Episode Description:
Straight from the ready fire aim to school of hard knocks, Mick Spencer started his first business at age 22. On-the-go, a sports branded apparel business started literally in his garage and became a multi-million-dollar business challenging the status quo in a traditional market.
Just when he thought he cracked it, COVID appeared and put pay to his plans of world domination, rather painfully, Mick had to call in the liquidator. Yet, even after all that he managed to get back on the horse in true troubleshooter fashion and started his latest venture Gravity Seltzer, a company which is thriving.
Points of Interest:
Getting started at age 21 2:09
The role of Tech 8:41
Shark Tank 9:25
Next steps & scaling up 11:47
Covid ramifications 14:30
Survival long term amid rising tensions 17:12
Difficult but amazing long-term learnings 18:24
Being a sole founder is lonely 23:49
Writing a book-start before you’re ready 24:33
Bouncing back 26:10
Why I am not the CEO of Gravity Seltzer 30:00
Taking a family break 36:00
What’s next? 37:00
About Mick
Mick Spencer is the Co-Founder & Chairman of high growth Seltzer brand Gravity Seltzer Co. He is also author of best seller, Start Before You’re Ready!
Get in touch with Mick:
LinkedIn: https://www.linkedin.com/in/mickspencer247/
Gravity Seltzer: https://www.gravityseltzer.com/
Transcript
Note: This has been automatically transcribed so is likely to have errors! It may however help you navigate the points of interests for you.
Mike: Welcome to the troubleshooter’s podcast with me your host Mike McGrath. Now in today’s episode, we speak to a genuine entrepreneur. Straight from the ready fire aim to school of hard knocks, Mick Spencer started his first business at age 22. On the go, a sports branded apparel business started literally in his garage and became a multi-million-dollar business challenging the status quo in a fairly traditional market. Just when he thought he cracked it COVID appeared and put pay to his plans of world domination, rather painfully, make had to call in the liquidator. Yet, even after all that he managed to get back on the horse in true troubleshooter fashion and started his latest venture that gravity sells a company which is thriving. So without further ado, sit back and learn how Mick Spencer refused to lie down and go quietly. Mick Spencer Welcome to the troubleshooter’s podcast. You’re very welcome.
Mick Spencer: Thanks for having me in this beautiful city.
Mike: No, I’m very delighted to be talking to you. My daughter Becky said you must talk to Mick Spencer. He’s got a great story. So, you are the ultimate Troubleshooter for me because you not only did you start early. So, you’re you’re extremely young by my standards, but most people are but you started the business at just 22
Mick Spencer:
Yeah, 21/22. Dropped out a year 12 volunteered in Hawaii for a year trying to figure out what I wanted to do and came back at 20 went to university and then had an idea to start a business and dropped out of uni at 21 and went for
Mike: You moved into the kind of branded sports apparel world. Where did you get the genesis for that idea?
Mick Spencer: Yeah, well, whilst I was at university, I was in a lot of social groups, sports groups, touch 40, comps, and all of that. Yeah. And I was the captain of one of these kind of committees and had the job of ordering uniforms. And I’d always been a passionate online guy like I think since like 1516, I was going to garage sales and putting stuff on eBay and making some money. Yes. You know, I was raised in like a builder, family and midwife, mom, and pretty entrepreneurial family. Yes. So I had a passion for online. And I was just astonished as to how old school the uniform industry was, you know, you had to drive 30 minutes, visit a catalog, look at all these samples and do your order on a piece of paper. And I had just had an idea to effectively build a website where people could shop the catalog online and actually add a logo and click buy and pay online, which was pretty simple, but revolutionary for that industry. Yes. And then I was getting pretty excited. And I got a few orders. And I think back then from memory, I committed to an order for a council for about 40,000 bucks. And they transferred me the money upfront, needed these goods in four weeks, and I found a factory who would make it and that was enough money. And I managed to deliver it 30 minutes before this event. And then I went Ah, screw it, I’m going to drop out of uni
Mike: full time for the good company because Bill Gates to the same, right?
Mick Spencer: Absolutely, yeah. So when you know, I’m gonna like I could go to uni for bloody ages. Or I could just actually go and do this. So I had a, you know, 150 bucks in the bank and a little dusty office at the back of mom and dad’s garage, and I set up set up on the go, I was always passionate about sports. So it was like it was feeding my purpose and passion. Okay. But you know, there was a clear problem in the market, which was people were ordering custom products, and it was really hard. And we had an idea to make it really simple. Yeah. And it was just then we bootstrapped and we went from there. And all of a sudden it became left the garage to a small office, and then a bigger office and multiple states and multiple people. And I suppose
Mike: that’s the other thing that is worth just delving into make is that you really were solving a problem. There was great take up by the market. So you’d got that absolutely right. Your timing was good. You’d sort of bringing some technology a bit of a solution to a sleepy market. And then it starts then it becomes logistics, right? Then you’re into how do you fund it? How do we keep this thing going? So I presume you need to borrow some money?
