In just 12 months in business, removals startup Muval has seen revenue of $1 million, all without a single cent from investors.
Founded by James Morrell and Mahdi Chardi, Muval is a platform connecting space in removal trucks with the people who need it.
Speaking to StartupSmart, Morrell says the pair came up with the idea after Chardi, who had worked in removals for years, started to become frustrated at inefficiencies in the space.
“Trucks that were travelling interstate often came back empty, and often travelled to their destination with less than 100% utilised capacity,” Morrell says.
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“That was a big waste.”
While trucks are driving around with space available, there are customers paying for whole trucks when they only needed, for example, half the space.
“If we could find a way to improve the efficiency of that system, it represents savings for the customer as well as increased profits for the company.”
Morrell and Chardi started working on the startup full time in July last year. Since then, they have serviced more than 1,000 customers, and seen more than $1 million in revenue.
“Seven figures in the first year has far exceeded our expectations,” Morrell says.
“We’re really, really proud of that.”
Once bitten, twice shy
In the early days, the co-founders did consider the possibility of funding. However, this isn’t Morrell’s first rodeo.
Having co-founded another startup before, and having taken VC funding for that startup, he was wary of going down that route again.
“When you raise money, you lock yourself into a particular type of growth,” he says.
“You’ve got investor expectations, and it adds a lot of pressure.”
His previous startup “built itself around funding from the get-go”, he explains.
The business raised “a few hundred thousand” dollars in seed funding, scored some early wins, and got accepted into a prestigious incubator.
But, it wasn’t to last.
“In the end, the investor funding dried up, and the business didn’t have the revenue to stand on its own two feet at that time,” Morrell says.
While his previous business partner still works on the project on the side, they both had to find other sources of income, and the company “kind of stalled”, he explains.
“That’s the danger when you build a company around investor funding from day one,” he adds.
“If it dries up and you haven’t got to a point where you’ve got revenues or profits … then you’re stuck.”
That’s not to say, this time, external funding is off the table. Morrell and Chardi have discussed it extensively, and even put together a pitch deck — although they never quite got around to using it.
Ultimately, Morrell says, with Muval, the pair came to a realisation a typical startup approach might not be right for the industry they’re in.
“We’re not a startup that’s come in with a completely new way of moving house, and disrupting an industry,” he says.
“We still rely on the relationship element, and we’re building strong partnerships with removal operators.”
These operators are all too aware of the effect a new tech player can have on an industry. Nobody wants to be ‘Ubered’.
“They’re very sceptical of a tech player coming in and removing their livelihood,” Morrell says.
“If we raised a heap of capital and dropped on everyone’s doorstep with a big splash, we just weren’t going to be very well received.”
Bootstrapping has allowed the startup to build on Chardi’s existing relationships in the industry, and to slowly build trust — showing them they’re there to “help them do better business”, rather than to pull the rug out from underneath them, Morrell says.
“We’ve built features and technology around needs that they have, and slowly taken them on a journey.”
Muval’s impressive revenue proves the startup is solving a problem in the market, Morrell adds. He admits most startups wouldn’t consider $1 million in revenue in their first year slow growth.
“It wouldn’t be a stretch to say someone with money could come into this industry, sign on hundreds of different moving companies in the first year, and get much bigger revenues … but I’m not sure how the industry would receive it.”
A great position to be in
Morrell says Muval may still consider raising funding in the future, although probably not until next year, after the busy Christmas period.
The co-founders have their eye on a few acquisitions, and are working on partnerships with Aussie software providers in the removals space.
They’re looking to grow the startup, “and having some money to do that would be great”, Morrell says.
“It’s a great position to be in.
“Raising when you need the money is the worst thing you can do. It’s nice to be able to do it on your own terms.”
Equally, he suggests investors are less likely to back a startup if it really needs the cash.
“They’re pretty savvy … and if they smell desperation, they’re going to run 100 miles in the other direction.”
The best way
In order to bootstrap your business to success, first, it’s important to have core skills in your founding team, Morrell says.
“You have to have a technical person, or someone who has development capacity … otherwise, you’re just stuck with external costs of development and design,” he says.
“That’s my contribution.”
Chardi has the complementary skill set in sales, and also brings extensive knowledge of the sector, he adds.
Second, he says startups don’t have to have everything automated and ready when they launch.
Founders can get stuck in the idea “everything needs to be automated and fully tech-enabled from the get-go”, Morrell says.
He recommends building what you can at the beginning, “and augmenting what you don’t have with your time and effort”.
For example, although Muval has the option of an automated checkout experience, the founders still augment a lot of sales “with good old-fashioned, over-the-phone customer service”, he says.
“That’s something that we will eventually work out … but it’s not something we’ve decided to tackle from day one.”
Ultimately, Morrell advises startups to bootstrap, if they’re able to.
“It would be great to see more startups going down this route, not necessarily selling so much of their companies upfront, and trying to get some runs on the board,” he says.
“It can be stressful — I get it,” he adds.
“Some people aren’t in the situation that we were in to start off, and sometimes there’s nothing you can do but raise investor capital.
“But if you can do it, it’s the best way in my opinion.”