Finding Traction with Luke Anear, CEO of SafetyCulture

Kris: From Lawson Media - This is Building A Unicorn, the show exploring what it takes to build a big, global business. I’m Kristofor Lawson.

Kris: No matter what kind of business you run - sooner or later you’ll find yourself having one of those seemingly boring business conversations around safety. If you’re a chef it might be safety in the kitchen, if you’re a warehouse worker it might be about using the right equipment to manage heavy loads, and if you’re a construction worker it might be about having access to hard hats,safety goggles, or the process of dealing with large machinery. These seemingly boring components are actual vital for the health and wellbeing of staff, and getting them wrong can be costly. So making the process of safety compliance easier is actually a big business.

Kris: Luke Anear is the founder and CEO of SafetyCulture… a company which is helping businesses manage their safety and compliance. It might seem a bit boring but that business is now worth over $440 million.

Luke Anear: SafetyCulture built a checklist app called iAuditor, and that became a checklist app that's used all over the world, for people to basically manage standards and maintain quality across their workplaces. Anything that they basically check regularly, whether it be from toilets or whether it be from like the end of a production line at Tesla or somewhere, then that's where they use checklists and iAuditor.

Kris: Luke’s journey to being the CEO of a $440 million dollar company started in Townsville - a tropical city on Australia’s North Queensland coastline. It’s in the heart of the Great Barrier Reef and has a population of around 200,000 people.

Luke Anear: We've got a university and a hospital and a fairly big army base and a range of different sort of government facilities there. It's this mix of a little bit of mining from out west, we've got the Australian Institute of Marine Science where we lead a lot of the marine biology research in the world. And so, Townsville is this kind of fusion of people from all different walks and you just never know who you're going to meet. Julian Assange lived in Townsville for a while, so did Greg Norman when he was growing up, so there's a whole range of different people that have come out of Townsville.

Kris: Like many people who come on this show, Luke is an entrepreneur through and through. He started his first business when he was just 12 years old - mowing lawns for people in his neighbourhood.

Luke Anear: We grew up on acreage so the idea of lawn-mowing with a push mower when you're 12 on an acreage is probably not the best idea, but I'd mow a whole acre for $50 and it would take me about 5 hours or so. But it was I think always something that I thought about, and I was constantly trying different things. I delivered pamphlets when I was about 11 I spose, just before I started mowing lawns, and I was constantly looking for stuff. School was kind of boring for me so I was trying to figure out ways to be able to do things. I grew up with my mum and we never had a lot of money so it was always the thing preventing us from doing stuff was being able to afford to do it, and so I was always coming up with creative ways to try and make a dollar so that then we can go and do the fun stuff, and I think that's what fueled a lot of it.

Kris: Luke really wasn’t that into school so when he was 16 he made the decision to leave and go and get a job, and he soon started running his first real business.

Luke Anear: …and I took over this glass recycling business where I'd drive my brother's ute around to all the bars and nightclubs and collect all the empty glass each morning at about 6am. There'd be beer and spirits and stuff dripping all over me and I'd take it back to this depot and then sort out the coloured and the clear glass and put it on a train and send it down to Brisbane so it could be recycled. It wasn't probably my best idea but it certainly gave me a bit of a taste of what running a business was like. I had friends would come after school and help sort the glass and I'd go around and pick it up each morning.

Luke Anear: So, that was when I was 16, and then I managed to get a job with a local businessman who was a really good mentor for me, and that continued for 20 odd years. And Hh took me under his wing and just taught me lots of basics, you know? "A dollar saved is better than a dollar made because you don't have to pay tax on the saved dollar." And just really simple things, a lot of basic stuff that helped me. I worked for him for a while and then went out and tried a few things myself and then ended up going back with him.

Luke Anear: I pitched this idea to him that he was a baby boomer approaching his 60s and he had these businesses that he was tied to, and I said "Well, how about I run these businesses for you and we split the profit?" You know I was 17 years old and he kind of let me down gently and said "I don't think you're quite ready for that", but at the end of the day we ended up on a sort of co-management deal where we were both running these 3 different businesses that he had. One was a 24-hour mobil service station, another one was a car auto parts yard, and there was a second service station as well. And so when I was pretty young I was all of a sudden managing people and stuff.

Luke Anear: Bill Smith is his name, funnily enough, and he just would take the time to teach me whatever. Saturday mornings was almost my favourite, because it was just Bill and I at the auto parts business and I would just ask him every sort of question and how he got started and all the old stories. He couldn't get a bank loan to start his first business, and had to work in the dirt on his own fixing old cars and stuff. And just crazy things I found inspiring and gave me the belief that it's possible, if you set your mind on something you can go after it and do it. He taught me a great deal, and that's why I kept seeing him and chatting with him. We had a friendship that lasted until he passed away, and it was pretty special.

Kris: What do you think it was that he saw in you as a young kid that gave him the confidence to allow you to take on some of these responsibilities at such a young age?

Luke Anear: Yeah, I'm not sure. I definitely was driven, I had a strong work ethic, I could work long hours from a really long age, and so I would put the time in and I would ask lots of questions and just want to learn and apply what I'd learned. And so I think he kind of responded to that and could see that every time he would give me a little bit I would take it a lot further and develop it even more. And so I was constantly trying to improve things and solve problems, I think those were the sorts of things.

Luke Anear: I actually did a week's work before I got that job, in a palm farm, which is palm trees. They grow all these big palm trees and we had to dig them out of the ground and that was the hardest work I think I've ever done. I had all these blisters on my hand and when I went for the job interview I was 16, just after I'd left school. I went for the job interview and I had all these blisters and calluses on my hand and he actually had a look at my hands, he said "Can I see your hands?" And he goes "Gee, you like a bit of hard work, don't you?" It was probably the only time I'd worked that hard so I think he saw a few things that he liked and away we went.

Kris: Luke managed Bill’s businesses for around two years, and the business was called Wade’s Distributors, named after Bill’s son.

