From idea to exit - The journey is more important than the end (3of3)

Reflections of a first-time founder and CEO.

If you’re reading this and haven’t read part 1 or part 2 it might be worth starting from the beginning: 

Check out Part 1 of this 3-part series: Part 1: From idea to exit – An idea, to a business that makes money

Check out Part 2 of this 3-part series: Part 2: From idea to exit – Shit got Real

Part 3 (of 3): From idea to exit – The journey is more important than the end (9 months ago to now)

We broke even! 

Finally we broke even - both in terms of cashflow and at the EBIT level! That was exactly 60 days ago today.

I can’t tell you how long I waited for that moment. Over the last 2 years that’s literally all I wanted – in my mind it was the reward for the hard yards (mine and the teams).

What prepared us for this moment actually started many months earlier. It was about nine months earlier that the Board took the decision to see what interest there might be for investment, or a partial or perhaps complete sale of the business.

This wasn’t a shock to anyone - it was always the plan to prove out the business model and have an exit event within 5 years.

As it turns out, it was the best decision we could have made and timing couldn’t have been better. Especially given the economic outlook resulting from COVID-19 and all the challenges it presents to business and especially if one of your revenue streams is sport broadcasting – there’s not much live sport on the immediate horizon! And, in fact I suspect, the ramifications for grass roots sport that rely on government funding and modest sponsorship contributions are yet to be felt and could further change sport as we know it.

The outcome of an IPO for telco and media businesses are hardly guaranteed. Considering the cost to IPO and long expected durations we were of the view that this was not the preferred route. And so we appointed advisors and started the process of meeting with more than 100 potential acquirers. Positioning OVO was difficult – where our multi-revenue model business had been compelling for investors, for potential acquirers it seemed complicated to say the least.

We were three businesses rolled into one and our multi-revenue business meant we could be attractive to lots of different parties with different interests. It became apparent that the mobile business was very attractive stand alone but the whole business had a smaller set of target acquirers who would value the three parts together.

As a founder you need overcome the vanity of your own perspective. We believed in the business and we’d seen the brand flourish as we scaled but you have to see it from the other side – your acquirer may not see value in exactly the same way. It’s a big lesson – personal and professional.

I am really delighted with the outcome of the sale of the OVO to amaysim. amaysim have been watching our progress and they’ve really valued the product we’ve built, the relationships that we’ve created and the quality of the customer base. In fact, the amaysim executive have also shown that they value the broader business because as part of this sale they’re partnering with Sourse, now a standalone SaaS and OTT business, to continue OVOPlay and make this available to what are now amaysim customers. The business is valued, the OVOPlay brand lives on. At the end of the day that’s humbling – we had an idea, we made it happen and we weren’t the only ones that thought it was awesome.

So did the multi-revenue business model work?

One of the most gruelling parts of the exit preparation has been the forensic, CIA style interrogation of our data. Our advisors told us early on that any buyer would do their due diligence on the numbers.

Funny thing though, I wish we’d done this level of analysis years ago because all that doubt would have been assuaged! By the way we’d been avidly monitoring our data over the whole five years and we were miles ahead of many scale ups in the measurement of business performance, but as my teenage daughters would say “this was next level.” 

The results were incredibly insightful:

• Subscribers that watched content on OVOPlay spend on average 10% more on their telco services than those that didn’t
• Subscribers that watched content on OVOPlay had a 15% lower churn rate than those that didn't
• Subscribers that watched our content on OVOPlay had a 40% higher lifetime value (LTV) than those that didn't
• Our Net Promoter Score was on average 40+, and some months as high as 70+ - this is unheard of in the telco industry and largely unmeasured across media

Across nearly every key metric OVOPlay created lasting value in both measurable financial and non financial terms and meant that the brand awareness that had been fuelling our growth had caused unexpected efficiency in our marketing – almost 60% of our acquisition could be attributed to OVOPlay in one way or another.

We had proven the business model and that is humbling.

The conclusions:

I’m not 100% sure who these conclusions are for but maybe they’ll be helpful for first time founders and first time CEO’s. It might also help to explain to my friends, family and colleagues what the hell OVO was really all about and why we did some of the things that seemed perplexing at the time! Take from this what you will. If they resonate, great and thanks! If they are perplexing or counterintuitive then don’t be a stranger. I rarely say no to meeting anyone interesting and new, and I love helping people.

