08Jan

Michael Dawson from OfferUs

Michael with Friend HelenIn this episode of Adelaide Entrepreneurs I interview Michael Dawson, founder of Offerus.com.au and Brandy Animations. I met Michael not too long ago and found his entrepreneurial journey so far to be quite interesting and I’m sure useful for someone wanting to get something started in Adelaide.

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Transcription

Nick: Hello everyone. Welcome back to Adelaide Entrepreneurs. My name is Nick Morris and this is the show where we interview people from Adelaide, people starting businesses, running businesses, working on different ideas, learn about their stories and see how perhaps, we can get some information from them to help other people. This week on the show, I’m talking with Michael Dawson. Good morning Michael welcome to the show.

Michael: Hi Nick, thank you very much.

Nick: Let’s get started by – I want you to tell us a little bit about what you are working on at the moment . Tell us a little bit about that.

Michael: Yes, sure. Well, I’ve been involved with business in one form or another for a few years obviously, just learning the ropes and getting into the code and trying to get some notches under my belt. My main project for the moment is called Offer Us. The concept with Offer Us is fairly simple. If you imagine a group of people, let’s say a gym club, a group of 40 guys who go down to the gym and they all buy protein supplements.

They could form an Offer Us group to request a better deal on the protein that they are buying and then businesses actually compete to make the best offer to the group. So, you can think of it as reverse group buying or, it’s a fairly simple concept but that I find that’s the best way to explain it. So, we are in the early stages – I’ve been running some offline deals at the moment, just to learn the process and then it’s a question of how you can streamline that and turn it into a web app experience that’s hopefully got a little bit of inherent virality if people can see the value and stop, creating groups and inviting their friends but there’s still a way to go.

Nick: Can people find that on offerus.com or…?

Michael: Yeah, offerus.com.au is where it lives. You will find one expression of Offer Us out there at the moment and we are working on a slightly different model that’s a bit more focused on the group, the group of people – if you know meetup.com, that’s obviously a very successful site, built around groups of people who have a common interest and they organize their events through Meet Up. So, I’m just trying to learn a lot from them and also sites like Facebook, and Facebook offers models so this second build is hopefully going to be a little more a, little better tailored to, I suppose who my real customers are, these groups of people.

Nick: How did you come up with the idea? Was it just something that you just came up with or did you do any kind of study to theory this idea?

Michael: It actually came from a bit of a real pain and I used the protein example because it makes sense to a lot of people but I actually found myself in that situation, just buying a lot of a certain type of very high margin health supplement and as part of a group, a large group of people who were doing the same and it’s a fairly simple idea and a bulk buying is not a new concept. People have been doing this in one form or another for a long time but I suppose, I was just wondering well, can we streamline that using the power of the web, so that where it starts.

Nick: It’s interesting, thinking about the similarities and the differences between systems like Group On, which have been fairly popular, not so much now but the last year or two [Audio breaks 00:04:03] and just personally, I have a distaste for those sorts of systems, saying like it can really negatively affect small businesses who, sort of perhaps going in naively and offer these enormous discounts and then find themselves doing all this businesses that they can’t really fill and never really make any money from it. So, obviously this system would be much better suited to the business as well, I think because it’s not going to be – so we hope there’s more control there, so they can take the deal or leave the deal so much. And also, they know how many people I, guess beforehand who are going to be doing the buying, so they can control things a bit better. From the perspective of the customer, what is the difference for them versus Group On?

Michael: Just jumping on what you were saying before. Obviously, a lot of businesses have been burnt happened then, with the Group On experience and also a lot of customers because they find that their coupon isn’t able to be served, service, either in a time frame that’s acceptable to them or they find they’re treated as second rate customers. I think a few of us has experienced that but you’re right. The model is actually a little friendlier on both sides because businesses essentially just have a big group of customers knocking at their door and asking, “Are you ready to come to the table with a discount for us?” and they can obviously take that opportunity or leave it, but the customers have – there are extra benefits for the customers, as well, just in that they are not limited by what businesses are choosing to push out to the masses at any giving point in time.

