Ed (00:00:04):

I am Ed Cowan, and this is Scaling Up.

Tom (00:00:14):

Often, I think people and culture gets thought of as a standalone topic, and it really isn’t because it really underpins and interconnects with everything else across the business. So, are you trying to grow really quickly? Because if that’s a strategic objective, then that will flow down to the type of people that you hire and the type of culture that you want.

Auto (00:00:33):

This podcast aims to educate and inspire, by telling the stories of great growth companies as told by their CEOs and founders. TDM is an Australian-based investment firm that invests globally in fast growing public and private companies. For more insights, visit our website, tdmgrowthpartners.com.

Ed (00:00:56):

From a kitchen table in Liverpool, England, to the dressing room of some of the world’s biggest sports teams, Castore is one of the fastest growing premium sportswear brands on the planet. Founded in 2015 by brothers Tom and Phil Beahon, both former professional athletes. Castore was built on grit, obsession and a bit of a chip on the shoulder. With no fashion experience, no contacts, no outside investment – the brothers remortgaged, their parents’ home, lived off just a thousand pounds a month and packed boxes late into the night. Their mission to build a British challenger to the global sportswear giants, a brand that blends high athletic performance gear with the sophistication of luxury fashion. Fast forward almost a decade and Castore is rewriting the rules of the industry. They’ve developed proprietary fabrics, run a fully integrated design to distribution platform, and perhaps most disruptively ripped up the old team apparel playbook, forging deep digital first partnerships with elite teams in cricket, rugby, football, and formula one. This is a story of ambition, execution, and staying true to your vision. My guest, Castore co-founder and CEO, Tom Beahon.

(00:02:21):

Tom, welcome to Scaling Up. This is a real treat for me on so many levels. A great place to always start with founders that have built big businesses is going right back to that founding story. So, if you can take us back to 2015-16, you’d fallen out of semi-professional football at Tranmere Rovers, your brother Phil with Lancashire Cricket. I’d love to know what the vision at the time was, what the gap in the market that you saw because you were starting from scratch. You had no experience, no contacts, no investment, and yet here we are today, 10 years later and Castore is shooting the lights out. So over to you.

Tom (00:03:00):

Great to be here, mate. Thank you so much for having me. Real privilege. I’m going to sound horrifically cliched, so forgive me, right at the very start of the pod. But for us, my brother and I, it was very much passion at the beginning that outweighed the substance. We didn’t have any great strategic vision. We didn’t have a roadmap of the key objectives we wanted to achieve. We didn’t spend a huge amount of time studying the success of competing business models in the market. I’d love to say that we did do all of those things, but I don’t want to come on here and be dishonest. I guess what we did have was twofold. Firstly, and I am going to sound boring here, but I truly don’t think that you can repeat this enough as a founder or a co-founder, is that deep, deep passion for what it was that you were trying to achieve.

(00:04:00):

So, although there wasn’t a mindset of, hey, let’s get this business to 10 million revenue or a hundred million or a billion, there was a very, very deeply ingrained mindset of we care passionately about this and we’re just going to refuse to give up until we have success. We don’t know what success is. We probably couldn’t define it, but we know we’re not going to give up. And that passion for me has to be the starting point. And don’t get me wrong, there’s some founders that have knockout products that change the world, but I think they’re the exception rather than the rule for the rest of us on planet earth you do just need to have that great resilience, determination, passion, drive, and that is what gets you through the inevitably challenging early moments. So, I always cite passion as the first and foremost characteristic that we had, and I think almost anyone else needs when they’re trying to create something from nothing.

(00:04:58):

And then secondly, we did have not necessarily an academic or a really well-ingrained well thought through strategy, but we did have a very deep intuitive understanding of the sports market because we’d spent pretty much all of our lives in it. So even if we couldn’t articulate super eloquently, look, sport is a secularly growing market. There’s these fantastic tailwinds behind health and fitness and wellbeing, and I love the Bezos quotes that everyone asks themselves, what’s going to change in the world and how can you position yourself on the right side of that change? But actually, the far better question is to ask yourself what’s not going to change and make sure that you do those really well. And Bezos talked about customers are never ever going to want to spend more money on products. They’re always going to want cheap prices. They’re never going to want their product to arrive more slowly.

(00:05:56):

So, if you can deliver it more quickly than anyone else, you’re probably going to be in a good place and they’re never going to want less reliability. So, if you can be the guy that the thing turns up when it says it does again, you should be able to win. And again, even if we couldn’t describe it perfectly at the start, we did have this intuitive feeling that human beings are not going to care any less about sports. They’re not going to care any less about their health and fitness. If we can position ourselves on the right side of those fundamentals, we’ve got half a chance of building a successful business. Honestly, it was no more or less sophisticated than that at the beginning.

Ed (00:06:31):

And that determination that had made you successful in your respective sporting careers, no doubt falling out of those professional systems probably put a little chip on your shoulder to really prove yourself.

Tom (00:06:44):

It most definitely did. And I’m from Liverpool, which is in the north, dare I say grittier part of the UK. I think a chip on the shoulder is not an uncommon occurrence in our part of the world. I don’t know what the Aussie equivalent would be. You want to prove yourself. And specifically, for me, because I had, and I’ve got no qualms about this being really open, that in my mind, Ed, I failed at football. There is no pretense as to, oh, you had some bad luck with an injury or the manager didn’t like your style of playing, or if the ball had bounced differently, you would’ve gone off and been a great success. I never kind of conned myself in that. And I did fail at football, and I had a very, I guess memorable experience that is said deeply into my soul where you get called into the manager’s office at the end of the season and told, Hey Tom, thanks for all your efforts.

