Ep 48: How To Build A Recession-Proof Brand With Your Principles - Andy Fallshaw from Bellroy [ Part 2]

Speaker A: When you think about something that happened during that social media advertising inspired DTC boom. It was a period where these brands could use ratios rather than fixed budgets. A lot of sort of incumbents were using fixed budgets so they couldn't ramp their spend on social media as quickly. And everyone said, okay, direct to consumer, uh, you know, through a digital interface, this is the future everything. But really what that was was this arbitrage on this realis that there was a good return on certain types of ads. So people went all in. And it's now that you're starting to see lots of these DTC darlings either struggling because the price of meta advertising has gone up.

Speaker B: This is Nigel Thomas and this, ladies and gentlemen, is the Ecom Alphas podcast. So leading on for the first fantastic, fantastic episodes with Andy, who's one of the founders over at Bellroy, Episode two, we go on to talk about how he structured his team at Bellroy and how the expansion globally has affected their growth and that team structure. And then balancing the people that have worked for him in those different regions whilst making sure they stay intact with those principles are outlined in episode one. Then we move on to talk about the next five to ten years and the future of retail. Talking about the big shifts in the market and how things will change and what, as a founder, uh, that you should really be looking out for. We also touched on, um, the advertising omnichannel, all the rest of it, what to do, what to look out for and how to adopt new technology, the benefits and the downside to it. Overall, just another fantastic episode from someone who really has been there and done it, gone all the way through from start to finish, and is extremely, in my opinion, intelligent and has a very unique insight on the market. So sit back, relax, enjoy, and if you do enjoy it, please share it with one person today. Wherever you hear this, happy holiday season, have a fantastic week and I'll be back soon with another episode. You talk a lot about resilience, which is amazing. How have you structured your team? I mean you're well over 100 employees now. I can't remember the, the exact number. You'll have to update me. But how? I'm curious because I know you have a unique philosophy in way that you look at the team structure, but how have you structured your team? Because you even mentioned at the start of this podcast that you're the CEO. Um, but in reality it's not really a hierarchy and obviously the balance and those kind of philosophies. I'm curious to hear how you set things up. So obviously had this massive success over the last decade or so.

Speaker A: Yeah. So Australia, uh, is the main base. So City of Melbourne is, and Greater Melbourne is sort of our area. So down in the southeast corner and the Melbourne office is our uh, main area. So and that's where we have a lot of functions. I'm um, currently down in our Bell's office. It's our product, uh, design hub. So we've got a lab down here with all sorts of incredible things. We've got phenomenal pattern maker that does all our patterning. Our uh, designers laser cut, so bond form. We can make all the products we want to in house so that we're in control of it, especially in the bags area, but also wallets and most of the accessories we make most brands outsource to the supplier and uh, have the supplier uh, do the patterning and work out a lot of the details. And we felt that would number one, make our products look like everyone else's who's at that supply with that patent maker. It lost the ability to really iterate and test and go through those rapid evolutions. So in Bells we have some of our creative team, but mostly product designers as well. And then we do work with remote folks. We have remote in several different ways. Uh, I think we do really value physical shared spaces. There's a style of iteration, brainstorming and contextualizing and there's a shared vibe you get in shared spaces. So we still do really value those. And you know, lots of our crew might only work from the office two, four days a week, whatever it is. Some are full time in the offices, but we love those spaces. We love bringing everyone together at least once a year for sort of a big learning conference and those sorts of things. But then we do have several people around the world. I think we've got crew on every continent other than Antarctica. We're working on Antarctica. We're trying to work out how we could add that one. But we have remote teams that some of those like, you know, we'll have customer support in two major different regions that let us kind of COVID the global clock, so to speak. We work incredibly closely with suppliers where we generally take over, uh, an entire factory or part of a factory. And those crew work full time on Bellroy. And the products we have made very differently to most other products. And so they take a level of skill that typically needs more refinement and more work. But then we also operate our supply chain on lean manufacturing, theory of constraints, a whole series of principles that mean the way our stock flows and the way our materials um, and movement flows and our production scheduling happens, it's small continuous work rather than big seasonal batches that sort of end up in shipping containers. So we don't like lumpy supply chains. We like very fluid, agile kind of continuously adjusting supply chains. And so that also means we then need much closer relationships with very few suppliers that we go deep with. We then schedule the work, we train in new methods of production that allow for this flexibility. So yeah, I guess uh, it's sort of a global footprint. Some areas like data or tech are easier to have more folks based remotely. Where others like product design for instance, you really need lots of your team in a shared space where you're working on the same products and iterating together. So yeah, it's a fairly global footprint with I guess the nucleus around Melbourne.