Mick Spencer: Yeah. So I mean, look, I bootstrap the company till about, I think it took me three or four years maybe to get to about one and a half million dollars of sales. Okay. And you know, at that point, I was like, Okay, this is like a 55 60% gap business. My CAC was very low, because I had an ability to, like I understood SEO really well online. So I just coded all the pages for the ranking search terms on Google, which was getting us the traffic. Yes. And the average order for us was like a couple of $1,000. It wasn’t like $100. So it was a very good basket size, and a very good returning customer. So all the economics were really good. And then I met a guy called Patrick Schmidt, who I’m actually out in Sydney with at the moment who was the CEO of the iconic I remember him actually looking at our unit economics going this is a really tremendous business like you hold no inventory. Yeah, you get paid up front. And it’s your you’re creating people’s passions into apparel. Yeah, you need to scale this, you know, and I think at that point, I was like, this could be a really successful business. But we knew it was very difficult. No one had ever really done it before, because we were manufacturing on demand, having a website that held no inventory, but a lot of virtual designs. So it was super complicated. So we needed we needed hash, to really just invest in building the tech. And we used a lot of like, third party systems, but they were very average. We knew we needed proprietary systems. And we needed to give our factories a easier format for them to produce. Right. So the crux for us was if we mastered this, this was not like a million dollar business. This was 100 or $20 million. global opportunity.
Mike: Yeah. So I mean, at that point, right, so you’re buying your products from overseas, right? You’re buying the apparel from overseas. So your lead times are, what 712 weeks,
Mick Spencer: the innovative thing about our software was we cut out 30 to 40% of the whole production time, which was the pre production phase. So we were giving out work ready files, all but to the factory, which meant that the same day they got the order, they could produce it, we cut out a lot of stages for them, okay. And then we were we just were quite innovative in a way I guess you’ve just airframes and everything directly to the customer,
Mike: because it was fairly light, and you had the margin and the margin. And we wanted the
Mick Spencer: best customer experience. You know, we wanted a world where it was just like, super easy what I
Mike: was trying to get my head around. So because that was that was the innovation in a way is that you took about seven days instead of seven weeks, right? Yeah, like,
Mick Spencer: you know, we got to a point where for customers three to four weeks, and then we had rush options less than 10 days, okay. And you could also order one piece or five pieces. So in a market where it was minimum of 50 or 100 units and a six to 13 week lead time. Okay, on average, we completely cut all of those indicators by half. So who the customers are that point, highlight customers were? We kitted out Sheffield Wednesday in UK, we keep it out the Australian netball team, the hockey hockey Australia, okay. But I would you know, 10s and 10s of 10s of 1000s of corporate running clubs, small touch football teams, schools, universities. We worked with giants like LinkedIn, Google, Red Bull, Microsoft, you know, we had a lot of we had a very tremendous customer list. Yeah,
Mike: that was what you tapped into you tapped into the fact that people wanted, they wanted it now. And they wanted it better than they were getting it.
Mick Spencer: It was also we tapped into the emotional connection. Right? If you’ve got a business like Oasis, you’re proud of it, you’re proud of the logos you and your staff are proud of that as well. So if you guys are on a team bonding session, you want people to represent the brand. So we tapped into the fact that people celebrated their best moments when they were in team uniforms in life. If you think about it, like you don’t have a lot of fun at the office unless you’re doing deals right. Yeah. Or, or you love your job. But if you’re going for a fun run, or if you playing cricket on Wednesdays, that’s the funnest time in your week. So it’s times you remember? Yeah, so we really tapped into the emotive connection between, you know, fandom and love for your colors.
Mike: Technology was changing at that point in all kinds of ways. So you, you mentioned the Google Analytics. So you’re all over that. In 2012 That that had merged posts. The iPhone really hadn’t it that whole online.
Mick Spencer: Yeah. Analytics. Yeah. So we were getting like, we were just getting really good pack. Like, you know, less than 5% of acquisition, like our revenue was acquisition at maximum, not 25 30%. So that was good. But we were competing against just traditional sellers in Australia, you know, your local shop in Alexandria, that would sell a plethora of uniforms, but you had to drive there and look at it all and all of that, you know, we didn’t want people to leave their phone. Well, we are but we’re also saving time for the mother of two who was the who unfortunately got the job of ordering uniforms for the porter Bulldogs soccer team, okay, we wanted to make it for her while she was sipping a wine at eight o’clock at night. Got to design it on the iPad and get it a couple of weeks later,
Mike: three to four years, you get to one and a half mil the GPS pretty good. You’ve proved it all up. And then you realize that this is there’s a much bigger opportunity here which you need to think about structuring for.
