What started with a vacuum, a beer and an idea has grown into one of Australia’s largest companies and most integral players in the last-mile logistics landscape, and as the demand for fast and cheap parcel delivery continues to rise, Shippit is only growing more important in the APAC consumer landscape.
Shippit has now grown to handle roughly 100 million parcels per year and operates across Australia, New Zealand and key south-east Asian markets to fill a critical role as a middle-man straddling the retail and logistics sectors.
Rob Hango-Zada was one of the two major players behind the foundation and development of Shippit and, together with fellow co-founder and co-CEO William On, has helped power the business from strength to strength over the past decade.
Hango-Zada spoke to ATN about the decision to go all-in on Shippit, what motivated the company’s ‘no dickheads’ policy, how Amazon has changed the last-mile logistics game, and more.
The story of you and co-founder William On pulling the trigger on starting Shippit because of a bad vacuum delivery experience is well established at this point, but what I love about it is everyone has discussed starting a business with their mate over a beer, but you guys actually did it and have grown it into something huge.
Since then, Shippit has become a massive, multi-national organisation, but how did Shippit’s foundation come about, and what did the two of you do to kickstart it early on?
It’s something I never get tired of talking about.
When I was working in corporate, I had always seen myself as something of a disgruntled entrepreneur, I would always try to do things a little differently and in my own way, and I never quite fit the mould. Will is built in a similar fashion in that he was always striving for a better outcome and searching for the path of least resistance to things, and that’s always driven us.
We were standing at this event we were at, having a beer and just having a chat as good mates, I was often the ideas guy but wouldn’t take them through to fruition, but I found myself sitting in traffic one day reflecting on this idea for a business that I had never done anything about. I’d written it in my notes app on my phone but never done anything about it. I found myself sitting behind a bus with an advert for a company that was doing the exact thing I had thought about, and it happened to be a pretty successful tech company at the time.
That offered a bit of validation that not all my ideas were crazy, and that gave me the conviction I had, but I didn’t really know how to follow it through. Will, on the other hand, is like a dog with a bone. When he gets an idea, he just runs it to ground really quickly.
His response to me was ‘what are we going to do about it?’, and when I said I had no idea he listed off three things he was going to do, and asked me three things I was going to do, and we got into the habit of writing down the things we were going to do each week while we were in our full-time jobs just to think about research we needed to do, speaking to retailers and other companies, learning about the topic, and each week we uncovered a new insight or nugget we went deeper on.
We ended up speaking to 50-odd people across retail, logistics, startups, tech companies, advisors, and average consumers, and the feedback was there was a big problem in the industry that wasn’t being solved.
Then family and friends told us every company was trying to solve it, whether it be The Iconic, Australia Post, whoever else, and we were kind of told it would fail from the get-go, which just gave us even more motivation to make it work.
That was the starting spark that ignited this thing.
You touched on working full-time corporate jobs and that ‘disgruntled entrepreneur’ perception of yourself. Was there a point of critical mass when you were working in corporate where you and Will thought ‘now is the time to put everything into Shippit’, or was it a slower build that you could, in a way, prepare for?
There are two stories that come to mind. Nine to five I was working my corporate job, and after – these days people call it the five to nine – Will and I would put our heads together to keep progressing the business on every weekend, evening and public holiday.
We got to a point where we built out the product and started pitching for investment to seek validation, to put a sort of social contract out into the universe to keep us committed and following through, and to get a bit of money – but we hadn’t got any money in at that stage.
It was a really weird sort of Twilight Zone of my career. I had a baby on the way, and I’d only recently got married and moved house before the idea kicked off. There was also a lot of conventional thinking coming from a migrant family to Australia, the thinking where we’re good corporate citizens who get a good education, work for an established company, do really well, stay there for 25 years and retire and get the gold watch.
But I was sitting in a board room or a meeting room at the time and we were discussing a strategy document with 20 really smart people around me who had come from all over the region to do this workshop, and we were stuck on a sentence in this briefing paper which would be used to brief a creative agency, which would then be used to create a campaign for the business I was working on. We got hung up on semantics and we spent a good hour just finessing that one sentence.
At the same time, I had all this inbound interest hitting the phone in my pocket with people wanting to learn more about Shippit, and it made me think of if we took that collective thinking power and, rather than debating semantics on something irrelevant to the mainstream, you can push the world forward in a very positive way.
That was a moment or a turning point in my mentality to think I would rather expend my energy and day-to-day on a problem I felt I could really solve.
The second part was I was relatively risk-averse compared to Will, I remember we met up for lunch at Pitt Street Mall when things were starting to get to the pointy end, and it was becoming really hard to maintain these two things.