(00:07:45):

We’ve made a decision that we’re not going to renew your contract, and you get thrown onto the scrap heap. And I do vividly remember it wasn’t quite a kind of Moses parting of the sea moment, but it was a feeling of I’m never going to let myself feel like this again. I’m never going to allow someone to call me into their proverbial office and tell me I’m not good enough. I want to have control of my own life and my own destiny, and if I fail, I’m not going to have anyone else to blame other than myself. And that experience in football really did put that chip on the shoulder and the fire in the belly to try and create something. And yeah, nine years in the fire hasn’t gone out yet.

Ed (00:08:30):

And yet to meet a successful founder without that chip because it is so integral to getting through those moments of zero to one. And for you that was packing boxes late at night, that was your parents remortgaging their house that was hustling fabrics and design from the ground up just to get the forward momentum from zero to one. Give us some insight into those early years.

Tom (00:08:49):

It’s so interesting, Ed. I mean, well come on of course to talk about where Castore is now and we are a far bigger business and a far more complex business, and the skill sets that you acquire as the founder, at risk of stating the obvious, they change completely. And you have to be really honest with yourself about what you are incapable of doing. And then that’s where, again, there’s nothing unique here, but that’s where the real skill becomes building the team and setting the culture and the framework for the organisation. And you do need a strategy at that point. In the early days though, when you are taking the orders that you are getting through the website to the post office, I mean I remember personally hand delivering orders if the post office couldn’t get there the next day, utterly economically illogical. There’s no logic that is a good thing to do either financially or in terms of a use of time. But you do it, you make it work and you’ve got one happy customer that hopefully tells two more people about his experience, then you’ve hopefully got two more customers and hey, that’s where the magic of compounding happens. But you’re right, Ed, it is illogical. It is unreasonable, but that is how progress is created in the world, is by people who are unreasonable. If we all followed the path that others had set out for us, where would innovation come from?

Ed (00:10:15):

And what about the brand ethos that the name is anchored in – Castore, the mythical twin from Greek mythology of courage and athletic prowess. This brand from day one has always been what I would describe as athlete led. There’s an ethos that it needs, that validation we’ll kind of come onto the business model in a second. But maybe just to round out these early years, what did you want to build from a brand that still stands today?

Tom (00:10:46):

Yeah, it’s a fantastic question. The answer is two things. Firstly, and I’m going to slightly contradict what I said earlier here about we had no strategy per se of what we wanted to achieve, but we were very intuitive, which I guess you could interchange the word intuitive for entrepreneurial. And intuitively we felt that no matter how ambitious you are or how big the chip on your proverbial shoulder is, going head-to-head with Nike and Adidas is going to be a tough challenge. So, do you really want to go and die on that altar? And therefore, to differentiate from those guys, we said we have to be two things, one premium. And that means there is a clear blue ocean between us and Nike and Adidas in terms of the price point of our products. We saw the success that Lululemon was starting to have.

(00:11:38):

We looked at the success that On Running the Swiss footwear brand, were starting to have both of them in different ways were premium. And we said, okay, we have to differentiate. Either we try and undercut Nike and Adidas and become a cheaper direct to consumer alternative or we go and try and be premium. And for us, it felt far more authentic to focus on product quality and fabrics and innovation and technology. And that all underpinned a premium product, a premium price point. You’re speaking to different retailers, you’re speaking to different consumers, you have a differentiated brand positioning at that point. So, the focus on being premium has been incredibly important to Castore from day one. And secondly, exactly as you alluded to, we said we have to be the brand that cares more about athletes. So again, maybe a little bit tongue in cheek, but we said we’re a brand that’s for athletes by athletes.

(00:12:32):

We are going to test the products more than Nike or Adidas do. We are going to go and find the fabrics that are very difficult for them to find, not because they don’t have the resources, because they do, but they’re such big businesses now. They’re so complex, it’s really difficult for them to change their oil tanker of a business. Whereas we have agility on our side. So, let’s go and scour Italy or Portugal for the most innovative fabrics. Let’s not take the first fabric that the mill wants to sell us, but let’s go to the mill and say, hey, we want a collaboration here. We don’t want a transactional relationship. Let’s try and make that fabric 2% lighter, 5% more flexible, 6% more durable, and those marginal gains, that commitment to detail over time. Nothing happens overnight in this world, but over time you do create a product that is better than the big guys and customers respect you for that. And if you can do that, you are onto something special.

Ed (00:13:31):

Yeah, I mean as a happy customer, I can definitely attest to those marginal gains. While we’re on these early years when we talk about athlete validation, there are some big athletes in the UK that were what you’d describe as early adopters, and Andy Murray was certainly one of them and he is now an investor. Maybe it’s worth just passing through that anecdote of how he came aware of the brand and the relationship now.

Tom (00:13:55):

Before I guess talking specifically about Andy and how that came about and all of the amazing things that Andy’s done for Castore, I think there’s a lesson within that experience that talks to the mindset of the founder or the entrepreneurs because I meet a lot of founders who do have incredibly well-written and diligent business plans. And then when an opportunity presents itself in the world that doesn’t align with how they understand what they’re trying to build, they don’t want to be open to it. And I can tell you maybe to very little surprise that there was no business plan whatsoever that said, hey, let’s go and get Andy Murray wearing the brand. And hey, Andy’s going to break down in tears, very emotive moment at the Aussie Open just before the start of the Australian Open because his hip was very painful and he said he was going to retire and then our logo will be on the back page of pretty much every paper around the world –  there was no business plan that said that.

