I went from $1/day to billionaire in 10 years... here's how

Episode 673: Shaan Puri ( https://x.com/ShaanVP ) talks to Nick Mowbray ( https://x.com/NMowbray23 ), the founder of the most profitable toy company in the world. — Show Notes: (0:00) Selling DIY hot air balloons door-to-door (5:57) First product (21:32) $30M David Beckham Tamagotchi fail (30:18) Nightball (36:18) Robofish (41:43) Diapers (48:44) Shampoo, pet food, confectionary, supplements, home products (1:00:07) Zurutech - a self-funded moonshot (1:03:28) Serial entrepreneur flywheel — Links: • Zuru - https://zurutoys.com/ • Zuru Tech - https://zuru.tech/ • Boom Supersonic - https://boomsupersonic.com/ — Check Out Shaan's Stuff: • Shaan's weekly email - https://www.shaanpuri.com • Visit https://www.somewhere.com/mfm to hire worldwide talent like Shaan and get $500 off for being an MFM listener. Hire developers, assistants, marketing pros, sales teams and more for 80% less than US equivalents. • Mercury - Need a bank for your company? Go check out Mercury (mercury.com). Shaan uses it for all of his companies! Mercury is a financial technology company, not an FDIC-insured bank. Banking services provided by Choice Financial Group, Column, N. A., and Evolve Bank & Trust, Members FDIC — Check Out Sam's Stuff: • Hampton - https://www.joinhampton.com/ • Ideation Bootcamp - https://www.ideationbootcamp.co/ • Copy That - https://copythat.com • Hampton Wealth Survey - https://joinhampton.com/wealth • Sam’s List - http://samslist.co/ My First Million is a HubSpot Original Podcast // Brought to you by The HubSpot Podcast Network // Production by Arie Desormeaux // Editing by Ezra Bakker Trupiano

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Shaan Puri?

  It seems like it was an insane decision to go to China with no money, no plan, no relationships, no language skills, slept in a bush and literally build your own factory.

• 0:08Speaker 01

  That was a disaster. When I say we were naive, I feel like that is even an understatement. But to be fair, success is about teachable. And in our business now, I'm a huge believer in firing bullets and failing fast. And then if the bullet works, it's a cannonball and we invest and we build the recipe around that.

• 0:25Shaan Puri?

  How big is the empire today?

• 0:27Speaker 01

  It's over two out of a billion US in revenue.

• 0:30Shaan Puri?

  And it's public or it's not a public company?

• 0:33Speaker 01

  No, public.

• 0:35Shaan Puri?

  Wow.

• 0:44Shaan Puri?

  So here's what's fascinating to me. So I have like a love language when it comes to business and my love language is self-made, dropped out of college, family business, multi-billion dollar company with no outside capital. Like you hit all of the things on my little bingo card there, which is what got me interested. I want to start with the origin story. So here's the bullet points. Grew up on a dairy farm. Started selling door-to-door hot air balloons, was in law school, then quit because he didn't like walking up a big hill every day. And then made a crazy rash decision, moved to China with no money, no plan, no relationships, no language skills,

• 1:24Shaan Puri?

  slept in a bush, somehow turned that into a billion dollar company. So that's the bullet points. Can you unpack that a little bit?

• 1:32Speaker 01

  That's quite accurate. That's quite a good way to summarize it quite quickly. If I was to frame up our probably first 10 years, it's that famous saying that success is going from failure to failure with no loss of enthusiasm. I think that actually really does sum us up. Grew up more or less on a farm and then we moved north for our schooling. And my brother won the New Zealand Science Fair with a model hot air balloon and then. We decided, or he decided, he was twelve, that we should make these kit set balloons and sell them door to door on the festivals when we were at school. And I'm slightly younger than him, so he kind of hired me as the, when I say hire, I was the free labour to help make the hot air balloons.

• 2:15Speaker 01

  And yeah, we used to make these model footed balloons and sell them door to door. I used to, when I was quite young, get my friends together and backpack around New Zealand and sell door to door. And I can tell you that learning how to sell door to door is a great life lesson because you never know who's behind that door and you never know what response you're getting. And on top of that, selling a flying, burning plastic bag is particularly hard to sell. So it really hones your skills early on.

• 2:42Shaan Puri?

  What was the, what was your technique? So knock, knock?

• 2:44Speaker 01

  I used to be like, we're just a small company trying to get off the ground. Wink, wink, like no pun intended.

• 2:51Speaker 01

  We were young kids, so that always helped. And you know, we'd often like, we'd sort of build theses around which neighbourhoods were more likely to buy. It was usually not the richest neighbourhoods. They were all maybe a little too smart. And so it was sort of somewhere in between. We'd always look for, you know, signs of children in the backyards of houses. And I always remember that one of my good friends, still one of my very good friends today, Fraser, he used to always outsell me. I don't think there was a day where I outsold him. And I always thought I was a much better salesperson than him when the door opened. But he just did not care about being rejected. He'd go from each house, he'd get yelled and shouted at and swear at, and he'd come out laughing

• 3:36Speaker 01

  and he'd be knocking on the next door within seconds. And I always had to build myself up after getting rejected, which was most of the time, to knock on another door. And it just kind of taught me, I guess, the power of just persistence, right? And you kind of keep going. And if you keep going and have that level of grit and perseverance, then your chances of winning, your chances of success are much higher. So I was certainly learning that at a very, I guess, young age.

• 4:07Speaker 01

  Yeah, from there, we, we, we kind of, Matt, Matt went to university as well. And then he dropped out after a year to set up and make or develop this hot air balloon through to a little bit more of a professional level. And Matt said, why don't we start, why don't we explore going to India or China to try and manufacture our hot air balloon? And given I was making them, I thought that was a great idea. And so Matt actually went off to India and China, did a little scouting trip, came back and he said, China, let's go to China. And I'm like, let's go to China. He said, you go to China. So I tacked up, didn't go my second year law, found the most entrepreneurial guy from my first year at university, a guy called Joe, dragged Joe to China.

• 4:50Speaker 01

  And see, we had no money, really no contacts. We went to a little place called Shantou. It was the middle of nowhere, there were no other westerners. And we had an apartment, I think it was like, probably the equivalent of eight dollars a month to rent. It was the eighth floor, no lift.

• 5:06Speaker 01

  So whenever you were thirsty, you had to get water, you had to like walk down eight flights of stairs to go and get water and come back up. And that's where we started, but we ended up getting ourselves into all sorts of trouble and strife and there's a lot of funny stories.

• 5:17Shaan Puri?

  The story I had heard was that you guys like, first night you like slept in a bush?

• 5:23Shaan Puri?

  What happened there? And but basically, what was the plan? Were you just gonna kind of go try to find a manufacturer, walk around? Like what were you thinking of doing?

• 5:33Speaker 01

  We were so naive and on reflection, I look back and it's almost like we built a toy company from first principles because we did everything different to everyone else without even knowing it. So we didn't know that you could go and contract manufacture your product. We were planning on setting up our own little factory. And that's essentially what we did, but me and Joe got into some trouble and Joe had to fly home to New Zealand. So my brother came over. We ended up trying to see if we could get a hotel, but everything was way too expensive. So we decided just to sleep in the bushes at Hong Kong airport. And I remember just getting completely attacked by mosquitoes all night. And we didn't want to sleep in the airport because the floor lights were so bright. And so, yeah, we ended up sleeping in the bushes and getting attacked by mosquitoes all night. It was not fun.

• 6:17Speaker 01

  And then we fed it up to China and we set up a little factory on the side of a river. It was a small kind of shed, more or less, in China. And my cousin Simon came up at that time as well. He was an engineer to help us and he welded a production line. And we bought, we pretty much spent all of the money we had on an injection molding machine. We employed a few people on the production line. We had a little old lady who used to cook for us every day. I think the budget was two RMB per meal, which is about thirty cents. And we started making our first product. And then we started making our second product out of there as well, which was a night frisbee, which we got sued on and we had no money to defend ourselves. So.

• 6:55Shaan Puri?

  So stupid question, but like, why not, like, it seems like it was an insane decision just to go to China and literally, like, build your own factory, like, literally, like, create a structure on the side of a river and like weld it yourself together. Why did you feel like you needed to be in China instead of just doing it where you were?

