in the rearview mirror, when they're thinking about customer experience, you know, they send you those surveys, which have 150 questions, after you've dropped your car off for a service, and no one ever answers them, right? Because it's, it's after the fact, and you hit delete. So everything that we do is all about like, in the moment, how do we create better experiences for customers? And how do we create better connectivity from those customers to the brands that serve them? So can you give me an example? We'll come to, I know the business has morphed a bit, like many in response to COVID. And, and I want to hear about your early career before we get in too much detail. But can you, what does it mean, in the experience? Does that mean you're asking me, give me the survey questions when I'm driving my car to the repair shop? Like, what does it mean? With one hand? Yeah. So it means a bunch of different things. I mean, we are a partner of Facebook, Instagram, you know, we have all the digital channels, WeChat, Twitter, and we help open up digital communication to businesses. So if you've got a problem, and you're kind of tweeting at the brand, or your Facebook messaging them, we can kind of pull that into the central team and help those brands respond really quickly. Where we started, which we'll get into in a minute is how do we help kind of hospitality and retail and bricks and mortar businesses respond to customers when they're in the building? Whether that's through a digital channel, whether that's asking them for feedback, when they're in the hotel room, it's all about in the moment, like opening up communication over a number of different channels to connect customer to brand. So you know, we have theme parks around the world, we have hotels around the world, we have malls around the world. And then now, obviously, with COVID, we're moving much more to digital and ecommerce and online type businesses as well. Okay, well, before we get there, let's hear a bit about your, you as a person as entrepreneur, maybe tell us just a bit about what you did in university, what you did for career first, and then work up to how you got this idea. Well, look, it all started on a warm summer night in 1982, when I was born. Do you want to start there? Should we just, should we fast forward? I think maybe we'll just, yeah, although I'm sure if your mother's watching, she'll be happy for that part. Hi, Mom. The entrepreneurial spirit, I think, came from my grandfather, actually, my mother's father, and he was one of the first kind of furniture entrepreneurs in Australia. So when he came to Australia, after the Second World War, he set up kind of furniture businesses, which supplied a lot of the really large department stores. And I remember as a kid walking through those factories and watching machines everywhere, and sofas being created, and then going and seeing them being sold in the malls. And that created a bit of a spark in me, the kind of a desire to kind of create something myself. So when I left university, I studied business, like all good, you know, good children do, you know, my mom was very happy. Hi, Mom. And I got my degree. And I was thinking, like, what am I going to do? And throughout that period, I had sort of a side business, which was kind of an online ecommerce business. That was a company I founded in my last year of high school, in 1999. And it kind of grew and grew and grew through university. And then when I left university, actually, we already had like 50 people and kind of shops and warehouses. And obviously, I went into it kind of full time. And I think four or five years after university, that business was off and running, it was a reasonably large ecommerce business, well before kind of all the monster ecommerce companies of today. And I exited that company. And obviously, Local Measure is my second, my second crack at the entrepreneurial roundabout. So you've never actually worked in a corporate or gotten ideas from another big company, you just were an entrepreneur from the get go. And it's quite, and my wife has had the opposite path. She's gone through management consulting, and then kind of strategy and corporate. And it's quite funny, when we chat about our day jobs, you know, at dinner, the experiences are quite foreign to me, like, because, you know, not that she has a huge politics, but the politics and kind of entrepreneurship and how you get things done in a big corporate is so different to being an entrepreneur and kind of running your own business. So how did you get the idea for Local Measure? Did you have some experiences that you didn't like? Did you talk to somebody who had frustrations about, you know, running their hospitality business? Where did this come from? It came out of a failed idea, which I think all good ideas come from. We started as a kind of, the original concept was, how do we kind of harness all of this social conversation and feedback and Instagram photos, and kind of help people understand what's going on in the world around them. And we started with a consumer application. And as you know, to kind of get any scale with a consumer application is really hard. And we were one of the many that didn't make it. But out of that process, kind of, we built a really smart team, and we built a capability around data and around intelligence, and being able to take in a lot of data, kind of synthesizing it really quickly. And what happened out of the ashes of that failed business was we had hospitality companies, we had kind of malls, we had theme parks saying, hey, so what you've got is an engine that can tell us what our customers are thinking and feeling, and kind of give us real time feedback. And we're like, yeah, that's exactly what we built. And, you know, in fact, we never really even had the idea for that. But they were kind of trying to hand us a check. And as all good entrepreneurs, you kind of take the check and run with it. And so what we did was we pivoted and kind of we built a customer experience business. And, you