(00:14:56):

But we did have the mindset of we want to build a big brand; we want Castore to be a globally recognised brand. If we’re going to achieve that ambition, no idea if it’ll take us 5, 10, 20, 25 years, but we are going to have to have world-class athletes wearing our products and competing on a global stage. So, we were open to that big thing happening. We couldn’t predict when or how, but we were ready for the opportunity when it presented itself. And I do meet a lot of entrepreneurs that seem to be a little bit more fearful of, yeah but my business plan doesn’t see this. And again, I say to them, yeah, guys, just like Mike Tyson said, everyone has a great plan until they get punched in the face. And entrepreneurship is getting punched in the face every hour of every day and seeing how long you can last.

(00:15:46):

So you do have to be adaptable. And the Andy experience, I think very much lead to that, that we were willing to adapt to the opportunities that the world presented to us. With regards to Andy in particular, we’d scaled the business, we were, I don’t know the exact number, but maybe 15 million sterling revenue. We were profitable, we were generating a bit of cash. And at that point, as a founder, you basically have a decision to make of, oh wow, this is working. People are parting with their hard-earned cash in return for our product and the model works financially great. Do I now want to go and leave the office early on a Friday to play golf or? Do I want to double down and really try and build something special? And if it’s the latter, which it was for us, then we need to go out and get these great athletes.

(00:16:36):

And it was very much a case of the harder you work, the luckier you get. With Andy, we gifted product to people around him, his coach, his hitting partner, his psychologist, his trainer, just so he would see the brand. So, there was a bit of hard work in that. And then, where the look came in was, he was coming to the end of his previous kit partnership with a far bigger US brand, wasn’t super happy with them, managed to get a face-to-face meeting with Andy. I can’t speak for him, but I think the fact that he and his brother Jamie come from a very working class background and gone on to achieve some obviously amazing things and my brother and I from a pretty humble background and although at a very different stage in our journey probably had a similar outlook and mindset and ambition, there was that meeting of minds if you like. And after we connected on that level, doing a transactional deal actually became pretty straightforward.

Ed (00:17:30):

So many brand synergies between Team Murray and Castore, but it was just such a huge moment that did take your brand to the world stage and something that I’m sure kickstarted probably what I’d describe as horizon two of your business and probably represents what Castore is today. So, let’s dive in to the business model because I think those that see that beautiful logo on their favourite sports team’s football jersey, or if you are sad enough to support the England cricket team, you’d see it there. Less sad the Sydney Roosters here in Australia, but it’s probably not evident the competitive advantage in the strategy that has been built from the ground up. And so, let’s dive into it because I’m sure these dots will emerge and be pieced together. You touched on the first horizon of the business was very much taking on the incumbent either wholesale or what I’d call D2C generalists, the New Balances, the Nike and the premium athleisure brands like a Lulu, but you were winning in my mind in those early days on product quality – athletes just love that high performance athletic apparel you’re producing. But Horizon two is really based in deep team partnership and how you could create win-win relationships and grow this brand and have what I would describe as almost a 360 platform where you have full stack proprietary supplier, design, distribution, partnership led. So, let’s dive into this. What was the strategic insight around these partnerships, or I guess a different way of asking why was the model around sporting apparel for sports teams broken, and why did you go after that?

Tom (00:19:21):

You are absolutely right, Ed. The team partnerships represented what I think of is Castore 2.0. 1.0 being we’d established a respected performance brand. We had people like Andy Murray and another athletes, Matt Fitzpatrick, the golfer, the British golfer that validated that premium positioning. We had a supply chain, we had a digital platform, we had a distribution network. And we were really thinking, my brother and I, about, well, how do we take this to the next level? And my brother and I had spent our lives in the sports world. We knew intuitively that unless you are a Real Madrid, Barcelona, a New York Yankees and Manchester United, you did not receive A-star service from the big guys. So, they are so big. Nike at 30 billion US dollars revenue, Adidas at 20 billion euros, unless you are doing rule of former a hundred million US dollars, annual merchandise revenue, you are just not big enough to matter to them frankly.

(00:20:30):

And because of that, they would provide a suboptimal product service experience model to any team that didn’t sit inside that global elite as I call it. So that was the problem to be solved. Underpinning that problem there was the challenge that there are very high barriers to entry in sport. You have to have a brand that athletes, fans, the team trust, because these are the tools of their trade. This is a highly scrutinised market. If fans don’t like something they will take to Twitter to tell you about it in no uncertain terms, the supply chain, as I enjoy saying to my friends in the fashion or the generic retail world, if they’re two weeks late delivering their autumn winter collection to stores, they’ll just continue to sell a spring summer, hope that the weather’s good. And generally, no one will notice if I’m two hours late launching a football jersey, I probably will get, if not a death threat

(00:21:32):

Then certainly some verbal abuse on social media. So, the scrutiny, the intensity of sport meant that there were very high barriers to entry and there therefore had been very few new entrants within the market. And the incumbents primarily Adi and Nike reign supreme. And of course, what happens in any market where you’ve got a quasi-duopoly and little innovation on new challenges, you don’t get that much innovation. So, no one had really thought about the market through an innovative lens as I saw it. And that for us was the big opportunity, not just that sport was growing, that sport was digitising, that sport was commercialising itself evermore, year on year, and that provided a great backdrop. But within the market dynamics itself, there was the opportunity to do something different. And exactly as you said, our view was a couple of things. Firstly, we can go to the teams and say, hey, are you a priority to Nike or Adidas?

(00:22:38):

Go and ask them where you sit on their priority list. And that worked. It was really simple, but it worked because again, there was a lot of teams that have huge fan bases, very passionate fan bases, often international if not global. You recognise brands, but they weren’t getting the A-star service from the big guys. And I could look them in the eye legitimately and say, you will get that A-star service from us. You are going to be a bigger priority. So, the specific business model that worked very well was that vertical integration that you said, where our pitch to teams was, Hey guys, we don’t just want to be your kit supplier, but we also want to operate your e-commerce platform, operate your retail stores, operate your domestic and international distribution networks. We have an infrastructure set up already to do that because we do it for our own brand.