• 7:14Speaker 01

  Well, we understood that most of the toys in the world were made in China. But when I say we were naive, I feel like that is even an understatement. Like, we were trying to make our hot air balloon, but we didn't even realize that we couldn't sell it to any toy chains or large retailers around the world because of course it didn't meet any of the regulatory standards. I mean, it had a burning can under it. So we were super naive. So then we started looking up products that we could maybe make in our little factory. And we saw this company in America making a light up frisbee with LEDs and it could be thrown at night. We thought, oh, that's cool. So we made this night frisbee in our factory. And I started hustling to try and sell this thing. As in, like, I would email

• 7:55Speaker 01

  every buyer in the world of every major retailer in every country I possibly could. And I remember I sold it to a distributor called Schilling in the US. And we spent what was a lot of money at the time. And I went to New York Toy Fair. And we'd made this night frisbee. And we'd also made this other product or copied this other product called a money gobbler, which was a money bank in the shape of an animal. And you'd feed the coins into its mouth. It would go down the throat into the stomach. So we started making these two products. Matt decided he wanted to set up a wooden toy factory for this money gobbler. We had our production line for making this frisbee. So I sold them to this company called Schilling. So I go to New York Toy Fair to be on their booth to start selling these two products. And I start selling these products. And this guy comes flying onto the booth

• 8:40Speaker 01

  and starts yelling at our distributor. So he's obviously got wind that we've made a product that's identical to his. And he had multiple patents for how the LED connected to the fiber optics and how this all worked. And of course, we Again, we were naive. We didn't even really know what IP was. So he comes, and so Dave comes up to me off the booth, the owner of the distributor says, hey Nick, we need to pull that frisbee off the booth. This is probably an hour into New York Toy Show starting. So I'm pretty disappointed because one of our products is gone, but I'm like, that's okay. I'll sell the money gobler. Well, if I thought the first guy was crazy, about three hours later, this lady, she has a whole business. She's built over 25 years building these money animal banks.

• 9:19Speaker 01

  And she has this big booth on the ground floor of Jarvis. And she comes up and she screams onto the booth and she's yelling and screaming and swearing at Dave. And Dave sort of, I can see this from where I am, but Dave sort of wanders over to me sheepishly and says, Nick, you need to take the money gobler off the booth as well. So it's in the first morning of New York Toy Fair, both our products have been taken off the booth of the distributor. I flew back to China. I said to my brother, I said, have you ever heard of this whole, you know, IP thing, this whole patent thing? I think we need to start innovating and coming up with our own ideas. And then we ended up getting into a lawsuit on the night flyer. They sued us. We had no money to defend ourselves. I remember going to Colorado because that's where they sued us to try and find a law firm to defend us. And I was going to all these firms and I was saying, well, that'll be a million or $2 million.

• 10:04Speaker 01

  We had like maybe a few thousand dollars between us at that stage. I was thinking, how are we going to defend ourselves? I ended up actually hiring a lawyer, convincing him, his name was Chad, he later got disbarred, that we would write the whole suit. He just had to put his name to it. And Chad did the whole case for us, but didn't really do it. We did it ourselves. We learned how to come always. So we did it incredibly cheaply, but he did. He ended up getting disbarred later on, but that was our only way because again, we had no money. And I was so enthusiastic. We had no other choice that we had to sell this product. And I remember selling the night frisbee to the department store chain in the US, Coles. With the K, I know we have Coles down here in Australia with a C. Never forget the buyer's name. I actually still work with her today. This is, you know, 19 years ago.

• 10:47Speaker 01

  Name was Jen Sarah. She was the buyer on Coles and I would email her every single day. And one day I got an email reply from her. It was all in capitals. It said, Nick, I do not have time for your daily email communication. Please stop emailing me every single day. And then I'll always write back, oh, I'm so sorry, Jen, but you know, I just think our product is really great. And at this stage, we knew we were in a little legal trouble, but we had to sell something to survive. So I was like pushing and pushing. And then eventually I get this email back from her. It was just two words, nothing else. It said, send the sample. So we send the sample to her. And she ends up ordering a full container. I think it was twenty thousand units of this night frisbee. So we're we're pretty happy at this stage. It was a big celebration. We

• 11:26Speaker 01

  never had a full container order of any product. And so we ship this full container of night frisbees. And of course, she gets enjoined in the lawsuit as well at Kohl's and didn't speak to me again for a long time. The irony is today, she's the director of Family Dollar Stores in the US and we're their second biggest toy supplier after the towel. So that's the funny thing.

• 11:53Shaan Puri?

  You're like trauma bonded.

• 11:55Speaker 01

  Correct. But we have so many of these stories. That is one of many, many, many in those early days. So we really were just scrapping every day to try and survive and sell something and just like live somehow. But we were living on less than a dollar a day.

• 12:12Shaan Puri?

  Okay, I have two things. One, let's do a detour to the dollar a day thing because my guy Diego, who helps me with research, he goes, you gotta ask him about the McBroke diet. And the McBroke diet, I said, what's that? And he goes, he goes, apparently, they were just eating off the dollar menu at McDonald's in China every day. And he had some trick about the french fries to get free french fries. So what is the McBroke diet as far as Diego calls it?

• 12:35Speaker 01

  It was, we didn't eat McDonald's. McDonald's was a treat. So me and Matt were in China. And for Christmas, of course, I think my brother didn't come back to New Zealand for eight years. He lived at a factory for ten years. He had a tiny little room at a factory for ten years, which is crazy in itself. But for Christmas, we would celebrate by going to McDonald's. And probably the equivalent of a combo is probably $2.50 in China at that time. So that's how frugal we were. We wouldn't even go to McDonald's. So but we'd go and we'd celebrate Christmas. And I always remember going Merry Christmas, Brian. Merry Christmas, bro. And, you know, finally eat some good food. I looked like, you know, I was so skinny at this point. But I'd always play a trick in order to get

• 13:17Speaker 01

  extra fries, I'd always eat half of them and then I'd take them up to the counter and say, hey, you only filled my fries, you know, half full. And they'd give me another one so I could get more for free. But we were so, we were like, even, you know, when we'd go on the train, we'd use a concessionary or children's pass and hope we wouldn't get caught because it was half the price. But I look back on it, it was like, you know, a fee would only be twelve RMB or a couple of dollars and we'd be saving a dollar. So by getting a concessionary fee, and we did that for years.

• 13:44Shaan Puri?

  So what, what was driving this? Because like you lived in New Zealand, New Zealand's a beautiful place. I assume you could have just had like a normal life that was like more comfortable. And I love, like, I'm a founder, I've been a founder, but I didn't do what you did. I didn't sleep in the factory. On like a mat on the floor for eight, ten years. I didn't live off of the less than dollar a day like. Were you guys just like, was it, you're having so much fun or you just felt there was no other choice? Or what was the, what was the mindset that kept you going? Because it was like, like many, many years just scrapping.

• 14:18Speaker 01

  I reflect back on it and it's, it is a little bit hard to understand in all honesty when you reflect back on it. But I think when you're in it together, you kind of hold each other accountable and you push each other because you don't want to fail. And I would say me and my brother are equally as competitive. And so I don't think you want to let the other person down in a sense. And so you just keep fighting because if one of you gave up, you're kind of admitting defeat. And so in a sense, you hold each other accountable to continue to, to fight and push forward. And as well as that, I think we didn't really have another option.

• 15:00Speaker 01

  We didn't understand like back then that there was even such a thing as going and raising money to build a company or. You know, again, I look back at the extreme naivety. I used to write emails to my mum from China and she was beside herself that, you know, I was up there, I was so young, I was eighteen. And I read these emails and to understand how little we understood even about the world, but just about business and how things worked is quite scary. And so I just think we didn't know any better. We just thought we'll just keep fighting and try and get these little wins and little wins and little wins. And, you know, we started to get, you know, a little win after little win. And then we started to get a little bit more momentum and then you started to learn.

• 15:43Speaker 01

  One of my favorite sayings is you win or you learn, you never lose, you never fail. So.

• 15:48Shaan Puri?

  And so connect the dots. So now you're, you've painted the picture beautifully of the extreme naive approach, the scrapping. And then somehow, you know, fast forward the tape and the movie and you end up with this super successful toy company. I think, you know, the third most profitable toy company in the world, doing over a billion dollars a year of sales, plus like, forget the other stuff you've even done after that. But I'm just saying, just the toy part. So connect the dots. Where did you start to really get the momentum or what were the breakthroughs, the epiphanies, the key, key breaks that got you to actually getting to that success?

• 16:25Speaker 01

  Well, there are a few stories along the way. And I, I remember just sitting there every day harassing and thinking really big early. So thinking, I've just got to get Walmart or I've just got to get Kmart at that time. Or I've just got to get these big retailers. And, you know, one story, I remember ringing Walmart every single day. And because of the time zones, it was late at night and month after month after month after month. And I always remember all the early names because I just see it in my memory. And I remember one night, my brother was basically telling me to give up. He was like, you're not going to get Walmart. And eventually the buyer, Ryan Halford, answered and I was on the phone to the Walmart buyer from China. And again, I was up with this young company, we're just in China, we're trying to get off the ground, we've got these products.

