Thankyou co-founder Daniel Flynn: Sustainable path forward meant “growing backwards”

In the world of founders and entrepreneurs, there are measures that many idolise with almost cult-like obsession. Like the size of our teams, revenue growth, the number of overseas flights we do per year, speaking engagements and followers on social media. While these all sound like signs of health and success on the outside, there are times when they can force our ambition to the detriment of the very businesses we’re working to build. 

Hypergrowth at Thankyou

Hypergrowth is a technical term given when an organisation’s annual compound growth rate exceeds 40%. And as founders, we all want it, or some variation of that percentage. 

In 2016/17, Thankyou, our social enterprise with a mission to help see the end of extreme poverty, was in a hypergrowth phase. We’d just launched Chapter One, a book I wrote about our journey, with a pay-what-you-want price committing its profits to help Thankyou fund a launch into the nappy category and then New Zealand, our first international test market.

In November 2017, as if the founder badges couldn’t get any shinier, I found myself in a 23-minute interview about our journey with Barack Obama.

On the outside, things looked good. But on the inside, something felt very wrong. So wrong that in 2018 we launched an internal project called ‘Project Salvation’. A few of us were genuinely convinced we could see the end of Thankyou. We were chasing and managing growth, but so many of our team were burning out, including Justine, who was bedridden for three months, followed by a nine-month recovery.

Our ‘best launch ever’ was becoming a living nightmare. Thankyou used to sneak its way into categories, but those days were over. Competitors threw everything at us, and we were spread too thin fighting competition in three other product categories. Our eventual launch in New Zealand led to an almost identical sales graph as nappies. Straight up, straight down, as every competitor threw everything they could at us.

We had retailers around the world and even a former president asking us about expansion plans. Adding bigger markets would give us initial growth in revenue, staff and other shiny badges, but the business didn’t feel like it could withstand the growth. 

Project Salvation and going backwards to go forwards

In 2018, Project Salvation arrived at a bold conclusion. We had to go backwards to go forwards. The way we were building Thankyou would never get us to realise our vision: sustained growth, in multiple product categories, in multiple international markets, and ultimately generating the size profits we wanted to help end extreme poverty.

As co-founders, we were profoundly impacted by a story of a leader who proposed that to truly succeed, everyone has to focus on their 5%, the bit that only they can do. So we applied this thinking to Thankyou. We realised that we were not living in our 5%; instead, we were trying to be the entire 100%. We’d built a full in-house model, and it was becoming a death star. We had 60 staff and would likely need hundreds more if we wanted to replicate the model in other countries. 

Introducing Engine Two

Throughout our history, it was clear that when it came to brand, innovation, pitching ideas, storytelling and giving, we’d achieved some world-class results. But when it came to other areas, like supply chain, retailer management, new product development management, running an eCommerce business, and operating in-house design? While we had some very talented people giving their all, it didn’t feel feasible to manage it all. We knew we needed to stay agile to get the results we needed, and it was time to take a leaner, stripped-back approach.

‘Engine One’ was the term we gave to the model that had built us to where we were. But ‘Engine Two’ was a redesign that would take us to where we needed to go — a lean model where Thankyou would focus only on our 5% and rely upon a network of highly integrated partners to deliver the rest. 

While it’s taken four years (and a wild story for Chapter Two) to fully switch off the ‘Engine One’ aspects of the business, we ran with ‘Engine Two thinking’ in pockets of the business from 2020, with remarkable results. Using highly integrated partners, we landed some of our biggest contracts ever, delivering more money to impact in a few months than our entire prior decade. 

Backwards growth for Thankyou

Last week, the transition was complete. Internally we have grown backwards to a team of 18 working with a growing global network of partners – who’ve figured out their 5% – in product design, creative, innovation, sales, supply chain and procurement, and eCommerce management together working on expanding Thankyou beyond the 23 million consumers in Australia to markets with 2.69 billion consumers over the next few years.

It hasn’t been easy. Our public invitations to Unilever and P&G to bring their global manufacturing and distribution capabilities to the table (as partners instead of competitors) to help us scale quicker both got rejected. But the silver lining is that we’ve found the right partners to work with and, over the coming weeks, you’ll start to see the new innovation we’ve created together for Australia first and, in time, the world. 

Today also marks the launch of the next chapter of the Thankyou book called Chapter Zero. A book I never thought we’d write. Chapter Zero is a bold step of going deep into foundations. Of going backwards, to go forward. This is a very different book, but without it, I think we’d only build the dream to half the height we’ve dreamed of building it. And even then, I’m not sure how long that half-height-dream would last.⁠

As founders and entrepreneurs, we can hold ourselves to vanity measures. Or we can begin to ask some deeper questions. Have we designed right, on the inside, to sustain growth and achieve our respective missions? Or are we just stuck on the hamster wheel that will ultimately just burn more people, more money, and more jars of midnight oil in exchange for shinier badges and ultimately unmet missions? 

I propose that for many of us to meet the missions we set out to achieve, we have to get off the hamster wheel. This means we have to grow backwards — decline on many of the above measures — to go forwards. And at Thankyou, we’ve found the courage to do just that. 

I wonder if the next thing we need to celebrate in the startup and business culture is foundations, good design for long-term sustained growth and founders, leaders and teams who are not burning on the inside – with fuel in the tank to see our respective missions realised.