know, it's a SaaS offering, it's B2B. And it's a really simple platform that helps brands, both get feedback from their customers and kind of engage with them in real time. And, you know, obviously, while the product has evolved and kind of morphed over the time, the vision has always been the same. How do we create really personalized, amazing, magical customer experiences at scale? And, you know, for any of us who have been consumers, it happens sometimes, but it's pretty rare. So, before COVID, when people were still traveling, going to theme parks, can you give us a couple examples of where a customer of yours was able to use your product to either turn something from a bad situation to a good or to make a good situation great? You know, customer walks in, tweets something, hotel responds, or, you know, parent uses something at amusement park, like a couple stories would be great. Yeah, I mean, well, you've taken all my thunder. Those are my stories. No, just kidding. So, we work with, obviously, you're in Singapore, we work with Accor Hotels, a large French multinational. In the US, you'd recognize them as Fairmont Hotels and Resorts. In Europe, Sofitel, you know, in Asia, all of those brands, Novotel, Ibis. And what we do for them is we provide like real time feedback. So, in addition to all the tweets and all the social feedback and the connectivity, if somebody kind of comes in, walks into the hotel, kind of connects one of their devices to the Wi-Fi, you know, one of the first things they would see when they get to the room was, how's your experience been so far? And it seems like a really simple thing, but, you know, often these big hospitality brands ask people how they feel when it's too late. Once the guest is already checked out and they're at home and they're unpacking and they don't care. The magic really happens when you kind of open up a line of communication in the moment. Because people tell you things they might not have ordinarily have told you and they just never come back. So, an example that my team always uses, there's a hotel in Singapore right near where you are, where, you know, there was a leak in the shower. Like, it's not a big thing, but for a luxury hotel, you know, there was a tiny issue that can be resolved really quickly. And the customer mentioned, said, look, hey, I don't want to complain. There's a small leak in the shower and my bath towel is getting wet. It would be great if you fixed it. The hotel, kind of when the guest was out, went and fixed it, kind of left some really plush towels and some bath robes and like some champagne and said, we're really sorry for the inconvenience. We've fixed it. And, you know, this is our little way to make your weekend special. What that did was not only did it resolve the problem, so that person's not going to TripAdvisor or complaining. It just created out of a slightly negative experience, like this incredible wow moment for really low cost. And it's kind of those stories that stick with consumers. I mean, I must have told that story to kind of 100 people. I'm sure that consumers probably told it to 100 people. And that's all kind of powered by our technology almost invisibly in the background. So what did happen? Can you tell us a little bit about how the technology surfaces that? Yeah, we have a partnership with Cisco, obviously the large global networking company. And so when a guest kind of joins the Wi-Fi, and in this case Cisco Wi-Fi, we throw up kind of a little emoji saying, you know, how's your experience been with us? I mean, you've probably seen them at airports. You know, a happy face or an unhappy face. And the analogue version is you go and you touch it. I mean, I think post-COVID no one's touching a negative emoji in the toilets at Changi anymore. But we've got a digital version and we deliver it over a network. And so the customer joins their iPad. They've just got to their room and it says, hey, you can take a second. Just tell us how you're feeling. If they hit negative, which this customer did, it just pops up and says, hey, how can we make it right? And the customer types in and says, you know, wouldn't have told you. Shower's a little bit leaking. Send. We intelligently route that to the closest available agent. We escalate it to the manager. We open a case and we make sure it gets solved. We track it all the way through. We close it and then a bot closes the loop with the customer as well. So it's kind of accountability at each step of the journey. And how quickly are you usually able to respond? I mean, I presume that's on the hotel or company side, but how quickly can you enable that? So it depends on the culture of the organization. I think the amazing thing about Accor is they've got like this DNA around service. And so, you know, we see them responding to things within minutes. And that just totally blows the mind of a customer. Like that when, you know, you say, I wish I had more bottles of water in the room and three minutes later you hear a knock at the door and almost as if it's magic, the bottles of water arrive. So it really depends on the capability of the organization. You know, whether it's a shopping mall, you know, it might be the concierge desk that resolves it. In many cases, it actually doesn't even need you to close the loop with a customer. It's just about, you know, sending the janitors to the toilets that the customer has complained has been dirtied or seeing that there's a trend about a problem this day and how are we going to change our strategy to fix it? So, you know, the really agile, modern thinking, customer centric organizations, they just get shit done quickly. Interesting. And obviously, COVID-19 has meant that there are fewer people at hotels and amusement parks, or at least maybe at hotels for luxury travel, they might be there for quarantine. I know you have had to pivot your business and apparently you've done that with great success. So can you tell us a bit about how you dealt with COVID and what you are doing now or where you're