• 17:08Speaker 01

  And he said, do you have a showroom in Hong Kong? And I said, I didn't know what a showroom in Hong Kong was, but of course I said, yes, I'll get back to you at the address. We started to learn that the toy industry at the time revolved around these showrooms in a place called Tim Sha Su in Hong Kong. All the companies had showrooms there and all the buyers from around the world congregated in Hong Kong twice a year to come to these showrooms. So I got on a train the next day to Hong Kong and had researched where these toy companies were and started knocking on toy company doors and trying to do a deal with them. I said, I'll bring a Walmart buyer and if you just give me some space to use and your address.

• 17:48Speaker 01

  And then, you know, hopefully you could sell some of your products to them as well. And every company denied me and denied me and denied me. So I thought, okay, we need to rent a showroom. And at the time it was a lot of money, but we found these little glass cubicles in a place called South Sea Centre. And they were just a few meters by a few meters, like tiny little cubicles. But I think they would have been like, I don't know, two or three thousand US dollars a month to rent. Cause Hong Kong was so expensive. And so at the time, we didn't have that money. It was, we were so poor. But I thought we don't have an option. We've got this chance to get the Walmart buy coming in. And so we, we, we, we just said, we have to do it. So we rent this little tiny cubicle and it kind of had curtains on the inside of it. And we, I, I found some shoveling that someone was throwing out from another showroom. So I put this little shoveling in there.

• 18:33Speaker 01

  We bought like a table and then I had a little roll up mattress and I would sleep in the showroom under the table each night. Cause there's no other room to sleep. So I'd unroll the mattress under the table, sleep in that. And then I'd wash in the little bathroom in the, in South Sea Centre in the morning. But I had the showroom and I start kind of realizing that the buyers come to Hong Kong in January and October every year. So that was good because now I have this kind of like base to like invite people to. So I get, you know, I get Walmart to come in. I actually got a guy called Frank D'Amico who was from Walmart Canada. And I'll never forget because he came in and I think he was so shocked that he'd given me a meeting when he saw this. Two meter by two meter showroom and he came with this two merchandisers. I went to shake his hand, didn't shake my hand. He didn't even sit down and he just yelled at me. He goes quotes across the table.

• 19:18Speaker 01

  And I'd filled out the quotes for around two or three products at the stage. He kind of reads the quotes. And I'd filled something out wrong and he just throws the quotes down on the table and just walks out and leaves this two Hong Kong merchandisers standing there staring at me. I think that was my second ever meeting and I'm just like in shock. I'm like, wow, where it's gonna be. And he just storms out. And then I contacted his boss. And said, hey, I had this really like bad experiences. This guy Frank, I genuinely think he was really rude and like, and his boss met him meet me again in their procurement, in Walmart's procurement centre in Shenzhen. So I was like, screw this, I'm gonna go up and meet him again. Met him for a second time. And he ended up ordering, and at the stage we had a night ball along with our night frisbee, but I think he ordered us seventy thousand dollars of this, this night ball.

• 20:00Speaker 01

  It was another good example of, of, of persistence. And then I remember one day, I had a men with came out Australia, but I was sleeping under my table and the door's only about a metre from my head, because this is such a little, small showroom. And the buyer came an hour early. And I was still asleep under the table and she was knocking on the door and I'm sort of like there, like looking at her feet under the door, I'm thinking shit, I'm still in beard under my table. So I had to wait for her to go away and then message her afterwards and say, hey, you didn't jump that ten o'clock meeting. She says, oh, I thought it was nine AM and. So I had all sorts of experiences, but I used to crash buyers, hotels, I used to post samples under their, you know, under their hotel room doors. But really we did what it, what it would take.

• 20:44Speaker 01

  The first break we got is, and this was a crazy story, is there was, I was in the UK at a company called Recreation and they were selling our night sports balls at the time. So we'd developed this other product. It was instead of our night frisbee, we'd made a night football, lit up at night and a night soccer ball. So it sold to this company called Recreation. I met a guy called Sean on their booth and he'd developed a soccer Tamagotchi. And so it was, it was kind of like a Tamagotchi, but you trained your player and then through infrared, you could play against each other. And he had like the Manchester United licence and it was selling reasonably okay in the UK, but he was having troubles with manufacturing. And I was like, well, we can make that for you, like no problem.

• 21:24Speaker 01

  And he was like, great, great, great. You guys can help me make it. Cause we were really, you know, anything was sort of wink at the time. We were trying to find a way to win anywhere. So we're like, Sean, we can make this. And then we started talking, well, maybe, you know, David Beckham, he's moving to the US to play in the US. What if we could get the David Beckham licence and we could try and sell this in the US? And he thought this was a great idea. So we went and pitched at the time, I think it was Simon, uh, Simon Fuller, who started American Idol, had the David Beckham, um, rights at the time. And I'm like a, I'm a super young kid, right? And they said, well, we'll give you the David Beckham licence, but it'll cost you a million and a half dollars. Of course, we don't have a million and a half dollars. But then we go to Walmart and Walmart, the buyer, her name, Danielle Priman, I'll never forget it.

• 22:07Speaker 01

  She loved David Beckham and he was moving to the US and she was just obsessed by David Beckham. And we probably blew a few bubbles, but anyway, as it turned out, Walmart turned around and ordered 2.2 million units of this David Beckham Tamagotchi, which I think they were like 14 bucks, 50 or something. It was almost 30 million US dollars. So keep in mind, we'd probably never had an order more than 70,000 dollars at this point. And our total revenue was like in the hundreds of thousands. Suddenly we get this order for almost 30 million US dollars. And then we're like, holy shit. We thought we were going to make a lot of money because we had huge margin. We were making this thing for $3 and we were going to make this thing for $3 or $3.20 or whatever it was.

• 22:50Speaker 01

  It sold for 14.50. So we were sort of counting our pennies and super excited. We didn't even understand that sell-through was a big thing. But then we were like, oh no, we have to work out how to make this product. Like, you know, we've got our tiny little factory with, you know, 20 people in it. There's no chance we can make 2.2 million units. So when I'd first gone to China, I've been on a tour with, he's one of the wealthiest guys in Hong Kong, like Francis Choi, owns Burly Light International, the other contract manufacturer for Hasbro, Mattel and all the toy companies. One of the first factories I ever toured, I somehow got in touch with his two IC guy called Wilson. And he'd taken me on a tour as an 18 year old of their factory. And you can imagine me coming from New Zealand and then going to these factories with hundreds of thousands of people and just being like, oh, what? This is like insane.

• 23:34Speaker 01

  So I still had this contact with Wilson from Early Light. So I got a meeting with Wilson. I said, hey, we've got this huge order. 2.2 million pieces. Can you help us make it? And he said, yep. And then I said, oh, and by the way, can you also pay for it as well? He said, let me check with Francis. Come back to you. Came back to me and said, yeah, if you transfer the letter of credit to us, you know, we'll help you pay for it as well. Great. So we start making this product. 2.2 million ICs, 2.2 million LCD screens. So they, all the components, and then Walmart turns around and cancels. They cancel it from 2.2 million pieces down to eight, no, 1.2 million pieces. And I was like, no, no, no, they can't do that. We've got a letter of credit. They've made it all.

• 24:17Speaker 01

  And then I'm flying back and forth. At this point, Shaun's kind of like in the background on this, like, I don't know, 20 year old. And I'm thinking, there's no way. But I was thinking, well, it's still fine. One point two million pieces. We've got so much margin in this. We can still make like good money out of it. But then they turned around and cancelled it all the way down to three hundred thousand pieces. Yet Francis was making all of this product. And I was just like, oh, so I'm going back and forward. It reads like some kind of soap opera because Danielle got fired. Obviously, part of this was part of it. And with Francis, I was like, there's no way I can tell Francis that, you know, that I've cancelled this many pieces and he's paying for it all. So I'm going back and forward to Walmart. And I calculated that if I get the order back to eight hundred thousand pieces, we could still pay Francis off because we had so much margin and still

• 25:02Speaker 01

  make like a million and a half dollars. And eventually I convinced Walmart to get the order back to eight hundred thousand dollars, uh, eight hundred thousand or nine hundred thousand pieces, whatever it was. And we shipped this product. And it was a disaster. Like it hit the shelf and it was cold red on the shelf. Like no one would buy it. I think they retailed it thirty dollars. They discounted it to twenty five, then twenty, then fifteen. No one would still buy it. Then ten dollars, no one bought it. Then five dollars, no one bought it. And then they eventually sold it to the dollar and discount channels for like fifty cents on it, like fifty cents a piece. And then of course Walmart came back to us and said, you have to fund all the markdown money from thirty dollars to, you know, fifty cents. And we were like, what's markdown money?