Mick Spencer: Exactly. So milestones, then we’re, you know, Janine Alice, I’d met somewhere, I think I did something with Richard Branson, and she was there and she said, You got to come on Shark Tank. So I went on Shark Tank, okay. And I was a bit hesitant about it, but I thought, you know, I’ll go on it, you know, whatever, I’ll go on it, I’ll try get a deal. So we went on raising 300 grand, and we had a massive negotiation, and I walked away with 600 and less equity. So it got viral, because, you know, three sharks came in. It was a big negotiation. But it was all part of the puzzle. I wanted for publicity more than the money to be honest with you. And and, and it was great and then that put us on the map and then I walked away from the deal actually and due diligence is you because of you know, there was just obviously The things I wanted that they wouldn’t commit to and then the next big milestone was, we were lucky that a guy that I’d known through Richard Branson was was the CEO of Virgin globally, David backspin, he moved into a role as MD of Wesfarmers. Okay. And, and he had this, you know, a couple of 100 million dollar uniforms. And then he saw our tech and he said, Hang on, you need a white label this technology for us because our inventory is problematic. And we could learn a lot of you. So, you know, we that was a real milestone for myself and the team. You know, we negotiated a term sheet with with Wesfarmers to buy an equity position.
Mike: And it was the tech that was really driving that. Did you build the tech? You’d had that bill as you were building in house?
Mick Spencer: Yeah, I have. You know, I think at that point when they came in maybe five or six full time technology team members, so CTO, front and front and back end developers database. And I was also really passionate about it hands on wanted to, we’re using like a originally like a third party for this layer. And then the rest of it was ours. And then we were trying to build the whole thing ourselves. Okay. They came in. And that was a big milestone, you know, we were so excited. You know, so they bought equity today. Yeah, yeah, we did a few million bucks of equity raising, they took a stake. And we also had an accompanying joint venture agreement, where they would introduce us to, notably office works, which I think it still might be going where you can design polo shirts at office works for your business, that that’s our tech, Kmart, we launched a customized Christmas promotional campaign. And then and then their uniform company work where group could kind of they could use our system to sell to their customers.
Mike: So that was a big jump. So all of a sudden, you’ve got a professional board, I presume you’re having to meet monthly, they want the manager accounts, you’ve got a plan.
Mick Spencer: Yeah, it was scaling, Capital Management. And then it was like, Okay, we’ve got, we built this innovative technology alongside our design tech, which was this, this this idea where everyone wants sports teams and schools want to design products and sell it to their members, but none of them want to hold the stock. So we actually built a technology where you could design your own range, and then you could build your own e commerce shop on our platform. So you could make your own margin, sell it to your members, and you wouldn’t have to commit to any inventory, right? And then your members buy 100 units, and we’d make it and freight and you’d get paid your commission. Okay. And that started scaling quite nicely. And the normal core business was growing. I mean, it was immensely challenging for a small team to integrate to Wesfarmers, like that was ridiculously crazy. Like, you can imagine this behemoth. Yeah, not fully acquiring the business. But we had to integrate like, we were a part of them. So our factories had to go through the same audits, right? And was there a lot of a lot of resource, you know, it was really draining. I mean, it was, it was pretty, in hindsight, we would have probably structure that deal differently, as you always do with these things.
Mike: I’m very grateful that you’re sharing with us, that you’re being so candid. So where did it begin to unravel? Because, you know, these are the lessons, aren’t they really,
Mick Spencer: we had a very positive trajectory. You know, there was a company out of the US that was a leading print business called Vistaprint. Oh, yeah, the founders of that, or the main founder and his m&a guys came out there was discussions about actually just acquire and it’s right when Wesfarmers came in, and we you know, we didn’t we didn’t want to entertain it because we thought Wesfarmers would be a better partner. Okay. But at that point, things were going great. And then we thought you know what the big opportunities here is to go and roll up all of these traditional uniform shops Yeah, doing one or $2 million a year largely husband and wife owned revealed a lot of their costs put them all online and all their customers online and then let’s roll this baby up to like a 50 million a year business scaling with you know, global potential and maybe sell it or IPL it. Yeah. And so then, you know, we needed at that point, we needed a bit more capital, you know, we were kind of talking. I think, you know, it was probably like three to six mil range wasn’t gigantic, but it was sizable. And, and we we had a we had a working capital facility and what happened was, we we needed so we went and acquired two businesses, integrated them doing a relatively good job. And, and then and then the good old pandemic hit right and we were just like, completely wiped. You can imagine like we are selling to people who touch each other as a as a sport, you know, like their fine sport, and that was all canceled, so I’ll never forget the gloomy, early 2020 of this Coronavirus, been introduced and thinking oh, it might just hit effect for a few months right and then all of a sudden it was sports canceling tours overseas. It was teams just fully closing up and then it just got worse and worse and worse. And all of a sudden we were like Holy Dooley, uh, you know, um, I think my chairman said at the time, and he was right, he said, I actually predict that it’s going to take us till 2023 24 to recover to 2019 numbers. Okay. And I was probably bullish and went No way. It’ll be a tiny thing. And I think a few of my events now, but anyway, it was really damaging, right? Like you can imagine all of a sudden going from,
Mike: yeah, doesn’t matter how good your margin is, if there’s no sales. Well, that’s right. So
