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Andrew: Hey everyone it’s Andrew Warner founder of Mixergy.com home of the ambitious upstart and I’ve got Naomi Simpson here with me she is the chief experience officer of Red Balloon and Naomi what is Red Balloon?
Interviewee: Oh we like to give people a good time Andrew. So instead of giving somebody a physical gift you give them a voucher to an experience and an experience could be anything from learning to fly a helicopter to belly dancing lessons. We’ve got more than two and a half thousand different activities through-out Australia and New Zealand that people use as gifts, either personally to give to moms and dads and weddings, all that sort of thing or all the way to corporate gifts and reward recognition programs, so business to business giving.
Andrew: What I here is that in your office you’ve got a big number that says how many people or uh how many experiences have been bought on your site. Can you tell people what that number says today?
Interviewee: Yeah, well right now it says 5… I’m just reading it (laughs) 588,491
Andrew: 588,491 experiences bought on your website?
Interviewee: That’s right since 2001. So Red Balloon is changing gifting in Australia forever you know we really want people to have a good time together we want people to go out and have fun and be with the people who are important to them, their family and friends. And really we don’t need anymore clutter in our lives. Do we really need another vase or another you know coffee mug? And so we’re really encouraging people to go out be with their family and friends or the people that are important to them and having a good time. And so in changing gifting in Australia we’ve got to ask the question, well how will we know when we get there? How will we know when we’ve changed gifting forever? And so that’s our big hairy, audacious goal is that 10% of the Australian population by 2015 will have had a Red Balloon experience. So the school board shows where we’re up to.
Andrew: Wow! So what’s the percentage today?
Interviewee: Well we’re over 25% there and it’s interesting because I took a photograph of the school board before I went away on holidays in April or was it May? Just a few months ago. We’ve come 100,000 in just six months, so the growth is exponential. You know the first year we only sold about 300 experiences, the next year we’re selling 300 a month, the year after 300 a week and we’re clearly selling you know way more than 300 a day in fact I’d like to say that next year we’re selling 300,000 in the year and you know it’s absolutely possible and we’re not far from it but it is all about being focused on what is the game and the game is changing gifting in Australia forever.
Andrew: First of all I want to go back to something you said earlier and just say Amen! That you are going to eliminate all the physical gifts we that we keep getting. I’ll I get is boxes and boxes of stuff I don’t know what to do with it. I want, I want to simplify my life.
Interviewee: Absolutely, and you know it’s also challenging for people who want to give a great gift because they want to give you something that is special, is important and shows that they love you, but you know, I have to giggle. My mother-in-law for the last seventeen years has given me a hanky for Christmas. I don’t need anymore hankies you know. I use tissues in fact. So I don’t quite know what she’s trying to tell me about, about me, but we do make it mean so much when somebody gives us a gift. Um, you know we’ve all had those unwanted gifts and we’ve all had those recycled gifts that we know have come from somebody else and they’ve just passed them on. So really to have an experience gift is just to enjoy the moment and it’s, it’s really important that people have a good time.
Andrew: Alright, when a business is done I think you told me earlier 99.9% of your business is online. When a business is online I’ve got to ask this question. Are you profitable or are you just turning over a product and getting clicks on your website?
Interviewee: I’m really proud to say that we are really a very profitable business. We’ve self-funded, we’ve invested greatly in the business over the last eight years. But the systems and processes have set us free and they make us profitable so um, we’re quitetransparent with all of our team what about how our profitability is uh….(static)
Andrew: Alright, so we got cut off there but what you were saying is that you, that internally you tell your people what the profits are right?
Interviewee: We’re very transparent about being profitable. It’s important for our clients to know, our suppliers to know and particularly our people. Because without the means you can’t uh, you can’t change the world. You know you’ve got to have money to be able to change the world, you’ve got to have money to be able to grow and career growth is important to people especially in a start-up or in a smaller business. You know if they want to grow their careers the only way that they’re going to get within a smaller organization is if that business grows. So um we’ve got to be profitable. We tell the team this is the expectation in terms of the EBIT Live that we want which is Earning Before Interest and Tax. So that they have an understanding….
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Interviewee: …So, they have an understanding of the requirement, and then we all play for that because we all know that we get to share the up side.
Andrew: Oh, you do? Well, first of all, can you give us a sense of how profitable you, guys, are?
Interviewee: This year, we focused to run on about a 12-[unintelligible] and that’s based on a very significant investment we’re making in IT and infrastructure. Last year, we [unintelligible] greater than a 15% [unintelligible].
Andrew: Wow. All right. Can you give us a sense of what that translates into, roughly, in dollars?
–I had to edit this out —
Andrew: Australian dollars. Right?
Interviewee: Yes, which, I hate to say, it’s on par with the US dollar, so when I talk million dollars, it’s exactly the same as US dollars.
Andrew: All right. Well, thank you, thanks for telling us that. I think that really gives us insight into what you’ve built over the last…we’re talking about eight years or so here.
Interviewee: Yes, it is, it’s eight years since we’ve started, and when I started the business at home, it was me and the dog. He still works with us, actually, he’s quite demanding now, though. Now, we’ve got a team, and I think, 54 or 56, it’s quite a big team.
Andrew: Let’s go back to 2001 when you started the business. I know that you didn’t get any outside funding, it was just a lot of hard work to get it going. Can you tell us what the original idea was that got you started on all these hard work?
Interviewee: Yes. Look, I left corporate life, I’ve been a corporate marketer for 15 years or so, and I left corporate life and I became a mom. I wanted more flexibility in my life, and I started by being a freelance marketer, which is fabulous. But, if you’re not working, you’re not earning any income, and the whole dot-com thing was going off at that early part of the century. I thought, “You know what? Maybe that would be great. If I started a dot-com business and I can just have it as a little hobby business at home. Then, we could play with the kids during the day and have the business at night.”