Will said he was all-in on this idea, that we had put some money in, we had momentum and we just needed a good crack at it. Because I had a kid on the way and a new mortgage, I felt I had a lot at risk, and I was worried.
He said ‘what do we need to tick off? Give me a list and we’ll make sure we get through that list of things that will give you comfort’. I said we needed a product that works, paying customers, investment, and we need our first enterprise contract which gives us validation.
We worked manically to get all four, and the one we didn’t get before we decided to pull the trigger was the investment.
We had a paying customer, a contract about to be signed with a big corporate, a product that worked, and that was good enough.
That’s when we threw in the towel on our day jobs and went full-time into Shippit back in 2015.
Every time I see anything about Shippit’s history or journey one thing that really piques my interest is the relationship you and Will seem to have. It might be a little bit Hollywood, but I feel like there’s this perception that if two people start a business that becomes this successful, one will inevitably try to push the other out.
As this company you’ve built continues to go from strength to strength how crucial is it for the two of you to keep those lines of communication open, stay on the same page and continue to grow your relationship as co-CEOs and grow Shippit?
It’s absolutely critical we stay aligned. Because we’ve got 21 years of friendship under our belt we’re not afraid to call a spade a spade and call each other out. We use different language with one another but there’s no ill will or any harm felt, and we both own our actions. It starts on a foundation of humility and understanding we’re friends no matter what.
As a minor segue, Will was a really high maintenance friend at uni, he’s kind of like Action Jackson, and I tried to break up with him at university. It was like if I don’t return a call I get ten messages, and I just couldn’t deal with it anymore.
He told me that I didn’t understand that we were friends for life, and he never turned his key. I was stuck with him.
When we first started the business, we would fight like siblings. We’d have arguments on the floor of the office, and it was only when one of the founding members of our team, Josh, told us he was going to leave after we’d had a massive blow up because he couldn’t deal with the animosity did Will and I start to work on a bit of shorthand.
If he said something that triggered me, I’d send him a little water pistol emoji, and he would do the same when the roles were reversed. We learned a language that worked for both of us.
Then, we also found that alignment drift starts to set in if we don’t catch up every week, so we formalised a ritual where the two of us will put our heads together every Monday and, like when we started the company, we would discuss what was important to us that week, what problems needed solving. So now, whether you go to Will or me, we’ve pretty much got the same direction, and that’s become really important.
From the moment I wake up to the moment I go to bed he’s the first and last person I message and who messages me. We’ve always got that constant two-way communication which keeps our alignment strong.
I want to take it back to that experience in the corporate environment for a second. You worked for the likes of Qantas, Procter & Gamble and Unilever.
I’m always interested in the experiences of people who have moved from a big public company to a small private or startup company, or vice-versa, but what did you take out of those experiences working for large, multinational corporations that you could apply to Shippit over the journey?
We often talk to founders that had prior experience in corporate and to those who started their own thing straight out of school.
I think one of the benefits of that prior experience is the knowledge you gain about how to communicate in business – which is a really crucial skill – and how to manage teams, manage conflict and properly lay out your thinking to analyse problems.
I think those core foundational skills you get as a grad at Procter & Gamble or a grad at Deloitte almost reprogram you to think in a very critical manner and operate in a particular way.
Having that kind of schooling with big corporates helped Will and I to know what good looks like. You can have a vision as to where you need to get the business to in which you’re aware and cautious of the pitfalls of bureaucracy and what bogs you down.
One of the first things we did was set a very clear manifesto from the beginning to say we had a ‘no dickheads’ policy in this business. We always play the straight bat, even if it’s bad news.
Nobody likes people slinking around in the shadows, having meetings and then confronting you in a dark alleyway at night. You want everything to be known right off the bat so everyone is really clear about what needs to be done.
We also appreciated that inclusivity was a really important thing. At the big corporates at the time there was really only one way of operating and working, and if you didn’t fit that mould, you didn’t fit in.
We saw the benefit of being able to have some balance in our lives, because careers are a marathon, not a sprint, and you’ve got to make sure you have that balance.
That balance and humility in how we operate has really come from having worked in some pretty poor team environments where things were just swept under the rug.
I think the benefit of knowing what good looks like and knowing what bad looks like equally sets you up to build the right infrastructure to run a company.
A key part of why I wanted to speak to you now was the time of year we’re in with the massive holiday period surge in parcel delivery.
With Black Friday, Cyber Monday and all these Americanised sales that happen pre-Christmas, that peak period seems to be starting earlier every year.
Do the expectations on Shippit change in this period, and how do your operations change to enable you to keep up with the rush?
