Vincent Heeringa: All right, Theresa, thanks for joining us. My Food Bag, what a phenomenal success. You need to tell us. Give us some idea about the scale of success of this product. How many years has it been going? How many customers?
Theresa Gattung: It's been going three and a half years. We're now up to 50,000 customers. We're turning over well over $100 million a year.
I mean that's absolutely incredible, but I suppose the temptation is to look back and say, "Well, obviously, duh. That was always going to be a success." Why hadn't it been done before if it was going to be so easy?
I don't think it is obvious to go, "Oh. well, it was always going to be a success." The idea was Cecilia Robinson's, my business partner, who's Swedish, and she had seen this concept in Sweden. A company called Linas Matkasse when she went home. She came up with the name My Food Bag and she wrote the business plan for it. She and her husband presented it to me because I was an advisor to them on their other company Au Pair Link. I looked at it and I thought, "Gosh this could really go" because it brings together healthy food, convenience, and I had that point, just separated from my partner of over 20 years, who'd done the cooking in our household. I had the benefit for a long time of not having to worry about what's for dinner tonight. Once you have to worry about that you realise, "Gosh, there's a bit of a problem, there's quite a gap."
Celia showed me this business plan and I said immediately this is a good idea. It could really work but it has to be well done. There's not high margins in food and if you think about it there's lots ways you can solve the what's for dinner problem. You can eat out every night if you want to. So I think the genius was really in the idea, and in James and Cec’s entrepreneurial skills, and in the founding group. Nadia Lim was Cecilia’s first choice, for the food person 'cause Sig, James, and I understand about online and business but we were not steeped in the food industry and Nadia had just won MasterChef in her early 20s so I thought "Gosh, she's gotta have talent, great determination" all those things which turned out to be correct.
It was really the combination of the group and we all put money in. We borrowed, we signed personal guarantees to the people who were giving us food. We took risks, is what I'm trying to say.
You put your own ass on the line so to speak.
Exactly. No one took any money out of the business until we were really close to break even.
Did it require something like fibre internet for it to work? Was that one of the ingredients that had to be there before such a thing could work?
It's true that there's no retail outlets so you have to be excellent online and you have to be excellent in the physical delivery. The online piece of it has to be easy. For some people once they go online, they order it weekly or fortnightly and they sort of forget, they never go back to the website again. It's not really an ongoing involvement.
It's not like you need an app.
No. But we have to make it as easy as possible for people to change the deliveries. Customer service, I think, was at least as important as the actual website. If you contact us, whether by new technologies or just plain old telephone you get excellent service, your problems sorted, the customer love team have complete power to do the right thing by the customer there and then. There's no many layers of approval you go through and, let's face it, even today the call centre experience in many companies is shite. Saying that actually we're going to put our customers at the heart and delivering that both in terms of the feedback about the recipes and in terms of the service, that's probably been at least one of the reasons for the magic.
If you could bottle that, if you could do it again. Could you do it again? If you could take a step back and say, "Jeez, these were the things I would look for in my next investment" could you say what they are?
I've since found out that husband and wife teams do tend to have quite a good track record of success because they're living, eating, breathing the business day long so I invested alongside two husband and wife teams.
Double your chances.
Maybe I actually got that right without realising. One thing that Cec, James, and I agreed on from the beginning, of course, with Nadia, we totally agreed the food philosophy. You know, the free range, organic where possible, and all of that, that's been essential. The three of us, the business side of it, we agreed that we were not building a hobby business. We were building for scale. And so we made investments, assuming that we were going to be able to scale the business before we had reached that scale.
I want you to think about your role as a CEO and a corporate marketer. Quite different roles, right? As an entrepreneur and a corporate business exec. But are there parallels? Did you bring any lessons from that corporate world to what you're doing now?
Well actually James worked for Telecom as well, as a business account manager for several years, so that was his corporate experience.
Did you know him then?
No. That was his corporate experience before we set up My Food Bag and we borrowed the Telecom, what was the old Telecom remuneration system and structure.