• 25:45Speaker 01

  And we were determined to keep our little bit of margin and refused to give them any money back. And so we had this, we were like, no, but you cancel these pieces and like da, da, da, da, this huge thing. Anyway, we got blackballed from Walmart for like five years. We never did business with Walmart after that. And it was not till years later that I met Danielle's boss at New York Toy Fair, dear Laura Phillips. And I wrote this big, long email of everything that happened and like, and we started to work together again. But that was sort of our, as crazy as it was, that crazy story was our first break to actually make a little bit of money. And then from there, I started doing deals with US companies that only sold product in the US but didn't sell internationally. So I started doing deals with them because we were really

• 26:29Speaker 01

  bad at designing into Falcon toys, terrible in fact. So we needed good products so I could open up these channels. So I'd do these deals with American companies like Zing or Zocca. I did a deal with the Australian company called Yoho to take their products and sell them internationally. And that kind of, and I'd tell a big story that I could get their products in everywhere, then I'd have to go out and hustle. So we had a product called Zidies, which became really successful, and a product called Schnucks, which was out of Australia, that became really successful. So we started kind of taking other people's products.

• 26:57Shaan Puri?

  How did you figure out that model? Because, you know, did you see somebody else doing that and you're like, oh, that's much simpler than what we're trying to do? Or did you fall into it? Like, it seems like you didn't use a lot of like mentors. You did a lot of running around with a fork, sticking it into outlets, trying to figure out, you know, where they, where, which ones are working?

• 27:16Speaker 01

  That is a great analogy. That's exactly what we did. We just, to be honest, we were making these products and our, the second product line we made were these night balls. But the product was so bad, Matt had, would move factory by this stage. And the engineering of them was so bad that they had these sort of foam EVA patches glued into this frame. But the production, I, I actually was getting quite a few orders. I was hustling around and getting orders, but Matt couldn't produce them because the production was so hard to do. And I'd get so mad at him that at one point I said, I'm coming back from Hong Kong. I was living in my showroom. And then from there I upgraded. I was living in a dorm room with 18 people at a place with puncture mentions in Hong Kong. So I wasn't exactly living the life in Hong Kong. I was getting these orders and my brother couldn't produce

• 28:00Speaker 01

  them. So I was like, I'm coming back to like, to China to take over the factory. And I learned two words of Chinese. One was tai man, too slow. And one was quadei, let's go faster. And we ended up like, I was like on the production line, pushing to get these balls out the door. And I remember they were coming off the end of the production line, half mangled. And I was just like, ship them, just ship them, ship the balls. We've got to ship them. But I remember years later, like you'd see these things on shelves and all the air had gone out of them. All EVA patches had peeled off them and they were just these shriveled up little prunes that he called the shell.

• 28:33Shaan Puri?

  I love that you're honest about it because there's so many people, because it's a very sexy thing to be like. You know, all that mattered was product and we really just built a great product and then everything worked because we built a great product. And like, I know, I know I've been there. It's like, dude, the first version of all my products sucked. In fact, the 10th version still kind of sucked. And I love that you're kind of unabashed and honest about like, look, we weren't super innovative. We saw shit working and then we were like, cool, we could do lights on a frisbee, lights on a ball like that. Okay, let's copy what works. And that your product kind of sucked. And you were just like, basically, you just kept doing door to door sales, even like at a global level, you just started doing globally, like door to door sales. And you literally, it sounds like it was like distribution and salesmanship and marketing that was keeping you afloat at the time.

• 29:19Speaker 01

  Yeah, well, we would sell, I would sell a product to someone and then we wouldn't get a reorder. We didn't know what a reorder was because the product would sell through. And then we just sell a new product to a new customer and we wouldn't get, and I'd just held another customer. And we didn't know for probably seven or eight years, what a reorder was. Like, we had a product actually sold off the shelf and the customer came back to buy more of them. But we could like continually hustle to all these different customers. But we did crazy things like we like a little back on it and it was kind of nuts. Like, we sold this product, the night ball, we got a distributor in the US called Spin Master, one of the biggest toy companies in the world now. Pretty similar story to our own, three Canadians built this toy company, very similar to us. And Spin

• 30:01Speaker 01

  Master had agreed to take our night sports balls for distribution in the US. And I'd kind of hustled a few retailers. And so it was this, it was this, should we sell it to retail? Should we use Spin Master? They'll really put lots of TV marketing on. TV marketing at the time was the thing. And they said, well, we'll run this test in Cincinnati. So we'll put your night balls into all the Walmarts in Cincinnati, and we'll run media in that, in that city. And then we'll decide whether to roll this thing out. And whether or not it was dishonest, I think it was more desperation at the time. But of course, I flew. To where the test was, I got to New York and I couldn't get a flight to Cincinnati. Well, I could, but it was too expensive. It was summer holidays. I went down to the bus station. I remember the bus station in New York at the start of summer holidays.

• 30:43Speaker 01

  It's like nothing I've ever seen. It was absolutely chaos, but I got a Greyhound to Cincinnati. I think it took like thirty hours. It broke down, stopped different places, got a Greyhound to Cincinnati. Stayed in this absolute like horrific place, but every day. And yes, this is a little bit dishonest, but we were desperate back then. I would bus. I'd get the bus schedule. I'd bus to each Walmart. I'd give people cash to go buy a ball. I'd go out and buy them on different credit cards myself. I was so paranoid that we'd get caught just to help our test sales go up a little bit. And I'd buy all these night sports balls, but it was a long day because the Walmarts were all so far apart. And I was taking this bus schedule to get to each one. I stayed there for a month.

• 31:24Speaker 01

  And I almost got killed in a place called Over the Rhine. If you look it up, it was the most dangerous neighborhood in America at the time. Over the Rhine, it's like wild. It was over these railway tracks. And I managed to walk down there in the middle of the day. And it was the scariest thing in my life. And I had a guy come up to me and he said, what the fuck are you doing here, white boy? And I was like, I'm just a tourist. And I hadn't realised I was in this like area. And then I managed to somehow like weeks later walk into it. I was walking back from downtown. There's no such thing as Uber back then or taxis. So I was trying to walk back to where I was staying, which was very close to Over the Rhine. And I walked in the wrong direction. I walked in there in the middle of the night and I got chased and had to hide. That was very funny, but um yeah, we were doing this to to get our test results up, which

• 32:08Speaker 01

  we had a good test and then Spin Master rolled the product out. Of course, it wasn't it wasn't a great product in terms of its construction. It was the same thing. But my God, did we have to hustle. We had to strap the fight so hard to to like literally just to survive. But we got to a point where we were we were selling enough to each new customer of each new product. And we weren't getting reorders, but we were profitable. And it was actually funny because after the David Beckham thing, we made like that million and a half dollars or whatever it was. We got a little bit fat and happy and we had a month where we lost two hundred thousand dollars. And I remember sitting, we sat down and we were like, oh my God, we've lost money this month. And we were like, from this day on, we will never have a day, a month, a week, a year where we lose money.

• 32:49Speaker 01

  Like if we're losing money in a month, we will like sit down, we will like eat nothing or we will like get rid of people. Or we will like live on nothing just to ensure that we're like profitable. Cause people wonder, how do we get to, you know, a few billion and a few billion dollars a year in sales now? And we've built it completely organically. And the truth is, we just, cause we like, we're so frugal and we start building. Our business got more and more and more profitable just every year for twenty years. So it was almost this cognitive process to how do we remain profitable? And then that's just compounded over twenty years and we've just got more and more and more profitable to the point where. Percentage wise, by far the most profitable point company in the world where we run at like forty percent net profits, which is unheard of in any.

• 33:32Shaan Puri?

  Wow.

• 33:32Speaker 01

  Industry in the world, the product industry in the world, let alone in the software companies. So, so we just built a very, very different model. That's why I reflect on it now. It was almost like we built something from first principles, the way we set up factories, the way now we automate all of our production, the way we don't do domestic. Uh, shipping, we do all F O B, the way we centralize all of our content and data systems around marketing globally. We've almost built this company from a first principles approach, cause it's so different to how everyone else does it. But we did that more through naivety than through planning.

• 34:01Shaan Puri?

  So you're starting this kind of like eighteen years old when you go to China. Do you remember how many years it took you to get to your first, you, where you made a hundred grand? Or when you made a million dollars, like how many years was that?

