The founding story of CartonCloud

Speaker 1: On ABC Radio Brisbane, Steve Austin.

Steven Austin: You may have noticed a bit of a focus of sometimes of my time with you so I love talking with people who are entrepreneurs, who have ideas. Radio is an ideas medium. It works really well and I love the culture of the startup world because they seem to be blind optimists often. They've got a crazy idea. They'll give it a whirl and see if it happens and more ... well, not more often than not that I've tended to interview people who've made it happen because they've got drive and passion. And as you know, sometimes great ideas are born from failure. In a sense, my next guest has one of those stories. Vincent Fletcher is his name. He's an entrepreneur and he's the chief executive officer of CartonCloud, which is a Gold-Coast based startup. Vincent, welcome to the studio. Thanks for coming in.

Vincent Fletcher: Thanks very much, Steve.

Steven Austin: Simple terms, what is CartonCloud?

Vincent Fletcher: It's a system for transport companies to use and warehousing companies to use to manage their freight, manage their warehouses, ensure that all of their drivers get their deliveries done on time and capture everything electronically.

Steven Austin: So the logistics management program or something?

Vincent Fletcher: Yeah, exactly right. Like you have people now running cabs with Uber, you've got drivers driving around getting signatures on mobile phones and tablets and these sorts of things. We provide them with that software to do those.

Steven Austin: Okay. I love startups and entrepreneurs partly because of the backstory of how you actually get to like you've got a company, great. But the backstory of often how you got to this point is just a ripping yarn. A few years ago, you and your business partner took all your savings and invested I'm told in a failing transport warehouse business. Tell me, take me back, tell me the backstory.

Vincent Fletcher: Yeah, so it was a bit delusional. What happened was-

Steven Austin: Let me remember that phrase, a bit delusional. Yes.

Vincent Fletcher: My business partner at the time, we were both 24 and we were running another small business together and he really wanted to start a transport company himself and he'd been trying for some time and then he ended up deciding, "Look, I know what to do. We'll just buy an existing one. That'll be heaps easier." He sort of thought "We'll be able to jump in there. We'll be able to make a lot of money real quick. We'll be able to do all these things."

Steven Austin: A get-rich quick scheme.

Vincent Fletcher: Well, yeah. That's how he pitched it to me and that's how I then in turn pitched it to my parents and that's also how he pitched it to his parents. We went into this thing, we borrowed a whole lot of money and used up all our own money and bought this business and it was, yeah, definitely didn't perform anything like what we expected.

Steven Austin: Things didn't go to plan. The business continued to fail and you were weeks away from going belly up, I'm told.

Vincent Fletcher: Yeah. Well, you know the funny thing was we didn't realize how much cash the company would require so as soon as we took it over, the cash flow just went to like zero and then just keep going down. And so then it's like-

Steven Austin: "Hey, where's my money gone?"

Vincent Fletcher: Yeah, "Mom, Dad, how much more money have you guys got potentially?" Yeah, I mean it was really-

Steven Austin: Did you really ask your mom and dad that?

Vincent Fletcher: I actually think I went to my brother-in- law. Yeah. And he managed to spot us another $50,000 to basically save the thing temporarily because we'd maxed out all of our bank loans and everything like that. We would hit all of our overdraft limits. And so then it was starting to come down to credit cards and family who we could convince.

Steven Austin: Wow. Tell me about the business. You say you picked up this failing business, a failing transport warehouse business. Was it a couple of trucks and a warehouse? Was it a dozen trucks? What was it like?

Vincent Fletcher: We mostly contractors, but in our own company we had about five trucks. They ranged anywhere from three pallet trucks up to like a 14-pallet that we had. Total contractors was about 20. And then we had a staff of about 15 so we had a 2,000-square meter refrigerated and frozen warehouse. During the day, we were picking orders out of the warehouse for our clients and then sending them out and delivering them on the trucks and getting them out to the stores locally.

Steven Austin: All right, so you bought the business, you'd maxed out everything, you'd borrowed every bit of money you could from family members/friends, maxed out the credit cards and you're a couple of weeks away from financial collapse basically.