In this five-year journey I’ve learnt a few things, in stages; Stage 1 - From idea to making money, Stage 2 – Shit just got real, Stage 3 – The journey is more important than the end.

Stage 1 – From idea to making money: 

Great idea? Nurture it first - Don’t rush to start the business. Test it with anyone and everyone - but only if you really value their opinion and are prepared to listen. Don’t be afraid someone will steal it. If it’s hard and worth doing, 99% of people don’t have what it takes to do that.

Enthusiasm inspires most people (but probably not professional investors!) - Be compelled by your idea and make sure all your key people and your partners are too. You can not underestimate the lengths that partners, staff and vendors will go to if they are compelled, they trust you and you do what you say you will. Your start up is going to be your baby and when you choose the people that are on the journey with you they’re a little like family.

Going it alone is going to make everything harder - The power is in people, be it co-founders or key staff. Even if you’re a solo founder surround yourself so that you don’t feel alone.

Be ready for many, many “NOs” when you’re raising capital - Be prepared for many “NO’s”. Actually, this is the seemingly brutal validation your idea needs to flourish and its testing your mettle – the first NO is tough but it doesn’t get easier for quite awhile! Virtually any idea can get funded if you are passionate enough. If it’s a bad idea, and everyone except for one poor schmuck says NO, and it doesn’t work out, at least you tested your commitment.

Good mentors want to help you – You want people in your corner that believe in you – really believe in you. These people don’t ask for money or options first, they want to help you as a priority. I have had many on this journey. They all know who they are and it’s not for this piece to go thanking them all. Suffice to say, good mentors are your keel in both the smooth and the rough seas.

Know your people – You’ve probably hired heaps of people but there aren’t many that you’d hire twice and even less that you’d trust from the get-go. When you meet these people keep them and when you understand what motivates them use that to reward them. These people when respected and liberated will do more for you in ways that you can’t imagine than anyone that’s only interested in the salary.

Believe in you – It feels like a cliché but you’ve really got to believe in yourself. If you’re like me, you might be starting without it – sure I had bravado but not the real belief that you need to face the really hard times. You can’t run away from the scary stuff because of fear – for a start if you run while you are live on camera being interviewed your arse will look big and you may well find yourself being memed on TikTok. Charge into it – head first - you’ll be so much better personally and professionally for it.

Stage 2 – Shit just got real:

If something feels wrong, it probably is wrong and you need to fix it – Anyone, whether they started a new business, or they started a new job can have this feeling and if at some point, it’s not fulfilling and it’s a job, change jobs now, don’t waste your or your employer’s time. If it’s your business, get on and fix it. You have no time to lose settling for this as the new normal. Oh, and a side point, it may mean it’s time for you to leave…consider that.

Raising money – I feel like I’m still a student on this subject but I have one very practical piece of advice that I hope is useful. Here it is, plot back from your end goal, and make sure you don’t lose control, because the ramifications are profound if you end up making desperate decisions – honestly I feel this has been a good bit of luck more than just good judgement for me.

Grow, but profitably – You may remember the telco luminary that I mentioned in Part 2 of this series. At the same dinner I asked him, “How did you manage to stay in control of every stage of your business?” (in his case +15 years). He said to me, “I always made sure I made a profit.” Think about that, it’s real and it’s so vitally important not to get caught up in the start-up hype around growth for growth’s sake. 

Make building and leading a team your priority – Of course this is always talked about. I have to be honest, if you ask one of my favourite people and former bosses, Jenifer Tejada, I bet she would say something like “Yeah, Matt wasn’t a natural leader”. I was pretty selfish and focused on my own success in my 20’s and 30’s. But for some strange reason in my 40’s, (I was 40 when we started OVO), I get immense pleasure watching people I hired get better, and in the process, I’ve harnessed so much more horsepower into creating OVO. We all have different leadership styles, find yours and be authentic to that every day.

Take care of your customers – It’s easy to get carried away with the vanity of numbers, particularly in a consumer business. X sales, Y churn, Z ARPU. I made it a point to always call a customer who asked to speak to the CEO. Granted I could do that in a small and scaling business. But I remember in my short stint at Telstra, David Thodey would do the same. So, if David can do it at Telstra, so can you. The experience is grounding, the feedback powerful, and even if the customer is wrong, they have a negative feeling and you need to understand why and improve things to make sure no one else has that feeling about your company. Oh, and hire people that are awesome with customers like Lawrence, Nick and Suliana, and do you best to never let them go. 