focused now? What was really interesting was we have a lot of clients in China. So in January, we actually started to see kind of footfall decline across, you know, entertainment assets, tourism, travel assets, and not that we were geniuses. I mean, if I was a genius, I probably would have shorted the Dow or something at that point, but I didn't. But we sort of did get a bit of an inkling that this was a little bit more serious than the Western media was letting on. So we were sort of trying to think early, like, what would it mean if there was a slowdown in kind of tourism and travel and retail and all the industries that we play in? And sort of just as COVID was breaking here in Australia and for our teams in Europe and the US, we kind of had already formulated a bit of a plan. And the plan was, you know, we asked ourselves in the mirror, like, what are we really good at? Like, what's the core competency of local measure? And the resounding answer from our team was, you know, we have this unique ability in real time to connect customer with a representative of the brand and kind of solve problems at scale. And so then we asked ourselves, why does it need to be limited to the bricks and mortar? Obviously, that's one part of an organisation. And that's a really important part, because in most cases, that's your first impression of the brand. But, you know, in a COVID world where people are hitting call centres and tweeting and texting and messaging and emailing, and the phone lines are blowing up. Why couldn't we have a right to have a seat at the table at that conversation and solve some of the problems in the contact centre? So, we partnered with AWS for a product of theirs called Amazon Connect, which is a cloud contact centre. And we re -platformed our whole business on top of Connect in about six weeks. And what that did was, yeah, what that did was it added voice as a channel. We never had voice before into local measure. And we added all of our social and digital channels into Amazon because they never had those social channels in their contact centre offering. And so some of the folks at Amazon kind of saw what we were doing and helped us go into marketplace so they could actually sell it for us. We're about six weeks in now to the partnership around the world. We're out talking to customers about kind of what our kind of combined solution looks like and our pipeline is starting to look really healthy again. So, with the new Amazon Connect partnership, can you give me the digital equivalent of the bathrobe example or the bathtub example? Now what happens? And how do they move customers from sort of contacting them over voice to some of these digital channels where they can serve more people? Then if you couple with that some of the intelligence in terms of like bots or automation, you can actually make sure sometimes that these complaints or that customer who's unhappy never actually even needs to get to an agent. If it can be resolved through a knowledge article or through a bot, you can actually reduce the cost to serve. So, I suppose the example of the bathrobe might be maybe I've got an issue with my policy. I reach out over web chat because I want to ask about an inclusion on my policy. And rather than ever actually getting to an agent, the bot shares with me the knowledge base article about what's included and what's not in my policy. It tells me my premium and thanks me for the service. Or maybe I say, well, actually, I really do want to speak to a human. And then our system with Amazon would escalate it either over the phone or over the digital channel to the relevant agent. So, that's kind of the equivalent of the unhappy customer. But now sort of partnering with the central customer service team rather than the frontline customer service team. Does this switch mean that, I mean, at some point, hopefully for those of us who like to travel, that there will be a post-COVID world and we will, in some maybe transformed way, go back to amusement parks and hotels? Is what you've done still adaptable to what you used to do? Or is it a complete move away? No, it's totally complementary. I mean, I think now more than ever, these hospitality businesses are also, for their own reasons, trying to shift people to communicate with them digitally. I mean, if you think about your behavior in a hotel, if you had something wrong in the past, you'd walk to the front desk or maybe you'd pick up the phone in the hotel room to get service. I mean, post-COVID, that's not happening. You're not touching a phone in the room. You're not kind of walking to the front desk. So, how does a hotel kind of reimagine what like a contactless customer experience could look like? And, you know, in a large part, that's messaging channels, that's chat, that's an e-concierge. And I think all of the things that we've just built absolutely apply in that world as much as it does kind of in the world that I was just speaking about. And you, I know that you're global. You're in Sydney, which is a wonderful part of the world that I love, but it is... You can see the sun peeping through the trees in the background. We can. So, how did you... Tell me a bit about as an entrepreneur, you know, with a company that is growing but, you know, not enormous yet. How did you build a dispersed team that works for you? How did you find talent? How do you manage it from Sydney? It's not easy. I mean, the interesting thing was with my first kind of company, we had operations in Australia and New Zealand. So, kind of relatively geographically close, similar time zone. We make jokes about New Zealanders, but we do understand and they speak their own variation of English. So, kind of, you know, it's a lot easier. I think the difference is, you know, we have folks in Singapore, we have folks in Spain, we have folks in Amsterdam, we have folks in Miami and Phoenix. So, different time zones, different languages, different cultures and obviously customers in all of those regions. So, you need to have kind of a really