Vincent Fletcher: Yeah, pretty much. I mean the biggest thing that we saw was that we were just super inefficient. Like we were taking three weeks to invoice anybody. We were doing a job and then we wouldn't invoice them for three weeks and then we were giving everybody 30-day terms, which means that they wouldn't pay us for like 60 days because everybody always doubles it. Pretty soon it's taking 90 days from when we've done work to get paid and so it was ... a really big thing was that cashflow hole was just enormous. It was mammoth. And in transport, when you're turning over quarter of a million dollars a week or this sort of stuff, it's extremely difficult to maintain that. You just can't do it for very long.

Steven Austin: So out of this adversity came an idea?

Vincent Fletcher: Yeah. We realized we had to cut costs so the biggest thing was, "Well, we've got to cut costs and we've also got to speed up how quickly we can invoice these guys and how reliably we can provide the invoices as well." Much of the business was really just manual. The drivers would go out and get signatures on pieces of paper and then bring them back and all of the processes around checking the pieces of paper for signatures and this kind of thing and then manually doing invoicing on spreadsheets and this kind of stuff was just mammoth. As a result, we started to build software to automate a whole lot of it.

Steven Austin: How'd you get the time to do that? I mean, you're running a transport company, your trackers, mate, your trackers and fridge mechanics. How did you get told to build a software program?

Vincent Fletcher: Well, I wasn't driving so I was in the office. We employed another guy to actually work with me and we basically then just started to use that, their business. We already had to cover all the costs of him and together, myself and him, we basically built this thing out and it took us within about three months from when we first took over the business. We actually had a functioning warehousing system that we were using ourselves. And it was able to calculate how much to charge our customers accurately every single week because simple things like if a pallet came in and then went out during the week, we'd go around and do our pallet counts at the end of the weekend, we'd miss charging for that storage. Little things like that by capturing all of that sort of stuff and then automating it meant that ... I mean, we cut two-thirds of our admin staff in one day once we got everything operational and running. And that then from there it just ... we got ourselves back out of the hole again and move forward.

Steven Austin: Don't skip over it. Tell me the story. How did you get yourself back out of the hole? You cut costs for a starter?

Vincent Fletcher: Yeah, so a big thing was once we actually had a functioning warehousing system and we had all of the PODs being captured electronically.

Steven Austin: PODs, what's that?

Vincent Fletcher: Ah, so this is when a driver goes to get a delivery done and these are guys delivering food to IGA and things like that, they're normally carrying paperwork, which gets signed off. When they get a signature on that, that's called a proof of delivery or a POD.

Steven Austin: Thank you.

Vincent Fletcher: Those things are vital. If you lose one of those, the clients will not pay their bills for what you've done. Our whole thing was about capturing those on mobile phones. And I mean, you should've seen the look on people's faces that IGA supermarkets and things like that when we first started to roll around with phones to get signatures on. I mean it's commonplace now, but back then they'd never seen it before. We had drivers going in there with an Android Galaxy and holding it up to them and saying, "Yeah, yeah, just sign this with your finger."

Steven Austin: Just sign this.

Vincent Fletcher: And people are like, "What's going on? Where did you come from? What does this new thing?" Once we got all of that stuff digitized, our admin requirement just bottomed out. It went from three people working full time down to one person working two-thirds time. And we literally just ran out of stuff for them to do as well as invoicing quicker. Our big thing was before it was taking us three weeks to produce an invoice. We were now invoicing the prior week's work on Monday. By 10:00 AM, everybody was invoiced and done. And then we turned everyone's due days down to seven days so we'd get all payments within two weeks and we just, yeah.

Steven Austin: You were within two weeks of going belly up, how long does it take to turn the company around?

Vincent Fletcher: Well, once we got the other 50K, we were actually sort of close to basically hitting the cashflow bottom. That was pretty much ... we didn't know where it was going to end, but we were sort of lucky in a way. It sort of ended not long after that. And so it really took us probably about another two and a half months from that point to start to see some savings out of this. But it was sketchy because we were having to say, "Well, the only way to get out of this is to throw more money and to start building stuff to automate it." And so you're already out of money and then you're having to throw more in, it was becoming a bit of a joke. I think everyone was saying to us, "Oh, yeah, Nick and Vincent. Yeah, invest in their businesses. That's a way to get ahead in life."

