A "haul" lotta success
Today on lunch with an entrepreneur we are talking with 39-year-old Scott Kilmartin, a self-confessed uneducated heathen who spent most of his 20s running bars in the US before returning to Australia and starting Haul, which recycles rubbish into green products.
He's going to talk to us today about how the business nearly failed, how to get the green dollar, how he has used social networking to boost the business and his strategy to break into the US.
Amanda: Hi Scott, how are you? So how hard is it getting the green dollar?
Scott: Pretty tricky. We discovered that the trend forecasting is definitely in front of the current consumer's buying status. Everyone kept predicting that green would really come in quickly but it was a slow lager.
We probably changed marketing from really preaching green to trying to market the design or the core aspects of our products and we had a little bit more success when we changed that strategy.
So tell us what you do. You take old things like billboards and you turn them into groovy satchels for the likes of Seek.com.au?
There are a couple of sides to the business. One is the consumer brand Haul, which is where we make stuff and sell them as a street ware or design accessory. The materials we use are recycled. We take old number plates and turn them into photo albums, we use advertising billboards, we use rubber truck inner tubes and turn them into messenger bags and we have just started using another kind of rubber material, printing blankets which come out of the big newspaper printers, and turn them into laptop sleeves and belts and wallets and things.
The other side of the business is an eco corporate gift manufacturer, so if you are a large outdoor advertising company like BMW, Seek, AGL or Jetstar, you've got all these billboards and more and more companies are conscious of not wanting to put them into landfill and seeing if they can make something out of them. So we have gone to those guys saying we can make stuff out of those billboards that is going to give them a good story and also give them some unique and pretty innovative products.
You manufacture here and use Australian rubbish?
We do. It is one of the tricky things about the business. Because it is a fairly new space we are often compared to conventional promotional products the fridge magnets, caps and t-shirts. Similar products to ours like a document wallet or a conference folder that is made in China, is landed and branded $5.99. For a similar product for us we are looking at the $15 or $16 mark and they go up to the $40 mark depending on whether it is a laptop bag, document satchel, notebook cover, etc, so we have had to spend a fair bit of time trying to educate our consumer. We can't compete on price as the materials need to be cleaned, handled and washed and also our labour costs here are a lot more expensive.
I guess we have really tried to talk to them about the uniqueness of this product and how it is embedded with their brand which is one of the tag lines we use. And we have tried to stay away from the price point stuff where we are not at all competitive and we won't be.
We currently manufacture in Australia although having said that we are getting demand for products that are really high volume with relatively low margin. We have just got a customer who wants us to look into making half a million luggage tags for them and that is the kind of order that we wouldn't be able to do in Australia for them so we are looking at some ways to potentially ship those billboards into Indonesia and send them back.
We are sending our rubbish overseas?
It is one of the banes of my existence right now, dealing with customs officials and trying to convince them, that it is going in there to be remanufactured and then come back out because it is actually illegal to dump things in a third world country.
They must think you are nuts.
It's not dull. There is a massive amount of the market that we are missing out on and if we don't grab that side of it as a volume player, someone else is going to step in.
What is the competitive landscape like?
We haven't had any of the promotional product companies come in yet but at some point that will definitely happen.
Now your revenue is over a million but you have almost gone under twice. What happened in both those situations and what did you learn?
We have actually been going for 10 years, and for the first five years it was sort of a bit of a hobby, where we would knock things out on weekends and after hours.
A few years ago, we had a really big customer of ours fall over fairly late in proceedings. At the same time I had invested a lot in the equipment and we were just cash strapped for about three months. We were literally teetering on the edge, to the point where I took a night job and for awhile there I was getting up at three in the morning and delivering doughnuts until 10am and then working during the day for three months, just to scratch around to make enough money to pay wages and get us out of the rut.
Have you financed this all yourself?
Initially we played credit card bingo, so we literally went and got a whole bunch of credit cards and over a period of time ran them all up. We are about to split the business into two, where Haul will stay as our street ware brand and the business which does the corporate stuff launches next week and that is going to be called Riveting.
Haul is a bit of a tricky one for me. I have had it for so long now that I have too much emotional attachment to it to allow someone else to come in and mess with it.
I am definitely going to get some investors into Riveting that can bring both some contacts in that large outdoor advertising space and some capital as well. And some investors will give us some speed to grow quickly and ward off any competitors hopefully.
And how much are you looking for?
I don't know yet, not sure. Because we are dealing with a lot of advertising agencies or the big outdoor companies, there is the potential some of the investment may come from some of the guys involved in that area.So what are you plans for the future?
We are starting to sell Haul into the US. We have just done a deal, partly through Austrade, to start selling some of our more successful products on Amazon, which is a nice way of giving us a soft entry into the US without opening offices and going to an enormous amount of trade shows. That along with getting some online press, media and blog attention, will hopefully allow us to enter the US without mush risk.
How does your brand message translate because you are not using US rubbish?
One of our most successful products is the laptop sleeve. It is billboard lined with neoprene. We have tapped really well into the Apple market: a lot of the people that are creating that billboard copy and text are using Apples. So with that kind of crowd we focus on design first and the green aspect is a secondary play.