• 34:13Speaker 01

  Well, it was probably a couple of years where we started to make money. But we still lived the same way because we needed that money to fund our growth effectively. You can't grow to billions of dollars a year in sales organically without borrowing money or going to a bank unless you're super profitable to continue funding that growth. And so we started to make money. But we never spent it. We still lived the same way. I still lived in a dorm room in Hong Kong. And so for years, for probably eight years, and as I said, Matt had, as we slowly moved and built bigger factories, Matt would always have a tiny little room, like a tiny little room in the factory. And that's where he lived in China with no other, like no interaction really with anyone else.

• 34:55Speaker 01

  And we were going crazy in those first years in China. Like, um, I look baffled and like, we had some serious problems.

• 35:01Shaan Puri?

  And so you, um, you take it all the way. At some point, you start figuring out toys that are new, novel, good products. Like I bought your bunch of balloon products where you fill up, I don't know, it's like a hundred or five hundred now, like a hundred water balloons at once. You can fill up in like, it takes like fifteen seconds to fill them all up. So you eventually start making good products. How did that happen?

• 35:23Speaker 01

  So we were sitting on a parallel path. We were taking other people's products and that was helping us really open up distribution. I would hustle and get them into all the retailers across all the countries. There's an email that I've sent internally that I had from like twenty years ago and it kind of lists every country in the world and all the retailers and distributors I was working with at the time trying to sell our products to. So we're really like pushing out to everyone. And at the same time, we were starting to learn how to make better products ourselves. We were sort of building a team in China and engineers and like some designers and we're starting to sort of parallel path, building our own products as well. But I think our, a big break after ZB's came when we did RoboFish. And RoboFish is still, we still sell about eight million of them a year today.

• 36:07Speaker 01

  And this was a Chinese inventor. We ended up getting sued for this as well. We were a five year lawsuit, but a Chinese inventor called Xiaoping. And I met a guy in Hong Kong, a French guy who had a factory in China, was running a factory in China. And he was doing some brokerings of some, for some inventions. And he showed me this RoboFish. I actually didn't, I thought, eh, that's cool. Didn't think too much of it. Then he showed my brother and my brother loved it. He's like, we've got to make this RoboFish pumite. And part of the deal was we had to make it in their factory if we licensed it from them. So we licensed this fish and it was like, it's got little carbon sensors, very, very clever design, it has an electromagnet coil in it. So when it touches water, it's all micro, it swims and looks like a real fish, swims in all directions and it's water activated.

• 36:48Speaker 01

  So we start making this fish and then the guy who was the inventor had worked in a US company before and he had tried to sell the invention to them, that said no, he'd signed a release on the invention saying, no problem, you can go sell it to anyone else. Of course, RoboFish blew up, came one of the best selling toys in the world. And then he decided that actually the inventor had designed some schematics or diagrams why he was under employment and he would sue us because they were still on his computer systems. And so we were in this long, long war suit. But even worse, we finally had like this massive hit. It was like the number one selling toy in lots of countries around the world. It was, it took us to, I think we did like a hundred million US dollars. So this was like a big break for us. But unfortunately, there's always a curve ball.

• 37:31Speaker 01

  The factory that we were bound to make it with, we bankrupted in the middle of production. But we had to design so much specialist production, not just the tools, but all of these fish were tested underwater for precious, they didn't leak. And there was just a ton of like specialized equipment that had been built to produce a RoboFish. They were all slightly, the weights had to be perfect. So this whole factory gets shut down. And of course, the wars in China meaning that the factory workers are the first creditors, essentially. So they send the army in to like stop anything or any assets being taken from this factory. So we're like peak RoboFish production, peak demand. Finally, we've got parts that are selling and everyone's scrambling. There were retailers that wouldn't talk to me for like seven years.

• 38:15Speaker 01

  Actually, one of my good friends today, it's one of the biggest independent retail chains in the, in the UK called The Entertainer. And the son of the owner, Stu, one of my closest, close friends today, he wouldn't even, he didn't even talk to me for eight years. Like I couldn't even get an appointment with him. But suddenly when RoboFish took off, suddenly all these buyers were coming to us and hey, like, like that RoboFish. So you've got to imagine we've finally had this momentum and then this happens to the factory and we are like. We were like shit and it was crazy. We could not get into the factory. So my brother, we had to do, and this again, there's so many of these stories, but we were like, we have no other option. We have to get our tooling. We have to get all our equipment. We have to get everything out of that factory.

• 38:56Speaker 01

  And we relocated to another factory, but the army was there. Everyone was there. You couldn't get in. So in the middle of the night, my brother got like eight trucks, got all of our team from one of our little factories, filled these trucks with people and like two, three AM in the morning, when there were less people like camped out at the factory, pulled up to the factory, paid a bunch of bribes to go in, took all the trucks into the factory. All our people went in, picked up all of the tooling and all of the equipment, loaded up all the trucks in the middle of the night, left and we went and relocated to a new factory. So we continued production. So it was, uh, it was crazy, but that was like, again, like nothing ever happens without a hiccup, right? Like it was sort of like, we finally felt like we had momentum and then this happened. So.

• 39:42Shaan Puri?

  How, how old are you now?

• 39:43Speaker 01

  Thirty nine.

• 39:44Shaan Puri?

  Okay. You're thirty nine. Do you still go as hard or like, are you still as nuts as the early version of you? Like, do you still have the same drive or are you human and you're like, you know, yeah, I used to really be super, you know, super driven, super resilient, going, going really, really balls to the wall. And now I'm, you know, tired and whatever, you know, I'm, I'm an old guy now. Like, do you still have it?

• 40:10Speaker 01

  I can, we still have it. I think we still are just as motivated today, if not more motivated than we have ever been. We see a pretty, pretty cool roadmap ahead of where we want to get to over the next 10 years, particularly through tech and building houses on production lines and through age older.

• 40:29Shaan Puri?

  So let's talk about that. So could you just summarize, how big is the? How big is the empire today?

• 40:35Speaker 01

  So we're over two out of a billion US in revenue. But we're growing at about twenty five to thirty percent year on year. So that's compelling. But I think the thing with us is, is our revenue is one thing. It's just how profitable we've built the business.

• 40:50Shaan Puri?

  And it's public or it's not a, not a public company?

• 40:52Speaker 01

  Not public.

• 40:53Shaan Puri?

  Okay, so privately held, super profitable company. That's like a billion dollars a year of profit, basically, out of the toy business. But then you have this diaper company. It's, you started, you started buying other companies, right?

• 41:05Speaker 01

  Not so much buying. I, I actually got Crohn's, so I got sick in China, in Hong Kong. And I had to have my bowel, my large intestine removed. This probably has something to do with living in China for all those years, eating incredibly poorly. I'm not sure. But I had to move home to New Zealand to get surgery about six years ago. And it ended up being a great thing. So I was in Hong Kong. I, I came home from the surgery. I was meant to rest for a while. And I was sitting at home and I was getting restless, trying to rest as I had my bowel, my large bowel removed. And I had a friend who had started a small diaper business and he was doing like fifty grand a year D to C in New Zealand. So really, really small.

• 41:49Speaker 01

  He'd been mapping away at it for three years. And I thought, well, I might as well help with this. But I always thought like toys is this industry where there really is a ceiling for the size of the business you can grow just because of the, the, you know, the addressable market, the size of the market. Also, you've got brands like Hot Wheels, which is super hard to disrupt. And I was looking at FMCG and I started to realize that there's like nine companies that dominate eighty percent of it globally. And when you build a toy business, you work in every material form. You work at speed, like speed of innovation is your DNA. You build this muscle for speed and working fast and innovating because you reinvent forty, fifty percent of your entire product line every single year.

• 42:32Speaker 01

  But because you haven't been so much from your product line every year, it becomes really hard to keep growing, right? Because it's a reinvent to catch up every year. And so I started to form this thesis about six years ago. I thought, man, we're so good at automating and we sort of, I would classify Zuru today as more an automation company than anything else. Like the product is almost secondary. We build incredibly sophisticated automation. We had a huge automation team. So whether that's building a house on production lines with robots or a dart blaster with robots, it's a big part of what we do. So, you know, I was like, we've built this automation muscle and the speed of innovation muscle. And I feel like these big FMCG companies, they, one, they don't innovate. Two, they have a lot of duopolies. So if you look at pet food, it's Mars and Nestle. If you look

• 43:15Speaker 01

  at baby, it's Kimberly Clark and Proper and Gamble. If you look at beauty or personal care, it's L'Oréal and Proper and Gamble, a little bit of Unilever. So there's a lot of them. If you look at laundry, it's pretty much just Proper and Gamble, a tiny bit of Unilever. So all these duopolies and monopolies across the board. And through that, they were delivering much margin to their retail partners. They really held the power. And I met, I remember mapping out Walmart's revenue and I mapped it against the top eight FMCG companies in the world. So Walmart did more revenue than all of them combined.