Steven Austin: Did the family know how close you were to losing everything?

Vincent Fletcher: Yeah, I mean we had to-

Steven Austin: That was a halfhearted response. Did the family know how close you were to losing everything?

Vincent Fletcher: I think if they listen to this they'll know. They were probably 70% informed. I think they knew it was definitely going bad, but I think the way we pitched needing the more money, it was "Ah, you know, we really need it to do some expansion. Not so much we need this to save ourselves."

Steven Austin: Where are you today [crosstalk 00:09:36]?

Vincent Fletcher: Well, so now, we sold that business, so we got out of that. That business was actually-

Steven Austin: The trucking warehouse business? You saved it, got it running properly.

Vincent Fletcher: Yep. Automated it. And then middle of 2015, sold the whole company. And that was actually based in Sydney. Since then I've moved up to the Gold Coast and we basically relocated ... We built a software business out of there. Once we'd seen what we did to our own operation, we started to look around at what other companies were doing in our space and we realized that it was really weird. We thought other people must have stuff like this. It's just that we were looking at the prices of it. We couldn't afford any of it. But when we started to look at what solutions were there, none of them really matched what we'd built. It was just our stuff was just so streamlined across the organization. Doing the signatures on the phones, all this kind of stuff wasn't really in the marketplace yet. And so I pushed Nick and said, "Look, we've got to turn this into a software company. I don't want to keep running trucks. I want to do something different. I want to provide this to everybody else."

Steven Austin: And how big are you today? Where is your system being used today?

Vincent Fletcher: Yeah, sure. So, wow. Actually at the moment DHL's rolling it out in Singapore and Vietnam.

Steven Austin: Crikey.

Vincent Fletcher: Yeah.

Steven Austin: Okay.

Vincent Fletcher: They're rolling out-

Steven Austin: So you've picked up major global transport logistics companies?

Vincent Fletcher: Yeah, we've picked up only a handful of those. Majority of our clients are our SMEs. Our real target market is businesses who are similar size to us, guys that are turning over anywhere from two mil to 20 million a year, running trucks and warehouses. And we've got about just under 80 clients now. There's about 14 staff with us. And so yeah, it's interesting. Last April there was only three staff and we had about 10 clients so that's the sort of growth that we're going through, and we project to be double our staff size by about June next year.

Steven Austin: Based on the Gold Coast?

Vincent Fletcher: Yeah.

Steven Austin: Software programmers and technicians, things like that.

Vincent Fletcher: Yeah, majority of our team is our programmers and developers. It's actually Gold Coast is definitely a tough place to find those sorts of skills because there's only-

Steven Austin: Oh, really? The Gold Coast is? Why?

Vincent Fletcher: Because there's not such a large number of businesses there that are hiring programmers. It's not a really strong tech place. You're actually having to really try and convince people to move there. I mean, we do a lot of marketing.

Steven Austin: And you have to convince people to move to the Gold Coast? Really?

Vincent Fletcher: It sounds crazy. Yeah, I know. I completely agree with you. You get the quality of life, you get low cost of living, you get all of these advantages, so we're having to advertise in Auckland, we advertise in Sydney, we advertise in Melbourne, we advertise a lot in Brisbane.

Steven Austin: You're advertising in New Zealand, our great rival, for staff to come and work on the Gold Coast?

Vincent Fletcher: Yeah, exactly.

Steven Austin: I thought the Gold Coast was already known as Auckland by the Sea or something?

Vincent Fletcher: Well, it is. I mean probably half our team is Kiwi.

Steven Austin: There's your first problem.

Vincent Fletcher: Obviously, myself included. I mean it's an attractive option for the guys if they can make the move. Once they're locked in with families and that kind of thing, obviously it's much more difficult. But we're really adamant about keeping everybody in the one place. We constantly get asked, "Oh, can I work for you remotely? Can I do this?" No, it just doesn't work the same. When you're there in the environment with everybody and you're able to just look them in the eye and say this is what I need done and work directly with them, it's so much more of an advantage. And so we're really, really pushing to bring a lot of talent into the Gold Coast and also to attract talent from other Gold Coast businesses as well.