Luke Anear: But Wade didn't really have much of an interest in it, and so I was managing that with Bill for a couple of years and it was about that time that I decided I wanted to head off and go down south. I actually got my mum, who left Telstra, and got her to buy in to, one of the businesses was a service station and an oil distributorship for Castrol Oil, which was a small business, it had two staff. So, mum bought into that, I think for about $30,000 out of her superannuation. Mum continued to run that and actually built it up into a reasonable little business, and I went down south and got a job as a trainee private investigator and that was the first exposure into the workers' comp industry and seeing what happened when people got injured at work, which was pretty interesting.

Kris: Luke was 19 when he moved and his new job was investigating workers' compensation claims when there were concerns that perhaps someone was trying to claim insurance they weren’t entitled to it.

Luke Anear: A lot of those people were genuinely injured and we generally wouldn't see those people, but sometimes you'd get fraudulent or exaggerated claims and they would get referred through to us, to a surveillance team. It'd be our job to go out and see what these people were doing. Often, they were working other jobs or they never were injured in the first place. So, it was basically people who were rorting the system, and we'd go and follow them around and sit in the back of the car and wait for them to come out and then go follow wherever they went and film them. It was a pretty fun job, I actually really enjoyed that a lot and had a lot of fun and different things happen over the years.

Kris: What was the weirdest claim that you had to investigate?

Luke Anear: We would see all sorts. But you'd see people who would have a claim in... one guy got $70,000 worth of renovations done to his house because he needed wheelchair access to the bathrooms and everything, and then he ended up winning a triathlon, and we filmed him, the firm we filmed him winning it and he was completely able-bodied. We'd see crazy stuff like that. You'd see people getting kicked out of home, their clothes getting thrown on the front yard by a distressed wife or something, and all sorts of crazy stuff. You know had people reach through, because you're often sitting in the back seat, this is a thing a lot of people don't realise, this is kind of a secret in the surveillance industry, but you're always in the back seat of the car when you're doing surveillance, you're very rarely in the front seat, and no one can see in the back seat, you have stuff on the windows or whatever. I had people reach through the front window, which is down a little bit, and grab the wallet out of the centre console and you know stuff like that, where you then spend the next two hours chasing someone around trying to get your wallet back. So all sorts of just random things would happen. We're observing the world, so you'd see all sorts of odd stuff.

Kris: This is while you're sitting in the back seat of the car, someone's reaching in and grabbing your wallet out of the front seat of the vehicle?

Luke Anear: Yeah, yeah, exactly. That sort of stuff. People crash into your car, they think there's no one in it, and then you pop out and you're like "Hey". Just about everything that happens in life you see happen. People sitting on your car, they think no one's in it, it's a parked car. Kids come up and throw balls at the windows, and just random things that happen when people think cars are empty and nobody's in there and no one's going to know. So it's pretty interesting.

Kris: After working as an investigator for three months - Luke found himself at a Tony Robbins seminar which sent him down a very different path.

Luke Anear: It was called Unleash the Power Within at the Hordern Pavilion in Sydney, and it was just incredible. One of the things that we did at that seminar was wrote down goals, and one of the goals I thought I wanted to achieve was how to make $40,000 in a month. And so, I wrote down this crazy goal, and when the seminar ended the music stopped and I kind of sat there staring at this goal. I thought "Oh my goodness, I have to actually go and do this now."

Luke Anear: And so, I walked in and quit my job at the surveillance company in Parramatta only three months into it, and they were like "You're just getting the hang of this. Why are you doing this?" They couldn't understand, but I was like "Nope, I've written this crazy goal down and now I have to figure out how to do it." I can remember sitting in the McDonalds car park in Parramatta and thinking "Now what?" I had zero idea on what to do to make $40,000 in a month and I'd just quit my job because I was earning about $800 a week there and I knew I couldn't do that. So it was just an amazing feeling, not in a good way, but this feeling of "What the heck have you just done", and not knowing what to do.

Kris: The answer Luke had to earning $40,000 in a month - was boxing.

Luke Anear: A friend of mine, he was a plumber, and he'd talked about doing this tough man challenge that had happened in Townsville funnily enough when we were growing up, but I'd never been to it. It was a no rules boxing competition, and that was the only thing I could think of. So, I rang Steve and said "Hey do you want to do this boxing tournament that we talked about once?" He was like "You serious?" And I said "Yeah", and he said "No way." So, I went around Sydney trying to organise it, literally walking into pubs and thinking "I could set up a boxing ring in here." I spent about a week doing that, and had no idea what I was doing. I ended up booking the Penrith Rodeo Complex out at Penrith, and I thought all the people in Western Sydney, they'll love to see this. So, after I secured the venue I had I think about $600 in the bank and the boxing federation of New South Wales said "You can't do that here and we won't allow it." So, that was kind of my first setback, I think, for that particular project.

Luke Anear: I rang the Northern Territory government, or the boxing association, and they said "Yeah, you can do whatever you want up here", so I loaded my stuff in the car and started driving and ran out of money before I got there because I'd put a deposit down on the other venue in Sydney and all that stuff. So, I had to go wait at a service station, I had no money, and this guy was there and I pitched to him. I said "I'm this young guy, this is my dream, I've set this crazy goal of making $40,000 a month, I've got to figure out how to do it. I'm trying to get to Darwin to do this thing and I need a tank of fuel, can you please help me?" And he was like "Well, I'm not the manager. You've got to wait for the manager." So then I had to pitch again an hour later.

Luke Anear: And the long story short is I got to Darwin, I slept in my car for a month, and organised the tough man challenge up there. I'd go into the hotel on the beach run and unplug their swimming pool filter at 10 o'clock at night when the pool closed and I'd plug in my mobile phone so I could charge it and have to get back by 6am in the morning before the cleaner would come, and then I could ring people and organise all the fighters and the staff, had security and all these things, and 415 cases of beer all on credit. So I racked up $22,000 in debt in a few weeks to do this thing.

