Stephen Jones always thought he was on track to manage an ASX-listed company. The 35-year-old Melburnian was a chartered accountant and had spent the first years of his career working for big-tier firm KPMG. But studying for his MBA while working at Australia Post set Jones in a new direction that would ultimately lead him to founding online furniture marketplace Furniture Exchange with university classmate Jason Wyatt.
Furniture Exchange was launched in October 2013 and is now home to just under 500 furniture retailers who list their products in a centralised, online database. In little over a year, the company employs eight people and is on track to turnover $1 million this year.
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I studied accounting at RMIT in Melbourne. As part of the degree, you work full-time while at university and through that program, I went to KPMG, where I met Jason Wyatt.
I spent six years at KPMG. I worked in audit, corporate recovery and corporate finance. I became a chartered accountant and then went over to the UK, as most young accountants do.
At KPMG I spent a lot of time doing work for clients. You hand over that work and then you move on to another job. But I thought I would like to be on the other side of the desk.
I went to London to get some experience in finance. I worked as a financial controller for a company called Car Phone Warehouse, which was about 10 times the size of Crazy John’s in Australia.
I got on the other side of the desk but it was all budgeting and forecasting and reporting and that’s just not me. I needed to be out talking to people.
I came back to Australia and worked for Australia Post for four years. I did my MBA while I was there and it was during that MBA where I realised you needed six key competencies in order to run a business.
All my life I wanted to run a business but I thought I was angling to work my way up the corporate ladder and run a top-20 or top-50 ASX company. That’s where I was going.
During the final year of my MBA, I thought about what I needed to know if I was going to run a business.
You need stakeholder management skills, you need people management skills, you need financial skills, you need sales and marketing skills, you need strategic skills and you need relationship management skills.
I thought about all those core competencies and I knew I could tick the box on every single one of those except for sales and marketing. How was I going to run a business if I had never brought in a single dollar in revenue?
I had a turning point, a bit of an “aha moment” and that was it. I got offered another role at Australia Post that was going to be leading an IT type team but I jumped ship and went over to Macquarie to sell portfolios.
I took literally four steps back to learn how to sell. That was in 2011.
In 2012 I opened up the front page of The Australian Financial Review and I saw this picture of Jason Wyatt, my old buddy from KPMG, and his mate Sam Salter. They had just won the Telstra Business of the Year for their business Bike Exchange.
I reconnected with Jason and we ended up at a pub in South Melbourne. He asked if I was happy and I said, “No I’m not, but this is what I am going to do.” He said, “Why don’t we do something together?”
We spoke about markets that are heavily fragmented but had not yet embraced online. And furniture came up. As it turned out, at the same time, I was moving into a new house and my wife was taking me up and down Church Street, Richmond visiting furniture shops. I was spending my weekends doing that. And I thought, this is so boring.
It is so easy to look for a car, look for a house, to buy a bike it’s very easy, but buying furniture is just a pain. So as a consumer it was upsetting and as a person, I thought I don’t need to run a top 20 company, I can make one.
It took me a couple of months to do the due diligence. Most entrepreneurs have a moment like this. It was 2am on a Saturday morning and I was going over these financial models that I had created for myself. It was just bigger than Ben Hur this thing. I just said stuff it, let’s just do it.
I put my house on the line. I took as much leverage and equity out of the house as possible. And I went into business with Jason.
Furniture Exchange operates exactly the same model as Bike Exchange. We use the same platform. We have all our own developers and designers in house so we don’t outsource anything.
It’s been incredible. I get paid nothing and I work seven days a week. It’s very different from working for Macquarie. But I have genuinely never been happier.
It’s a true startup in that every dollar we’ve spent goes back into the business.
When it’s your business, you do the little things. You’ll tidy the desks, you’ll put the bins out. All these little things. You’ll make sure there is beer in the fridge on Friday, you don’t just expect it to happen.
One thing I learnt very early on and is something my father taught me is cash is fact, profit is fiction. So I manage to that. It’s all good and well for my sales guys to come to me and say I got this great deal, but I say did you really? If I send them an invoice, will they pay it?
The greatest thing about the chartered accounting degree is not so much learning the accounting standards; it’s more that it teaches you how to think in a more structured way.
We were fortunate to have a trailblazer which was Bike Exchange, which was fantastic. And they now own the market for bikes and it’s a real tribe, bikes. That’s what I need to do, and the opportunity is far greater in furniture.
There are 500 bike stores in the country, and 440-odd are on Bike Exchange. There’s 16,000 furniture, bedding and homewares stores in the country and we’ve got 500 of them. It’s a highly scalable business.
With furniture, everyone needs to sit down. When we’re having a bad day, and you do have bad days, you take a step back and remember that everyone needs to sit down. It is a market that is never going to go away.
Our big challenge is talking to furniture retailers and getting retailers to acknowledge that online is where they need to play.
The more retailers you get, the more data you get in terms of products, and the more consumers you get. So we do a lot of SEO work, a lot of search engine marketing work, that’s our main marketing. Now we are trying to branch out with some out-of-the-box thinking, we’ve done a campaign with Alisa and Lysandra from The Block, which is going fantastically. And next year it is about above-the-line marketing spend.
Last month 53% of our traffic was on mobile or tablet and of that 53%, about 46% was between 7-10pm at night. I can see it. I can see the people, sitting on their couch with their iPad on, just looking.
Our job is primarily as an educator of consumers, to say it is OK to buy online. Not just browsing, but the ecommerce side as well. And that’s where we’ll see tremendous growth over the next two or three years for sure.
We focus on driving traffic into the retail stores because that is where 90% of the transactions today in furniture are going to happen. We recognise that. So we go into the stores and say there are five different types of consumers. There are people who want to call you, people who want to email you, people who want to come to your store, people who want to buy now, and people who want to click and collect.
The bulk of furniture retailers’ marketing plans is to go to Bunnings, buy a bucket of white paint and write ‘Everything Must Go, 50% off’ on their window. And that’s ingrained in consumers’ head that you don’t pay retail for furniture. So that’s something that requires a lot of education, that’s something I’m desperately trying to do, to change that.
Retailers who don’t have a web presence are automatically eliminating themselves from that conversation. Not being online is akin to not unlocking your doors each day. You’ve got be there.
The key message in business is if you don’t keep it simple, you are eliminating yourself from a lot of conversations. Our mandate is to be as simple as possible.
The next 12 months will be about getting new retailers on board. We’ve focused on furniture because we are Furniture Exchange but we’ve grown a little bit in bedding, and we’ve just started homewares as well.
Homewares is a growth category for us. There are literally thousands of little homewares stores in all the little villages around the country, which is traditionally booming this time of the year.
We’re talking with some other parties about launching other verticals, using our software. It’s just a matter of finding the right people to run those businesses internally.
We need to expand with a focus up the eastern seaboard but also move over to the west. We have some stores in Western Australia but customers there are crying out for more options.
Part of our strategy is we want to go to New Zealand and that will also happen next year. New Zealand is closer than Western Australia and everyone needs to sit down over there too.
Bike Exchange has launched in Germany and next year they launch in America. We will absolutely follow them there and everywhere in between. What we do doesn’t exist anywhere else in the world, other than eBay.
The business is the last thing I think of when I go to sleep and the first thing I think of when I wake up. And I dream about it.
The thing that keeps me awake at night is that we haven’t been good enough or as good as I would like us to be, at explaining to retailers how good we are. But we are getting better at those conversations.