Mick Spencer: look, what we then did was unmetered capital raise. Right. So I already had working capital debt secured debt. I know the time secured, but I had debt. And then, and then I had this timeframe, right to go raise capital. And we were like, well, let’s raise more because it’s the pandemic. But then naturally, you know, investors and advisors got pretty scared because the pandemic was bad. And then we were affected by it, obviously. Meanwhile, me and the executive team a kind of pivot in the business to start getting contracts with our medical, just trying to help firstly, info product, yeah, then we’re trying to make gowns, masks, whatever we can do in the factory ourselves. Get stuff online, you know, it was like, just me in the office on my own everyone at home trying to engage the team. super stressful, right, as everyone went through. Our whole business was turned off overnight, overnight, but um, and I’m left with what I think at that point, including the Philippines offers maybe 40 heads or something. Yeah. And thinking, you know, how are we going to pay for everyone? Yeah. And but we pivoted really well, you know, really got the business to profitability pretty much and, but we had this overhanging working capital that we were trying to raise to either buy out, or get extra funding and continue it for another two years. And then really, at that point, the majority on it just wanted it to be a secured facility. But what we what we found was it was just, it was just impossible to to buy out. And so we raised a bid from our put in some extra capital, all my other shareholders put in some capital as a secured loan debt. And then it just, it just suffocated us and there was, you know, there was all of a sudden a fair bit of tension. Yeah. So the next 12 months was like, how do we how do we survive long term? Okay, I think I saw that the best opportunity for them was just to try sell the business, you know, try and recapitalize the debt. And, and possibly just sell. And then it just got it just got very, like it became war, you know, like, came pretty tight and tensioned. And, and we did have a, we had an offer a bit of a, you know, a bit of a Hail Mary started coming out of the US more like 2021 early and, and I wasn’t able to square the deal away, because there was so much tension, so, so I had no choice but to effectively just get rid of all my equity and shareholders equity and put the business into VA, okay, on the basis that, you know, I’d be able to buy it back, or I’d be able to buddy up with a couple of groups and buy back. Right. So that process was like, tremendously emotionally difficult, right? Business you start, it’s your home. It’s your name, it’s your life. Yeah, you’ve got people’s jobs on the line. You’ve got your own money on the line, you’ve got shareholders money on the line. And, yeah, that was a that was a really difficult, but like, long term, amazing thing to go through. Yeah, taught me and the team so much, and my shareholders. And I mean, I had amazing, you know, it was it was a complete business dispute. There’s no doubt about it, like there was shareholders that I still am close with. That was my side. And there was another on the other side and,
Mike: and what will West farmers like to deal with at that point? I presume they had bigger fish to fry today. For them.
Mick Spencer: It was exactly I mean, for them, it was like, you know, they, it was just I think it was also just becoming probably annoying, you know, they didn’t want to get in the paper, you know, didn’t want to get in trouble with it. So I got it, I got it. And they just they’ll go through huge issues. And I mean, massive growth, but their massive declines. No one knew what was going on. Right. No one knew this was like, this was like January 2021. To may 2021.
Mike: Yeah. So we were really staring into the, into the abyss when we really didn’t know what’s gonna happen.
Mick Spencer: No one knew. At that point, I just went, you know, what, and I was just really lucky that I engaged the coach at that point, and I just had some incredible shareholders. And at that point, it was just like, I had this one lady who runs an advisory firm in Melbourne and, and we’re going to engage her to help to try and run a sale with it all and, and she she just told me the ultimate truth. She looks for all the documents and just kind of said, make your fat. Excuse the friends like you. You’re done. Don’t put another dollar into this business. It’s time to move on and see if you can get it back. And it
Mike: was a debt really, that that gives us secure debts.
Mick Spencer: Yeah, I knew at that point, as a director that we I knew that I wasn’t going to be it wasn’t you? But it was June about a month’s time and I knew with what was going on with the business. I was not going I used to be able to recapitalize that balance sheet. And therefore myself and my other directors were trading insolvent today. So that day, we made the call that it was not worth continuing to trade for 18 months. Yeah, we did not believe we could recapitalize it, okay, and repay the loan when it failed you. The rest of the business was actually from an operating level, we’d got the business probably back to the best profit ever. I mean,
Mike: there were winners and losers in COVID. But one of the winners was online, because I mean, online, went nuts with food and,
Mick Spencer: and I had a couple of businesses at that point that I had kind of started helping and they were all they’re all doing. But for us sports teams weren’t going back to the footy field. So and they weren’t order in uniforms that we’re going to use last season’s Okay, so we were just and it was just like we could I have written it out and seen what happened. Yes. Okay. But it was very difficult. It was very difficult. Yeah.
Mike: Because I mean, the lessons you’re talking about the which you have to go through, not just physically and intellectually, but at a visual level, you kind of you can feel it. I mean, and that, that, I think, you know, that’s gold, and you’ll pull on that for the rest of your life. I mean,
Mick Spencer: you also just go okay, well, like you’re in m&a. So you get it, it’s everyday for you for founders. It’s not, you’re told by Chairman, lawyers, accountants, advisers that this is the best deal you’re gonna get. Yeah. So do you look at a general security agreement in detail? Do you look at a security trust data in detail? Yeah. Do you look at a convertible note certificate and backing note deed poles in detail? No, not usually, you kind of go, Well, I trust those guys. Or girls.