Kris: Wow, I mean, that's a lot of debt to take on when you're someone that only a couple of weeks before that, you're begging a fuel station owner for a tank of fuel.

Luke Anear: Yeah, exactly. I was burning the bridge and swimming for the island, and so I just kept on focusing on it each day. But the thing was, people would be like "That's amazing how you could try and do that", and I think people expect some big gust of wind or momentum every day to be driving you but it's just not the case. I would wake up each day in my car and go "Okay, now what am I going to do?" I'd organised everything over the phone and I was this baby-faced 20 year old from Sydney that no one had met, and so they just thought I was some big organiser. So, on the day, people actually got to see me and they were like "Who's this kid and what have we done?"

Luke Anear: I said gates opened at 6 and it started at 7, on the radio, I'd got radio advertising and stuff. Pretty crazy situation, and then of course it rained because it was in November in Darwin and it was monsoon season, and at about, I don’t know, 20 past 6, the DJ came up and said "I need $600 cash before I'll start playing any music", and I didn't have the cash, so I was like "Well, just give me a bit of time" and I think he started to worry.

Luke Anear: Thankfully, at about 10 to 7 there was a massive queue of people and they were all turning up late and a security guard came up to me with a handful of cash and said "Where do you put all the money?" And I hadn't even thought about where to put the money, and so I just grabbed $600 of it, gave it to the DJ, I said "Start playing your music, dude", and away it went. I took in $64,000 in five hours and it just kept going. I was stuffing money everywhere, I ended up driving my car in the middle of the crowd and putting money all under the seats of the car and everywhere because I didn't know where else to put it. It cost 22 to do it, so walked away with $42,000 a month after I set the goal, and after that I thought "Wow, what's next?"

Kris: That's kind of proof of what determination can get you. You set about this goal and despite the odds you still made it happen.

Luke Anear: Yeah, it's probably served me more than any other lesson in life I think. The idea that you could walk out the door with just your shirt on your back and you'll be okay. That's a really powerful self-belief to have and I think that's what that taught me. We live in an age and a time where you can literally go and do anything, and I think, Australia's been built on immigrants and a lot of countries have been built that way, but you hear some of those stories. Often I get in a cab and talk to cabbies, or these days Uber or whatever, and people have started from nothing many, many times. And I think once you get that sense that it'll be okay and you don't have to be fearful, then you can take some risks and really go and have some fun. And so it's served me a lot along the way.

Kris: And coming up after the break - Luke’s determination leads him to start a new company.

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Kris: This is Building A Unicorn - I’m Kristofor Lawson.

Kris: After staging his boxing tournament - Luke went back to being a private investigator. It was kind of a fail-safe that he knew he could rely on. He was good at it. Although that didn’t stop his entrepreneurial endeavors. On a trip to San Francisco he came across a system called CAPS - which was for locking the wheels of shopping trolleys to stop people stealing them from the car parks.

Luke Anear: I spent seven months doing all this research on shopping trolleys, and I could tell you all these stats. The supermarket in Canley Vale, they would lose all their trolleys every six months, 220 trolleys. Then there was other major retailers who would have one manager stealing trolleys from another manager's side at midnight with a truck because their lost trolleys came out of their budget. There was all this crazy trolley theft happening that I'd never knew about.

Luke Anear: So I secured the rights to that and then spent seven months trying to convince the retailers to implement it, and no one wanted to because they said "Well, all the supermarkets are always close together, and if they stop people from taking a trolley outside the car park then people might get annoyed and go to the next supermarket." And so, no one could do it. And now, 15 years later, that system goes in pretty much every supermarket that gets built, and I think I was just a bit ahead of the time.

Luke Anear: So, that one didn't work and I got back into the surveillance game for a bit, and then I ended up getting a gym. A guy I was living with, he was a consultant in the fitness industry, so I ended up taking over a gym on the Central Coast of New South Wales called Ultimate Fitness. Huge big aerobics floor, squash courts and all this sort of stuff. I didn't know what I was doing, so I was there for about 10 months or something and realised "This is not easy either", and I got back into the investigation game and that's when I stayed for a few years then ended up managing a team in Sydney and working my way up.

Luke Anear: … and I was doing stuff as well, I was selling news footage to Channel 9 and 7 and stuff in Sydney when I was down here, and also photography for the Sydney Morning Herald, Daily Telegraph and things like that. I was always doing side-hustles. I enjoyed doing lots of different things I think as much as anything, it wasn't always about trying to make money, it was about just experiences and trying different things.

Luke Anear: And then once I got back to Townsville I gave mum a bit of a hand for a while in the oil business and then opened a photography studio with a mate. We were doing weddings and commercial photography and stuff, but I pretty quickly got bored with that, and that's when I started to think "Well I don't want to go back into the workers' comp investigation industry, but perhaps I could be part of the solution and help people avoid getting injured", and that's how SafetyCulture originally started.

Kris: The name SafetyCulture would come later, but Luke started his new business which he called Wade's Business Solutions, because people in Townsville knew about Wade’s Distributors so Luke figured that would be a great name. And he started off selling policy documents to businesses who couldn’t afford to get their own documents written.

Luke Anear: It was a basic policy manual. It was a set of policies for training staff on how to behave. There was manual handling policies for lifting things, there was email policies, today I would call that unnecessary stuff but back then it was basic, very basic. Then we started producing training documents for specific tasks around how to work on a roof, or how to dig up a road if you're laying fibre-optic cable, you're going to have barricades for pedestrians and all these kind of things. We started building what became a library of about 600 odd documents that people could buy, and typically before then they would pay consultants maybe $800 to $1000 a document, whereas I was paying former government inspectors to write the documents and then putting them online for $80 each. I'd have to sell 10 of them to cover the cost, but that became a really good business because people needed this stuff, and they didn't want to... They couldn’t afford often, small businesses, they couldn't afford to pay $1000 for every document for each piece of machinery or every task they do.