• 43:45Shaan Puri?

  What's that acronym you're saying? What MCG? What is that?

• 43:48Speaker 01

  FMCG, fast-moving consumer goods. So FMCG, CPG, consumer packaged goods. So, so if I looked at Proper and Gamble, Nestle, Mars, all the biggest FMCG companies, collectively their revenue is less than Walmart, who does 611 billion. But then Walmart makes only a fraction of the profit. They're all public companies and the big FMCG companies make the lion's share, 75% of the profits. So I thought, is there a world in which we can be disruptive in FMCG, fast-moving consumer goods? Can we deliver more margin to our retail partners? Can we innovate faster, bring our speed of innovation mindset to these categories? And can we reach a customer in a far more efficient way? And can we move at the speed of culture? And obviously at the time, digital and data-driven advertising was, you know,

• 44:31Speaker 01

  starting to become a bigger thing and, you know, targeted advertising. And I was still looking at baby and I was thinking, well, you've really got a mum.

• 44:39Speaker 01

  A mum who's an incredibly targeted audience or a parent who's incredibly targeted audience, how can we serve them in ad every single day in a targeted way rather than just like blanket media? So that's a super efficient way to reach our customer. What if we do the better product, deliver more margin and position at a better price? And that was kind of my overall thesis. Can we do this? And can we run our same kind of first principles toy model like F O B? So we don't hold product, super lean, large advertising dollar spend, but in a really centralized, controlled way. And I thought, okay, I can do this. So I worked with my, with my friend and I said, okay, let's launch this diaper brand in New Zealand as a test market. And within one year, I think we're taking 40% market share in New Zealand, launching a diaper. And I remember meeting Greg Foran, who was CEO of Walmart at the time, and he's a New Zealander. And I met him

• 45:24Speaker 01

  in New York and I was like, Greg, you know, toys is great. And it's been this, it's this incredible university for us because it really allows us to, you know, it's, we've built skill sets that is very hard to build in any other industry. And I said, we're going to take on diapers. And he turned to me and he said, Nick, ever heard of Coke and Pepsi? Like he was saying that it was going to be that hard to crack, like Pampers and Huggies are going to be that hard to go and disrupt. And I said, I get you, but I think we can do this. I'm going to give it a go. So we launched in New Zealand. The second biggest brand in New Zealand was Treasures. Huggies was number one. Treasures was a local brand. Their share just plummeted. They ended up going out of business and having to sell the brand for, for the pennies on the dollar.

• 46:04Shaan Puri?

  And you're spending a ton on Facebook ads or what are you doing?

• 46:06Speaker 01

  At the time, Facebook, and then it progressed to Instagram. Now it's progressed to TikTok. Like it sort of always progresses, right? Like, so you've got to move the speed of platforms, but you've also got to move at the speed of cultures. How do you move at the speed of trends to build content to move at the speed of culture?

• 46:18Shaan Puri?

  And was that a new, newish skill set for you? Cause it seems like the toy company was retail driven.

• 46:23Speaker 01

  Yeah, well, YouTube was starting to kind of thing, but it was mainly TV advertising for toys at that time. So it was still TV was predominant and then it kind of switched to, to, to YouTube. So today we don't spend any money on TV and toys. It's all YouTube. It's all TikTok. It's all YouTube Shorts. So it really like the platforms change in how you reach people. But so I had this thesis, but we just quickly took all this market share in New Zealand. And I was like, holy shit, we can make an incredible light. But to be fair, success is a bad teacher. Like we just got the success out the gate. Rascals just, we launched, it just took off. And so I packaged up that case study, went to Australia, went to Coles and I said, hey, look at what we've achieved in New Zealand, look at all the margin we're delivering, look at the category share we've driven. We helped foodstuffs reverse their category share decline. Like they were getting hammered by the competitor Woolworths here.

• 47:09Speaker 01

  We inverted that, we took them the other way with them on, yeah. So Coles was like, love it. Launched with Coles, same thing. We won Coles Non-Food Supplier of the Year Award in the first year. And just helped them like take heaps of category share. So I was like, wow, this really works. Took that model, went to the U S, went to Walmart, was like, hey Walmart, we could help you disrupt, you know, your two big suppliers here. And they gave us a Dallas test, same thing. We became actually last year Walmart's fastest growing brand, total box all categories with Rascals. Went to Target, did the same thing with our brand Milli Moon. Milli Moon actually just over to private label and Huggies is second biggest sub-brand in Target. And under or about three and a half years, which is incredible. So it was sort of this like wake up moment that wow.

• 47:51Speaker 01

  And I think last year we produced two billion diapers and this is all in under, this is all in about five and a half years. We've, we've, we've built this business. So well over a billion dollars in retail sales last year in diapers in, you know, five years. So from start to, to, to go a billion dollars a year, should I say, and growing incredibly fast, like this year, it can grow thirty percent again. So this was sort of an, an open for me and I thought, wow, we can do this in all F M C categories. So I started testing in New Zealand and losing, like we tested infant formula, didn't work. We tried Femcare, fails. We tried like oat milk, fail. I did all these old things. I started failing and I was like, oh. But my partner at the time, Jamie, had a background in luxury P R and, and, and beauty and was huge beauty enthusiast. So I said, hey, don't do that. Let's start a beauty brand. And we started Monday Hair Care.

• 48:36Speaker 01

  And which is the little pink bottle, Forbes called it last year, the most famous shampoo and conditioner bottle in the world. But we launched that peak COVID and that was the second one. It just took off. We, I think in Australia, um. We won product launch of the year and we had five of the top ten in total here. Yeah. We over to Pantene in sales.

• 48:54Shaan Puri?

  What do you think is the difference between the ones that worked and the ones that didn't? Is it category? Some categories were just more ripe. Was it you nailed the packaging and the positioning and that's actually the thing that matters most? Is it luck?

• 49:04Speaker 01

  Diapers was is driven by price and performance. And we were the first one in the world to take a China diaper to the world. And China's making the best diapers in the world. So in China, there's like a thousand domestic brands all competing for the technology and nonwovens and substrates and SAP. And machine technology has just gone like that because of all domestic competition. So we took the best product in the world to market at the best price in a category which is price and performance driven. So it's either you've got to be price and performance driven in a performance driven category. Or you've got to be innovation driven. So we launched Dummy Yum, which is super innovative to factory product, like really innovative. And that was just pure innovation that made that like take off. So innovation. Or it's got to be design and creative. So Monday was, you know, it's still a bowl of shampoo, but incredible design and creative.

• 49:48Speaker 01

  And then we just owned TikTok as in it is the number one haircare brand in the world on TikTok. And by a long way.

• 49:56Speaker 01

  And it was just the right design, creative positioning, branding, marketing, and it just took off. And I think last year in the US, it was second only in total growth in haircare to Procter and Gamble's total haircare portfolio, just the Monday brand. And so then I started to learn kind of which categories would work for us. And we've gone super deep in those categories and we've applied our same model. So building all the factories in diapers, we built a factory, I think to us nine months to reduce. And we're doubling the size of it right now. So we'll have four billion diaper capacity by next year. And beauty, we built the whole factory, everything under one roof, injection molding, rotor molding, filling, mixing, all of it. We built all the lab in Shanghai. We put L'Oréal formulation specialist over, Unilever formulation specialist.

• 50:37Speaker 01

  So as soon as we found something that was working, so I was out poor sourcing to begin with, then we do the Zuru thing, which is go super deep. Automate everything we possibly can, put all AGVs in. So every little part of it, we want to like automate as much as possible. And then pet food, I started at the same time. I bought a young guy who won New Zealand's high school entrepreneurial program out, a guy called Alistair. He's incredible. I said, let's start a pet food business together. Actually, we worked with supermarket and we said, let's do pet food. And so now we're getting huge momentum there. And one of our brands, I think, bulkers was drove thirty percent of all cat treat growth in America last year. And then we experimented in supplements, which has been a little bit hard. I built a brand with the Kardashians called Dosin Co. We ended up selling that last year. It just, it worked everywhere else in the world. It failed in the US.

• 51:20Speaker 01

  And so as soon as we don't have the scale of the US, it sort of lets exit it.

• 51:23Shaan Puri?

  Yeah.