Thank you HR department. I'm thinking about you in particular as opposed to the business.
Yeah, sure. Well first of all life has changed because of the internet because of what you said before us. In corporates today, using social media, connecting that way, is way more important than it was in my day. I was still here in the days of big brand agency. Now you have digital... You don't just see one different agency. You have different agencies for specialist things. So that's changed everything for everyone. Marking automation is now so much more important. It doesn't matter whether you're Coca-Cola or My Food Bag. That's changed the environment completely.
What hasn't changed then?
Well what hasn't changed I think is that at the end of the day, there's still something about the tangibility. When you get a My Food Bag delivery on a Sunday and you open it it feels like Christmas. Here are all the beautiful ingredients. Here is the lovely Nadia showing me step-by-step how to cook these recipes that make me feel like a domestic goddess, or at least a less-stressed working woman. The feeling good is a result of consuming the product and actually enjoying with every sense what the product does as important. People talk about us as an online business, but if you're My Food Bag customer you actually understand the relief, first of all, and how good it is to see that person bringing that food down your driveway on a Sunday.
What gets you out of bed? At a hundred million you could probably sell. I'm sure you have people knocking on your door. But you keep going. What motivates you?
We all really love the business and we just recently launched Bargain Box. All of our product launches have been driven by the feedback we get and so that's going really well. We love a challenge, we love the business. Yes, we get approached all the time. And a couple months ago, we said in effect that we were actually going to enter into a process of just looking at potentially capital raising process. We're still assessing, but at the moment we don't see a future where we're not still running this business and really keeping it going.
And you personally?
Oh yeah, I do other things as well. This is a big of my time but I have many things on the go, both commercial and charitable.
Does the future for you look like a series of projects? Would you throw yourself into one business again?
Probably not. I'm the girly swat who did extra subjects when she was 16 because I couldn't fit everything into the school curriculum timetable. I'm just that sort of person.
Imagine you're the younger self. The girly swat. Wants to please, working hard, blah blah.
I didn't say anything about wanting to please!
Oh, okay. Excuse me. Wants to succeed, shall we put it that way?
Curious about the world.
Well what have you learned?
That things that previously you wouldn't think come together are where the next shift comes from. What's an example of that? I've got a cousin who liked to scribble. Not obvious that scribbling would lead to a career. Now as a "can work anywhere in the world," when he was in New Zealand, had Weta Digital chasing him around Wellington, trying to get him to stay in New Zealand because computer animation has become a skill that's highly valued now, 20 years later. And so things that didn't used to fit together before, scribbling on a pad and computers, turned into something that we wouldn't have heard of 20 years ago. So My Food Bag is the integration of a few things until it makes it possible that the value on the quality of the food that we're eating, the time pressure of so many working women, and so maybe there wasn't an opportunity for that a decade ago, but it's real now.
So that's one thing that the future is shaped by the integration of things that used to be rigid boxes that different coming together.
And the second is that sometimes things don't change except in the detail that's important. Like fashion comes around but the shape of the silhouette's slightly different. One of our suppliers recently said that he was the last person who used to, many years ago, do the milk run in Herne Bay, because that was the only suburb where there was enough premium pay to make delivering milk work. The idea that people like stuff delivered to their door is not a new idea. We all went away from that in the '70s in driving our car to the supermarkets, but this in a way is new wine in old bottles.
Yeah. Anyone that likes going to the supermarket needs their head read. So here we are on the Idealog podcast talking to the lovely Theresa Gattung in her lovely Auckland home. But Auckland's new to you. You're a Wellingtonian. What gives?
Well I call myself a Kiwi. Remember I was actually brought up in the Bay of Plenty. And my spiritual home is still Waihi Beach. I lived in Wellington for many years, that's right. I was in Auckland all the time and just at the time that we were setting up My Food Bag, it became obvious that really I needed a base here. That was three years ago now, and I have to admit that I stopped spending a lot of time in Wellington, but there's a lot I like about Auckland. Of course I hate traffic but I like the dynamism of the city.