(00:23:30):

And by us operating that rather than you, because we are the manufacturer, we are making a far higher margin selling that product and we’re happy to reinvest some of that margin saving back into you guys as the club. Not only does that have a direct financial benefit to the team, but it also aligns our interests far more closely because every extra dollar of revenue I generate for them, they’re going to benefit from as well. They’ve got an incentive to help me. So that aligning of interest was an incredibly powerful incentive that’s allowed us to not just work with so many teams but work with them to significantly grow revenues.

Ed (00:24:08):

And I think the word that you just used is an exact description of what you’ve provided the industry which was lacking. And that is true partnership. There are teams now who once it was, they tried to do it themselves, it might’ve been a bit of a cost center, they’re now making genuine gross profit dollars from having Castore provide their infrastructure to be nimble. It’s almost taking the best of the fanatics licensing model in the US but applying high quality performance where, and to be able to do that at scale is not easy. And so, teams like Red Bull and McLaren, they’re lining up for partnerships with Castore, which is incredible. And the thing that comes to mind, if you go to the Castore website, and this is the only brand I’ve ever seen do this in athletic performance wear is I can search your call line or I can go to the Sydney Roosters wear, I can buy F1 merchandise. And so, it is in actual fact a hundred percent aligning interests.

Tom (00:25:13):

Exactly. And that’s where the synergy, to come back to that word again, becomes very organic. So, where these partnerships work incredibly well, and it is worth repeating that they are very hard work operationally. They are very intense. You are not just providing product to the first team where their product on the pitch and are watched by tens of thousands of funds. You are providing it to the pathway, the youth teams, the wider community organisations that these teams support. And if there’s a problem with 1% of those products, it’s a big problem. So again, the operational investment required to provide that service at a high level is significant, and we’ve had to raise significant growth capital to allow us to do that and to allow us to do it consistently. But the upside that comes once you can do this is that my marketing, again, rule of thumb, people will have different numbers, but let’s say 15% of a fast-growing consumer brand’s revenue will be reinvested directly into marketing.

(00:26:25):

That would generally be an accepted rule of thumb. I don’t have to do that because teams that I partner with are not just fantastic marketing that put my logo in front of millions of eyeballs, but they do it in a far more authentic organic way than any amount of Instagram or Facebook advertising could ever do. And on top of that, if we do a good job, we should be able to generate profit for everyone, ourselves and the team through those partnerships. So, if you put those numbers together, you can grow your brand more quickly because you’ve got this fantastic marketing channel through the teams that the vast majority of other brands do not have. And you also have a profit generating engine because you are competing in a market that is growing quickly, has very resilient revenues because sports fans do not stop attending sports matches in a recession. They don’t change the team that they support. A team may win or lose or draw, but you’re not walking down the high street and buying a competitor’s product. So, the financial fundamentals within sport can be very attractive. And if you put that brand growth together with those financial fundamentals, you should be able to build a quite attractive business model.

Ed (00:27:43):

And the one call out that we haven’t touched on is when you do control the full stack for these teams, there’s a huge data opportunity for you to cross-sell, upsell both between your range and their range. And so, the flywheel around your brand continues to grow. So, it’s a fascinating business model that again, from the outside probably doesn’t look as disruptive as it has proven, and yet here we are, it really has caught the attention of the big players now who used to spend a huge amount of money with no real intent to recapture it. They just couldn’t afford not to be on the tier one jerseys.

Tom (00:28:23):

Exactly right. I mean the data point is incredibly interesting. It represents a massive opportunity, but my view on utilising that data for cross-sell and upsell, which is definitely a very real opportunity, it’s the equivalent of advertising for these streaming services that could Netflix put adverts at every 10-minute interval on a film or a series that we all watch? Probably yes, they could, but it is going to negatively impact the customer experience and at some point, down the line that will affect churn and other things. It’s kind of the same with us. I don’t want an England cricket fan or a McLaren Formula One fan to buy a McLaren or England jersey and then two hours later I’m trying aggressively to sell a Castore hoodie. Maybe it could improve margins and my numbers in the short-term to do that, but I don’t think it would be conducive to long-term success. And again, founders have many deficiencies and I’m the first person to put my hand up and acknowledge that. But probably what founders can do that let’s say traditional managers can’t do is sacrifice that short term if you believe that the long-term benefit is worth it. And that to my mind is why the very best businesses in the world do get built by founders because they’re far more open to delayed gratification than traditional managers are.

Auto (00:29:51):

You’re listening to Scaling Up with Ed Cowan, a podcast brought to you by TDM Growth Partners. Visit the website, tdmgrowthpartners.com or for interesting insights and commentary, follow us on Twitter at TDM_growth.

Ed (00:30:08):

Let’s move to some challenges because things don’t move in straight lines. So, there are, as we’ve pointed out, plenty of benefits of running a fully integrated business, but there’s also plenty of complexity that comes with that. And as you have scale that complexity doesn’t just increase, it is exponential. So maybe we can just talk to – what you’ve learned around scaling your operational systems and processes, particularly in the last few years, just to ensure that you can deliver on that brand promise not just to your teams and their fans, but also your customers.