Kris: Wade’s Business Solutions started to to gain real traction and in 2007 Luke realised that the name had to change…. And the way the business ran needed to evolve.

Luke Anear: We had a telemarketing model where we'd ring businesses and annoy them to say "Hey, we can come and do a free gap analysis on what paperwork you have", and things. It was just a terrible business model. That ran for about three years. There's businesses that just take energy from you, and there's others that give you energy, and that was one that just took energy, because you're trying to convince people that weren't interested in what you had to buy it. I made a decision at some point, "I never want to have to sell anything to anyone ever again. And let's build great things that people want to buy."

Kris: So at that point, you were getting on the phone, you're calling these companies, you're pitching them the product, you're getting a lot of knockbacks and rejection. How did you realise that "Okay, well the thing that I need to do is I need to ditch that process, I need to change the name, and I need to go all online"?

Luke Anear: Yeah, it's a good question. I went to a conference in Atlanta, so I was never afraid to jump on a plane and go to learn stuff. I went to a search engine optimization conference, an SEO conference in Atlanta on the east coast of the US, and I saw all these random different businesses that were really doing well from just basically finding the market through Google and optimising their keywords and landing pages and all that kind of stuff, and then understanding conversion and driving the funnel and… I kind of just got some ideas from that and came back and thought "Okay, here's what I'm going to do." At the time, I actually had surgery on one of my knees. I came home, had surgery and was laid up for a couple of months, and that's when I thought "Well, I can't walk around, but I can at least build some micro-sites and do stuff, write content." That was kind of the start of it, and away it went, that was a very different business from that day on.

Kris: And were you working on your own at this point or had you hired other staff?

Luke Anear: It had gone up to about 20 odd people when we had the telemarketing business, and now it had gone back to maybe two people I think, something like that. Myself and a couple others. I had Margaret, who's still with me today, she was working from home in Brisbane, and we had Karen, who was doing our accounts and stuff. So there was a couple of people, not many, and we'd scaled the business back. It was so easy, it was the kind of business where you'd wake up in the morning and there was more money in the bank than when you went to sleep. These kind of cliché terms that all these marketers throw around, what-have-you, people try and sell their ideas to people, they're always throwing these cliché terms around, but that was something. I guess I narrowed my criteria for what I wanted to do, because I tried all different things. I was like, "I don't want to have to sell stuff, I want to have something that people want to buy. I need to have something that works while you're sleeping." All these different sort of pieces of the criteria came together for that business to start to really thrive.

Kris: SafetyCulture, despite having a new name, was still figuring out that one idea that would help it achieve scale. And Luke says they threw a bunch of concepts at the wall before landing on one which had traction.

Luke Anear: We had a training platform that I built in 2007, so that was for training staff at work, and no one really used that. It was built as a Flash platform, for those that remember Flash. So that wasn't great. And then in 2010 we built a document management portal for people to manage all these documents that they were buying off us. And so it was like "Hey, you pay a monthly subscription and then you can have all your documents in one place." That was terrible as well, nobody used that either.

Kris: Luke was also working as a videographer for none-other than Tony Robbins, and was being exposed to some really successful celebrities. And he says that roll helped shape his thinking. During this period of time Apple released the iPhone and there was this large uptake of people starting to spend an awful lot of time on their smartphones… and this trend sent off a lightbulb in Luke’s brain.

Luke Anear: I started to think about mobile first and maybe people could run their businesses on their phone eventually. So, in 2011, I went out to James Cook University in Townsville. A friend's wife worked out there who organised someone from the IT department, Professor Ian Atkinson, who leads their IT research team. He sat down, and a couple of others, and introduced me to someone. I said "Here's what I want to do, I want to build an app", and it was actually for doing risk assessments before you do a job. So, before you dig up a road, or before you turn off the power, you have to assess all these steps, you know?

Luke Anear: And so, they introduced me to Alan Stevenson, who'd dropped out of James Cook Uni and was working at the youth detention centre. And Alan turned up at my house, came through the front door, and we sat down on the kitchen bench and started designing an app called IJSA, and we built that and released it and nobody used it. It was terrible. And I think we had 70 downloads.

Kris: Was it the name?

Luke Anear: Yeah, possibly. But I think just the app was too restrictive, and so we just chatted to a couple of people. One of the customers was Lendlease, and it was a free app, so they didn't pay anything. But we went down to Melbourne to one of their sites and they said "Look, your app's okay but it could be better, but really what we want is you to get rid of all this paperwork", and they pointed to like 250 binders on the wall of all these contractor paperwork, and I kind of went "Yeah, that sounds too hard."

Luke Anear: So, we had to start unpicking the complexity. Every customer's got different wants, and so it was overwhelming for a while. We sat back and the common thread through all workplaces, not just in Australia but all around the world, was that people have to check things regularly to make sure that they're okay. The status of something, you check it, is it okay? If it's a Starbucks store you want to check it each morning, are the tables all laid out correctly? Are the benchtops clean? Whatever. And so, the checklist was the thing that everyone was already using. Every McDonald's bathroom had a checklist on the wall, when it was clean, who by, their initial, the time, et cetera. And so I thought "Okay, if that's the tool that universally is being used, then that's what we should build."

Luke Anear: A few months later, the first version of iAuditor came out, and we said "We got 72 downloads on the other one", so we were like… “if we got 10,000 downloads in a year. If we could do that, that would be amazing." And we got 10,000 in a few weeks, and away it went.

Kris: Luke says that initial customer base was all organic. They didn’t invest in any kind of marketing - people were just finding iAuditor in the app store, downloading it, and then using it.

Kris: You're getting all these downloads, but downloads don't necessarily create a sustainable business. Was there a point were you realised you were onto a winning idea, that the people that were downloading this really loved it, and that you were actually creating something that was going to be a sustainable stream of revenue?