Yeah, New Zealand sees to be in fine health at the moment, at least entrepreneurially. There's lots going on. You travel a lot. I know you've got business in Australia. What are your thoughts about the Trans-Tasman rivalry at the moment?
Did you watch the rugby?
Which one? Take your pick.
Look, New Zealand business is in good shape. I should say though that my mates in the agricultural sector wouldn't necessarily say that. Perhaps that tide is turning, but dairy has clearly has a more difficult time of it than previously. But absent the agricultural sector, yeah domestic business, domestic economy is growing so much that it is a good time for businesses here.
When you travel, and you think about New Zealand's place in the world, what are the things that really stand out for you that are important? That are worth investing in? I don't know, choose anything. Technology, environment, ethics. These things are often named as important things. Is there anything that stands out for you?
That's a good question. I don't think I've been asked that before. I guess I'm not really a silver bullet person. I think that putting everything on one bet is not a good idea. So I've never really gone for "Oh, well, New Zealand should be only those things that come from the agricultural sector, because that’s a competitive advantage" or "New Zealand needs to shift away from that and do nothing in the agricultural sector! Got to go into design or..." I say, look, if you bring people up to believe anything is possible and you give them access to world class education, some will go overseas, some will come back, some will live here. What turns out you can't control so you shouldn't try to plan it too much because the
future of what jobs our kids are going to do is completely unknowable. We have no idea. So to me characteristics like curiosity and belief in yourself and collaboration, because the technologies of our world very much about collaboration, all of that is more important than any particular thing.
Peter Cullinane and I talked and he's very hot on this idea of quality, and quality is going to be a New Zealand thing. But that comes at a cost, right, it's expensive. Is New Zealand's place a premium place in the world?
Well Peter might be more qualified to talk about that than me. Certainly in terms of My Food Bag and New Zealand business we have decided that we can probably do this at every variant but we started out at the highest quality that we could say that we could build a business around. That is where we started but everybody wants to eat well and eat healthily. And all kids have the right to a good education, not just kids who came from wealthy suburbs, so I think that egalitarianism of New Zealand is really deeply embedded. And people should be able to access the best quality that they can afford.
What's the coolest thing you've seen lately?
The coolest thing I've seen ... Obviously I'm not getting out enough. Oh! I know what it is. Jazz Apples have up with this one thing that you can both core and slice the apple with one push. One little device. And it sits in your drawer and you can easily see what it is. You don't have to go "Oh goodness, what is this?" And you just get your apple and you go ‘bang’ and here we are, cored and sliced.
You can have one in every My Food Bag.
Oh, I'm not sure about that, but I think that they're trying to get one in every household.
Yeah. That's a good idea. What else are you doing apart from My Food Bag?
Quite a few things. First of all, I'm very involved with a company called Telco Technology Services, which has essentially put the whole primary school curriculum into the cloud. And we're now trialing that in schools around the North Island. That's part of a whole digital shift in education that's going to influence our lives for the next decade, two decades, three decades.
Who's the customer in that case?
The customer in that situation ... the customer ultimately is the kids. But effectively, through Tomorrow's Schools, you're selling them to the schools. We have an preexisting relationship with many of these schools, because the infrastructure of some of the business has been on ‘the man in a van’ fixing infrastructure for quite while. Therefore, you've got an encore relationship with the school, and that makes it possible to introduce new concepts. Then we have a whole professional learning team that go in and help the teachers...
Does the ministry welcome that kind of innovation, because they're a tricky bunch.
To be honest ... Francis Valintine and I had this conversation the other day, and we were scratching our head about this. We were saying that we think there is a gap. I personally really support Tomorrow's Schools. I think that the community deciding and not trying to manage everything from the center was completely right. That's how you get breakout innovation, that's how you get people taking responsibility for their own lives and the kids in their community. On the other hand, this shift to digital technology that teachers need to go through, is really very important, and I can't see how we can have a situation where some teachers are creating apps for their kids and others can't even turn on a PC.