Speaker B: And which markets are you looking to push into within the next three to five years? Obviously I appreciate that's going to be changing a lot over the next 12 months especially. But just curious in terms of obviously your guys expansion, that thing of starting

Speaker A: a uh, slim wallet brand in Australia meant we had to be global from day one. We've solved for the current scales many of those issues from much earlier parts in our journey than many other brands would. So every month we are already selling in 150 countries. We already have retailers in over 50 countries. We're basically in every region of the world, every major economy. When we look at our sales it is spread around the major economies of the world. And so we're basically already operating in each of the regions and countries that we see high potential in. You know, North America is our largest market, US is our largest market. But it doesn't dominate the sales. It's Europe's good, Asia's incredibly strong for us. We sometimes work with distributors in particular markets that have a lot of language and cultural nuance that we want to really understand. Uh, other times we go direct for wholesale. We sell direct through marketplaces and website sales ourselves around the world. We have warehouses around the world. So we're basically already there. I think there's still incredible opportunities in certain regions. I think there's still more opportunity in Europe for us. I think there's still more opportunity in China. Even though we're doing some really good sales and successes there, there's certainly regions we're still interested in expanding the footprint more. But I think it's already a global footpr footprint and we already have ways of working around the world in parallel rather than in series.

Speaker B: What you're trying to tell me is if you're looking to start a, uh, global brand, Andy, you've got to move to Australia first, right?

Speaker A: Well, I think if you begin a brand in the US it's so much easier to stay with your focus in the US you might be able to get away with fewer warehouses. There's no tax compliance issues across international borders. There's. There's many fewer things to solve. So I think it's more that if you start in a small market, just work out where your ambition is. But, um, it's certainly a lot harder to solve global logistics. There's a lot of brands that do really well in a home market that fail to replicate that success in other markets. I think for us, we've always traveled, our teams have always been very global. We have so many nationalities and cultures sort of represented in our team that I think we never wanted to sort of deprive certain regions of what we're making. We always wanted to share it. We always had folks inside that could help us understand what might be needed in particular regions or countries. So it was just a choice. Again, I think it's much simpler selling one product to one market. I just think it's not the shape of business we wanted.

Speaker B: Yeah, no, it's interesting because my idea was to ask you about the principles at the start of the episodes and then throughout the episodes as, uh, obviously you're talking about all the parts of the business to see that how those principles have obviously been built and shaped your business. And I think that just like hitting that nail on the head, the fact that obviously you're so balanced across all these regions, the fact that you have people from all these different countries, it's incredible to. Obviously you're talking it, but with actions like you can just see how it's just how. How important that vision is and how, yeah, it's really helped shape your. Your business. So honestly that, yeah, amazing. And I don't think I've spoken to another brand who quite thinks just like that. I'm learning a lot, Andy, for sure I'm interested from your side of things. I'd, um, say the, the CEO, the founder. What is it? You obviously said, you know, you're not looking for obviously a quick exit. And that's pretty evident by how you've shaped the business and what you believe in. But I'm interested and maybe you haven't got an answer to this question, but what is it to say for you? I've completed my mission Here at Bellroy, is there something where you think that will happen or is that just uh, something off in the future which may or may not happen?

Speaker A: Yeah, I think even as we describe those goals for Bellroy not being these really concrete 10 year things, uh, I think uh, our goals for life is to sort of enjoy the journey and enjoy the craft of it. Running a business has a lot of stresses. There's a lot of times when you want to be doing something else, but you know, you need to come in and sort of help write the ship in an area or do something there. And so I think for us, the way we conceptualize success isn't a static thing. Even when you were discussing, you know, the approaches to the environment earlier and sustainability, like when you actually look at systems imbalance, it's not that they're in stasis, it's that there's a dynamic that can move and flex and pulse, but there's then checks. Once something starts to get a bit too out of whack, it can kind of pull back the other way. I certainly know that every time I look over our product, I'm so proud of where we've come from. I'm so proud of where we are and I know there's still so much to do. And each time we look at our, that, you know, the work we're trying to do in the world to try and move it towards better ways, it's like really proud of where we've come from, really proud of what we're doing, but so much work still to do. I don't even conceive of goals in this sort of, once I reach that, it's job done, retire, it's much more enjoying the craft, enjoying the journey, realizing when something might be out of balance. How can you sort of bring a countering force in to write that a little? And so no, I don't think there is a point where it's like job done. I think it's much more trying to enjoy the craft and the daily practices and the dance and yeah, the tango.