There’s always been this disconnect, the existing deal offering, it started with Group On, and then spread and now there’s heaps of similar sites and Facebook’s done something similar but what they all have in common is it stops with the business wanting to sell more stuff but the difference with Offer Us is, it’s just about a group of people, they just share a common desire to buy something. So, it’s about their needs, it’s about what the people want, so, there is that extra freedom I suppose. It just opens it up to obscure products. I use this as an example. I’m talking with the group the Adelaide Five Spinners at the moment. They are a fantastic group of people with a very obscure hobby and we’re negotiating group discount Offer Us the fuel that they buy. Now you’d never find one of those on Groupon.com but the model of Offer Us just makes that easy on both sides.

Nick: Interesting, also, you mentioned how you did your first field and on the second field now and you are trying to learn a lot from different communities and work on the product, better service to market. Do you have a particular process, do you have any thoughts on how to do that in a structured way or you are just putting yourself out there, just generally collecting ideas from different places?

Michael: I love the entrepreneurial processes and I suppose I’m fascinated by the difference, the different ideas out there, the different processes and models. On the one level, I’ve just read so many books and I’m fascinated by the science but on the other level, I find myself obviously floundering at times being a bit random. The challenges I suppose, to structure your thinking and structure the way you go about things, even if you have a fantastic process in mind, it doesn’t always translate to actually what you do in the real world. In terms of the models that are out there, I’m a huge advocate of the customer development process, which was developed by Steve Blank.

He actually mentored Eric Ries, who wrote the Lean Start-up, which is quite a famous book. So, “The Lean Start-up” is built on the customer development process and that obviously is quite well known and it has some great principles but getting back to the customer development process itself, I find there’s really a lot to learn. So, that process is about quick testing, recognising the assumptions that you’re making in the start-up process and actually getting out the building and trying to be systematic about validating or invalidating those assumptions. So, you know Steve Blank put it quite well. I think he said that one of the biggest mistakes that entrepreneurs make, is thinking that start-ups are just a miniature versions of big companies.

We look up big companies and see that they have a business plan and we think okay, well we should write a business plan and look at the various divisions of a company and you see the way that they spend their marketing resources and they just try and follow a similar model. It’s a mistake obviously, but they see that start-ups are not just smaller versions of established companies, they’re very different. He said, a start-up is searching for a business model, for a viable business model, whereas an existing company is executing a business model and those two things are fundamentally different and if you start to implement the proven principles of business execution in the search for the business model phase, you’re just going to waste your resources and you’re probably going to be one of the 95% of start-ups to fail. So, I think there is a lot to learn from the start-up for the customer development process and I think that there’s a guide start-up owner’s manual, which I recommend by Steve Blank. That’s a bit of a start.

Nick: Of course, that is a book or it’s an online resource?

Michael: Yeah, if you Google Steve Blank, you’ll see a bit of a landing page. He’s been involved with lots of different expressions of these same ideas. He was quite heavily involved, he’s involved with start-up weekend and the start-up weekend next programs. He’s worked with Alexander Osterwalder, who came up with the business model canvas and there’s actually a great app out there. I believe it’s called Strategyzer and that’s an app for the customer development process. I think there is an iPad and a PC version. I suppose if you just Google Steve Blank, you’ll probably get to most of his resources.

Nick: Awesome. We’ll, I’ll get those links afterwards and put them in the show next for this, for this interview at adelaideentrepreneurs.com.au for anyone who wants to check them out. As you’re working on your projects now or for us, are you doing this full time or do you have other work to support you while you work on these projects?

Michael: Yeah, well I suppose like a lot of other entrepreneurs, I do have a couple of things on the go at the moment and one project that I’m really enjoying at the moment is actually a site that I run called Brandy Animations and it’s quite simple. We just do little branded animations for businesses. You may have seen some of these quirky sketch style animations. That’s something that I’ve been doing and it’s great because I’ve been meeting lots of interesting people and I’ve been doing a little bit of other contractual work at the side.

Nick: Let’s change tact a little bit now and talk a little bit about your background and your [Audio breaks 00:12:39] to this point of your journey. Who was the first catalyst for you to think to the entrepreneurship and businesses as a part to the typical career job model of earning a living?