Yeah. It seems madness, doesn't it.
It does. I do think there is role for the ministry to have some sort of overall funding of professional learning for teachers. I do. That isn't in place at the moment.
Or at very least, maybe some sort of standards that industry could meet.
Some sort of overall umbrella that actually is not just letting schools go, "Oh! How do I deal with this?" Principals...
Yes. Not having to reinvent it school by school.
Exactly. Principals asking us for help all the time. That's...
That's a goodness. I'd join that one. What else you got?
Company called Mobit which is very exciting. Two brothers from Auckland came up with this. Its customers are in the US. It's all about marketing automation. It's giving customers the power, whether they're small businesses or medium-sized businesses, to actually manage their own marketing campaigns just through mobile. It's basically saying email marketing is dead ... and we're not an email marketer trying to become a mobile core marketer. We're only about mobile phones. There's more mobile phones than there are toothbrushes. You know what it's like. That company is doing really well. It's taking off in the US. That's our main focus.
Fantastic. That's aimed at small business?
At the moment, it is, but we have a very strong obvious open development pathway through to middle business...
Is there a connection with Xero or Vend or any of those local cloud providers?
We don't need to, because it's all about mobile. We've already done all the negotiations with the telco providers in terms of the mobile piece, and it's very powerful. We don't need to have any of those ... we need to integrate with Infusionsoft, and ultimately we'll integrate with some other systems as well. We're embedded within that, and when we present at conferences in the US, we have to beat back people coming to the booths.
It's a really good example of what you talked about before of joining two different ... the need for marketing has not changed, but the technologies. You put those two things together, and bingo. That's interesting. How is that funded? Again, have you reached into your pocket to do that?
Yep. We've just done another capital-raising round of New Zealand investors. It's the real meaning of [private equity. The original meaning of private equity.
What else? Anything else ... that you can talk about, at least?
I've got quite a few charitable interests as well. I still chair the Wellington SPCA, and I'm on the board of the national SPCA. We've got quite a big programme there of what we're trying to do with that organization, and I love animals as you just about tripped over my cats coming into my house.
She ran away in fear.
I'm organising a woman's conference in Auckland next March called ... my Austrian friend and I went to a conference in America last year and we were blown away by it. We came back and we said we're going to do something like this in New Zealand.
What makes it different? There are quite a few conferences, and there are quite a few aimed at women.
What makes it different ... okay. The theme of this conference is women who are making major differences and changes in the areas of business, education, and health. This is not one of those conferences that's about, "Okay, anybody can achieve anything from a difficult background." This is actually women who are already very grounded and powerful in their own lives going, "How can I make a difference in the world and have fun along the way?"
Taking it to sort of nek level?
What I was blown away by in particular in the US conference was the integration of for-profit and for-good. This conference was about a third corporate women, about a third social entrepreneurs, and a third commercial entrepreneurs. Again, back to what I was saying before, Vincent, they didn't make a distinction, "Well, this is a commercial and this is social." There was a woman there who was a financial midwife. It was her business, and she helped other women give birth to their businesses.
A financial midwife. Only in America, surely.
Corporate body coach teaching execs about improving performance by getting in touch with their bodies. These ideas may sound weird, but so did having a personal coach sound weird ten years ago.
Yeah. Totally. In the States, anything's possible, surely.
Some of the women I heard were amazing, and I've underwritten and organized this conference to bring them down to New Zealand. It will be a very very special weekend.
Next March 15th.
My last question, I suppose, is are you open for business? Is the Gattung bank account still...?
My limitation is energy. I generally am not separated from my money. I like to be involved. I've only got a limited amount of energy, and I've taken on some things lately ... chairing Co. of Women to help other women entrepreneurs, because I believe in that as well. My limitation at the moment, Vincent, is I've got to try and not be that girly swat who just took so much on and then couldn't actually have time for her friends anymore.
Also I suppose do the things you do a little bit better.
Yes, with not feeling I'm always late for the next thing.