Accept there will be curve balls, stay constant and persevere – A mentor of mine said, “your job is to be constant for everyone”. But how do you remain constant when you’re worried about making payroll? Truth is, you don’t fake it, that’s transparent and people see right through it. No, you are up front with the team that can impact things to make sure you do make payroll, and you challenge them to help you do just that. But you don’t go below that level with your fears and concerns. I learnt this skill through trial and error, some things were for the Board, some for the exec team, some for senior management and some for everyone. The key is, can the person you share the fear and challenge with help fix it? If not, don’t burden them with the fear and uncertainty. Sometimes there were challenges that were just mine and the founders to solve, e.g. raising money to get to the next hurdle. The amazing folks in the call centre would never have known that it was happening and why, and what might happen if we weren’t successful. That’s why they were always focused on doing their best.

Don’t stop innovating, ever - Either you have started something, or you are inside a bigger enterprise, creating change. I believe, until I’m proven wrong, that you have a duty to constantly challenge. Not in an adversarial way, but in a constructive way. I remember being on stage at an esports event and someone asked “what if I have all these great ideas about how to bring esports to <INSERT COMPANY> and no one will listen?”. My answer: “Quit now”. See, this lady who asked the question is the best type of employee, new ideas, asking good questions and willing to speak out. I remember her because I kind of have a fantasy that she quit the next day and went somewhere that did accept her inventiveness, and now she’s kicking arse! We never stopped innovating at OVO, ever.

Stage 3 – The journey is more important than the end:

As I reflect on the last five years, particularly writing this three-part series I am almost overwhelmed with a sense of pride. Pride in what we have achieved and proud of the results, pride that I’ve always been truthful, proud of the people who made it happen, immensely proud of the brand we created and the way we’ve gone about building it.

They say that when people are dying, and they are asked what they regret most, almost universally they say I wish I had taken more time with the people I care about.

Obviously, this ought to be your family, but the people that I’ve surrounded myself with through this journey are an extended family. We spend at least 40 hours a week with each other (probably more like 80 hours) and in our case your colleagues are part of your family and investor community as well. 

So, at the end of this journey I don’t feel like I regret spending enough time with my family, I’ve built a bigger one. I have a pretty big family now and in one way or another they have been part of this journey.

What next

So that brings me back to where to from here…

Of course its Sourse baby, yeah!

Sourse is indeed a treasure. It can’t be an accident that a number of Australia’s smartest technology minds have contributed to Sourse over more than 7+ years and circumstance has meant we have the opportunity to do what we did at OVO, with Sourse.

All that is needed now is to put 100% focus on its purpose, its why. To solve really big problems and to help brands and businesses drive real results. Looking after each customer like they were your only customer, just like we did at OVO, will ensure our customers tell others. That’s a big part of making a B2B software company successful.

I am delighted to be afforded the privilege to return to my roots in the SaaS industry. Moreover, I am privileged to be leading such a high-quality team as we scale a technology business in one of the most interesting technology domains today; Machine Learning (ML) and Artificial Intelligence (AI).

We are on a solid footing with some marquee clients, and as a result of the work from the past 18 months we have exciting prospects and opportunities all over the world.

We are also taking OVOPlay with us and will be continuing to scale it while also helping other OTT operators re-platform their service on our AI driven OTT platform.

In many respects this is about travelling the journey I have just been on this past 5 years, all over again, although this time I am much better prepared for what lies ahead.

I am better prepared not just because of the experience, but because I have much more equal balance of conviction, assets, and understanding of what it will take to scale a business. 

I hope to be sharing this journey with you, either as a friend and colleague in industry, an investor, and perhaps you’ll consider being the most important partner in this journey: a customer.

As I sign off this 3-part series guess what I am doing first?

I am dusting off the working backward document – I feel like I need a holiday but hey that’s not possible at the moment and that’s got to be fortuitous!

Go well everyone and I look forward to sharing the next story with you in due course.

Faithfully,

Matt

p.s. I also want to thank my Mum. Never forget your mum boys and girls.