Mike: Look, it’s interesting, because I mean, we started our business at Oasis partners really had to provide practical, earthy, right sized advice, because, you know, I was in business at 22. And I sold the company at 28. But it was a tough sale on the back of his 1990 interest rates with 70%, I’d gone from the blue eyed boy, to I’ve got a load of debt. I remember my, my father’s home and my uncle’s home, we’re both on the line. So that was tough. Now, I was able to navigate that I had some good people around me that I’m truly grateful to to this day, but but that the kind of advice we were getting was so rubbish, I can’t put into words. I mean, I’m really keen on good advice from people who’ve walked that road before you whereas most of the advisors are generally professional service lines. They’re either accountants or lawyers. And they’re generally professional service, guys that you haven’t sat where you
Mick Spencer: may not have done deals that were bad in the past, like you’ve gone through yourself, or I have as an example, I also think the one thing that I learned was often advisors in some situations are not necessarily like, you aren’t sure if they really work for the company or for the investors. That’s probably the best summary. Yeah, I’m sure you know what I’m getting at. Right. Like he’s got to
Mike: be careful about secondary gains. So yeah, wherever you’re getting your input, you’ve got to be saying, Okay, well, what’s in it for them? Right, and how neutral is it? Yeah. Because it’s often not neutral, particularly in m&a. You know, we have to walk that line every day.
Mick Spencer: And it’s tough. Like, I actually, I actually look back at OTJ now, and I, like there was, you know, yes, there was some disputes and issues at the end, but it’s a tough one, right? Like, we needed the capital, and obviously, capitals gotta get structured a certain way to balance a risk profile. And we, we took that risk as directors. And, and that’s what you learn from, you know, and you just, but now, it’s like, I’ve passed that on to a lot of people. I’ve set up other businesses, you kind of just get on with it, you know, but it did take a lot of time, right? Because yeah, as founders, your whole when you’re a sole founder, which is a whole nother topic. So foundership I just don’t think ever is something that I would ever do. Again, it’s extremely lonely. And I don’t think in many solo founders are successful ever.
Mike: We’ve had people on the podcast who who’ve been partners and the rest of it, and it’s gone gray, we’ve had others on that wouldn’t entertain a partner that yeah, so whatever’s going down, you need a team. You know what, whoever’s on that team, however, it’s structured. It’s can’t be just you. It’s too hard.
Mick Spencer: It’s and it’s lonely at the top. Like, it’s tough for founders. And it’s something that I’ve tried to just pass on as much as I can. Since you know, I left OTG and that business got sold and stuff, and I’ve moved on to new things. It’s just trying to give founders advice.
Mike: When did you write your book? 2019. So it was that cathartic? Getting that? Getting that book read?
Mick Spencer: It was awesome. Yeah, it was great fun. It was great fun if I had another amount of time. I’m a father now. So times hard, but I brought another one just with my recent lessons. But so how did you come up with the idea for the book? I mean, like most things, like I’m severely add, so it was like, Okay, I’ve got an idea for a book. You know, start before you’re ready. I’m going to start before I’m ready and go and pitch it to a publisher. And if I get a publishing deal, I’ll write it. Okay. So I said to a publisher, hey, you know, I’ll get Richard Branson, behind it, founder of the north face a heap of people. Here’s the concept, you know, I had, I was, but I’m almost blind minus 18 eyesight. I’ve had two heart conditions that have almost killed me. I started a business at 21 with nothing and it’s become relatively successful. I’m going to write a book that’s practical for founders and, you know, people wanting to quit their jobs and start
Mike: Okay, so published it wildly, wildly. That’s a best seller. Okay, and it’s called start before you’re ready to start before you’re ready. Great. Yeah, it’s
Mick Spencer: an audio book. It’s sold in I think, 50 countries. And I still get messages all the time from people who have read, it was awesome. So yeah, publish that. And then a lot of universities took it up. It’s been, I think, three or four universities still as their our entrepreneurship class, our literature piece.
Mike: Okay. So they’ve taken a lot of our m&a content, they’ve put it on to Yeah, events to universities, and it’s like, can I just push it out? You know, you know, 12 things not to do with these services. And then they’re doing
Mick Spencer: courses on it, right. I mean, it’s, it’s where the real world education comes. Yeah.