Steven Austin: Why did you base it on the Gold Coast if you're having difficulty sourcing software engineers around the Gold Coast region?

Vincent Fletcher: This is another ... I guess you can say I just jump into things, right? When we sold Roving, it was like, "Well, we can move anywhere now." And I was like, "I've been to the Gold Coast once. It was really cool." And at the time I was doing a lot of travel. I mean I still do. I fly in and out a lot to client visits and that sort of thing all over Australia. The Gold Coast airport is so accessible. I mean, I live in Palm beach, which is 10 minutes drive from the airport. It used to take me like an hour 20 on the train in Sydney to get to the airport. Getting to Melbourne was like a six-hour trip, whereas now it's cut down to, even with the longer flight time, it's about four.

Vincent Fletcher: I mean, the whole thing door to door, it's just so convenient. And then when you're there and when you move there and you're like, "Wow, you can buy a house here not far from the beach for $500,000." It's a completely different world to living in Sydney. And that was just a huge draw card for me and for Nick as well. And yeah, we really like it.

Steven Austin: That's the story of CartonCloud? And you're hiring, but you're having to advertise overseas. I'm surprised to hear that. You have to advertise overseas to get software engineers and programmers to work on the Gold Coast.

Vincent Fletcher: Yeah. We literally, we have constant ads running on Seek, both on the Gold Coast, all the cities in Australia and New Zealand. We're currently putting together like a recruitment video as well because we're pushing really, really hard recruitment wise just to try and find the right people. And I mean it's hard to get into our workplace too. We're very selective about who we take on just because we're restricted in terms of who we can get. It doesn't mean that we're lowering our standards. I mean, we do turn away a lot of people, but I think the team we've got is extremely strong and we just want to build on that.

Steven Austin: Well, now that you're an entrepreneur, is it worth it?

Vincent Fletcher: I haven't seen anything substantial come of it as yet.

Steven Austin: But you've turned the company around. You're employing people. You've moved from Sydney to the Gold Coast and you're scaring the world and selling contracts to major global logistics companies.

Vincent Fletcher: Yeah. I think a lot of people probably go into this thinking they're going to get really rich in not a long period of time because they see movies like The Social Network and hear about Facebook. They hear about Google and Uber and they just go, "Oh, my God. I'm going to be worth $10 billion in a matter of minutes." It's nothing like that. Everything takes years and years and years to even get to a point where the clients will even buy it. And that to me, I think, was a bit of a shock. I mean, obviously we're still quite a long way away from actually making money.

Vincent Fletcher: We still lose money, but we have investment which assists us with that. And so-

Steven Austin: Your mom and dad again?

Vincent Fletcher: No. Now we have, what do you call them?

Steven Austin: Serious investors.

Vincent Fletcher: Yes [crosstalk 00:00:15:57]. Seasoned investors.

Steven Austin: Venture capitalists and the like, is that right?

Vincent Fletcher: Yeah, exactly.

Steven Austin: People, you can't say, "Oh, things are a little tight." You've got to actually say, "Actually, we're not making money."

Vincent Fletcher: Yeah, exactly. But that's really beneficial too. I think my advice to anyone who's looking to get into this would be: Be prepared for it to be probably 10 times harder than what you think. Be prepared for it probably to take 10 times longer than what you think, but be prepared to learn like so much more than you would just working somewhere else. That's been my biggest takeaway. And if you can continue to grow it, the number of things that you just get exposed to and you have to work it out for yourself to a large extent and just push through all the time.

Vincent Fletcher: You can't just say, "Oh, well, I'll let my boss deal with that." It doesn't work. You're the boss. You've got to make the call. That amount of experience, it's unparalleled. I'm hoping that we can continue to grow this thing really strongly and maybe in a couple of years I'll look back and go, "Wow, I knew nothing when I was on ABC radio." Whereas today I'm going, "Oh, I know so much more than I did two years ago when I knew nothing."

Steven Austin: My guest is Vincent Fletcher. He's an entrepreneur. He's the Chief Executive Officer of CartonCloud. They're a logistics software management program. It's a Gold Coast-based startup. This is ABC Radio Brisbane. What's been the most important lesson on your journey for you so far, Vincent?