strong culture, I think, to kind of keep, you know, all of those people aligned. You know, we have a great leadership team who support me to kind of make sure that everybody has the same messaging. You know, obviously, we won't be able to this year, but in the past, we've done like an annual conference in Asia where we've kind of brought all the team together. And that's created like an enormous camaraderie and kind of a shared sense of purpose. And I think in large part, that kind of culture and that closeness of the team has really helped us through the COVID period. Because even though people realize how hard the market is and how tough things are, they kind of really rally together to kind of create the new normal for us to help us get through this time. So, yeah, I mean, it's hard. I'm doing calls early in the morning and late at night and you have to make extra effort to do, you know, CEO office hours and kind of updates over your collaboration over Webex and kind of all the things you'd expect. And we communicate often and over communicate. But I think it ultimately comes down to the culture. And if you've got a strong culture, I think it doesn't matter what time zone someone's in. They kind of still feel included in the purpose and the mission of the company. And are you able to try to describe your culture? I always find that something people talk a lot about their culture entrepreneurs, but then sort of asking what that means. I don't want to put you on the spot. It's very hard. No, well, it was kind of interesting. Our COO, who you know, Sarah, who used to work at Twitter, sort of brought her own sense of kind of culture as well. And what was really nice was she helped us through a process to kind of distill what our actual culture meant. And so we got feedback from the whole company, which was a total mess because everyone had a slightly different vision. And we kind of got post-it notes on a wall and we put all of the common themes together. And what was really interesting in that process, we ended up with a few strands of why people thought this company was special. And why I'm laughing is we did a quiz last week to make sure that everyone knew all of the answers. And if my team are watching and I get it wrong, they're going to absolutely harangue me. But our culture boils down to zero ego. Think like a customer. Do the right thing. Own it. Punch above. Have grit. Build each other up. And laugh out loud. And so those are the eight kind of, I suppose, pillars of our culture. And each of them have some stories behind it. And every year we do like an award ceremony for the person in the team who kind of exhibit those kind of cultures. And they get a little trophy as well with a story. So that's sort of how we brought our culture to life. I like those. Is there any, you said there's a story behind each of them. Do you want to pick one in the story behind it and share that? Yeah, okay. Well, look, I think probably the one that's probably the most interesting is kind of do the right thing. And I'll read what that actually means because we've got them up in all of our offices. So what that means for us is we're responsible for what we put into the world. We play by the rules even when it's easier not to. So I'll kind of give you one example of that. So about a year and a half ago or two years ago when GDPR came out, a lot of the social platforms tightened all of their privacy rules. And that had a really big impact on kind of the CX industry and kind of all of the developers and ecosystem partners around the platforms. At the time, and we still are a Facebook partner, and that means that we just have a higher bar of compliance because we've been certified and kind of ordered by Facebook. And we saw that there were some developers who kind of weren't doing the right things, who were having access to data that they shouldn't have. And we could have done that as well. But it just didn't sit right with us. I mean, privacy and security of end consumers kind of is paramount for us. And that's really important. So we chose that no matter – we did lose some clients because we wouldn't do some things on those platforms that were unethical. We stuck by the rules. We played by the rules. And ultimately what we found, I don't know whether it's karma, but the ones that skirted the rules aren't around anymore. And the companies, I think, like us, that played by the rules, that acted as thought leaders, that taught our customers the do's and don'ts and kind of what is acceptable use and what isn't, have grown stronger. So, yeah, I don't know if that always works in life, but for us, you know, that was an example of doing the right thing. And doing the right thing also paid off as well. So you've mentioned a couple times – that's a great example. I really appreciate it. You've mentioned a couple times large companies that you partner with, Facebook, obviously, to get the data. But you also mentioned Cisco and AWS. You're a small entrepreneurial company. I'm sure those kinds of companies, the large ones, admire your nimbleness and your ideas. But on the other hand, I think it's hard for a startup to get involved with a large company, you know, where they're not buying you. I mean, maybe they will eventually. And obviously that's not something you're going to tell us. But where you're partnering with them because the sizes are so different and there's so many inequities. And so I think you mentioned to me that someone has called it for you, dancing with gorillas. So you've been dancing with Cisco and dancing with AWS as examples. How do you manage that? How did you get through to them because you're small and they're big? And then how are you managing those relationships? I think that's really interesting for many entrepreneurs. So, look, I'll just start by caveating. If anyone from Cisco or AWS are watching, we didn't call you gorillas. That acronym was one of our board directors saying gorillas like to dance with gorillas. And we're certainly not a gorilla. So in their case, a