Mike: So how did you bounce back that, you
Mick Spencer: know, inspired by the next generation, so I was really, I was really lucky to have this young guy who approached me at OTG. His name’s Liam. He’s the co founder in gravity. Actually, he’s 22. Now he’s, this is the smartest 22 year old you’d ever meet. And I knew his father. He’s a very successful financial planner. And he wanted to come and do an apprenticeship with me, he’d read my book, and he wanted to come and do a bit of an apprenticeship. And he was ducks in chemistry at uni. And he was a very savvy guy. And I said, like, Oh, if I have any ideas, I’ll give you a call. And then, you know, I think it was like, I was starting to drink. I was starting to drink alcoholic Seltzer, which was a category that had just launched in Australia by about a year. And I was having it because I was like, I wanted a lot of choice in my life, like, I wanted something that was a bit healthier, you know, and, but still wanted to enjoy a drink. But the flavors, the products were all like light, ethanol mixed and really boring, and just not great. And I kind of felt like, just weird drinking them. And I said to this guy, because I’ve just gotten back from Hamilton Island with some friends, was a bit of a recovery of business trip, you know, like, come with us, Mick and my wife, and we’ll go up and, and, and explore the islands. And, and I thought, far out, I started looking at the market online over there. And I saw what was happening in America, Seltzer, hard, seltzer had gone from nothing to a $20 billion category in five years. So other Yeah. And then I looked at Australia, and I saw this just starting to launch or one year in and I thought, wow, none of these brands have substance. They’re all appealing to a customer who wants to make a better for you choice, like a sports person or a healthier, younger person. But none of the brands actually have something they want to drink. So I said to this guy said, I’ve got an idea for for this business, seltzer. What do you think he said, mate, that’s all me and my friends drink, but they’re all rubbish. You know, all these young kids now there are watch their body, they watch what they drink eight, Instagram, that they’re at the gym, they’re drinking less, but they’re spending more per beverage. So they’re all that the whole booze game is changing. Anyway, and I had a friend who was running a big craft beer brand called Ben spoke from Canberra are very good beer. And I said, What do you think about this category? Is it here to stay? And he said, he said, Yep, it’s definitely here to stay. But you know, if you’re going to do anything in it, you’re gonna have to launch by this summer, you know, so we were kind of like, September at this point. 2021. So I said to this kid, you know, I said, mate, do you wanna go and he’s like, Yep, I said, Alright, here’s the deal. You’re out, you drop out of uni, you work full time on this, and I’ll give you a piece of the company. And you and I will build it in lockdown. And more people were moving to better for your drinks in lockdown, because there was just so depressing. It was so much going on in everyone’s life. But I still want to have a drink but wanted to have mindful drinks. So we started gravity seltzer Originally, the basis was when you drink beer, you feel heavy. When you drink gravity, you feel weightless. So we played on the whole space branding element. But I knew there was a few simple things. I had a few mates that were professional athletes, pro surfer, pro motocross pro wakeboard, they were all stuck in Australia, because they couldn’t compete. They were all drinking seltzer. All big profiles online, right. And so I said to them, how about you help me out and bring come and get a stake in the company? Then I had a friend who ran a marketing agency, and he’d done a lot of incredible work with a lot of consumer brands. And I said, our calls all about promotion. How about you come and bring your team’s studio services for a steak? And, and then we kicked off and within six months, it was growing really quickly. And then was really lucky to meet a great sales director who’d built Ben spoke. He came on as our sales director and a piece of the business and my CFO Greg, who was former head of commercial finance at Coke and C UB. He’s moving in October and becoming our CEO. And then, you know, there was me, my co founder day I have in Greg, four of us all skin in the game all had real good skill set of something that this industry needed. And then 18 months later, you know, it’s grown really well.
Mike: Yeah. So isn’t that amazing? So I want to talk to you a little bit about that. So why aren’t you the CEO, then
Mick Spencer: I just don’t think I’m the right person to run it. And I don’t think I’m a good guy to actually run
Mike: this at all to conclude that you’re right, was that some of the work you did after your other? But you know, you’re looking at the lessons. Yeah. So what were you concluding that got you to that point where you said, Look, I’m probably not the guy to run it day to day? Yeah, I think like,
Mick Spencer: for me, I’m really good at just acting on ideas. You know. And, and I think when I went through the discovery of, of what I did wrong, in my last business, it was, you know, I held on to too much responsibility, and I didn’t probably take people on the journey enough, I didn’t get people in with the right skill sets at the right times. And, and I also just realized what my ultimate skill was, which was, like, I’m a good guide, I’m a good guide of people. I’m a good marketer. I’m a good hype guy, and I’m great at relationships and networking. Okay. You know, this industry particularly, is very difficult to booze game hypercompetitive, it’s very hard to sell to people, because you have to be in the right distribution, Banner groups, you got to have the right rebates and terms.
Mike: So it’s not sleep, is it? Like, I mean, if you look at the apparel game, that was that was ready for a shake up. Right. But it’s booze ready for the same shakeup?
Mick Spencer: I’d say it is, but in different ways. Like, when we map out the market at the moment, you know, in a market like this that’s emerging and growing? Well, 70% is owned by the major players, you know, and then and then you look at the remaining 20 to 30%, that is going to be owned by independence. So, you know, effectively, you need to become the leading independent, to effectively have a position that someone wants to take you out or be you know, but the the idea was also like, I just wanted to have fun, you know, I’m I’m a new dad, I’m, my skill set in this game is not to be the one operating the day to day because fundamentally, it’s a it’s kind of a finance, first, marketing. Second, actually, type of industry. It’s an incredibly I come from online businesses where you getting paid up front, you’ve got, you know, factors your pay after you’ve been paid. Yeah, you know, the booze game, no matter how smart you are an inventory planning, it’s a it’s a, you’ve got larger working capital deficits. Now the opportunity for volume is much larger. But you’ve you’ve got to be incredibly smart on the books,
Mike: that high concentration that you mentioned in the sector, comes with with, you know, that brings its own challenges, because they like to own the space and boss it right. And they’ve got incredible resources. That’s very true. Yeah. So so, you know, it’s interesting that you’ve put a bit of a dream team together, they’ve got got these capabilities to go toe to toe with those guys.