Tom (00:30:46):

Yeah, no, what a great question that is. I mean where to start? There’s so much, but probably the best way to answer that concisely, what have I learned is, and it’s different for every business. I’m not saying this is applicable to everyone listening, but for our business there is an innate balance between scale and the speed at which you scale and quality of experience that you provide. And you can have one, but you’re going to have to sacrifice the other. And you have to be really conscious about what decision you are making when you do that. So, to maybe try and bring that statement to life during COVID, our core business started to grow like rocket fuel, not because we were doing anything particularly spectacular, but certainly here in Europe everyone was locked in doors. The only time they were allowed to leave their house was to do exercise.

(00:31:44):

They couldn’t go into shop so they could only shop online. And we had the good fortune of being a digital retailer selling product online. As I said to the team at the time that don’t get carried away guys. We haven’t all become geniuses overnight. If we couldn’t do well in this period, we probably don’t deserve to be in business. But our core business started to scale very, very quickly and combined with that, the opportunity and the professional sports team market really opened up. We’d started to make some headway into that market, going into COVID. But during COVID, and I don’t want to speak on behalf of the big brands that they may describe it differently, but certainly my perception of their view at that time was, again, unless you were the New York Yankees or Manchester United, they were not interested in trying to provide a service to you because they had enough of their own problems to deal with.

(00:32:37):

And this was I guess the transition where you go from being a passion, emotion led entrepreneur at the start zero to one, but when you are then going from one to two, you do have to be more strategic. We made the strategic decision, this is probably a once in a generation moment, we don’t know that, but hopefully it is. We see it as a massive opportunity. Let’s try and grab market share because team sports are a difficult market to break into, we’re unlikely to get this opportunity again in our lifetime. Let’s try and scale as quickly as we can. And we partnered with a lot more teams. The model of the full stack vertical integration did work, and it worked financially, it grew revenues. Those revenues were generated at a higher margin. It allowed our own brand to grow more rapidly because our logo is seen on all these great athletes all over the world.

(00:33:29):

All of that was fantastic, but the operational complexity that went into that was very difficult to foresee in advance and looking back and as Steve Jobs said, it’s very easy to connect the dots looking backwards, but looking back, we went far too broad, too quickly. So we would say, Hey, absolutely we can do a partnership with the West Coast Eagles or the Sydney Roosters, and simultaneously, yes, absolutely we can do a partnership with Red Bull, Formula One who have a very popular driver who is Mexican, and that means we’re going to have to open warehousing and distribution capabilities in Mexico doing those two things simultaneously. And there was also 10 other things that we were doing at the same time, whilst it made sense in my head strategically, and I am also a big believer that you do have to take risk in life and even if you’re uncomfortable, you don’t build a great business by taking the low risk option all the time.

(00:34:27):

But looking back, we did try and do too much too quickly. You have to be humble and honest with yourself about that, but you also then have to be capable of standing up, kind of puffing your chest out and say, okay, yeah, we went too broad here. How do we now try and fix some of these problems? How do we refocus on the supply chain operations, the infrastructure, the systems that are underpinning this business because our revenue went from 50 million sterling to 250 sterling in a very short space of time. It sounds lovely and in many ways it’s great, but our infrastructure did not grow at an equivalent rate and that was hard work to go back and reinvest in that we had to go and do a big fundraise. That in itself is a big undertaking and not easy to do. The way I described it, Ed, was kind of driving down a motorway.

(00:35:22):

I don’t know what the speed limit is in Australia, in the UK it’s 70 miles an hour, so you’re driving down the motorway at 90 miles an hour while simultaneously leaning out of the window trying to change a tyre, without losing control of the car or slow down. That is how it felt for probably 12 or 18 months. But now having come through that and having invested in the infrastructure and the systems and the team and the distribution network, yes, I learned a lot of lessons, but I also, looking back, I would not have learned those lessons as quickly if we didn’t make the decisions to try and grow as quickly as we did. So absolutely, yes, we could have done it better, but you only learn how to swim by jumping in a swimming pool.

Ed (00:36:04):

It’s an incredibly interesting discussion because every founder faces this trade-off and they’re tough trade-offs, speed versus control, and it’s so sexy in many respects to see that revenue line going exponential. What isn’t so sexy is, as you say, trying to just to play this analogy out, trying to change the tyre while the car’s going 70 miles an hour. And where many founders get to is, they work out that 50 miles is a far more sustainable speed limit to be driving at for longer periods of time to meet your long-term strategic vision for the company, sometimes faster isn’t better and that car needs to be well tuned and just drive at a more consistent speed. Have you had that realisation? Is that a fair analogy?

Tom (00:37:48):

Absolutely, and completely, yes. So again, there will be exceptions. There will be, and AI is going to be incredibly interesting. I don’t think any of us quite know how it’ll play out and will there be companies in the next decade that can scale exponentially at a rate that we haven’t seen before? I suspect yes, there probably will be, but again, for my business for Castore, and I suspect for the majority of others, you do reach that inflexion point where building the machine to go consistently at 70 miles an hour is far more powerful and creates far more long-term value than driving at 90 miles an hour. But being slightly out of control, the skill I think is the founder is to be able to, let’s continue the driving analogy, be able to see around those corners, see what’s coming down the road, know when to try and turn the dial to speed up and then equally know when to turn the dial to slow back down and you’ll never get it right perfectly.

(00:37:52):

And I do look at our competitors or certainly around our market and there’s people that are very low risk and that’s right for them. It’s not for me to say whether that’s right or wrong. Maybe at times we went too far to the other end of the spectrum, but in my mind at least you have to do that to know where that balance is or where that line sits. And you do come to the realisation that compounding a business at 20% per annum for 20 years is creating incredible value and it creates a hell of a lot more value than compounding it a 100% for five or six or seven years. And that’s a mathematical fact that isn’t an opinion, but it can be hard to really learn that lesson when you’re in the trenches every day.