Luke Anear: Yeah, I think traction is the key to success in business, and this had traction. We had customers emailing us from all around the world, and saying "Hey, we're an airline in South America, we're using your app and we're checking all the aircraft and it's amazing, and we're taking photos and doing all this stuff and producing reports." And so, it became obvious that this was something, and… it was a free app. So there was no money. Then they said "Well, instead of a .PDF report with all our photos and all the answers to the questions, what if we could have a Word report?" So we were like, "A-ha, this is where the magic's going to happen. We'll charge $7 one time for a Word export unlock feature."

Luke Anear: So we put that in and of course, it made $1500 a month or something, so that was the first monetization we had. And then people would contact and say "Hey I lost my device, where is everything backed up?" And we're like "Well, do you back up do your device to your computer, because there's no cloud or anything." And so I turned to Al and I'm like "We need to find someone who can build a Cloud", and so we built a Cloud and away it went, and charged $5 a month for the Cloud and people could back their stuff up. Of course that didn't work very well and we had to rebuild it and all that sort of dramas, then it became a real engineering-based company. We just had to get as many people as we could.

Kris: This early growth was enough for Luke to start pitching the business for potential investment… although it was a trip to Google’s IO conference that really set things in motion.

Luke Anear: I actually pitched to Blackbird at a Google meetup night in Sydney, I came down and Bill Bartee, one of the founding partners of Blackbird, I pitched to him and said "We're doing this app", and he was polite but he showed no interest which is typical, you know VCs.

Luke Anear: I went back home and one of the guys, we had about five or six guys in the garage working on stuff, and Google I/O was on in the US and one of them said "I've got a ticket for it, I want to go", and I was like "Yeah, on one condition. That whatever they release, you buy it, we've got to get it. Whatever it is. If they release something, you've got to get it." That was the year they released Google Glass, and you had to be a US citizen, you had to jump through all these hoops. They were really hard to get.

Luke Anear: Anyway, we got through all the hoops, we got the first pair of Google Glass outside the US, and so came back to Australia and it was in Melbourne the next day. We were down there and there was a conference we were at and an ABC journalist, he noticed them. He does the tech show on ABC. Anyway, he noticed it and people were like "Oh my God, is that a Google Glass?" The next thing I was on The Project on Channel 10 and on national TV and all of a sudden Blackbird became interested. We were talking about building this checklist app on Google Glass which we had no idea how to do at that point, and that's when Blackbird said "Hey, we want to come up to Townsville", and Rick Baker walked down the driveway and here we were, six guys in the garage, trying to build an app.

Kris: This was the middle of 2013, and the iAuditor app had been in the app store for around 15 months… and they had traction. People were using the app but the investment would help them take it to the next level.

Luke Anear: We didn't know what to do, we'd never meet a VC, a venture capitalist. We didn't even know what this thing was. We were like "This is crazy", we knew nothing about fundraising or any of this stuff. And so we felt like we had to try and impress him somehow, I got a Subway platter from the Subway shop up the road, like "Let's get a big platter for him."

Luke Anear: A funny story is we had these clocks go up the day before, because we could never work out what timezone our customers were in, and we were Googling the timezone in order to say good morning or good afternoon or whatever, "Thank you for your email." And I said "We should put clocks up with the cities around the world underneath them, and we'll look this global company." So, the day before he got there we put them up and double-sided taped them on the wall. And of course, while he's talking, the Tokyo just peels off the wall and crashes on the ground, and the guys are messaging each other. I think they ran across into my garden shed where the lawn mowers were, they had a little meeting in there, going "How are we going to re-stick these things? They're all coming down." Then someone's messaging each other going "London's about to come down, someone grab London." It was hilarious, this kind of sideshow going on while we're trying to keep the venture capitalist entertained and tell him about the business. Rick saw the traction we had and the passion we had for the product and what we were doing and said they wanted to back us.

Luke Anear: We were the first company. Now, Blackbird's giving out millions, we were the first company that they'd given out a million dollars to, and their fund back then, fund one, had a maximum cap on it of a million dollars. So they put in a million but they said "If you want to raise any more, you can go and speak to some of our high net worth people who have invested in our fund." And so, I had four meetings with them and got another million dollars and so we had two million dollars and away we went, that became our first funding round.

Kris: Up until this point Luke was funding everything with the money he was making from the original documents business along with a little bit of money coming in from iAuditor… but he needed the cash to help the business scale.

Luke Anear: I think we thought if we got more people that we could build more, and so I think there was a sense if we were to get some money, that would allow us to grow, but that wasn't what we were pursuing. I wasn't really… I’d pitched to Bill a few months earlier, but I didn't really know if that's what we needed. I think money doesn't take away your problems, it probably just allows allows you to buy the next set of problems that you've got to solve for, and so we still had to solve our current problems. Mike Cannon-Brooks and Scott Farquhur were the main investors in the Blackbird fund, the fund one, and both those guys did a screening call. They kind of vetted me for the investment and did a call on Skype, about an hour each, where they just asked all sorts of questions. Scott, at the end of it, really took a liking to it, said "I want to help if I can in any way."

Luke Anear: When I spoke to Mike and Scott, that's when I realised "We can learn a lot here", and these are guys that have seen the movie before, they knew what problems we were going to face, and that's why I took the money. Once I met those guys… we were in the process anyway, but I still wasn't sure, I was still like "I think this is a good thing but I'm not really sure, I think we should do it", but once I spoke to Mike and Scott, I think Atlassian at that point probably had just under a 1000 staff and they were like way, way ahead of us. I went "Okay, I can learn so much from these guys and we don't have to just continue to soldier on in the garage in Townsville", and that helped us to no end.

Kris: And coming up after the break - SafetyCulture starts scaling.

(AD BREAK)

Kris: This is Building A Unicorn - I’m Kristofor Lawson.