Mick Spencer: That’s right, we’ve got a good strategy, we’ve got a really good product that’s won a lot of great tenders and range and incredible reviews. And, and we’ll keep, look, first we’ll keep just driving the category, we think Australians want more mindful drinking more better for you products. So we want to drive the category and an OS and a few other independent brands are really doing a good job. And we need that because we need you been aware. Yeah. And what’s exciting is, you know, you’ve got the 20 to 30 year old that already knew what seltzer was. But now what’s emerged is this customer that might have been drinking our sugar, our TDs, or brown spirits, or a lot of craft beer that’s starting to go, wow, I didn’t realize that had 250 calories in it, and I can have a nice brewed seltzer that’s got 80 calories. Yeah, I could have three or four of those in the, you know, in the calorie count of that. I mean, if I asked you five years ago that people count calories with alcohol, you probably laugh at it.
Mike: so you’ve got a non alcoholic version, right, that you’ve launched? I mean, it has that guy, that non alcoholic space seems to be emerging. We noted from some of the social research that the young kids are not drinking at 1617 1819 The way they used to. So do you see much of a future there?
Mick Spencer: Look, I think if I fast forward three or five years gravity is not just a sell to company right where we are multifaceted brand. You know, we will we will have multiple categories that we serve under the brand sell to being one flavored water or nine hours would be another so we see the opportunity as a light sparkling water as opposed to it being a non alcoholic drink. So that’s where we see the future of nine out I think you know, it because it’s a it is lightly sparkling like lightly sparkling flavored water. And you know, it’s trending up in pubs in bars, grocery and convenience have had a lot of investment but they’re kind of realized that the non branded stuff is not working yet. flavored water and energy is working well. So, you know, but for us, we believe that people want to have a gravity or times of day. So they’re gonna have a flavored gravity water in the morning and then a gravity shelter at nighttime, it’s Yeah, happy days,
Mike: just picking up on that theme that you’re the hype guy, as you said, you’ve just been on a bit of a tour around Australia, basically talking about gravity and a sell to companies. So tell us about that.
Mick Spencer: You know, one of the things that I that was also important was, I’m across a lot of businesses now. So I think with running the business, I actually just wasn’t at a stage in my life where I wanted to just have this as my only thing. There’s a few companies that I’ve either got a stake in or advise, and I’m really enjoying that. So I think, you know, that was a big part of the decision. But having a baby was the same thing. I was like, you know, I just want to, I want to be free to be able to spend time with my young one. And the family. But this year, we just decided it’s always been on my wife and I’s bucket list was to say, the east coast of Australia. You know, when you’ve got a business of 40 or 50 staff, and you’re the majority owner and CEO, it’s pretty hard to do anything like that, right? But when you’re the chairman and you’ve got great people and also the hype guy, it’s a bit easier. Okay, so we thought, You know what, it’s going to be a cold winter, we’ll buy a bus. And not a lot of sales reps will be traveling this year, because craft beer has gone through a big decline. Okay, so why don’t we go and visit every regional surf town up the east coast of Australia, go and visit the pubs and the bottle shops, introduce gravity to them and get a few waves while we’re there. Right. And a couple of newbies at the local pub. And we’ve just come back from doing that for five months. So coming in to Sydney, I’m very cold. Is that right? I just come from Cooktown 25 degrees. Yeah.
Mike: Well, that’s amazing. What a great story. Make thanks for sharing that was send them know, in terms of the future, you’ve already said that you’ve got big plans for the brand, outside of the current category. Right. So yeah, where to next?
Mick Spencer: Yeah, look, I think we just for now we just keep doing what we’re doing. For me. You know, it’s about evolving and learning as well. I don’t think it’ll be my last rodeo. But I think this will be this will be a great fun journey over the next couple of years. And yeah, and I’ll keep keep investing in helping some other businesses on the way up and yeah, Sam, Sam, what’s next?
Mike: You mentioned that you like helping others that you like the idea of giving others a leg up. Talk to us about that? Yeah, well,
Mick Spencer: I started a little coaching kind of business been, I noticed that businesses doing like zero to 10 million, if they were husband and wife owned or, or, you know, one or two owners, often we’re struggling to get to the next level. And I’ve always been a bit of a growth guy. So just coming in, and actually helping them understand financials, running month end processes, running customer acquisition plans, and actually just holding them to account almost like a light Chairman role. I’ve actually seen some of these businesses grow and control their finances a lot more. Yeah. And it’s just been, it’s been fun, you know, because you’ve seen businesses that, you know, didn’t really know their numbers, to now have doubled in two years and are a lot more profitable. And the owners are having a lot more. And they’re actually, they’re almost getting to a point where they come to see someone like you where they go, yeah, we’ve got an $8 million business. We don’t want to know what’s next here. What are our options, and I want to build a bit of exit opportunity and, and lifestyle opportunity for those businesses.