Ed (00:38:40):

Yeah, that’s a nice reflection. Of course, when you’re brand building, it’s those drips in the bucket. It does take 20, 30, 40 years to build these generational brands. It’s not a software company that can necessarily scale at a 100% and those brands tend not to exist for as long as these consumer brands that you are building. Are there any other trade-offs? Just while we’re talking about these scaling challenges and before we get onto people and culture, what you’ve just described also was through a very unique period of capital markets. So, when you took on growth capital, that was very much in the heated days of growth of all costs and yet two years later when market conditions change, you may have had to manage those investors and their expectations to actually suit what the new age of your business was going to look like.

Tom (00:39:33):

I mean, I think history will look back on that period of let’s say 2020 to 2022 when interest rates were zero. And again, certainly here in the western world, QE and money was being pumped into the economy and there was this SPAC phase and this meme stock phase. It was just a crazy period generally for capital. And you were rewarded as a founder by investors for growth for all costs as you said. And then very quickly, this was not a slow transition over a period of months or years. It happened very quickly that Russia invaded Ukraine. There was big changes in energy prices here in the western world. Interest rates went from zero to five plus percent very quickly, inflation went to double digits very quickly. And all of a sudden, you’re in a world where that IM presentation that you’d written with painstaking detail doesn’t have great resemblance to reality.

(00:40:30):

And again, when you talk about trade-offs, you can try and continue to meld the world to how you want it to be and say, no, no, we are going to continue to grow at X percent per annum even though the market has changed and that growth would now be not made profitably, but you’d have to sacrifice capital to do that. You could do that, but you’d be taking a big risk because you’d be hoping that oh, maybe in two years or three years the capital markets will be open again. And they’ll reward businesses that have continued growing in that period, or alternatively you can say, well, the world’s changed. It’s logical for us to change our strategy and pivot against that to prioritise efficiency and margins and cash generation. And it’s easy to forget this in any business, the customer, who do we exist to serve? The customer, either people that are buying cast products or the teams that we partner with, how do I provide the best product service experience for those guys?

(00:41:36):

And if I can do that, no matter what capital markets are, no matter what’s going on in the economy, I should have a pretty good business. So, for us, that was an easy decision. It was the latter. Rather than continuing to try and grow at all costs, what is a little bit more challenging is to have those very honest, robust conversations with investors. We are fortunate that we have fantastic investors for the most part, our last funding round was led by the RAIN Group, US based, but offices across Europe, sports focused. We did have that really honest conversation with them and they were not just supportive but incredibly helpful in, well, how can we help you guys find these pockets of growth that still do exist in the market? Because no matter what may be going on in the wider economy, the economy of Formula One is still growing quickly or cricket is still growing quickly. I think often people that are leading businesses hide behind the macro and say, it’s tough out there. We can’t focus on growth. And in my opinion, the reality is a little bit more nuanced than that. You have to be as creative as possible in finding the opportunities for growth.

Ed (00:42:46):

I love that. And I mean one opportunity for growth we haven’t touched on, and it is a lever that I’m sure you’ll try and pull in the not too distant future, and that is the US market, particularly F1 and the growth of F1 in that country has been a great tip of the spear for your brand into that market. It’s obviously the biggest sporting market. It has various levels from the tier one teams right through to the college market is ginormous. How are you thinking about approaching the US and getting excited and operationally ready for that?

Tom (00:43:19):

Yeah, it’s really interesting. So, on the one hand, absolutely everything that you’ve just said there is true. The biggest market in the world, the biggest economy in the world, certainly the biggest market for sports in the world. So that’s incredibly exciting. As you say, college sports I think offers incredible opportunity, which really excites me because the NFL and the NBA have these big, centralised deals with Nike. Again, never say never, but difficult to see how you could go head-to-head with Nike and outbid them on that. But within college sports, the market is far more fragmented. You have these fantastic colleges that maybe don’t get the tier one a-star service from Nike and Adidas, but they do have hugely passionate fan bases that should represent a massive opportunity and that really excites me as well. But on the counter side of that ledger, because it’s such a fantastic market, it is incredibly competitive and again, competition is the fastest way to kill returns, and you do have to be very careful that you could generate significant revenue in the US. Could you generate that revenue profitably?

(00:44:33):

Certainly relative when weighed up against alternative markets, any decision is only as good as its next best alternative. The US market, because of its competitive dynamics, is more difficult than other markets. And as you say, you would have to go and invest significantly in infrastructure. Again, I’m going to break my rule or contradict my point earlier about being affected by what’s going on in the macro economy, but if I’m going to invest in warehousing and other things in the US that would be multi-decade investments. Quite hard to do that right now with what’s going on in tariffs and other things that make it difficult to do business in the US. So, the US is very exciting, but you do have to have a very clear plan as to how you’re going to get to profitability, and that’s easier to see than do; now, whilst I absolutely do think the US is very exciting and it will be a growth market for Castore going forward.

(00:45:33):

I also look at markets like India, which in 10 years, and I’m not an economist so I don’t spend time studying this, but I guess it’s going to be a far bigger economy in a decade than it is now. It has deep connections to certain sports. Of course, cricket being the most prominent, and I don’t think that the bigger brands are maybe as focused on the Indian market or the Chinese markets or some of the Asian markets as they are in the us. Everyone has in their management presentations, the US has great opportunity. We’re going to go and capture that. We’re going to be the Uber of this; we’re going to be the Amazon of that. They’re very well worn cliches. I actually see some of those emerging economies. The growth may be a little bit more volatile. It may not come through quite as you expect, but back to this point that we mentioned earlier, Ed, that as a founder, I have the privilege of thinking in multi-decade timeframes rather than quarterly timeframes. Actually, there’s some fantastic opportunities in emerging markets, whether that’s Mexico, Brazil, whether that’s India, whether that’s China, sport is a huge economy in all of those markets, and I don’t think they have the same competitive dynamics as the US which as the most mature market in the world is also the most competitive market in the world.