Kris: SafetyCulture raised $2 million in venture funding… and then received a government grant of $1.79 million bringing their total funding to almost $4 million. And that new found cash immediately went into scaling. Luke started hiring people, a lot of people... and so they had to find an office because there was no way they could keep working from the garage.

Luke Anear: We just started hiring anyone that we could find, and we put on I think 21 new people in three months. And went from just a few of us… we got a 1000 metre office, which is like 9000 feet in the old system, and we had eight of us in there in this massive office. It had its own basketball court and a 70-seat cinema and stuff. It was a financial services company that was way ahead of its time before us, and they fitted it all out. The place was empty for over a year, and they wanted $350,000 a year rent for it and I said "Our budget's about 70", and we got it for 100. And so, that's still our office in Townsville, and we just started hiring people and making all the mistakes that you make when you start on that journey.

Kris: Obviously with that quick growth that funding allows you to start implementing, how were you thinking about making sure that you were growing at a sustainable rate and one which meant that the culture of your company didn't get ruined?

Luke Anear: Well, firstly we didn't know what growing at a sustainable rate meant, we were just scrambling, trying to get as many people as we could. And so I think, in hindsight now, we would know and look back, but we tripled the company in three months and yeah, like culture, all these sorts of things change.

Luke Anear: We had an engineer come from Sweden who basically walked in and said, "Look, everything you guys have built is rubbish, and I could rebuild the whole thing myself in three months", and he's clearly a genius. So we were like "Okay, then let's do that." And so he worked feverishly for about two and a half months, and then said he was getting homesick and up and left. And the guys, to their credit, then picked up the pieces. There was no documentation, no one knew what he'd built, but it turns out it was actually on the right track and it was lucky for him that we did it. But that all impacts culture. We were just hustling, trying to build stuff. That project, which he said would take three months, took over a year and nearly killed us all.

Luke Anear: Every month, I was doing videos to customers and saying "Next month we've got our new platform coming", a lot of the problems people had with trying to sync their photos and things, it was just taking forever. We built it on App Engine, on Google's App Engine infrastructure, and there was a 60-second timeout limit on any request from the server, and so people would have all these files, they'd take a hundred photos in an inspection, inspect a building or something, and it would be a massive file. And if it didn't upload the whole thing in 60 seconds, it would just cancel out, but on the device, we didn't tell them it cancelled. So, we had people saying "I've had my iPad sitting on my desk for three days syncing, and it still hasn't finished", and it'd be like, "Oh no, it timed out after the first minute."

Luke Anear: All these kind of crazy stuff. Just typical start-up tech company scrambling, and customers all wondering why stuff doesn't work how it should. Every month I'm saying this new platform is coming, and after about three or four months I just stopped doing videos. I was like "I don't actually know anymore." I remember, our Head of Engineering, Anton Maskovoi, he sat down with Rick Baker from Blackbird. I was like "You've got to tell the investors what's happening you know, because I think they're tired of hearing the same thing from me." Anton, he was the third employee at Atlassian by the way, and he'd been there for years, and then he left and joined us. He said, point blank, "This is the first time in my career I actually don't know if we're going to finish this, and I don't know if we have the team to be able to do it." And I'm like, "Well, that's reassuring."

Kris: It’s times of crisis where you really figure out the true value of your investors. Some investors might decide it’s time to cut and run... While others will help you actually solve the problems in your business. And to Blackbird’s credit - they stuck with SafetyCulture while they sorted out their engineering issues.

Luke Anear: Yeah, and this is a credit to Blackbird, and I think they are the best VCs in the country. They have backed us through stuff like this. Now, it's a success story and people go "Wow, that's awesome", but it's those times when the uncertainty was so high and we didn't know the way forward. Rick, and Niki, was involved as well back then. You'd just be like "Okay, what are we working with, how do we figure this out?" And they truly helped us. And so Anton asked all sorts of tough engineering questions that we just hadn't asked, and in the end it all happened. In February 2015 we launched our new backend and everything worked fantastic.

Kris: In 2015 SafetyCulture had a seed round of $ 6.1 million US dollars… and then in 2016 raised a further $23 million.

Luke Anear: That was Index from London who led that round. And again, it comes back to traction. We didn't go out looking for investment, but certainly were happy to take meetings and chat to people and build relationships.

Kris: As we’ve mentioned on this show before, finding the right investors for your business is important. You want people who believe deeply in your mission and who will help you take it to its full potential.

Luke Anear: The Index guys were great, they were good partners for us, and I actually had a customer from New York at my house in Townsville who I'd brought out to meet some of the team, and we were having dinner and I was like "Oh my God, I've just realised I'm supposed to have a meeting with these VCs in London on Skype", and I had to leave the table. I went downstairs and I was 15 minutes late, and that was my first meeting with Index and Jan Hammer and the other partners. They were sitting around this table, and I don't know why they waited 15 minutes. I think most people would have given up, but they were still sitting there 15 minutes later, and up I pop on the video screen and "Hi, I'm sorry, I've got a customer at my house here", and it was the weirdest thing. But, eight months later, we did the deal and it worked, they came out.

Luke Anear: I think that's the key in finding people who believe in what you're doing, and not just investors that are trying to deploy capital that they've got, but people who actually understand your mission, and your space, and the problem you're solving, and share some of that long-term belief in what's happening here and not just looking at it from a transactional point of view and saying "Well, you guys have got great numbers and here's your growth rates and your churn" and all the usual stuff. Those things should be looked at after the initial "What are we actually trying to achieve here, and is this something worth doing? And then let's look at how well we're doing it." I think a lot of times we come across investors and they pretend to show some interest, but really all they want to do is see the numbers, and we would pretty much rule out anyone at that point. And then they get excited and say "Oh, this is a great business, we want to invest", and it's like "Yeah, no." I think we've been very particular about who we work with.

Kris: Then in 2018, SafetyCulture raised a further $60 million Australian dollars bringing their total valuation to $440 million.