I thought that was a fabulous idea, but really, so then, I started looking for a business that would suit an online application. What we’d seen in that early part of the Internet age was people taking existing big businesses and then sort of applying them to the Internet. So, groceries, for instance, or airline ticketing and so forth. Really, what I was looking for was something to bring to market that could not be done if it wasn’t for the Internet. So, really RedBalloon could not operate unless we had the world wide Web. So, that’s kind of interesting, but also, coming from a traditional marketing background, I should know nothing about the internet, nothing about online marketing. I’m sure there’s many, and my team would still argue I don’t know anything, but I, basically, took the profits from my consulting business, which was $25,000, founded outsource supplier of websites, briefed them, and say, “I want you to build this website.”
Now, at the time, I thought that was fantastic. But really, because I didn’t understand anything from wire framing to briefing to business analysis, I didn’t understand any of it. Really, what I got was an electronic brochure, and I hate to say this, it was red with black writing, so very difficult to read. It’s funny, I asked a group of people, I speak a bit, and I said, “Did anybody [unintelligible] this website?” This guy stuck up his hand and I just ignored him. But afterwards, I said, “Did you really [unintelligible] this website?” because I basically know the IP addresses of everybody that came to the website, and I said, “Did you really know?” He said, “Yes.” “OK.” He said, “I was studying multimedia and Internet design at the University of Technology at the time. My lecturer [unintelligible] in as an example of the worst website he’d ever seen.” I was like, “Oh, my God!” So, lucky I didn’t rush in front of everybody.
But, you know, I had this great business idea but the execution and the application were very, very missing. In fact, the whole website was framed, and gorgeous Google could only find and categorize it as keep intro because that was the only text on the website, everything else was images. So, it was a pretty rough start. In fact, it took two months and four days to make the first sale, which was a very, very long time when your husband, the accountant, is asking, “So, how is the project going, sweetheart?” I’m going, “Oh, fabulous, darling. This dot-com thing, it’s really…,” you know. The tech wreck had happened, there’d been a dot-com crash by the time I got around to launching. Launched date was first of October, which was three weeks after the September 11 crash. So, we wondered if we’re going to sell anything ever. So, anyway, it’s pretty amazing to have come through such a journey.
Andrew: I want to dig in to some of what you said so far. But first, let me go back a second. When I asked you about your revenue and profits, I sensed that you’re uncomfortable talking about it. You and I are friends and we’ve connected through a friend and before we started, we said that we wouldn’t get to do too detailed into the profits. So, what I’m asking you now is, do you feel comfortable with what you just said going out there? If you don’t, as a friend, let me know and I could take it out. I think it’s OK that you said it, that you said it, but I want to be fair.
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Interviewee: It’s quite funny actually because I’m actually doing some judging on ecommerce sites and unless you’ve got the data, something can look fabulous. But unless you know, then things can look pretty but unless it’s a real business it doesn’t have the same validity. So we’re pretty upfront with people. I just…we tell people our revenue all of the time but I don’t know if we’ve ever seen the…we do with our company but I don’t think…I don’t know if I’ve ever put it on there. Like anybody could see this; our competitors, anybody. But what impact would it have? I don’t know. We’re a profitable business and… In the early years it was very small profits but now we can invest significantly back into the business.
Andrew: Okay. All right. Let’s go forward then to what you said about the first sale coming two months, four days after you launched the site. How did those first sales come in? That one and the ones that came in afterwards?
Interviewee: Yeah. You know the funny thing was when we launched the website – and I love the way I use “we”. It sounds so big and grand. When I launched the website…no… One of the things that the outsource developer had done was create an email tool and this is before the privacy laws. And I as a marketer, had been gathering email addresses so that I was going to send out an email to announce the launch of Red Balloon opening for business. Well what happened was I didn’t know that they’d set up the emails as a scheduled task so I just did some dummy email to see what it looked like and how the html thing worked and all that sort of stuff. And unbeknownst to me, I then sent crap to my seven and a half thousand very precious names before we were even live and ready to launch. And I was devastated by that because I pride myself on being a good marketer and here you go, basically spamming people and you didn’t even have a website. And they honestly thought that we’d sent them a virus or something and I think we got black labelled in email from that and I think it took us years to recover from. So the launch in that very early phase was very, very rocky. I mean, this is so tragic. I can’t believe…it’s been a long time since I’ve talked about this but I remember going into town, like into the city, and literally I would walk with balloons attached to my briefcase with the url on it, hoping people will see the url and then type it in. Not a very clever marketing strategy, really.
Andrew: Well you said you had seven and a half thousand people in the mailing list. How’d you get 7,000 people on your list in the beginning?
Interviewee: Well because I’d been in marketing and marketing consultant for quite some time, I had been visiting trade shows and asking people if they wanted new product information. Well my friends! I’ve got at least four so they added to the list. So really I just collected that through trade shows, seminars, exhibitions and getting people to sign in. But of course because we didn’t have a brand presence they don’t know really what they were signing into, just new product information because I was a marketer. So that’s why it was so devastating, that email going out because the first Red Balloon experience, meaning online experience, was atrocious.
Andrew: So what was your plan when you wrote out your business plan, where did you think you were going to get your customers? Did you think that that 7,000 person mailing would result in some customers and then some of their friends would come in and buy and word of mouth and recipients would all translate into new customers?
Interviewee: Yeah. Well I suppose everybody kept telling me “What a great idea! Why didn’t I think of that?” And I thought the idea would really carry it. So yes, I believed that the seven and a half thousand names, they would then…like I had all these things like “forward this your friends” or all this sort of…refer a friend and the reality is that didn’t happen. Really the way that we grew was our customers and our suppliers are actually our media. So in any given moment as long as we’re looking after the execution, like how fabulous the experience is, then they will go off and have great time and they will tell ten people. Now we didn’t have FaceBook back then or twitter but they would still email their mates or talk to them or whatever. We used portals back then as well. Most of the things we did then, to launch, I would never do now.
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Interviewee: …Most of the things that we did then to launch, I would never do now. It’s just we’ve moved on so far in terms of [unintelligible]
Andrew: Can you give me some of your mistakes? I’d love to learn from them.