• 51:24Speaker 01

  And supplements, we've sort of struggled with our brand habit, which is sort of ticking away. And then very much home care, we're building a bunch of brands as well. So we've sort of, and conviction. So we've built this, what I call our five vertical strategy. And we're going very, very deep within all of these verticals. And I think all of them individually can be bigger than our toy company within, you know, two or three years.

• 51:47Shaan Puri?

  What's, what's the dream? Like, so why, why go so hard? Why do so many, right? Like you could, just off the toy company, you could be sitting on a boat you own, looking at an island you own with a, you know, a beautiful drink in your hand. Is that just, you, you love the game? You have some dream? You want to be a hundred billionaire? What's the, what's driving doing more, more and more?

• 52:09Speaker 01

  I think we love it. Number one, love having a thesis, love competing. For me, it's, it's sport, right? Like it is sport, having a thesis, going into something, working it out. And as we build these things, you know, toys, business, the edge business, FMCG business, you know, as you become more successful, you think, how can I solve bigger problems? And the same person Greg Forl, I said, you've got to wrap your business in a bigger purpose as well. And I thought, we thought, how do we solve bigger problems? Cause we're almost in a privileged position now, right? How do we go on to actually solve bigger problems? Which is why we've started building Zurutec over the last, what's actually been eight or nine years.

• 52:46Shaan Puri?

  Can you, can you explain what that is? So it's a crazy moonshot idea. I think you have, you either have or are building the largest factory in the world, period. What, what are you, what is the, what is that idea? What is Zurutec?

• 52:58Speaker 01

  So Zurutec, the thesis really was, if you look at the construction industry, it's been done the same for hundreds of years. It's also the biggest segment or market in the world, construction property development. And the idea was, how do we build the first factory in the world that has a customized input? So the design of a building and a fully automated output. So how do we build the buildings for a small fraction of the cost of what you build a building for today? And, and we're now, we, we started off, so we built our software, which is called Dreamcatcher, which is built on Unreal Engine and it has an incredibly simple UI sort of user interface.

• 53:42Speaker 01

  But the logic layer or the coding layer below that is incredibly, incredibly complex. We've catalogued every building code in the world, so you can drop a pin on any location in the world. It maps the terrain, it does the building code. And then you can design your house or building or whatever building you want in our Dreamcatcher software. We've also built our own AI assistant or our own large language model called Queera, which is basically training, it's training our model on all the great architects. So you can talk to your building and it builds it in front of you. You can put a 2D plan in, you can decide on this room, I want it to be Stockholm style and furniture. And it maps all the furniture and does it for you. So it's incredibly intuitive software. Basically, a 10 year old can design on Dreamcatcher.

• 54:27Speaker 01

  And then it does all the structural side, it does all the EVP, the mechanical, the electrical, the plumbing. It does it all in a super intelligent way. Wherever you've dropped the pin where you're building the building, it works out the orientation of the building for the sun. It works out how many HVAC units you need, it works out how many solar panels you need. So basically then the software translates every part into our factory. Our factory builds every single part and it's completely automated. And the factory is designed from start to finish. So originally we built a one fifth scale factory. So that's to test the software with the hardware and how that all integrates together. So it builds these mini houses, the one fifth in every dimension. And then we, once we had got that working, we built a, it's about a three hectare factory and it's a test production line.

• 55:10Speaker 01

  And that right now is producing, that's, we're testing the software at full scale with full scale houses. And we're building a house about every two weeks right now, which is test. And then we have like a hundred little changes and we go in software and change it. And then we bought a factory or a building. It's twenty five acres in size, which is our first commercial factory for producing commercial houses. And in phase four, we'll be building one of the biggest factories in the world. I think second only to Boeing is the plan. So that's all planned out now. But we are building a house for five hundred dollars a square meter. And it's the best quality in the world. Irrated concrete, ceramic tile, but we have innovated every single part of the process. So we have the wall module, the tile module, the window module, the

• 55:54Speaker 01

  lighting module, the smart home module, and every single team, I think, is the best in the world of what they're doing. So it is a huge project. It is a massive undertaking. I think we have about seven hundred software and hardware engineers working on it.

• 56:06Shaan Puri?

  Are you self-funding this? Or did you raise money for this?

• 56:08Speaker 01

  Correct. You know, we self-fund it. And so we're getting very close now to a final product. We think we're five test houses away from getting it very close to perfect. And then it should be transformational in terms of how the world builds. And anyone can use Dreamcatcher, the software. So you could go onto Dreamcatcher, and there might be a million different two-bedroom houses that have been designed by people on the platform. And you can look through them. You can put a price on selling your own design. You can go through them in real time. You can stage furniture. We'll have a marketplace. IKEA could digitally scan all of their furniture into our marketplace. Artists could digitally scan all their art in, so you can put it in your house. You can go around in real time and see it. And so the software is really, uh, the software is really incredible, um, you know, what we've

• 56:51Speaker 01

  built. So super exciting that we're getting so close now. And the houses that we're producing each couple of weeks are really incredible.

• 57:01Shaan Puri?

  I mean, this is a insanely cool idea. Uh, just to basically, it's like, like, if you go to the website, it looks like you're looking at The Sims, the video game, like, you could just kind of like zoom around a house. You can like move things, whatever. But you're saying there's a button where you just basically click print, and then the house gets built in an automated factory, which is just a kind of mind-blowing idea. How much are you going to put into this funding-wise? Like, you must be pushing, this must be like, you must be putting hundreds of millions of dollars. Is that right? Or am I overestimating this?

• 57:34Speaker 01

  We're spending a lot, for sure. So the software, so we have three offices in India, on the software side, Pune, Jakarta, and Ahmedabad. And we have two in Italy, Milan and Wanda. The reason in Italy is we actually acquired Years ago, the software part of it, it was two guys, Martin and Alessio, they're parents, both architects. They decided that architectural software was built on incredibly old software stacks. And so they were like, well, gaming engines are like going like this. And so they decided to build software or architectural software on Unreal Engine. And so we acquired them and that's sort of the reason, I think we have about a hundred and sixty, a hundred and sixty or so people sitting in Italy on the, on the software side. And then they worked with India on the software side.

• 58:18Speaker 01

  And then in China, we built all the hardware side out. So we have three sites where we're doing all of the hardware and automation development. But we kind of parallel out, our automation team has sort of grown in parallel. We, you know, they automate, for example, we produce fifty seven million dark and water blasters a year. But we produce a dart blaster from a plastic granule through to finished product with no people. Our competitors like Hasbro, they're outsourced to factories who still produce with drills on production lines. We're now building our automation two point O where we're using vision and machine learning. So we can actually change out any model of blast on the same production line. It can see the mold and it can see the shape and where all the screw holes are and it adapts completely. So we've kind of parallel out like, parallel out our automation with building a housing project,

• 59:02Speaker 01

  but also taking all that expertise and building it across our ZUR agent and, and toys business, which makes us so, uh, so disruptive. But the big difference is when we automate a product in FMCG or toys, you're making the same product over and over and over again with robots. This is incredibly complex because you're building a tailored product for every building site in the world and every building code in the world, and it's different every time. And so having that fully automated output with a fully customized input has never really been, or has never been done before in the world.

• 59:35Shaan Puri?

  Dude, you're a madman. Do you even like, who are your peers? Like, who do you relate to? Do you just read like an Elon Musk biography and you're like, oh, that's the only other guy in the world who I, I have something in common with? Like, is that somebody you admire?

• 59:50Speaker 01

  We have a huge admiration for Elon. We've been big Tesla backers and fans for a very long time. In fact, I would say my brother.

• 59:56Shaan Puri?

  Do you know him?

• 59:58Speaker 01

  I had a chance to meet him and then I had to fly home for an emergency. And so I actually don't know him. But my brother, my brother was very similar to Elon. So my brother was sort of the, the driver behind ZUR tech and our, our building project. He's very similar in his way of thinking, I think. Like Eon calls it the idiot index, for example, right? And the idiot index is when you look at the cost of a rocket. Well, he looked at the cost of what a rocket used to cost to build. And then he looked at the cost of the materials. And it's like, you know, hundreds of times the cost of materials to build a rocket. And he's like, well, then he takes a first principles approach. He breaks it down and he works out effectively, you know, how to build a rocket at a price that makes sense based on the cost of the raw materials.

• 1:00:40Speaker 01

  I mean, we're having a similar approach to how we build a building, whether it's one story or a hundred stories. It's look at the cost of materials out of the ground and look at the final cost of the building. The idiot index is really high. And so it's same or similar type of thinking. So how do you go back to your first principles approach and do it from the ground up in a completely different way?

• 1:00:58Shaan Puri?

  Did you see the other day, I think yesterday or two days ago? Boom Supersonic did their first supersonic flight. I don't know if you followed this startup?