Mike: Look, we’ve met people who who’ve who’ve literally thrown us the keys and said, Get me out of trouble we want to sell, and then we’ve worked with them. And then literally 18 months later, they’re gone. I love this. I don’t want to sell anymore. Yeah, you know, it’s great, literally. So
Mick Spencer: is it like actually resent their business because it just becomes too much like a job,
Mike: which is why I was so fascinated, mate in your story, because you figured out what you want to do and what you’re best at. And and you figured out what to leave alone. And I think this lesson of understanding that ownership is not necessarily the same as management, the executive doesn’t have to always be the non exec doesn’t have to be the executive and controlling a business can be done in a variety of ways. And I think that that’s a great lesson, particularly as people get a bit older, and they’re finding it more difficult to put in 50 hours a week. And maybe they can’t sell their business because not everyone’s gonna be able to, but maybe they can step back and step down and do some succession work and understand they can bring a lot of value, you know, outside of just spending 40 hours there.
Mick Spencer: You’re right. It’s like there’s this weird thing around control for owners of businesses. And I think I also look at it now a bit differently. I look at my own positions like an investor should and I often look at that and gravity is a great example where I go, probably going to make a better return on my capital with a more astute person running it than me running it. I’m happy to still be over it and have the right parameters to control it if need be. But you can do that. Yeah. at a board level, as opposed to in the day to day,
Mike: exactly. You mentioned Richard Branson. He’s obviously been a bit of a inspiration to you.
Mick Spencer: He has Yeah, absolutely. Yeah. Yeah. I was lucky enough to meet him. About nine years ago, we spent a day on a panel together and I spent a day after it with him on my business and was very inspired by him. You know, he’s an adventurer. He loves exploring. Yeah, he’s always done stupid publicity things. I’ve always been a fan of. Yeah, any. And, and he’s pretty happy go lucky. But he’s actually a pretty firm business person. Yeah. So yeah, he’s a he’s a, he’s an amazing man.
Mike: He takes his notepad around and makes lists everywhere he goes, he’s a list guy.
Mick Spencer: Yeah, there’s something psychological about that as well, that you just write stuff down at computers in your brand different. I’ve been trying to write stuff in the mornings a lot more than get on my phone. Yeah. Okay. Just to get it in. Yeah,
Mike: I do the same. I got a journal and it’s been cold for me. Really Yeah. But it’s interesting, because one of things I like about Richard Branson, and it’s less true of him now. But he was all you know, when I grew up in the 80s. He was the guy who was always taking on the big guys. When he started the airline. Everyone thought he was nuts. Right? Yeah. And yeah, interesting. He just been to see what was the name of the guy in the US had just gone broke?
Mick Spencer: Yes, he had like his airline or something. Yep.
Mike: And he went to see him and he kind of just had a chat with him, which is, which is very insightful in terms of how he thinks because he was in his own bowel at that point with British Airways. And anyway, he British Airways went for him as often these conglomerates will do and they had massive market share and power. And they went for him. And he took them to court. And he won. Yeah, it was it was just worth every dollar of
Mick Spencer: that. Yeah. And therefore was on the media and the front page. I mean, one thing he always said to me was, and we did this a lot in the last company was, was was just do a lot of your own PR. It’s cheap marketing.
Mike: Okay. Okay. Well, let’s get three quick questions before we let you go. What’s your favorite book? Would it be one of Richard Branson’s?
Mick Spencer: Probably saying screw it. Let’s do it. Yeah, I’d probably say it’s that.
Mike: And then what’s your favorite place in the world? I bet you’ve got a few. But what’s your favorite place?
Mick Spencer: I would say it’s actually Mollymook on the south coast of New South Wales, is it? Yeah. And then second would be Hawaii, where I lived for a year and have gone back to 10 times and proposed to my wife there. Yep.
Mike: Nice. Nice. Make Spencer it’s been an absolute pleasure to talk to you. You are the ultimate troubleshooter and I love your book. Start before you’re ready. I love that title. It’s straight out of there. Ready? Fire aim. School of entrepreneurs. Yeah.
Mick Spencer: Now. Thanks for having me. It’s been awesome.
Mike: Great. Good to chat. Thank you. Well, so there you have it. How to bounce back from adversity in one easy lesson. I don’t know how we do it for the money. Congrats to Mick and good luck to him and the gravity seltzer company. Now, if you liked this episode, be sure to tell your friends and colleagues. And if you’re feeling really generous, our review only good ones, please. As you know, we’re very sensitive. Big shout out to our sponsors Oasis partners, practical right size advice at each stage of the business life cycle, especially if you considering an exit call when other guys are no aces. So until next time, stay safe.
Link to previous episodes: https://www.oasispartners.com.au/troubleshooters-podcast/