gorilla is dancing with a little mouse. And I think your question is how does a mouse even get noticed by a gorilla? And then how does it dance? Yeah, on stilts. So with Cisco, it was really interesting. We solved the problem for them around kind of their wireless portfolio. We added value on top of Wi-Fi. So, you know, the example that I gave you earlier around providing additional services, connectivity, feedback, that really helped their narrative and their story because, you know, they see themselves as an intelligent network and more than just the pipes and more than just the boxes that you screw into the wall. It's around the data and around the connectivity. And with us, they had an example of how that could actually be brought to life on their network. So, you know, all of these large partnerships require determination and persistence and networking. And, you know, I've had to use investors and advisors to kind of get me into the right level. And so that's sort of the easy part, because once you're in the right level, then you have to kind of convince them that what you do gives value to them. So in Cisco's case, they have a really mature way of partnering with organizations and they don't discriminate on the size of those organizations. And so I think for them it was really natural that they wanted to support us. And they've been a phenomenal partner from their chairman, Chuck Robbins, who's come out and visited us in Australia, to their partnership leaders, even to their local leaders. They have been a partner, kind of what you could only hope for in terms of ethical and really wanting a win-win situation. AWS was slightly different. I mean, obviously that was sort of more forged in the fire of kind of COVID. They reached out to us at the right time and they solved the problem for us in terms of their intelligence and their bots. And we solved a problem for them in terms of our capabilities and some of the social capabilities that we had. And same deal, their partnership organization is really mature. They onboarded us really quickly. They got us in front of the relevant executives and they just got super excited. I mean, they're geeks at heart, which is really interesting. And when a geek sees good technology, they get excited. And from there, we've sort of got their sales team energized and we're going to market together. So yeah, it's definitely a skill that we've learned and we've honed. And we've had many other examples with large companies that I won't tell you about that have failed. So those are the two that worked. Okay, so that's interesting. So it doesn't always work. But what I think I heard you saying is that what might make the dance possible is that you are solving a problem for them. So even though you're unequal in size and maybe brand name recognition, you are even in terms of solving problems for each other. And so although it looks like a mouse and a gorilla, it's really not in the space where you're interacting because they're solving a problem for you and you're solving a problem for them at the same time. I think you're absolutely right. No, I've heard a couple entrepreneurs on this program and be interested to hear your perspective. And at the risk of getting you to repeat yourself, a lot of people have said their success is just single -minded focus on the problem they're solving. And I think that that's what I'm hearing from you too. You've had to change a little. Yeah, with a healthy sprinkling of determination and not giving up because every entrepreneur has two good days and two bad days. And I think the difference between being successful and not is the people who don't give up on the two bad days. You kind of pick yourself up, you dust yourself off, and you can kind of get back in the ring. I think sometimes there is genuine luck. I think other times you kind of make your own luck. So are you willing to share any stumbles on your entrepreneurial journey and how you got yourself out of them? I've talked with a couple other people about things that have gone wrong that you can't control, and I think you've given us a very good example with COVID of how you pivoted. We only have a couple minutes left, so if there's another example of something maybe you could control and what you did about it, that would be a great way to wind this up with lessons for other entrepreneurs. Well, I think being able to call a spade a spade. As I said to you, we started the idea of Local Measure as a consumer application. We almost ran out of money, and right at the 11th hour, we sort of saw a twinkling of an opportunity around kind of monetising through a B2B platform, and we kind of weren't afraid, I call it, to sort of call your baby ugly, say the thing that you had wasn't working, and kind of focus on the next thing. Because too many people think their baby's beautiful and just stick to it no matter what, and it fails, and it's game over. Whereas I think we were kind of honest enough with ourselves to say, you know, what we have isn't working, and how do we get ourselves out of this mess? And that was kind of what started Local Measure, and we wouldn't be here talking about this today if my team hadn't kind of made that hard call to kind of pivot. When you say we, how many of you had to make that decision together at that time? Look, at that time, it was probably myself and our board. So, you know, a decision of that nature, that you're going to stop a product and completely pivot, I mean, that's done in collaboration with, obviously, your board and some of your big investors. All right. Jonathan, we're at our last minute, so I just want to thank you again for everybody. This is Jonathan Barouch, who launched and runs a company called Local Measure that is focused on customer experience in the moment. Thank you, Jonathan, for spending the time with us to share your journey and your successes. Thank you so much for having me. If you're interested to learn more, localmeasure.com is our URL, and I'm jbarouch on Twitter. We'll look for you on Twitter. Bye.