Interviewee: Well, we used a shopping portal, and that was good to give us a brand presence because we’re right next to some of Australia’s largest retailers. So, that looked fabulous, but it was very expensive, and we didn’t necessarily get the return on that investment. Being an online business, it wasn’t in the early days about building brand, it was about building transactions. So, we did that, I wouldn’t do that now. We did better advertising and that sort of thing. That, to me, isn’t really how I would do it now.
Affiliate marketing is still big, but was just in its infancy stages then. But really, I think, that Google AdSense will surpass affiliate marketing because if you’ve got a content website, you just want to be guaranteed an income, whereas affiliate marketing is a little bit more subjective.
Andrew: But in the early days, affiliate marketing worked for you?
Interviewee: Yes, in the early days.
Andrew: That was one of your successes.
Interviewee: Yes, it really was, and just in terms of driving traffic. Really, we had the belief that it was not our job to track people to the Internet. It was our job that if they’re online, then attract them. So, we didn’t do any advertising, any above the line, anything. You know, no billboards here, no radio, no anything, and even now, we’re very limited on the media we use. We know that the role of the media that we choose is about reinforcing or re-exciting people about our brand. So, we’re not trying to introduce them to the brand, we’re just reminding them of the fabulous [unintelligible] time they’ve had.
Andrew: I see. All right, let’s go back then to the $25,000 that you started off with. How much of that money went to the Web designers?
Interviewee: All of it.
Andrew: Oh, really?!
Interviewee: Yes. So, it was actually really quite sad because I spent $25,000 to build this website, and then it was delivered and it was crap, it was really bad. Of course, I wanted to change it and make it from red to white and change some more. I went back to them and I said, “Look, guys, we need to change this, we need to change this.” Of course, they said, “Well, that’s going to cost you $150 an hour” or whatever it was, but it just was a fortune when you’re not making any money. I really wasn’t into it much either, and I had no money to promote it. So, I was going to rely on the same amount of marketing which I just screwed up.
So, you know, sometimes there is a God. We got new neighbors and I had little kids, and we went next door to meet the neighbors. I said to this guy, I said, “Oh, hi, welcome to the neighborhood. What do you do?” He said, “Oh, we moved here because my wife’s been transferred with work.” I said, “But what do you do?” He said, “I’m a ColdFusion programmer looking for work.”
I didn’t realize that, of course, ColdFusion, which our website was built in, was such a unique sort of language, such a boutique language. I said, “Oh, really?!” You know, [unintelligible] only 200 ColdFusion programmers in the whole of Australia. Right? I said, “Oh, really, ColdFusion, that’s interesting, because I’ve got a ColdFusion website.” And I said, “Look, I’ve got no money, but if you’d like to come next door and practice while you’re looking for a job, please do.” And, as it would happened, he ended up being with us for four years, and it really was the turning point. I do wonder if Mark hadn’t moved in next door would I’ve persisted and carried on. He’s just a gorgeously, wonderfully generous person.
Andrew: Would you have, knowing yourself today, knowing who you were back then, would you have just found a way?
Interviewee: Look, I know I would. You know, I’m like a dog with the bone. I’m so persistent and I don’t give up. And you know, this is a bit embarrassing really, but it’s a bit about ego. You know, I’ve been this marketer for Apple and Ansett, which was an airline here, I’ve worked with KPMG and IBM. I’d have big brand experience, and here I am saying, “Oh, I can build a brand based on listening to people and responding.” And here I am, you know, day three, going, “Oh, my God, I’ve ruined the brand experience. It’s going to be horrendous.”
So, a lot of ego was at stake. I mean, my husband is that [unintelligible] the whole time going, “So, how’s the project going, sweetheart? How’s the project going?” So, probably, I’d never wouldn’t have given up, but if Mark hadn’t moved in next door, I do wonder what I would have done technology-wise. I couldn’t afford the $150 every time I wanted to change a word, it just wasn’t plausible. I would have found something, I don’t know. I don’t know.
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Interviewee: I would have found something. I don’t know. I don’t know.
Andrew: Were you always that kind of person who would just find something, find a way?
Interviewee: I think you have to be resourceful in business. One of the reasons I suppose we’ve won innovation awards is because we don’t have the resources. We have to do things a different way. At Red Balloon we often look at what we love at work, we want to do more of that, and then write a list about what we loathe about our roles. And that’s the stuff that’s repetitive, that’s uninteresting so how can we get rid of the loathing stuff? Peter, my husband, works with me now in the business, and as an accountant he said, “Look. Don’t mind helping you a bit but…” clearly he’s a senior accountant, “I don’t write checks.” And I go, “Oh, all right sweetheart. You don’t write checks. Well that’s going to be interesting paying 900 suppliers every week if we don’t write checks.” So he went to the bank and he said, “Look. We’ve got a technology platform, you’ve got a technology platform. Surely we can just get them working together.” And some API integration, something like that, and it worked. And so literally he pays 900 suppliers and it takes less than five minutes. Whereas I know another experiences company in a different part of the planet has six or eight people in their accounts department. I’ve got one. So that’s one of the reasons for the profitability but it’s also just the way we’ve always approached things. You know? Who wants to write a check? No one. So let’s do it differently.
Andrew: That’s why I’m intrigued by what you earlier that you and your people will write a list of what you love about your work and what you loathe about it and then what? Can you give me an example of how this works because I’d like to eliminate the stuff I loathe about my work. I’m sure the person who’s watching us, listening to us right now is feeling the exact same way. How do you…can you personalize it so that we can…so that it can become concrete for us and we can use it too? How have you done this?