Michael: I think it started fairly earlier on. I mean I just love tinkering and putting things together and inventing, so I guess sometimes that sort of starts quite young. In terms of when I realized that I could make entrepreneurship my career, it was actually first year of University. I was doing an Engineering degree and I ran into the eChallenge program and up until then, I had all these grand ideas, didn’t really know what to do with them. I did a lot of talking and a lot of writing. I’d write up plans and things but it was probably the first eChallenge that I did that I would say that there’s a turning point. I mean, mind you, I was also incredibly naive. I’m sure I’m still quite naive but looking back on the work that I put out there, it’s quite embarrassing but it’s been a journey sort of learning ever since.

Nick: The eChallenge, can you tell us a little bit about that for people that don’t know what that is?

Michael: Oh yes, sorry. The eChallenge is Adelaide’s unique business finding competition. So, the format is, it’s around about a 10 week program I believe, structured sessions, so students form teams and progress through 10 weeks of sessions on, let’s say, marketing and writing a business plan and at the end, there’s a pitch event and the teams are judged according to their presentations. We would like to think that the traction that they find in the real world but I for one was so caught up writing my business plan, that I wasn’t actually out there validating my assumptions and I suppose since then, I’ve come to see that as the biggest issue with entrepreneurship, in staying inside a building, writing, planning, researching. You can do that until the cows come home but when you step out of the building and talk to customers and see if anyone is perhaps willing to pay for what you’re offering, that’s when the real learning starts.

Nick: What do you think, do you feel, a best way or good way of actually doing that or actually reaching customers? Is it about literally going out of the building and talking to them face to face or can you do it by emailing or reaching out to them online or by the phone or is there a specific way of doing it like, for instance, people talk about making sure, is there difference between sort of asking someone would you pay for this and get them to actually get them to give you money for something? What are your thoughts on that?

Michael: It’s a great question and it is something that I ask myself too, you know the practicalities when it comes to – and what we are talking about is the customer development processes that process of getting out and validating your assumptions. I suppose it begins with, first thing, of understanding who your customer is. It goes without saying but some people do overlook that and they’re so caught up in the product, in what they are trying to sell, that there’s not that understanding and the focus on the customer. So, when you know who your customer is, I honestly don’t think it matters how you go about talking to them in the initial stages, just as long as you are talking to them.

I love just setting up casual coffee chats, particularly if you have a product that might be able to help someone, you can generally get quite far just from a cold call. I personally haven’t done much sort of emailing to learn – I sort of used emails and phone calls to set up chats in person but obviously, there is a limit to how far you can take that. You have so many hours in the week and I’m probably not the best person to comment on things like surveying and learning. You would obviously have much more experience on that side of things.

I understand you can learn where there’s more in personal sort of research methods but I’m a little wary because, as you say, when people say or when they tick the box yes, I would buy your product, hypothetically it’s very different to actually getting to that purchase decision and if people like you, they’re gonna tell you, what you want it hear and that really works against you because, in the early days when it’s about learning, you don’t want to be told that your ideas is just perfect, you need to have the hard learning.

Nick: It’s an interesting process, which I’m always keen to get someone’s take on it. Back to the eChallenge, is this open for all students or just Adelaide Uni students and is it a course in itself or is it something that’s separate to people who studies?

Michael: Well, sure. Originally, the requirements were, that every eChallenge team had to have one Adelaide University student and actually other team members could be from the general public. So, as long as there was one representative of the Adelaide Uni student body, you could form a team. Actually, since then Adelaide Uni’s broadened it up to any students participating or any students enrolled in a South Australian education program. It may pay to, head to the eChallenge website of Adelaide Uni’s website just to confirm but I do know that it’s broadened out to students in Tafe, Windsor University, Adelaide University, so it’s a real broad mix.

Nick: Do you pay for that or is it kind of funded externally?

Michael: I believe there may be a token entry fee but that wasn’t a major consideration, I believe. For me, that’s something it’s just a registration to make sure you’re serious. You do find in some teams sort of come and go. The process is quite drawn out and jumping into the eChallenge doesn’t luckily win to a daunting picture in front of thousands of people at the end. I certainly would recommend the process.