Over the last nine years Shippit has really matured into becoming the mission critical software platform Australian retail has come to rely on. We’re now doing circa 100 million deliveries a year, and that means we’ve become a really critical part of the fabric of how retail operates.
For us, a peak means a surge in volume, which comes with a surge in enquiries and tracking requests. Our retailers rely on us to make millions of decisions a day on which freight partner is going to conduct their delivery, which is governed by a set of rules they impose and pricing that both need to be bang on.
All of that is governed by a whole set of factors that need to go right, and then we need to produce a label in 500 milliseconds when you’re talking about these high-functioning, automated facilities that are just punching out packages.
We’re a cloud-based solution which, for the first time in the Australian market at least, has the same reliability and latency as an on-premises solution. That’s a pretty tall order that means a lot of investment in our infrastructure that scales dynamically with the volume demands and loads that are placed on it.
Then, it’s also a time of year where retailers need to make sure their shipping strategy is on point and they’re not going to lose customers to a leaky issue or problem.
We need to make sure we’re furnishing our customers with all the insights around where the pitfalls of their delivery operations are so they can tighten their proposition, and as part of that we manage services to our client base.
That’s where we work with a partner carrier and facilitate a relationship between a long tail of carrier and some of the biggest retailers in Australia. We need to make sure we’re working hand-in-glove with carriers to ensure they can handle volumes that are going to come their way, and they’re scaling responsibly and still delivering within SLA.
It’s a very big focus for us and we spend our whole year thinking about how to prepare for it. Then, when the game is on, it’s all about empathy and urgency for us, just making sure we’re there to support the retail community to have its biggest peak ever.
The Amazon effect is having a massive impact on last-mile logistics expectation all over the world. I ordered a book yesterday, it will arrive today, and that’s someone crossed off my Christmas list.
Does that added customer expectation because of the Amazon effect rise at this time of year because of the added sense of urgency of getting the packages on time and ASAP?
Absolutely. You have to think about the psychology of human behaviour. You’re getting to the pointy end, and you have a lot of emotional attachment to the purchases you’re placing. It’s not like you’re buying yourself a tub of protein powder or a bottle of vitamins, you’re buying an emotional reward for a friend or family member, and what stands in between you getting that in your hands to give to that individual is the delivery company and retailer fulfilling the order.
What we often see is a doubling of inbound enquiries and a doubling of interactions needed to be had around that at this time of year.
At any other time of year, the number of people buying gifts is mostly governed by the number of birthdays that exist, but now it’s all concentrated so you have heightened levels of anxiety.
There’s an interesting relationship between the speed of delivery and the success of that, and how many support interactions that will be created.
If you think about it, anxiety typically comes from waiting. Even if the delivery says it’s going to be there in two weeks, you still check if it’s going to take two weeks to get that order to see if there’s any chance of failure. If you need to place that order again there’s another two weeks ahead of you.
If it’s there within a day, then you almost don’t need to think about it. It doesn’t cross your consciousness. The Amazon effect implies free, fast and reliable delivery removes that part of your brain where you’re thinking about gift giving.
I think it’s a really critical thing retailers aren’t necessarily embracing because they’re thinking about the dollars and cents of this rather than the lifetime value of the customer they’re mortgaging.
I know there’s no such thing as a secret sauce to building a successful company, but in a time where a lot of logistics companies that are adjacent to the role Shippit fills are struggling or closing down, Shippit is continuing to grow.
You’ve mentioned the ‘no dickheads’ policy and how critical it is to stay aligned as key things to your success, but are there any differentiating factors you can partially attribute Shippit’s growth and success over the past few years to?
I think as a founder you’re always the resident optimist, but you’re also the behind-the-scenes pessimist, and Will and I subscribe to the theory that only the paranoid survive.
We are constantly paranoid for good reason, and it drives a level of rigour where you don’t become complacent with where you’re taking the company.
There’s also a whole theory around success and what success means. Success is ephemeral, it’s temporary, and that speaks back to the complacency piece.
You must survive, not win. Winning the race is making sure like being an F1 car going around a Grand Prix circuit knowing when you have to make a pit stop, how long you need to stay there and when you need to get back on the track.
For us, we need to make sure we keep the business alive for long enough to benefit from the failures of other companies, but also long enough so we can drive a compounding effect on what we’ve already built.
A lot of companies build really quickly out of the gates, lose steam, lose capital and crumble. We see a lot of working capital issues where companies don’t plan to spread that risk out. They take all that risk early, assuming they’re going to get a lifeline, and then they drop.
We’ve now established a rhythm where it’s all about the long-term. It’s all about sustainable growth and all about listening to what our customers need from us, staying paranoid with our ears to the ground and trying to hold those three things in concept.
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