Interviewee: Okay, so I suppose there’s two phases to this. One is, as an organization we’ve been using the Gallup Strengths Finder so we know what people are innately great at. And you know, you can have different strengths between people who are fulfilling the same role. There’s no right or wrong about what strengths are but it just gives us an insight into what inspires these people, what makes people feel great. So when I did it, for instance, I found out that I’m a very positive person. I’m input, which is why I write my blog. I need to store this information somewhere; at naomisimpson.com. And then I’m also what they call “woo” which means I love people, winning others over, I love people. So having me in an office is not a good idea. I’m the sort of person who needs to be out working with customers and talking to customers. So and there’s people much better at operations and logistics and all that sort of thing. That is nowhere in my strengths. So the first thing is to understand what is innately the strength of somebody. So let’s take my corporate team. So this corporate team now has ten people on it. Some of them are dedicated to selling Red Balloon programs with corporate clients and off they go. So we ask them to do the love-loathing. What’s the bit they hate the most? And I have to say I’m in this group. I hate writing proposals. I really don’t like it. I don’t like writing proposals. The other thing is they hate chasing money. You know, they’ve done the work, they’ve sent the invoice and they do not want to have anything to do with it. But…and that’s because if you look at their strengths they’re all positive, they’re self-assured, they’re out-there sort of people. And yet chasing money, they don’t really…that’s a different sort of skill. And they don’t like it. So then we find somebody who has the innate strengths of liking chasing money. And we have a fabulous woman who does that for us and she’s like a terrier with
a ????. She’s not going to let them go and she just has this different level of strengths towards that. So as your business grows you look at, “Well if we can put all…somebody might actually like that stuff, you know?” And that’s fabulous. It’s all about such a variety of people for a variety of roles and so what Tee does every day I think is amazing. That’s this woman’s name. I think she’s absolutely amazing because I don’t like doing it but thank goodness we’ve got her. So that’s…
Andrew: Tell me, is that a luxury of a profitable growing company or can an individual do it? Can you have done it in the early days back in 2001, said, “This is my strength. That’s what I’m going to focus on and the rest I’ll put aside for now?”
Interviewee: Well when it was just me, the only thing I’ve never done in our business is cut a line of code. I have never programmed anything. But I’ve blown balloons. I’ve fold packs. I’ve answered calls. I’ve put on board suppliers. Don’t know if I’ve done any accounts either. I think I might have in the early days. But I think it’s great to have that broad experience and understand each of the disciplines. But when it comes time that you can no longer do everything on your own, you’ve got to work out, “Well what’s the first person I’m going to employ?”
Naomi: I would have found something. I don’t know.
Andrew: Were you always that kind of person who would just find something, find a way?
Naomi: I think you have to be resourceful in business. One of the reasons we have won innovation awards is that we don’t have resources. At Red Balloon we often write down what we loathe about the work and what we .
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Interviewee: …you’ve got to work out, “What’s the first person I’m going to employ?” Surely, employ somebody to do something with the bits that you don’t like. You know, get somebody who’s going to like it. So, I think, that’s why he can’t speak went so fast across to my partner, Pete, because I was going to do that, and while we got somebody into the production area because it was important and I’m not a data person. So, I think, it doesn’t matter if the size of the organization is to be aware of it and to move towards it. It might not be today, but be very aware of what gives you energy, but also what saps your energy. Because if you’re doing too much on the energy sapping, you’ll never going to get to the bigger game.
Andrew: OK. People keep asking me for book recommendations, you mentioned Gallup StrengthsFinder. I’m going to suggest that they go and get any book by Marcus Buckingham who talks about finding your strengths, who talks about why you should focus on your strengths and not try to pick up your weaknesses.
You’re right? Do you agree with that?
Interviewee: Absolutely. I’ve got to [stand] a book list of, you know, when people ask me, “Oh, what should I read?” I think there is probably half a dozen essential business books to read that will really take you to the next level. There’s a book by Bob [Lamar], another guy by the name of Simon Sinek, and both of them, they really explore the question of “why?” So, often people will say to me, “I’ve got this business idea, I think it’s really great. What do you think?” The first question I always say is, “Why are you doing it?” If they can’t answer that really clearly, and making money is not one of them, I often will say to people, “Look, if this is about making money, you might be better off getting a job.”
But if they’re wanting to change the planet, they’re wanting to add value to other people, I think that’s a really good idea. So, really, for me, it’s answering that “why” question. I’m really clear about our “why,” we’re changing gifting in Australia forever, and getting that “why” question right early up. My “why” has changed when I started the businesses. I said started because I was a mom when I started this [unintelligible] business. The “why” changed when I started listening to customers and the impact we’re having.
For instance, this man who wrote to us about how [it was for him], so everybody who goes on a RedBalloon experience gets a questionnaire survey. We read everything and he wrote quite extensively. He said, “My father is 84 years of age, and he wanted to do the DC3 flight, so I bought him one.” Now, DC3 is [unintelligible] antique plane. He said, “I drove to the Central Coast, which is about a hundred kilometers away, picked him up, and drove him to the airport. He was excited like a little boy going to a birthday party as I drove him to the airport. He was so excited that when we got to the airport, I decided to buy a ticket myself. It was truly embarrassing on the flight as my 84-year-old father tried to pick up the flight attendants.” He said, “But on the way home, my father spoke to me about how, when he was a child, he’d listened to the radio and would always wanted to fly on a DC3.” He said, “I just wanted to let you know, that this day, this RedBalloon day experience, will be one of the days I remember my father spoke. I’ve never seen him so animated. He’s a very quiet man.”
So, in listening to the customers, in listening to their stories, I got really clear about our purpose. So the purpose might start as one thing, you know, “I’m sick of working for those big guys,” it might start as something. But if you’re not really clear about what you’re contributing to the others and why you’re doing it, it’s very hard to inspire people to come along with you for the ride, whether that’s your customers, your suppliers, or gorgeous, gorgeous employees.
Andrew: Gorgeous employees is right. By that, I haven’t seen any of your employees, but I’ve talked to them in putting these together. Man, you’ve got great people! There’s one person I forget who I…I don’t want to start naming names, but I will say, I think there was one person who was sick when we needed to coordinate. She got on the phone with me, she taught me about the business, and she got me up to speech so that I can do a proper interview. You’ve got incredible people.