Ed (00:46:55):

That was just such a thoughtful answer. It’s so easy as a founder to want to take over the world, but to actually think about it methodically and strategically and actually have that long-term vision and how there will be a moment in time, but it’s not now and it’s a tough trade off because it is glitzy, it’s glamorous, there are bright lights, and yet clearly you are being incredibly thoughtful as to what’s next. So, I took more from that answer than I have from many of the founders I’ve been lucky enough to interview. So, thank you for the insight.

Tom (00:47:30):

That’s very kind of you to say, I can’t take credit for it unfortunately, so I’ll fanboy for a minute, but one of my favourite entrepreneurs, because I am a bit of a geek and I do like studying other entrepreneurs and how they’ve built their businesses is, well, one of your own actually Aussie guy Bruce Buchanan of ROKT and obviously built a fantastic business, big valuation now over in the US and Bruce is I think a phenomenal entrepreneur, an even better human being and does talk very eloquently about exactly that – that look, we’ve all got these big ambitions, but you do have to make those trade-offs and every business is different. So, there’s no playbook that works identically. You have to apply critical analysis to whatever you hear from others. But speaking to people like Bruce that I’m very lucky to do through Red Bull where we’re a mutual partner, you can just glean insights that no business textbook or I suspect Harvard Business School will ever give you.

Ed (00:48:32):

Yeah, there’s a few better in the business than Bruce. That’s a good call out. Let’s touch on one last topic and that is people and culture. I know you are incredibly passionate and thoughtful here. I’ve got a few key questions because every business is unique around people and culture, and everyone comes from a different angle. One of the angles you come from that is unique to Castore is your sporting background, and you played in professional teams and that no doubt taught you a lot about teamwork, no doubt taught you about what great leaders look like, what great coaching looks like. How have you applied some of those principles that you learned and lessons from your career that you’ve brought as leaders to Castore?

Tom (00:49:15):

Yeah, it’s such a fantastic subject and question. Often when people think about culture and people, to my mind, they think about it in isolation and it is a far broader topic because it does align with, well, what is the strategy of the business? Are you trying to grow really quickly? Are you trying to be hyper innovative and disruptive and move fast and break stuff? Because if that’s a strategic objective, you then need to have financial objectives that align with that, and you then need to have incentive plans that align with that and then that will flow down to the type of people that you hire and the type of culture that you want. So often I think people and culture gets thought of as a standalone topic, and it really isn’t because it really underpins and interconnects with everything else across the business. So, the first thing I would say is as the founder, it is your responsibility.

(00:50:16):

You cannot outsource culture. There’s no amazing HR person that can do that for you. You do have to set the tone within the organisation, and you have to step up and want to do that. You can’t see it as a job on the list. It is fundamental to your role. Secondly, it has to be authentic to you. So, if I was to say that right, I want customer to be super collaborative and we want to be consumer first and we put the customer over any financial that you can kind of get as many platitudes as you want, but it has to be real to you otherwise you’re going to get found out very quickly and then you lose all authority or respect as a founder or a leader. So, unless it is authentic, unless you can genuinely walk the walk and live the values that you are setting out for the business, it doesn’t matter how well put together they are, they ain’t going to last.

(00:51:12):

So that is a lesson that I’ve learned because we went through a period, I mean we are not far off 500 staff now, and the business grew quickly, as I’ve said, where we tried to kind of almost over-engineer it and inadvertently it does become less authentic, and it just doesn’t work. So that authenticity is key. But the biggest lesson I’ve learned is, although it’s the responsibility of the founder to set the culture and define what the culture of the business is, it’s not going to be the founder that ingrains that culture throughout the organisation. So, we have an exec team that’s an exec group of seven people that cover each key business area that make the big strategic decisions. Those guys do a far more important job than I do on a day-to-day basis of ingraining the culture that I want for Castore throughout the business.

(00:52:15):

We have an SLT senior leadership team and that groups about 25. And again, those guys do a far more important job than either I or the exec of passing that culture down throughout the business. So, it’s the responsibility for me to set what it is, but the more important responsibility I have is to find those people in the exec in the SLT that they don’t need to be the same as me. We don’t need to be the same people. We don’t need to have the same outlook on the world, but we do need to have a fundamental alignment of what is it Castore exists to try and achieve? What is the roadmap that we are working towards to try and get there and what are the values that we want to represent? So, for us, we have to be more agile than the big guys, if we are not more agile, then what the hell are we have to care more than the big guys because we don’t have as much money as them.

(00:53:10):

We don’t have the resources or the experience, but if you care more, do you know what customers really value that? And then thirdly, we have to embrace innovation more quickly and more fluidly than the big guys do because again, if we are following them, we are never going to be in a lead position. We have to be leading the market and again, very easy words to say, very big risk that those words become meaningless. But if you get the right people in key positions within the organisation, you have the right strategy, you have the right roadmap to get there, you have your fundamental values that you want to represent you authentically, then you get the right people, and they embody those values. That for me is where the magic happens, but it’s far easier to say than do, and I don’t profess that we’ve ever got it right. It’s a work in progress and I suspect always will be.

Ed (00:54:00):

It’s always a work in progress. Culture is a living and breathing organism that needs tending to daily. I love that framework of the people strategy, supporting the business strategy. It can’t live in isolation, and it needs to be almost the infrastructure around the business strategy. When you’re talking about the right people and building out that team as you’ve scaled, there’s no doubt being a leap from generalists to specialists. You started out packing boxes and are now a CEO of a scaled business. So, I guess the question is what type of person transcends, has been able to grow with the business, and also who are the types of people that you need as specialists that for the next leg of the journey are going to be incredibly valuable?