• 1:01:05Speaker 01

  I did, yeah.

• 1:01:07Shaan Puri?

  He, he kind of had a similar story where he worked at Groupon basically. And he's like, you know, a product manager at Groupon, selling coupons on the internet. And then, you know, for fun was basically having a, you know, a hobby of flying. And then gave himself a year to, from a first principles point of view, uh, understand how planes work and figure out if there was some business he could build in the, you know, around planes. Cause he just loved planes. And while he was building his spreadsheet, he was just like, I don't get it. There's no reason we shouldn't be flying supersonic speeds right now. And then he took it to like professors and others. He's like, where, where is the error in my calculations? Cause this is telling me we should be doing supersonic. And they were like, no, there's no theoretical errors. Uh, just no one's doing it.

• 1:01:49Shaan Puri?

  Like there's no courage is the limit, not like, there's not a materials problem. There's a courage problem. There's a entrepreneurship problem. And seeing that go, you know, yesterday to doing their first supersonic flight was super inspiring.

• 1:02:01Speaker 01

  Incredible.

• 1:02:02Shaan Puri?

  So you, you're doing all this stuff. Do you like have hobbies? Do you do stuff outside of this? What's like, what is fun for yours? This is like, my cup is full with this.

• 1:02:10Speaker 01

  Sport, definitely sport. We loved, just loved competing really. So anything that has a competition element is something that I get a lot of enjoyment out of. So yes, certainly tennis, golf, just sport in general is, is, is something that I enjoy doing. But, um, yeah, as you get older, like obviously. We don't, I used to think you wake up every day with that pit in your stomach because you're wondering what's going to go wrong today and what do we have to solve today? So, you know, obviously we don't have that, that issue any longer and, and definitely get to spend more time with family. I finally had my first child last year, so that's uh.

• 1:02:43Shaan Puri?

  Congrats.

• 1:02:43Speaker 01

  It's been a big change. It definitely changes your perspective on things, I think, which is, which has been really good. I always sort of kick the can, delayed it as long as possible, thinking it would slow me down, but it's definitely been one of the best things, so.

• 1:02:56Shaan Puri?

  Do you, um, when you start these new companies, cause I always, I always find this interesting, whenever you have like a serial entrepreneur, uh, people have different approaches. So some people, they, you know, they have their main thing and they leave and they say, I'm going to go on a sabbatical basically for a year, figure out my next thing. Other people, they take some percentage of their time, they're devoting it to new ideas and they go, they roll up their sleeves and they're super like on the ground, figuring out the new idea. Other people, they recruit a operator and they just give the operator kind of like the idea, maybe a little bit of a plan and then let the operator run. And they kind of are there as more of a chairman or a board member from afar. When you did like the diaper brand and these other ones, were you like boots on the ground, like every day figuring it out? Or did you do the operator model? What, what did you do?

• 1:03:40Speaker 01

  Definitely boots on the ground. What I would say is in our business, there's a through line through it all, right? We're essentially making a product where there was a house, a bowl of shampoo, a laundry pot or a dart blaster. I mean, it's essentially still making product, building factories, selling it into, to retail. So we've built such a big flywheel, like if you look at our Shenzhen office, we have three and a half thousand people there, right? It's such a big flywheel that it just becomes easier and easier to plug into that flywheel, regardless of, you know, what category in. Yes, there are all different industries, but we're still effectively trying to make the best product in the world at the best price. We set ourselves the goal of making a product for zero dollars. I know that's impossible, but that's our goal. How do we make this product zero dollars and how do we make it the best in the world?

• 1:04:25Speaker 01

  So there's a through line through it all. So very much boots on the ground. I believe, you know, leadership has to be on the dance floor, have to have your hands dirty. That's where you get most insights. And in our business now, I'm, you know, I'm a huge believer in firing bullets and failing fast, so. I say get an actionable insight. Where's an insight? Find an insight somewhere in the world. And insight forms a bullet and a bullet is a minimal viable investment into testing something. And then if the bullet works, it's a cannonball and we invest and we build the recipe around that. And once the recipe is working, you can pull a lot more things into that recipe and build that recipe out. So our mindset around fast fail, we actually have what we call fast starts now in FMCG. So we're trying to build a minimal viable products to test quickly, as fast as possible.

• 1:05:09Speaker 01

  And so we can really speed, like speed of innovation is is probably the biggest thing for us. And we're trying to test more things in these categories faster and learn what works and what doesn't. Cause in my experience, things either just like hit the ground and start working or they don't. And then we have a mindset around continuous improvement. So we call it two percent improvement a week. The power of compounding. I know two percent improvement a week is nothing you can measure. But that's the mindset. That's what we put into our DNA and we always say to the team, we suck now compared to where we'll be in the future. So we had this relentless mindset of being able to look back on ourselves a year ago and be like, we weren't even good then. And I think that compounding improvement is such a a big part of of what we do.

• 1:05:50Speaker 01

  And then from, you know, when I look at team members, I'm trying to, people say they try and build talent density in their business. Yes, we try and build talent density, but for us, we're trying to build like grit density. And I say when we hire, we're looking for grit, smarts and someone with a bias to action, like real doers, right? People that just like we fast fail, we go in, we do it, we are the winner, we learn. If it doesn't work, we're getting heaps of insights out of that on how to improve next time. So our mindset or our DNA in the business works across any of those verticals or categories we're in. We have the same mindset and the same approach and the same DNA as to how we approach them.

• 1:06:28Shaan Puri?

  If you were interviewing me, how would you figure out if I have any grit?

• 1:06:31Speaker 01

  I I think actually like looking back at your history is it's kind of like, we often find like people that really great competitive sports people and they really love to win and were highly competitive. Like I want to understand how competitive you are, how much you really want something. And to be honest. It can be really hard. Like, we've built this loop process in our business, similar to the Amazon loop. So we're, you know, half we're hiring and looking at, you know, whether you fit and can do the actual job. But the other half is really, do you align to our DNA? And so we have a loop. We have, you know, eight people, you know, half of those people will

• 1:07:11Speaker 01

  interview or questions around, you know, our DNA and really trying to go deep on understanding if that person fits our DNA. And so we're really trying to build up, you know, not only our talent density, but our grit density. But certainly, it's something that I find is really important. All our best people have just incredible grit and incredible bias for action. Sure, they're smart, but they just get shit done. And, you know, we decide something in a meeting and they're already kind of actioning it in that very moment. And that's kind of our, our, our culture. Well, it's that, it's kind of that saying as well, right? That lazy people work a little bit and expect to be winning, whereas winners work as hard as they possibly can and worry that they're being too lazy.

• 1:07:56Speaker 01

  And I feel like that's super true, right? Like, people that like work hard, they're always worrying that they're not doing enough or they're being too lazy. And it's kind of those people, that's kind of like the mindset we're, we're, we're looking for.

• 1:08:10Shaan Puri?

  Yeah, I think Elon has a good question. He uses in interviews, he says, uh, uh, tell me about, he just starts, sits down, he just says, tell me about the hardest problems you solved and how you did it. And, you know, you could get so much from one question because what's the hardest problem they solved? You know, it will show you the scope and the trust they had in prior roles, like, were they just nibbling on tiny little issues or were they actually like biting into really meaty things? Yeah. And like, yeah, can they talk about the details, the paths that didn't work, the paths that did work? Because that's the person who was actually doing the work. There's so much like resume lying where somebody says, oh yeah, we did this. Like, cool. Tell me how you did it. They don't know because they weren't the one doing those parts of it.

• 1:08:49Speaker 01

  Correct, correct.

• 1:08:50Shaan Puri?

  Nick, this was awesome. And I really appreciate you coming on. I know you don't do a lot of podcasts, but your story is, is honestly incredible. I think. As much as you're building in the factories, I think you can, you doing a podcast like this can build 10,000 new entrepreneurs with more grit, with more resilience, just by sharing the story. Because you're showing, you know, what's possible, you're showing what you did, how it all turned out and how you approached it. And so I think, you know, a simple hour like this can do a lot for a lot of people. So I really thank you for doing it.

• 1:09:19Speaker 01

  It was a lot of fun and yeah, I don't often share our story all that often, but

• 1:09:25Speaker 01

  yeah, I totally agree if it can help inspire people and I always say it right. It's not really how capable you are, it's how willing you are. And I think it's the willing people that stick at it for a long, consistent period of time and continually improve that actually are the most successful. It's not necessarily about how smart you are. It really is just grit and perseverance and you end up getting there. So I think that's the big lesson for any entrepreneurs out there, really.

• 1:09:54Shaan Puri?

  Right on. All right. Thank you so much. That's a wrap.