Interviewee: I do, and it’s a privilege to work with them. They are gorgeous and they’re committed to what we’re up to.
Andrew: You mentioned the book list, how can we give people your book list? How can we tell them what books have changed you, what books have influenced you? Can I link you up on a blog post somewhere that I can link to?
Interviewee: Yes. Look, I actually have them on the right hand column of my blog NaomiSimpson.com., the authors to their websites, they’re all there. Simon Sinek, Daniel Pink, I think, is an interesting guy. But, obviously, you have to read the Gazelle’s book, that’s just the absolute Bible, the “Rockefeller Habits.” But I supposed, some of the ones that are a little bit more esoteric or not as well known is the “I Want What She’s Having.” Now, that’s a great book.
Andrew: Never heard of that.
Interviewee: Have you read that?
Andrew: No.
Interviewee: “I Want What She’s Having,” it’s on Amazon, it’s by an author called Naomi Simson.
Andrew: (laughs) Listen to me, how did I not have that in my research? All right, let’s make sure to link up to that one. People, if you’ll listen, if you read it, give me your feedback, too. Send me an email, my mail address is up on the website, and obviously, email Naomi and give her some feedback, too. I love when people, who watch us, connect with you.
Interviewee: Yes. So, look, you can get that on Amazon, but it’s quite funny because…and you can get it online. If you come to the blog, you’ll see the book on the right hand column there as well. But I wrote it at the 5-year mark, and there are things in that book that, when I read it back, it’s almost embarrassing. You know, “Oh, my God!” because, obviously, we’ve moved on so far from there. It’s sort of a reveal old book, and I [thought it’s worth] to know about some of the disasters and the things that we won.
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Interviewee: more esoteric or not as well known as, “Oh, I Want What She’s Having.” Now, that’s a great book.
Andrew: I never heard that.
Interviewee: Have you read that?
Andrew: No.
Interviewee: I Want What She’s Having. It’s on Amazon. It’s by an author called Naomi Simson.
Andrew: [laughs] Listen to me. How did I not have that in my research?
Interviewee: [laughs]
Andrew: Alright. Let’s make sure to link up to that one. And, people, if you listen, if you read it, give me your feedback too. Send me an email. My email address is up on the website. And, obviously, email Naomi and give her some feedback too. I love when people who watch us connect with you.
Interviewee: Yes. Look, you can get that on Amazon but it’s quite funny because, and you can get it online. If you come to the blog, you’ll see the book on the right hand column there as well. But, I wrote it at the five year mark. And there’s things in that book that when I read it back, it’s almost embarrassing. You know, I go, “Oh, my God” cause, obviously, we’ve moved on so far from there. And it’s sort of a reveal all book. And, you know, I tell once and all about some of the disasters and the things that we learned, and what inspired me and what kept me going.
And, you know, there was a time there that I just felt like a punching bag. I would have, you know, everybody at me and at me and at me. And I remember saying to one of my entrepreneurial peers. I said, “You know, you said that we’re like those clown punching bags. But, you know, what happens if I just don’t want to get up?” And he said, “Well, then, Naomi, you’re not an entrepreneur.” And so I wasn’t going to put up with that. So, [laughs] you know, it keeps me going. There’s nothing like a little bit of a challenge, you know. So, now I write the book. I think it was almost therapy for me to be able to put a lot of that stuff in the past and move on.
Andrew: Okay. So, we talked about the $25,000. It went to the web designers. Mark helped fix that by coming in and working on cold fusion. Now, we know how the website was up and running. How did you get then the original users if email didn’t work and you didn’t have enough money to pay for ads at the time? Where did the customers come from?
Interviewee: Well, apart from wondering around with the balloons on the bag which wasn’t very successful, look, the very first customer we got was actually Order No. 14 because I dumped 13 orders before to check the website that actually worked. And, I called him. And I said, “Look, hi, my name’s Naomi Simson. I’m the Chief Experience Officer at Red Balloon, and we’d like to call all of our customers to find out how they experienced the website.” And he said, “Oh, who are you? What are you? Never heard of you. What have I done?” And I said, “Look, you’ve just bought a stress busting massage for your friend, Scott Hidge.” And he said, “Oh, right. I had no idea what I was doing.” I said, “Oh, could you give us some feedback about the website.” He said, “Oh, it was crap.” And I was like, “Oh.”
But the thing is the word of mouth will travel. And we actually used our supplier base very much to help with that in terms of the execution. So, once we had one customer. Another thing that we did is with our corporate customers. So I had a marketing career as a freelancer, and one of my corporate clients was Fuji Xerox. And Fuji Xerox called me at some point and said, “Hey, what are you up to over there? What are you doing? You know, we want you to come to this program” or whatever. And I said, “Oh, look, actually no. I can’t do that now. I’ve got this new project. It’s called Red Balloon.” “Oh, tell us about that.” And then they said, “Oh, that would be like a real good sales incentive program.” And I said, “But, you’ll have to be national.” So, I said, “Alright, national. That’s going to take a big investment.” And so, he said, “Look, I’ll tell you what. I’ll go national and I’ll do all this development work cause Mike Mark was now on board.” And I said, “but, I need you as a testimonial.” And I said, “Sure, not a problem. We’ll give you a testimonial as long as it’s good.” I’m like, “Right, okay.” So, I went back to my suppliers, talked to my suppliers and said, “DD Suppliers, who do you know all around Australia that we could bring onboard as suppliers?” And sure enough, I fulfilled on my word. And that’s how it came.