Nick: I think there’s actually anyone who is listening at the moment we’re recording this in mid June 2013 and there’s an eChallenge coming up soon, so check that out. Hopefully, I have the link for that. You also did, I think you mentioned you did an entrepreneurial course at Uni? Was this the eChallenge or was it a separate thing?

Michael: Yes, my degree actually has been in Innovation And entrepreneurship, so Adelaide Uni offers a degree program and Masters program and actually off at the back of the eChallenge, I decided to, I’m moving to the Bachelor, so that was how that happened. You know there’s been a lot of great learning through those years at Uni. I found sort of both in and out of the classroom because you have fantastic lecturers who had a lot to share, sort of on a personal level and the students as well who come through.

I remember to be really interesting people and you do get a broad grasp of a lot of ideas when it comes to the entrepreneurial process, marketing and management but I found that in a way, we all augmented that with, yeah I suppose study into other models that are being used because entrepreneurship is a really rapidly changing space. You look at what the web’s done to entrepreneurship and it sort of speaks for itself, so the ideas that Steve Blank, Ries and Osterwalder you know, a lot of these mean sort of new wave of entrepreneurship a lot of these guys. It hasn’t necessarily made it’s way to the entrepreneur into the University curriculum but we had a lot of scope to explore, to explore the different models.

Nick: In my interview with Chris Hooper recently, he talked about mentorship and getting a mentor or several mentors and how it’s been fairly instrumental in his entrepreneurial journey. Is this something that was encouraged or perhaps enabled by either the echallenge or the course you did at Uni or have you just used any kind of mentoring or mentorship opportunities yourself?

Michael: Starting with the eChallenge program, I neglected to mention, it does have mentorship component built in, which was fantastic because my first mentor really inspired me. He sat me down and asked me the hard questions and really believed in me and did all the things that a great mentor should do. One thing just had a little bit of attention, looking back, my mentor was a businessman, perhaps more so than an entrepreneur and he was encouraging me to spend time on the business plan and I suppose it comes down to that comparison of the search for the business model and the execution of the business model. So, I was doing a lot of things that weren’t really helpful, you know.

What I should have been doing was actually getting out, talking to people who I was saying I was going to be selling my product to and I probably would have discovered a lot earlier that I wasn’t actually seeing a viable business model but through that mentoring process, I did learn a lot and I was also really inspired, I think. I put a lot of my initial inspiration to my first mentor. The Uni course that I did didn’t have mentoring per se but obviously we’ll be coming in and out of the classroom all the time and build up similar relationships. In general, I think it’s great for entrepreneurs to be accountable to someone older, preferably someone who’s been down the [Audio distorted 00:24:18] to go.

I think we all have a lot to learn every stage in life and especially while we are young, having an older mentor, I would say, is essential for any entrepreneur and I think you find that a lot of people who would make good candidates for mentors are often quite open to the idea. You know, people love to help out, especially if they perhaps see a little bit of themselves in a young entrepreneur. So, right now I’m working with Geoff Kwitko. He’s a mentor of mine, great, well known figure in the Adelaide space and I’m really getting a lot of value out of working with him and I think he offers consulting and various things on the side.

Nick: Let’s talk a little bit about, before we move on perhaps, let’s get an idea of timing. When you went through Uni, how big a difference is it between then and now?

Michael: So, when I finished Uni, I was doing classes up until last year semester so that was like 2012 I did the last classes.

Nick: So, you are working on some project as well, in between that time before Offer Us?

Michael: Yeah, absolutely. I mean, if you [Inaudible 00:26:00] the storage vault around my hard drive, you will see about ten different archived business idea folders – I’ve never been without one really. What I regret is being kind of passive and all about this sort of theoretical – I wish I’d thrown myself out there and more with those. I’ve always been working on various projects and I think it’s been fantastic, all of the projects that have amounted to anything and a couple that have been successful to a degree. You learn so much and so I suppose that’s why. It sounds cliché but there is no such thing as a real failure. I suppose the only real kind of entrepreneurial failure is where you sink unnecessary expenses where you’ve been a little bit premature and I suppose the challenge then, is to get creative about how you can minimize your risk in an event ship but I’ve had literally sort of dozens of little business ideas and you learn a lot through them.

Nick: Could you pick one perhaps, just to give us a little bit of insight perhaps into some of the other things you’ve worked on?