Luke Anear: Lee Fixel, who led the round last year, he's a phenomenal investor and incredible track record, but more importantly he's just a really great guy to deal with. He knew all about our business, he actually looked at it in 2015 and they didn't invest then, and this was last year in 2018 and he said "I've missed out before and I don't want to miss out again, and I'll fly to wherever you are." So he met me, I was in San Francisco that week, so he came over and flew from Tokyo, and he just sat down and said "All right, just give me the full story", and within 90 minutes the deal was done.

Luke Anear: I think our previous valuation was 120 million, that was a year earlier, and he said "Okay, I want to invest, I'm in, what's the price?" And I remember, I said "400 million." He was like.. and I won't say exactly what he said, but he was like "That's a big price", and I said "Yeah, but we're a great company, and you've got to pay a premium for good companies." He said "I'll have a term sheet to you within 24 hours", and he did. And I said vanilla terms, no board seat, we know what we're here to do, and we just need to keep getting on with it and we'll ask for help along the way, and he's just been fantastic. He sent Patty McCord over, who was she wrote the book Powerful, she was at Netflix for 14 years with Reed and she came out and spoke to the team and stuff. And so Lee was just great, just really straight-forward to deal with, and all of our investors have been.

Luke Anear: And I think it's important that there's an efficiency that comes from that, where people can trust each other, and you just know. I asked the other founders that Lee had investors in similar questions, I did some background reference checks and spoke to different people and I asked them all "How would I have a falling out with Lee? How would we not get along?" And the answer in a different way was said basically each time, "Just don't bullshit the guy. Just tell him exactly what happens at every step of the way." Then I asked Lee the same question at the end of it all, I said "How will you and I not get along? What do we have to know?" And he said "Just tell me exactly what's happening and I'll be able to help you, but if you try and fabricate it or you're not telling me exactly what's going on, then I'm out that day it happens." And so he said "I've invested in 72 founders and that's only happened a couple times." So, I was like "Here's a guy I can deal with..."

Kris: SafetyCulture now have around 300 staff with offices around the world including Sydney, Manilla, Manchester, Kansas City, and their original location of Townsville.

Kris: It's a lot different managing a 300-person team to managing six people in your garage, so what have you learned as a leader as the company has evolved and how have you been able to evolve your skills to meet the needs of such a big and diverse workforce?

Luke Anear: Well, I think I've learned that I'm not a good manager of people. Managing 300 is very different to five or 20 or 50, and they're different skill sets. And I think, as someone who starts a company, you're constantly putting yourself out of a job from day one. In the beginning you're doing all support, you're answering all the calls, you're working with the product team, all these things, and gradually you just have to keep putting yourself out of a job. It's at a point where I think my skill set is not managing hundreds and hundreds of people.

Luke Anear: I think last year we grew probably too quick, in 18 months we went from 85 people to about 300, and it just felt like the wheels were falling off. We had to slow down. Culture was changing, our customer service was dropping, and I think that's one of the things, you've got to follow your intuition. And late last year I was like "Let's just take a moment. We're hiring up to 25 people a month. Let's just stop for a bit, understand what's working well and what's not working well, and figure out what we can do to improve that."

Luke Anear: And so, we spent probably six months actually just taking stock and looking at different parts of the business and supporting the people to be able to do their best work, because a lot of people were junior people in senior roles and we hadn't necessarily gone and hired all managers. It was lots of engineers and ranges of different people, and it wasn't necessarily like a big company where you structure all these different departments and then you hire for them, we were kind of just scrambling along. People would come up with an idea and we'd go and do it.

Luke Anear: I think we're now at a point where we've reset, and now ready for the next stage, but in the next couple of months there'll be some announcements about a couple of the key people that are coming in to help me with that. And I think it's taken me a while to get my head around exactly what it is we need. As a sole founder, Alan who started it with me who's still here, he's probably smarter than me in some ways. He's never wanted to manage teams of people, and so he's continued to work as an engineer and he loves that. So, it's largely been me trying to be basically a sole founder in that sense, in how we scale the business. I've had to think about what's the best way to find the right partners and people to now take it to a much bigger level.

Luke Anear: It's a lot bigger than anything I can do, so I think recognising and having the self-awareness of what you're good at is part of it. We'd hire people for roles that I didn't even know how to do those jobs, I've never worked with executive teams and things, so we're constantly just trying to feel our way through, and fortunately we do enough things well that it's a successful outcome, but we make plenty of mistakes along the way and learn from that. It's all part of it.

Kris: And while Luke isn’t involved in hiring staff these days, he still enjoys meeting everyone that comes into the business and learning about what brought them there. But he has noticed a change in how people perceive him as the business as grown.

Luke Anear: You have this CEO effect where it's like "Oh, the CEO's in the room", and I just never understood that that was happening. I would be like "That's just me, and let's all just work together". And so I had to figure out how to try and make people feel comfortable and let's all just do our best work kind of thing, rather than people feeling like whatever the CEO says must be right, which is just pure crap. I have a thousand ideas a day, and 980 of them are probably terrible. So it's just not how it is, and I think once people… you do start working with them, then they realise. It's like "Oh, right, we're all in this together, and we can just get on with it." It's a funny sort of thing, but I think it's pretty normal, everybody goes through it once you start scaling into sort of hundreds of people, and it's just the stuff that you don't ever think about when you start a company that you've got to contend with. People struggle to sometimes say what they'd normally say because you're the CEO. I've had to work on that and continue to make people feel relaxed and comfortable when they don't know you very well, it's an interesting challenge.

Kris: Do you get imposter syndrome?

Luke Anear: Yeah, I think most days. I would also say that I have a feeling of incompetence most days. As a founder, you're constantly taking on the next challenge. When you start these companies, and building them, you're constantly doing the next new thing. And so it means you're never actually good at it, and the minute you do master it, you've got to hire someone to do it. So, you're constantly, by nature of building a company, you're faced with new challenges all the time. And usually, you've got to figure out how to get around them.