You know, it was very stressful though in those early days. I remember, for instance, having… you know I come from Apple and these other places where, you know, and that was one of Steve Jobs lessons in his early days was “do a few things but make them look bigger than Ben Hur.” You know, I think you all remember the, you know, what was it the Sugar Bowl or the, you know, the Superbowl, the Superbowl thing …
Andrew: [inaudible]
Interviewee: Yeah, with that … So, you know, that was always his thing and I worked at Apple, you know, well a while ago. Anyway, so I just said, “Right. Well, there’s a corporate gift show. We know that corporations spend more. We’ve got this fabulous case study now with Fuji Xerox. Let’s go and do this trade show.” And, anyway, my husband, you know, cause we’re working from home, came to me. He said, “Naomi, I’ve just got an invoice for $15,000.” And I said, “Oh, yes, sweetheart. That’s for the trade show that we’re going to do. And he said, “Are you joking?” He said, “Have you seen out revenues? You know, it’s $1,000 a month revenue, not profit. And you’re spending $15,000.” And I said
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Interviewee: And I said, “Oh, sweetheart. You know if we’re going to do it, we’ve got to do it properly. We’ve got to look fabulous, you know. Can’t go there half, half, you know, though”
Andrew: I know.
Interviewee: Anyway, the biggest most almighty fart of all time and finally after about an hour of this berating, he said, “Well, it’s your money, honey.” And good on him, really, because, obviously, once your husband said to you, “It’s your money, honey,” you’re going to prove him wrong, right? So, every single person who came to the trade show, I followed up with a phone call. And I got one … a business card from one of the large [sounds like toy cos.] and I called that company afterwards and I said, “Oh, look, you know. Met you at the trade show. Interested in Red Balloon.” He said, “Oh, look, thanks for that but I’ve actually passed your card onto our HR department. Of course, I just think, “Alright, that’s the end of that.” And off and didn’t think of it.
Well, then in about three months later, the HR department called me and said, “Look, we’re thinking of doing a length of service program. You know, come on in.” I went in and, you know, as you do, you read upside down. I could see the numbers of what they were saying. And I was going, “Oh, my God. This is more than $200,000. This is massive.” And, you know, they said to me at the time. They said, “So, are you in New Zealand?” And I said, “No. No, we’re not now but we will be by Christmas” you know, looking upside at these numbers and getting all too excited. And they gave us the order.
So, not that I rubbed it in, mind. But we got the order, and that was a really, a pivotal point because it was an ongoing. So, between Fuji Xerox who launched their program for just one quarter, then actually kept on doing it cause it was getting them such great results, and they did it for six consecutive … So, having this regular income was fabulous. So, and then also with this [sounds like toy car] program, every month we were delivering vouchers to them. And I was good on my word.
We opened New Zealand in the same way as we’d gone national. And it was interesting though because I did go back to them about six months later and I said, “Oh, by the way, you know, we’re now in New Zealand. So, send on over those New Zealand winners anytime you’re ready. And they just smiled and said, “Oh, I think we’ve got one winner, maybe, next year.” I was just laughing. You know, I could have fly then first class to Australia to go on their experience for cheaper than starting a business. Didn’t actually qualify the size of the opportunity in New Zealand. But, it’s actually been one of the most fabulous things for us is because we have, a trans [sounds like tassman] offering which is actually pretty special. And, so, very glad we did it but didn’t quite qualify the size.
Andrew: Wow. So, the first customers that you thought you were going to get were going to be one-offs, individuals who were buying gifts for each other, for their friends, for their family, and it ended up being that the better opportunity in the early days came from corporations who were willing to buy in massive numbers, who were willing to place massive numbers of orders with you.
Interviewee: But also, they were … That’s exactly right. But they were also prepared to support us and promote us.
Andrew: How?
Interviewee: So. Well, for instance, Fuji Xerox running a thousands incentive program announced to all of their dealers and distributors that Red Balloon has surprised us. So, then all of a sudden, they’re [inaudible] about Red Balloon. And it was the same with the Toyco [spelling] and many of the other corporations. So, you know, it was, that brand association was very, very powerful.
Andrew: Okay, and so from that first show that you did, you spent $15,000 but you only got one big customer from it, one meaningful customer?
Interviewee: Oh, no, we got more than that. There was more than that. It was just that that was such a significant size, it changed the scale of the business. And it also took us to New Zealand. So, really, it has been this listening to customers and responding that has made us grow dramatic …
Andrew: Can you give me a sense of how you hustled. You now had $15,000 on the line, your husband doubting that you could pull this off and make it valuable, your first and maybe your last show unless you do it right. How did you do it right? How did you squeeze out every piece of value from that show?
Interviewee: But one of the things was I invited our suppliers to participate as well. And so they came onboard and they donated their time and their equipment. So, V8 super cars or hot air balloons or whatever, they brought them along. We had trapezes there and all sorts of things. So, it was fun and it was interesting and they donated their time. The other thing is that I found another business that was sort of a, an associate type business in a similar … it had a similar audience but completely different offering. And I sublet some of the space. [laughs]
Andrew: So, you had $15,000 worth of space. You brought somebody in to take a piece of that space, so you made back some of your money?
Interviewee: Correct. And I got all of the, basically, all of the actual activity and the excitement and everything on the stand was for free.
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Interviewee: That’d be great for Red Balloon. And obviously our own people, we literally invent experience as well and then we go and look for a supplier of that.
Andrew: Were you looking for individual suppliers in each city or were there at the time national companies that you could work with that would give you a national presence with one agreement?
Interviewee: We tried for some national agreements but the reality is I would say 85% of the experiences are run by small businesses. And so there were some large chains; especially, let’s say, massages and spas, that sort of thing. We actually found working with smaller suppliers…we become very important to them with the amount of business we send them. And we really are a support network for the smaller businesses.
Andrew: When you said that the suppliers helped you what kind of help did they give you? Would they send customers over to you? Would they promote you somehow?
Interviewee: No, neither. They helped us by usually referring new experiences or other experience supplier, so they’re very much a part of a community. Or also just being a testimonial when one person says, “Oh, I don’t know if this is any good. Are you with Red Balloon? Oh yeah! It works actually”, that sort of thing. So if we don’t have anything on the shop we’ve got nothing to sell so suppliers are very, very important customers to us. So without their commitment to the integrity of the experience I don’t have a business. And that’s what I mean by customer support. They’re looking after individuals every day. Hundreds and hundreds of people, making sure they’re having fabulous experiences. That’s what I mean.