Speaker B: Yeah, that's honestly, it's a very healthy way of living. I wish I could think more like that. So again, taking notes here, Andy, in the next five to 10 years then, or just, you know, the future of retail, like from a macro perspective, what do you see the big shifts are going to be in the market and how do you think things will change and what should other founders and CEOs and execs and everyone else in these amazing companies look out for in your Opinion.

Speaker A: I think it's good to think about history and patterns that play out. It's good to think about economics and principles that tend to play and for instance, just going back to the direct to consumer thing. It's like if you look at billboards, massive expensive billboards in Times Square, it's easy for Coca Cola to advertise on a billboard because within a block or two you can find that product anywhere. When you think about something that happened during that social media advertising inspired DTC boom. It was a period where these brands could use ratios rather than fixed budgets. A lot of sort of incumbents were using fixed budgets so they couldn't ramp their spend on social media as quickly. And everyone said, okay, direct to consumer, uh, through a digital interface, this is the future everything. But uh, really what that was was this arbitrage on this realization that there was a good return on certain types of ads. So people went all in. And it's now that you're starting to see lots of these DTC darlings either struggling because the price of meta advertising has gone up, or flipping to brick and mortar, or starting to explore wholesale or starting to do these things. So I think when we look at trends over a long term, there's this notion that customers do have different preferences for how they want to engage with physical products. Some want to do it in person, some it's shipping and returns are fine. Some want a marketplace, others have discovery. Some want to trust a retailer who curates for them. And they can trust that as they come into that space, space, there's not going to be anything that they'll regret six months later. There's lots of different like that. That beautiful diversity in humankind is also why humans are going to want to interact with things through many different ways. And if you're trying to compete for a billboard, but people can only interact with you through one channel, through one very specific commerce platform, you're not going to be able to bid as much for that billboard unless you've got, you know, some secret sauce or something strange. So I think that there's going to, I suspect my guess is that sort of omnichannel flux, like people will want to interact with your products in many different ways. And you know, a digitally native brand has certain benefits, less legacy in certain spaces, those things. But also I think they'll keep being experimentation, they'll keep being people wanting different platforms. They'll keep being brands, start in one zone and one channel, but then actually want to start to move out and get other types of Feedback, other types of conversion, other types of things happening around their communities, and ways to interact. So return to more variety, I think things that are easier for customers and better for customers, things that nurture, uh, interaction. Again, I think many of us have been a little more siloed over the COVID periods, especially if you're in cities that lock down a lot. But rediscovering the joy of being in physical spaces with people, you know, there's a lot of good reason to get out and find excuses to mingle and meet new folks and do those things. So I think I'm expecting more diversity, more variety. Again, I think we get these waves where a new platform comes in and everyone says, this is it, this is the future. And actually it's just part of the future and there will still be many other parts and many other forms. So it's not much more than saying humans are diverse. I expect it to still be very many diverse things out there.

Speaker B: Yeah, no history definitely repeats itself. You're not wrong there, Andy. What I was thinking while she was saying that, and they were, honestly, they were really great insights and, uh, I couldn't agree more from what I'm seeing. And obviously the people I'm talking to, like yourself. But maybe it's going to be good for the market because obviously those brands that came in for obviously that big, explosive growth, how, how much do the founders actually care about changing the world? Well, in reality, a, uh, lot of the time, if they're not willing to go long term, they're not willing to go omnichannel, probably that much. So actually, maybe long term, it clears out a lot of the rubbish in the market. And then the brands that are left, like Bellroy, for example, are the ones that did set that mission up. You know, they do really care. And, um, that can only be good for mankind.