Luke Anear: So, the feeling of incompetence, or people call it imposter syndrome, where you're in situations where you don't feel like you're the master of your domain, or that you're even an expert on a subject. That's constant, that's most days for me, and it's just how it is. And I've had jobs, like when I worked in the service station, they were the jobs that I could do well each day, and I knew that I could turn up and "I'm just going to do this job so well." But, this is not that, there's so much uncertainty. Sometimes I wish I had a job where I could just do it well each day, and you feel good about it, but the reality is most days it's hard, and that's the nature of doing this. If it was easy, everyone would have done it, but it's the same as any other big challenge in life. If you climb Mount Everest, it's not fun most of the time, it's exhausting, it's hard I would imagine. And I've done other difficult things.

Luke Anear: I think people expect that stuff's always fun and easy and you know what you're doing, but you just don't, and that's also where the most growth and often excitement comes. That's my personality, I really thrive in that environment, but you do constantly feel like you're in over your head, for sure.

Kris: SafetyCulture also think carefully about how to build their own internal culture. So much so that the company brings the entire team together once a year for a week so they can all be in the one space and see each other in person. They used to do these in Townsville however as the team has grown they had to look for new locations… and this year the team is going to New Zealand.

Luke Anear: Customers come in, I share the vision and where we're going, the state of the union address and all that kind of stuff, and then we do a 24 hour Shipit event at the end of the week where we build whatever we want to build and get it out in the world.

Luke Anear: And so… It's expensive… And it's getting harder, because when there was 30 or 40 people we'd do it in Townsville, and then last year when we did it up there and there was a couple of hundred we were spilling out on the street, we had food stands and vendors out in the car park, we'd take over the movie theatre down the street that we'd hire for a whole week and we could just go in and use that… And so It's a big investment, but when you've got people all trying to work together in different parts of the world, and often they're typing keys on a keyboard to each other, what we noticed was that little problems start to grow when people don't have rapport.

Luke Anear: And so, bringing them together, let them relax, do some great stuff, talk about work, talk about other stuff as well, and just reunite everyone with why we're here. Bring customers in and share the impact. Investing in that is worthwhile, because if you've got 10 people in a team who are disengaged and not really sure why they're here, then that’s expensive, that's even more expensive. When you've got 300 people and growing I think it's a great investment to bring everyone together, realign why we're here, share what we're doing and reset the vision for the next 12 months, 24 months and then go away, getting on with it. And people talk about this stuff for years, I think we're up to Shipit number eight, we used to do them twice a year, and we're up to Shipit number eight or something now, and they've all got a theme. I think we've had ‘Hack to the Future’ and we've had ‘Hack-Man’ and all these different themes. And people talk about "What's their best one" and all that kind of stuff. That’s the stuff that really bonds people.

Kris: Wow. That's incredible that you're able to do that, but the payoff, yes, it is very expensive to fly your entire team in from around the world, but then the payoff is that people just work together better. Is that something tangibly that you noticed? That every time you do these events, that you bring all the staff together, that coming out of those events people just seem to work more harmoniously?

Luke Anear: Yeah, absolutely they do. They then help each other more, and they have relationships with people in different offices that they can reach out to, and do things more efficiently. Instead of perhaps sitting on a decision, a customer asks a question and they now know the engineers that are working on that, they can ask them directly, or the product manager, whoever. And so it improves efficiency and communication across the whole business when there are personal relationships that people can work through. It really does make a difference. I think in the scheme of things it cost us about $2500 a person all up, because some are flying from the US and the UK and other places, and others are just going from Sydney, so it works out about $2500 a person per year, and that's, in the scheme of things, I think very reasonable.

Kris: You started this back in 2004, it's 2019 now. When you look at how far you've come in that time, how do you feel?

Luke Anear: I haven't really stopped to think about it. But, look, we're definitely building something very special. I think it's got a long way to go, I think we've achieved an incredible amount so far with an amazing group of people. The stories that we get from our customers, people, it sounds boring. Workplace inspections and things. But it is transformative for people, and a lot of our customers are people, they're not IT people, they're people just doing their jobs each day and all of a sudden they're getting recognised for rolling out an app that changes the whole workflow across all their teams. People have got Order of Australia Medals for the impact that it's had on the community. People get a $10,000 cash prize for initiatives they've put in place.

Luke Anear: One of the things I remember is a guy from Canada phoned me once and said "I've raised two adult disabled children, my wife and I, over the last 25 years, and our lives have been a battle the whole way. These last few years I'm the iAuditor champion in my workplace." And he broke down crying on the phone, he's saying "This is the first time I've felt like I'm actually contributing to something that people accept me for, and I'm winning at, because my whole life's just been such a struggle. At work, people now come to me and I'm the guy that did that." It's pretty emotional, and you hear these stories every day.

Luke Anear: The other week I was in London and heard that United Nations were using iAuditor for assessing security checkpoints in Afghanistan when they set up checkpoints and things. That's I think what we're most proud of, and that's what I look back on and say "That's what we did together as a team. We've built that." We've got a lot more now to go, and the opportunity just keeps getting wider, and we're at the forefront of that. We're now doing stuff with IOT and sensors and broadening what we do. We've got the ability for people to be able to hit a button when there's a problem, and wake people up in the night and say "Hey, you need to tend to this." Override silent. Everyone sleeps with their phones on silent now. We're dealing with teams in the workplace and they have things go wrong, how do you communicate to them? So, really interesting challenges that we're tackling, and something that really excites us.

Luke Anear: So I think, we haven't really stopped to think about where we're at, we're just ploughing ahead. We're probably going to do a bit of a funding round, more so for the early employees this year, and that'll be really interesting. It's great to see them get some rewards for that and you know, we'll just continue to push ahead. There's lots to do.

Kris: Thanks to Luke Anear for taking the time to speak with me for this story.