Michael: Well, I ran an English document proofing service and this was one of the more successful ventures and in we sold something that was more that could be said for most of the others. So, what I did was experiment with ways of contacting various international sellers like retail goods sold on Ebay, sellers mostly from China and I experimented in offering them a free proofing service, in which I just highlighted all of the document errors. I just said like this is something that we do for free. We also provide a proofing service and you might like to see where these errors are.

We did some color coding and stuff. We had a non zero success rate with that. By that, I mean we had a lot of numbers turning over and we had a conversion rate at times around 7 or 8%. It was a waste of time but we got better and we were doing this service at various price points and it was a great learning experience. We ended up shutting that down because it wasn’t scalable. It was a service based business and it was never going to pay us more than McDonald, so we shut it down.

Nick: I noticed you said we but you have a business plan for that?

Michael: Yeah, I did. I primarily had one business buddy, who was able to speak Cantonese and Mandarin and so we complemented each other there. That was a great experience as well because we had a lot of learning there as to how to work together and manage the concept to equity and earnings and risk, so, that was good.

Nick: And your other projects, have they been also, some of them have other people or mostly just yourself?

Michael: Actually, for the most part, I’ve been by myself. I kind of, you know, I have a bit of, I have some opinions. I kind of feel like if you have an idea, it’s good to flush it out on your own and not over complicate it while you’re in the really early days and then, when you get to that point where you’ve actually validated you know a few key concepts, that’s when you’ll need to start bringing people in. I suppose if there’s a real skill deficit, if you want to do something in a space that you know nothing about you, might, one could argue that you should form a partnership right from the get go but perhaps it’s not the business for you to move into, so I mean, that’s just a bit of a personal thing. At the moment with Offer Us, essentially, it’s just myself. I’m working with a couple of others but not in a really formal basis but I hope to form a team when we get a few more notches in the belt.

Nick: Few more questions on this. Do you have any thoughts on – people often talk about this, when do you know that the ventures failed or when you should move on? You mentioned with your proofing service there, the fact that you couldn’t scale it and probably you want to talk about taking an idea to the failure point and then pivoting all then sort of leaving something else. But don’t you want to think that processes that were defined, do you have any thoughts on how should you know where the failure point is, or the point at which business idea shouldn’t be pursued any longer?

Michael: Yeah, that’s a fantastic question and it’s something I’ve thought a lot about and I’m really interested in having a few thoughts. I suppose initially, some people talk about the back of the envelope calculation, where you just sit down and say “alright how many people are there?”, “What’s the market for widgets?”, “What could we realistically sell them at or perhaps best case?”, “What could we make them for?” and you are so engaged in that viability assessment at really low level early on, like it’s the first thing you do and I think had I had that sort of filtering approach, I would’ve shut down, you know a few ideas, without assuming at all. Perhaps even the proofing service in a rut from the get go but and that’s not really again, to the point.

One thing I’d like to say is, often we think about pass/fail. I was applying for a Government process and in their work, they had a little teaching, sorry a Government program, trying to incentivise a new business process in South Australia. One of their training resources addressed this question, they were talking about primary research and even the result of that is a pass/fail. The secondary research pass/fail and something or other, like it’s a real binary process but I kind of feel like that’s the wrong mindset and because it is about learning. You go into a business with an idea, a set of assumptions, if I can provide this to this group of people in this way, the sum total will be a business model that’s viable.

The complexity of every assumption that you’re making, doesn’t lend itself towards a yes, no. It’s not a, this is viable it’s not viable, okay, well, we actually learn, so the customer wants it in this way and they’re not interested in making an upfront purchase. What can we learn from that? So, I suppose the term pivot comes to mind, and it may be overused but I would say it’s more about individually testing assumptions and learning and changing. I don’t think it’s about pursuing a big green light or a big red light you know, a go or a stop. It’s about at every point, you’re testing. You go in with hypothesis you know my customers will be willing to pay $1,000 for this value proposition and if they’re not, then you look at practice subscription model and you can flesh out each of these assumptions in a real, kind of iterative fashion and I suppose that’s – my point is, it’s more about changing direction, rather than a go and a stop. I guess, you know, if at any given point in time, you really can’t see a pivot that will take you in a path that you want to go, perhaps you found that a lot of your original assumptions were wrong and that learning process just takes you to that point, I guess where you just know.