Tom (00:54:49):

Honestly, Ed, it’s such a pertinent question to finish with. So that has been, of all of the challenges that we’ve had, and we’ve talked about some of them today in terms of balancing speed of scale with investment in operations, and we haven’t talked about it in depth, but we’ve got to react and adapt to our competitors realising that Castore exists and then trying to take partners off us or imitate some of our strategies in how we’re partnering with teams. And that’s the beauty of capitalism. So, we love it and embrace it. There’s all of these different challenges. There’s raising money, there’s raising money from the right partners on the right terms. It’s a never-ending list. And I guess it is a nice circle of life moment where you say, this all comes back to passion. Unless you’ve got the passion, then those challenges just become too difficult, and you can’t embrace them with the right mindset.

(00:55:39):

But of all of those challenges, undoubtedly the biggest one is getting the right people because if you get the wrong people in senior positions, and we’ve done that, and to be clear, not because they’re bad people, they’re just not the right individuals for your business at that moment in time and it doesn’t work. It might be that they’ve come from a far larger organisation. We went through a period where we hired people from our larger competitors, and it didn’t work. That can have a materially detrimental effect on what it is you’re trying to build. It can put you 6, 9, 12 months behind schedule by the time that you realised it isn’t working. You’ve had those difficult conversations, you’ve moved those people on, you’ve had to go and find their replacement and get that person embedded within the business and understand if you make bad decisions on 3, 4, 5 senior people, the effect is significant.

(00:56:38):

Conversely, when you get the right people into those senior roles, the impact it has, it just puts a huge, huge smile on my face. Because as the founder, you go from being the guy that feels the need to do everything and wants to be on top of everything. Unless you do it and you give an opinion on it, it’s not going to get done to then saying, I can trust that person. Not only can they do it as I would like, they’re going to do it better than me. It’s hard to articulate just how good a feeling that is when you’ve been on the journey that founders go on. And then of course that frees you up to think more about, okay, well what is the right strategic direction of this business? Should we be thinking about the US and India simultaneously? Should we prioritise one over the other?

(00:57:24):

Because if I get that decision right, and if I can get the roadmap right on that, that’s going to add a hell of a lot more value than me giving my opinion on the email CRM that’s going out to the database a week on Tuesday. Albeit I still do enjoy inputting on that, I must admit. So, I guess the answer is most things in life is it’s really difficult. You have to go through trial and error. And what we found is within our exec now, there is a balance between people that have been with Castore pretty much from day one. Our first ever hire after my brother and I is now our COO, and he’s a fantastic individual, knows the business inside out. He is a cultural disciple that embodies what my brother and I want Castore to represent, and he’s grown with the organisation.

(00:58:12):

He’s doing a completely different job now than he did eight years ago, and he’s got the intellectual ability to do that and the personal ability too, but we also have people that come from the military. Our head of logistics is an ex-military guy and when I was hiring him, I was like, look, this a challenging job. I’m not going to mis sell it to you. There’s a lot of hard work. We do need to invest and it’s a high intensity environment, but I can promise you that unlike the military, at least if you mess up, no one’s going to die. So hopefully that’s a positive, again, excuse my tongue in cheek British humour there. But you get these individuals that come from different walks of life, you combine them together and that’s where the magic of human relationships and team building and culture really does come to life because there’s no right answer. It’s a continuous cycle, as you said earlier, Ed, but when you get those people in the right roles, all pointing in the right direction, I truly believe that a business like Castore can challenge the multi-billion-dollar competitors that we are competing against. And that shouldn’t be logical, but it can happen, and I love it.

Ed (00:59:20):

And is there any unifying thread for those that are thriving? Because it’s not an uncommon situation where you go and hire a brand cv, someone who’s worked at a bigger business into a really, it’s always scrappy scaling up these businesses and ultimately it doesn’t work out because they’re used to a larger support network around them. They’re used to managing more people and yet often as you’ve just described, people who have come from the military and have the same grit and determination are willing to live your values in actual fact work out as far better hires. And it’s not necessarily in plain sight.

Tom (00:59:59):

Again, great question. I’ve not yet found a formula that can be codified and maybe AI, all of these genius things it’s going to do for all of us, no doubt in the future. Maybe AI will be able to codify if you have this type of business that’s growing at this rate and this market and faces these competitive dynamics, these are the characteristics that you should look for. Whether that’s military, whether that’s the type of experience they have, the amount of time that they’ve spent in different organisations, maybe that will be achievable. My small brain hasn’t yet worked it out, but I’ve very much learned that as sophisticated and as data led and data centric as the world is becoming and that’s a one-way direction of travel, you cannot beat the age-old interview question that I ask myself, not a question that I ask them. If I was flying somewhere for a meeting with this person and my flight was delayed by four hours and I had to sit in an airport with them and have a beer, would I be disappointed by that prospect or excited by it? And if it’s the latter, that is as good a conclusion as any that I’ve managed to work out as to whether someone’s going to fit in well.

Ed (01:01:15):

That’s a great way to wrap this. Tom, thank you so much for your time, your insight, your thoughtfulness. There will be leaders of all scale that listen to this, and no doubt pick out the gold nuggets that you presented. So, thank you so much. I personally loved it.

Tom (01:01:33):

Thank you very much and look forward to you buying me a steak when England win The Ashes later this year.

Ed (01:01:40):

Oh, when Hell freezes over, please. Thanks Tom.

Tom (01:01:45):

Great. Thank you very much for having me, mate.