Speaker A: I like that there's diversity of businesses. I like that there's some that take a risk and just go one channel and go deep and try and spin it fast. But I certainly do think, you know, every new technology that's adopted must have some benefits. That's why it's being adopted. But it will also have some downsides. And I think it often takes society a little while to learn the downsides and then start to, uh, pad and protect ourselves against those downsides a little better. And I think when we saw people be consumed by time on social media, it felt like we were getting all these buzzers and all those returns of, you know, endorphins or validation or whatever. And then we started to really see the downsides and we started to see, see anxiety rising and all sorts of issues. I think it's great to have these experiments that are very rapid changes and fast things, but always a new technology will also come with downsides. And so for instance, you know, buy now, pay later, uh, that, that was something that came in and we looked at it and we thought it was skipping around regulations and we didn't like it and so we didn't offer it. We thought it's going to take a while for societies to, to build protection and sort of catchment for it and to realize. And we're like, we could see this getting out of hand pretty quickly. And soon people are paying for food that they'll consume that day on pinet buy now, pay later and they'll be paying for it for months. And it's just like, ah, ah, whoa. This is a bit scary, this is a bit yuck. And so that was a choice we made to not offer that because again, some of these rapid adoption technologies, it just takes us a tiny while to realize what's wrong with them and where it is going to cause some issues. We're not hiding in a forest working off candlelight. There's still many wonderful technologies that you look at it, you address it with principles. You say, can we see the pluses and minuses, can we even see the negatives and know how to counter against those? So we have a huge technology adoption in Bellroy. It's just some of these things when they move so quickly and there's a lot of uncertainty about the downsides, that's when it can be a little bit of a worry and sometimes a little bit of caution might be sensible.

Speaker B: Yeah, well, uh, I think it's hard to be strong when those opportunities present themselves. So that's why you obviously have to have, you know, like minded people in one organization and everyone obviously is aligned.

Speaker A: And just to speak to that quickly too. I think that's one of those wonderful tensions, right? The amount of alignment, like what is it people share in common value systems, but then also the amount of diversity. Because once there's a rapid change in society or once there's a rapid change in context, if you're all the same, you're not going to have the solution set available to draw on and pull in quickly. And it's why I'm um, petrified of the idea of a whole bunch of old white men in a room, all the same wealth, all the same whatever, determining the future of societies. It's like you need this like really interesting environment where you can bring diverse perspectives together and you can still align around some common values and common goal directions. But then you've got so much more richness of examples to draw on and contexts and all these things so that you know when something rapid like Covid hits or something rapid like a massive change in Zeitgeist hits, there's already a bunch of people in there that you've got great working relationships with that uh, have deep expertise in this space and straight away they, they take the guiding role and sort of using them as your guides through this new landscape. So it is it, but it's attention. You also need enough overlap, enough shared things and then enough difference and diversity.

Speaker B: Yeah, I saw a post on LinkedIn this morning that spoke to that which it had two boxes on. Um, one box was like the square was fully filled out and that was the truth. And the box on the right hand, um, side was the same square with a tiny little shade in the box in the right hand side corner which said your perspective because obviously, you know, that's the way we see the world. We think that's the matter of fact, we think that's the truth. But like you rightly pointed out, actually probably your perspective is missing out. Well, it definitely will be missing out so much. And that's why we need to embrace diversity and why for example reading books is such, you know, in great investment of time should get to see the shared perspectives from people's lives learnings at least in my opinion.

Speaker A: That's, I'm listening to great podcast episodes with various views and folks and all the other ways we can expose ourselves to. Yeah, different thoughts and different perspectives.

Speaker B: Yeah, especially when we get fantastic guests like yourself. But just wrapping things up and the one thing I like to do before we end the episode, obviously we'll, we'll get on to Bellroy and how people can find more about the brand and what's up coming in the next few months. But if you were put in a, uh, let's just say you had a consultation with an entrepreneur who's just starting out, they had this great idea, they had a passion for a specific community and they were building a product and you had a one hour consultation with this person and I appreciate, you know, very blanket statements but you were in control of obviously what was talked about in that conversation, what was going to be important for that person over the next five to 10 years. Probably a lot of what we've already spoke about, but what will be the topics that you'd focus that hour around?