It is sad at the same time, when you see people hanging on to an original idea and I share the link with some friends recently at the Bullet Bowl entrepreneur. There was a chap who invested 26 years of his life on a product – you know that’s the opposite of entrepreneurship, that is pretending that you’re an established company, investing lots of money in production. The entrepreneur’s job is to be nimble and to learn, I think actually Geoff Kwitko, getting an interesting lesson. He said some topic that he said that assistance is one of the worst characteristics for an entrepreneur, instead it’s about best smarts. It’s not about blunt determination, it’s about being ready to learn and being ready to change, so that’s the quick [Audio breaks 00:36:05].

Nick: Cool. Yeah, that is an interesting sort of discussion. I think the way you’ve put it really makes sense about being right changing directions versus a go versus a stop type situation. I just want to ask you on, you do coding, at what point did you learn those skills?

Michael: Yeah, I’m an interesting one because I’ve been doing application programming for a long time, so we’re talking visual basic was where I started and actually had been using for a long time since I worked with the business automation team, the tax office in working with business applications and that’s – in encoding terms it’s very procedural. It’s about processes and data and I suppose entrepreneurship, now a days is all about the web and they are quite different beats, so I started with one form of coding probably when I was thirteen, was just teaching myself and I really fell in love with it.

It was until about two and a half years ago, perhaps a little longer that I really started get into the website of things and it has been really quite self directed. I just do it because I loved it or originally I was just learning because I love to tinker and I think we should just like, if anyone watching is interested in getting into coding, just play, just find ways just to play in the same pit that was really how I’ve got a love for it, getting into practicality I suppose. There are a lot of awesome teacher resources, out there treehouse.com. A team, treehouse.com was a fantastic one for me when it came to Ruby On Rails, which is what I use now, but there is a lots of other resources out there too.

Nick: Cool, well that pretty much brings us up to now, I guess back to where we started. Can you give us, perhaps a few more ideas on what you are doing at the moment and your path in the future?

Michael: Yes, sure. Well, I’m not at a point where I’m really feeling an unfamiliar sense of clarity. I’m quite used to having my head just spinning with ideas and a various projects but I’ve been quite successful in cutting out a lot of stuff, so from this point on, I’m working with this Brandy Animations, as a means to generate some income I suppose, bank roll the larger project, Offer Us and which you might say is a deferred revenue project. And, so, it’s that sort of two focus that I have right now, you know.

I’m quite easily distracted probably just because I love meeting interesting people and doing interesting things but I’m going to keep that dual focus at the moment, so Offer Us being the long term project and Brandy being the short term project. I have a few other cash flow activities. I’d quit my job last year but had been doing a little bit of consulting and content creation but now it’s a good time bring it out to this just two things.

Nick: Awesome. Well, that’s pretty much all I’ve got for this interview. Before we finish up, do you have perhaps may be one or two bits of advice in general for people perhaps, wanting to start out on entrepreneurial journey in Adelaide, some kind of key things that you recommend they do?

Michael: Sure. Since you mentioned in Adelaide, I think it’s probably a first great step just to get involved in the community. We have an awesome start-up community here, so someone wanting to jump into the community would well to come down to our start-up weekend, coming up in a month’s time to get amongst the margin on [Inaudible 00:41:07] just to have conversations and you’ll meet interesting people.

If I can extend that to a couple of pieces of advice, it would probably be just to read some books that, I suppose pack a big punch, in terms of the value. So, “The Lean Startup” is a great book. There is another book out there called “Rework”. I believe it is by 37 signals but that should come up with a quick search. Perhaps not to burden you those two books are great at digging up some old thinking and laying a pretty good foundation in terms of the start-up process.

Nick: Awesome. Well, I’ll try and put some links in the show nights, as far as events go and meeting people. People can always go check out on adlaidebusinessevents.com.au one of our websites, which we try to collect lots of business events, good resource.

Thanks very much Michael for coming on this show. It’s been a real interesting conversation and I hope this will be useful for some of my audience.

Michael: It’s been a pleasure. Thank you very much.

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