Andrew: Okay. So we now know that…we know how the business was structured in the early days. We know about the rough parts of it. We know about how getting that tele-co helped change the business, helped project you further. What was the next milestone? The next step that made you grow way bigger than you had been before?
Interviewee: It was just getting people on board who gave us scale and who had different talents and different skill sets. I had a work experience girl with me in the early days and she was loading product on. And I looked at the website and one of those experiences was a new mum’s massage. And she had found an image of some woman in slinky lingerie, looking very pornographic to me. I was like, “Oh my God! A, no woman feels like that when she’s had a baby, let me tell you. But B, where did this image come from?” It was just so inappropriate and I just knew that we had to get a process around this. We could just be in so much trouble so quickly with our brand and so I recruited a product coordinator. And when I put the job ad, I got a few responses, I couldn’t choose. I could not choose between these two employees. And one was quite outrageously loud and the other one was clearly a very detailed, fun, fabulous girl but clearly very detailed. And I knew that they were going to bring completely different skill sets to what was the same role. And I couldn’t choose. So I employed them both. Much, as you can imagine, to my husband’s happiness. “What the hell do you think you’re doing? What do you think they’re going to be doing?” And I think it was probably the first time we ever had a little bit more bandwidth so we could be proactive instead of reactive. So one of them…she still works with me. Six and a half years later, she was a product coordinator-product manager, became marketing manager. Now she runs the show. She’s the general manager. And the other one also has had a fabulous journey with Red Balloon. She was very much doing the PR and you know, anything to do with our public presence, she was doing all of that sort of thing. And she left to do an MBA and started her own business. And she is now a supplier to Red Balloon. So the years go on but they were both beautiful and perfect for the role. So I’m really glad I did that. Gave
us bandwidth.
Andrew: You mentioned Peter a few times. How does Peter deal with you being such a center of attention? I see your picture on
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INTERVIEWEE: So I am very good at keeping costs low.
ANDREW: Whoever is listening to this, do you love entrepreneurship or not? Where else do you get to be this kind of clever?
INTERVIEWEE: [Laughs]
ANDREW: And come up with real results?
INTERVIEWEE: Yeah, yeah, it was fantastic.
ANDREW: Ah, this is the most entrepreneurship business in general. Entrepreneurship is the most fun you can have.
INTERVIEWEE: It is, it is good. And also it is a little bit scary and daunting at the time. The adrenaline is pumping, and that is part of the game. And we got to remember that, it is a game.
ANDREW: When your heart is pumping in the middle of the night and you’re worried you may have went in the wrong direction, and people are doubting you, and someone is looking at your brochure website and going that’s what you left corporate world for? When all that is happening, how do you say that’s a game and go in there and play the game? What do you do to get yourself past that?
INTERVIEWEE: Yeah, I suppose one thing is if you can’t laugh at yourself then life is pretty serious. We are actually all Australians as well, and Australians never take themselves too seriously. And the other thing is that we’re in a fun business. And I’ve always figured if I’m not having fun, given that I choose this as a lifestyle, then how on earth can I expect my clients to be having fun? So fun in the work place is very important. In fact one of our standard lines is that it’s okay to mix business with pleasure.
ANDREW: Okay, so what about this. On a more practical side, knowing that you can go back into the corporate world, was that a bit of reassurance letting you say: Let’s play this game all the way out, worst case I get to go back to the life I had before. It’s not like I’ll be out on the streets.
INTERVIEWEE: Yes, of the things was that I was very comfortable in that corporate space because that’s where I come from. And I did have a lot of people I knew in the corporate world. Like I said, [inaudible] was actually a client and they approached us. So it was fabulous for us to have that. And you know I did know a lot of people around the city. So really it just evolved. And I have had many sleepless nights in this business. I do tend to wear it on my sleeve. But the reality is I stop and say: Did anyone die? No. Is this brain surgery? No. So lighten up, really lighten up. And it isn’t about money at the end of the day, great entrepreneurs they win it, they lose it. It just happens.
ANDREW: Alright, so we have talked about expenses with the website, revenues, and how you got your customers. You mentioned suppliers a few times and I haven’t dug into that. So where did you get your orginal suppliers. I understand that you got this idea that you could put people up in these hot air ballons, you could put these adventures of their lives, where did you get these adventures?
INTERVIEWEE: Because the internet was really glitchy at the time, we actually didn’t find them online. It is probably where we go look now, but it isn’t where we found them in those days. We literally used the yellow pages. The initial ones we used the yellow pages to read flyers and bulletins that sort of thing. We found that there are four ways we actually get suppliers. But in the early days it was us doing the research and finding them. And then getting suppliers to trust us was a big deal. “You know, what do you mean you’re online? We never heard of online, I don’t have a computer.” You know that was the first thing, all of our suppliers had to be online and have a computer and mobile phone, and that was a challenge in it’s own right. “What do you mean you’re asking me to buy a computer, just to do business with you? I don’t know that, just come back to me when I’ve heard of you”.
ANDREW: Why did they need to trust you? Weren’t you paying for the product for the experience only after you sold it?
INTERVIEWEE: Yes.
ANDREW: So why did they need to trust you? Your money is good, it’s in the mail.
INTERVIEWEE: I know. It’s one of those things. It’s almost like a return on time invested. But they wouldn’t of thought of it that way. “Why should I take photographs? I got to write a description. . Oh and I need public liability insurance.” So I got to invest some time in promoting my business with you guys. So I don’t know about that. It’s completely different now, completely different. You know I am always in this position of having a waiting list of people always wanting to join Red Balloon. So in the initial we just literally begged. We really begged people to come on Red Balloon. Then what happened is that they begin to see that we were making sells. And then it was hassle fee and then they got their money before the experience. It was all easy for them, they didn’t have to invoice us, it was lovely. Then what happened they would start suggesting other experiences. Either of their own or other suppliers that they knew. Then we found that our customers where recommending experiences, and they’re often the best ones.