Speaker A: Oh, uh, yeah, Interesting. I think, you know, I'm a big believer in this idea of quality equals fitness for purpose. And so if you don't understand the purpose, you can't determine what's fit for that. And so I think in an hour, probably the first 20 minutes, maybe 30, would be asking a lot of questions about what motivates them, what gives them energy, what depletes energy. Where are areas where they have interesting perspectives that are a, uh, little different to other people's? What are uh, things they don't mind doing that other people seem to hate doing, but for them it's no probes. I think there'd be a lot of questions about trying to understand sort of some sense of a, uh, way to know how they could dick at something for some time and really get energy from that. I think trying to create a new business, trying to change things in the world or move something new into the world is a lot of hard work. There's a lot of barriers and hurdles and things. And so trying to do what theoretically sounds like a sensible thing isn't good if it's not speaking to their deep sort of intuitive sense of what gives them energy, what feels rewarding. So first I think it'd be a lot of questions in that space and then once it was there it would probably be trying to find a bit of a sort of Venn diagram overlap of what are things that you already have some expertise and area and passion around? What are things that you don't mind doing on a weekend and it might be part of it? Like so, for instance, I have a lot of friendships with phenomenal world class designers because we'll often go surf or ski together, we'll go do an activity and we get to jam design the whole way. And so I'm getting to sort of learn from these designers in phenomenal world class brands. All this space and it's fun and this is our idea of good time. It's kind of talk and work and it's kind of just playing around and surfing and you know, doing snow activities, whatever. But what are ah, ways that you can have genuine overlap where when you do a thing, it's not just for the work or the commerce or the community aspect, it's actually just part of your fabric and you just weave it deeper and deeper and there's more and more overlaps for the reasons you do it. I also really believe that there's lots of people that have made money not respecting their customers, but not Many people have built great brands or changed the, uh, world for the better, not, uh, respecting customers. I think you've got to actually love your customer and the community and the people you're serving. If you're going to create something meaningful for them, you have to respect them, you have to have compassion for them, you have to want to solve their problems and help them live a better life. And so thinking about communities and thinking about setting up this space, it's like, who are people you care about? Who are people you want to serve? Who are uh, folks that you can bring some perspectives that would help them? And so it's actually, again, some people just want to live a corporate life and measure their success according to profit and dividend. But for the folks I normally jam with it, it's like, can you find something where it's ticking more goals in your life? It's ticking a social aspect and a commercial aspect and a sort of returns for work aspect and a passion aspect and like, what are ways you can do that? So, uh, sorry, I don't have a better answer. There's not like, you know, the one bit of advice for everyone is probably flawed. And so it's more that dialogue of trying to understand motivations, trying to understand the sort of intuitive, deep stuff and the more deliberate stuff and trying to knit those together in a way that you could imagine this being a platform that keeps growing and keeps becoming more meaningful.

Speaker B: Yeah, there's no right or wrong answers here. And that was certainly fantastic advice. A great, uh, great way to wrap up this conversation. So where can people find more about Bellroy and Watch should they be excited about in the next six to 12 months? We can drop any links in the show notes as well.

Speaker A: Yeah, I think signing up for our, uh, email newsletter is just a great spot. It's a fun newsletter. I'm so proud of how the team put that out with interesting content. It's not too common and it's not the same stuff every time. We're on most of the social platforms, but I think the newsletter's a great spot. And one of the things about us, we're not a seasonal brand. We try and create modern classics and keep them in stock for as long as they're loved and used. And we then iterate on them. And so that means we're not like seasonal releases. There's things being released constantly. I think every second day there's a skew on average. And so it's this continual flow as we're exploring better ways, as we're trying to craft it. You know, we moved into bags a few years ago, and we're evolving those still very quickly and finding some really unique approaches to things. So there's more coming there, but we also keep going back to each of our categories and trying to work out how to make it better. So the product's there, but also just the content's really interesting. I love the newsletter. Uh, all that's good fun.

Speaker B: Amazing stuff. Well, thank you so m much for taking time out of your busy schedule to speak to me today, Andy. I really appreciate it, and I think there's some really golden nuggets and valuable insights to the audience today. So thank you.

Speaker A: Thank you for hosting such interesting conversations and sharing that with the world. I think it's so much better when we can learn from other people's experiences. Experience rather than having to do all the mistakes ourselves. So thank you for what you do. It's great content and, yeah, it helps the world.

Speaker B: So wrapping up these two great episodes of Andy. Firstly, I think I just want to say I'm so grateful for having a chance to talk to these incredible founders. And, um, let me thank my team for reaching out to these people and setting these up and editing the episodes. All in all, I certainly learned a lot. I hope you did. Please share the episode with someone who might find it valuable. Leave a rating on the app or wherever you listen to your podcasts. Have a great holiday season. Be back soon with another episode. Take care of yourself.