Hey You secures a further $2 million: Why its founder decided to take a step back
Tuesday, May 17, 2016/
Sydney startup Hey You has secured a further $2 million in funding from existing investors and installed a new CEO as it looks to take a “disciplined” approach to a new phase of growth.
The cash injection in the mobile bookings and payment app for cafes comes from Westpac’s Reinventure and Exto Partners, who contributed to a $5 million Series A round in the company last year.
Hey You founder Rebekah Campbell says the new funding is a “small extension” to this round and was a smooth process.
“The growth has been great and we wanted to keep doing what we’re doing and not be distracted,” Campbell tells StartupSmart.
“It’s great that existing investors were willing to come back in without any real fuss. It’s been good and simple. Having good investors who continue to support the business as it grows makes the job of a founder so much easier.”
Passing on the baton
Further to the investment, Campbell will be stepping back from her role as CEO, replaced by the founder of Our Deal and Choosi Shaun Cornelius who will take control of the startup’s growth plans.
Campbell says that while letting go of control is never easy, she’s sure the right person is now in charge.
“It was all about finding the right person. I could immediately see from the conversations and once he started that he was doing this better than I used to do it,” she says.
“That made it very easy to relinquish. It would be a lot harder if you felt like you could be doing the role better. He’s the right person with the right experience and mix of skills that complement mine.”
Campbell says she will still remain closely involved with her company, but came to a realisation that someone else needed to steer it through its new growth stage.
“As a founder you start to recognise what your skills are and that the business is going into a different phase,” Campbell says.
We have a larger team now and we’re scaling, which requires different skills. My skills are required but there is another set of skills needed.”
Cornelius says he plans to bring a disciplined approach to the now 45-person team.
“It’s certainly in a growth phase and it has a huge amount of potential going forward,” Cornelius tells StartupSmart.
“Now it’s all about scaling up the business and a big part of that is making sure we have the right team in place and that we’re operating as a high performance team.
“Businesses like Hey You have so many opportunities and they need a great team that’s focusing on the important priorities with a disciplined approach, while also retaining the energy and flexibility of a high-growth business.”
He says he has been a customer of the service for a while and has been closely following the company’s growth under Campbell.
“I always admired it from afar – as a business and as an awesome service to customers,” Cornelius says.
“I’ve really enjoyed getting to know Rebekah. She’s clearly got a lot of passion and has been instrumental in achieving a huge amount for the business. I’ve been inspired by that.”
Campbell says this provides an important lesson to other founders in knowing when it’s the right time to step aside and let someone else take the reins.
“I’ve seen other people do it too early when they still needed that scrappy founder that can try new things,” she says.
“But it gets to a point where you’re at a certain scale and you can’t afford to make those mistakes. You want someone that has done it before and that will make less mistakes than you and get a better outcome for everyone.
“You need an experienced set of hands to help steer the boat.”
A rollercoaster ride
Campbell’s startup has gone through a series of pivots and funding rounds since first launching as a music industry-focused company called Posse in 2010.
After relaunching as a retail-focused app in 2012 the company received $2.7 million in funding across two rounds but struggled to monetise the offering.
In 2014 Posse merged with a competitor, Beat the Q, offering an app where users could order, pay and gain loyalty benefits at local cafes, and closed a $5 million Series A round late last year.
It’s been a “rollercoaster” across the series of iterations, but Campbell says they’ve finally pinpointed a viable business model.
“It’s been a longer journey than we thought it was going to be, but that’s just how it goes,” she says.
“It’s hard to get exactly the right idea the first time, but we’ve continued to evolve and learn and we’ve always made progress.
“We always think about what worked, what we learnt and what we can do next time. Having that progress has put us in really good stead now.”
Campbell says it is steadily growing by 4% each week and that things are finally starting to pan out for the startup.
“It’s been a rollercoaster and sometimes it feels like you’re pushing uphill for quite a long time,” she says.
“We’re not on the smooth downhill bit yet but it feels like we’re starting to get there. There are still turns but it’s starting to get easier.
“We’re at a happy point where we can try new things and they generally work.”
On the back of the rapid growth, Cornelius says one of his first tasks as CEO will be to diversify the company’s offering beyond just coffee and snacks.
“We have an extremely engaged customer base that is ordering coffee and then a little food from our network of cafes,” he says.
“There’s obviously an opportunity there and we’re excited to broaden that out and help customers with their food ordering. We want to broaden the experience from just the morning to lunch too.
“It’s a huge opportunity and something we can deliver on confidently.”
He says the hospitality industry is in the midst of disruption, and Hey You is in prime position to capitalise on this.
“There are a lot of players doing really interesting things in the space, but we’re in a unique position in the market,” Cornelius says.
“We’re lucky in terms of the positions we’ve taken in ordering ahead and now we have an early advantage and are in a lead position.”