Vincent Fletcher: I think you always have to focus on what the customer actually needs rather than what they're telling you that they want.

Steven Austin: So sometimes the customer doesn't actually know what their problem is?

Vincent Fletcher: Yeah. One thing that we've learned, especially in the last eight months, is that customer's requirements can really derail your business. They come in saying that they need something, whereas in actual fact, when you actually dig into the core of what the problem is, it's something else. And we've gone on wild goose chases building stuff for people, which has often been paid work, that to be honest, we haven't really wanted to do. We've done it for the financial and then we've come to the end of it and gone, "Ah, this, to be honest, although you've told us the problem that wasn't really the issue."

Steven Austin: Often your customer didn't know what their own problem was and you tried to solve a problem that wasn't actually there?

Vincent Fletcher: Yeah, to a large extent. And I think that's really common with software companies when they're quite young, where you're in this race to get cash because you've got to stay afloat still. And so you basically take on any possible work that you can to some extent to get money in the door. And I mean that was a big lesson for us was that people are telling us, "I need this, I need this, I need this." We build those things for them and then we'd realize that they weren't using them.

Vincent Fletcher: We'd go, "Why didn't you use that? Oh, well to be honest, we found out that this process doesn't really match our business." And it's like, "But you told us exactly what you needed." And they're like, "Yeah, well, that's sort of what we thought we needed." That's been a huge thing. Like I said before, Steve Jobs often said you need to come out and tell people or show people what it is that they actually want rather than just listen to them telling you this is what I need. And that's been really interesting or dig much, much deeper into what they're actually trying to solve.

Steven Austin: My guest, Vincent Fletcher, is an entrepreneur. He's hiring programmers and software engineers by the way. He's CEO of CartonCloud, a Gold Coast-based startup. He's having to advertise internationally to get people to work in his company on the Gold Coast. This is ABC Radio Brisbane. What have you had to give up, Vincent? Over the years, so you started in transport and logistic, but what have you had to give up? In other words, things you had to miss out on? I assume sleep, but other than sleep, what have you had to give up to get to where you are today?

Vincent Fletcher: If you go and work for somebody else and you get a good job as a programmer or as somebody else, you've got a lot of stability. You know what your salary is going to be. You don't just continually undervalue yourself because you're holding out for something that may come later. I think that's a big thing. I mean, personal finance, definitely given up a lot of that. Pay myself a lot less than other staff in the company simply because we need to.

Steven Austin: People that realize that, but often when you speak with small business people or entrepreneurs, they often get less than the staff they actually employ so you're paying yourself less than the people you're employing?

Vincent Fletcher: Yeah, not all people, but quite a few of our senior staff, definitely. And I'm comfortable with that. But you have to become comfortable with that. You have to become comfortable with the fact that you're going to keep pushing regardless and you're always going to put in so much effort and that you literally just have to pay the talent what they would get working elsewhere to go through this with you to some extent. I mean that's one big thing. Another thing too is that I think one thing I have given up is when you're working in your own business, unless you've got mentors and that kind of thing around you, it can actually be quite difficult to learn at a pace which is much higher than say your business's own progression. If your business is stagnant and it's not really moving, your ability to actually learn much about business in general is quite restricted.

Vincent Fletcher: And so we sort of went through that for a period of about eight months, probably mid-2015 to about March, 2016, where we didn't really have our marketing and advertising correct. And so as a result, we weren't attracting very many clients. And as a result over that period of time, I came out of it feeling like I haven't really learned a lot over the last eight months at all. There's nothing really going forward that I feel like I could go, "Oh, the last eight months has been really beneficial because I've learned all these things." But then once we sort of sorted out the advertising and marketing message and got that sorted since then, now I can come back and say, "Wow, the last 18 months have been phenomenal in terms of, I guess, my personal growth in terms of understanding more about what I need to be doing, more about how business operates, more about how software needs to be built." These signs of things.

Steven Austin: When you next come into studio, I hope you're on the Young Rich list, doing fabulously well. Thanks for coming in.

Vincent Fletcher: Thank you very much.

Speaker 1: Steve Austin on ABC Radio Brisbane.