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Interviewee: …and you know how I said before about loving and loathing stuff? Well, he does all the stuff I don’t want to do, which is really amazing, and he loves it. So we’re talking things like compliance and text planning and payroll things and all those sorts of things. Man thank goodness, and to have somebody in a financial role in your business who you absolutely trust is paramount, you know it’s so fabulous. So many an entrepreneur is away with a story and forgetting about, oh what about the cash flow here, or what about this, and so he’s doing all of that. We just have the right person for the right role and we just make a fabulous partnership.
Andrew: Alright, we’re coming close…
Interviewee: You could not get him to do this, I promise you.
Andrew: I was going to ask. So he wouldn’t want to do a video interview like this. I see pictures of you on-line. He wouldn’t want to be as photographed and as seen as you are?
Interviewee: No.
Andrew: It’s just not his thing?
Interviewee: Absolutely. It’s not his thing. We were asked to do something recently for a radio station on, you know, couples working together and I managed to get him there, but it was very reluctant and there was no photos and all that sort of thing. No, it’s just not his thing and he’s like, we’ll leave you to do all that stuff, it’s fine. Quite frankly it’s easy to having a single message, it’s fine.
Andrew: Alright. But, if Olivia and I happen to be in Australia and want to take you guys out to dinner would he be comfortable with that, or is that…
Interviewee: Oh, absolutely.
Andrew: Alright.
Interviewee: He’s very much present and around the office, he’s actually the only person at Red Balloon who has an enclosed office, and that’s cause he’s so noisy. He’s very noisy, all the rest of us…
Andrew: What kind of noise is coming out of his office?
Interviewee: Oh, when he’s on the phone, I don’t even know why he needs a phone, he may as well just talk at them even if they’re on the other side of the city they’ll hear him.
Andrew: We’re American, so we’ll drown him out.
Interviewee: Yes [laughs].
Andrew: Tell him to bring ear plugs.
Interviewee: Yea [laughs].
Andrew: Alright. We’re coming close to the end of the program here. Do you have any advice for an entrepreneur who’s ambitious like you were in the early days and maybe struggling a little bit because of the economy right now? Or because they’re early on in their career? How can you guide them?
Interviewee: One of the things is, you know, you get a lot of knocks and it’s the ability to pick yourself up. You’ve got to really believe in what you do, absolutely believe to your core, that this is right. Self doubt is the greatest stopping point, when you begin to believe the crap, when you begin to believe, oh, what if it doesn’t work? Have no second option. There is only one option and that is to win, that is to succeed, just one option. You know I like to put my four P’s together because I was a marketer, so my first one is, clearly know your purpose. Absolutely know why you’re doing it. Secondly, is about the people, I did not do this on my own I had fabulous people around me. My customers are fabulous, you know, you’ve got to have great people, great employees, great supplies. Thirdly, it is about the process and the planning. You can not grow unless you’ve got process and systems in place. You can’t build the Taj Mahal with ten pigs, so if you’ve got a vision grow it. Think of it big, play a big game. Then the fourth one is passion, and you can’t fake that. You either love what you do, you believe in it, or you don’t. I don’t make this up, it is the way I am. I really, really love it every time I hear about somebody doing the Red Balloon experience. I get excited when I look at the scoreboard. I’m a truly passionate individual who’s up to something, and it does take passion, because that passion is infectious.
Andrew: I’m smiling so much. I’m holding back my smile so I could just pay attention to this, but I’m smiling so big as you’re saying this. The person who’s listening to me right now, listening to us, if you’re having the same exact experience you’ve got to come back and tell me what you thought of this interview. This is one of my greatest one’s. Olivia, we have got to go to Australia and take them out to dinner.
Interviewee: [Laughs]. Come and have fun.
Andrew: Yes.
Interviewee: We have a few things to do here.
Andrew: Thank you for doing this interview. I’m going to say, before I say goodbye, how can people connect with you, you mentioned your website. Let’s mention it again so that they can go onto it and read it,your personal blog, and then the business site. Sorry.
Interviewee: OK. So it’s naomisimson.com, which is N-A-O-M-I-S-I-M-S-O-N.com, but you can Google search it or whatever and you’ll find it, naomisimson.com. I did mention the book, which is always, I think they’re actually nearly out of print so they might be getting a bit scarce, but have a go at that one. But then obviously to see what we do is redballoon.com.au and also redballoon.co.uk, but have a good search around there. You’ll find us on Facebook, on Twitter, in fact, follow me on Twitter, that’s a good idea.
Andrew: What is your Twitter handle?
Interviewee: It’s /naomisimson, all one word, so it’s Twitter.com/naomisimson.
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Andrew: Don’t just follow her send her a message. I keep telling people who are listening to this these little connections, when you say “thank you for doing this interview” or say “I saw you on the interview” it’s a nice way to connect with people before you need them. And who knows maybe ten years from now the person that says “Hi” to you now will have some kind of business relationship with you, but you’ve got to start small, and that little Twitter hi is often a way to do it.
Interviewee: One of the greatest rewards for me, and one of the reasons why I do this sort of thing, and why I wrote the book, is it’s amazing the people who will come up to me and say “I read your book three years ago and I started my business and it’s changed my life,” and I go “Oh my gosh.” You know, it’s amazing, or people who send me little tweets and say “I read your blog yesterday, I had tears streaming down my face, I can not believe the experience you just shared with us.” So when you hear that you do have an impact and it’s up to me to give generously because the world has given so generously to me, it’s only my job to give back.
Andrew: Well, thank you. I’m so looking forward to all the feedback that I’m going to get on this. People don’t just sit back and listen, contact me, contact Naomi. In the comments give us your feedback, I keep wanting to hear what you think of these programs and especially this one because I’m so excited about it. Naomi, thank you for doing this interview, and I’m looking forward to meeting every single person who’s watching this and hearing their excitement. Thank you.
