Mike O'Hanlon - Morning Startup

I was just going to rattle through in order, and if there are any insights I've got on how that was successful or, in retrospect, how I didn't realize how I planned it. I'm a mechanical engineer and I've always been interested in getting involved in my community and helping out with energy, food, transport—things that are actually useful for our society. I find myself entering those spaces. I had a fun place I was studying while I was working in tech. My first job was working with a professor at UWA on a low-energy-use air conditioner idea he had, and I got offered a spot commercializing some tech that came out of UWA's Motorsport team regarding using aerospace spray composite materials to reinforce civil structures. So I ended up working as a materials engineer and had an opportunity to take that tech into the wind sector in Europe. I had an excellent week where I personally set the record for share prices at FMG—I bought them at their peak. That transaction started going down. While the finance went up because fossil fuels went down, the wind sector went from 30% growth per year for a decade uninterrupted to no new jobs. I'd already bought my ticket to Paris. Everybody, my friends, had a little phone call saying the job interview doesn't look sustainable. I was a little bit upset about that, but I went anyway. I went on a bike ride. My dad said, 'Look, you bought the ticket, you like your bicycle, you've got a chance—take your bike over there for a ride.' I came back to Perth and my closest friends were all jazz musicians. I used to be the last audience—I addressed a crowd of one. My last gig as cordless MC, I was supposed to MC. Every rapper will tell you that the best rapper is in their hotel. So I wrote an album over the course of six months or so, and at the Coconut one night with all the dudes—because every Thursday after the guys played a gig at the Moon, we'd go back to someone's house and play poker—I showed the guys the album I'd been working on and said, 'What do you reckon?' They said, 'Let's be the traveling fan of brothers and I just have a sweet life.' My best man came, put his arms around my shoulders, and really solemnly said, 'Dude, your music is horrible. But if you're open, we'll help with that.' I was bummed out for about a day or two because I'd worked really hard on it, and I guess that's a balloon right there—it is a good album. So we ended up starting The Bird. It was just a group of people that wanted a place where, ultimately, I was thinking I'll make myself a star, I'll put myself on stage every Friday night. That didn't become a part of my life anymore. So we built The Bird. I'll skip over the fine details of how we did that, but we did it all ourselves—myself, my father Brenton, and a guy named Dan Develin, who was the guy who told me to put my thumbs up. I ended up being the sound guy and doing bookings and PR. This was right when Facebook changed. I remember back in the day on Facebook, everything was open—there were no sponsored posts or all that noise you're not interested in. When that changed, I was frustrated. So Matt Hartley, the handsome gentleman in the gray hoodie over there, I told him I had this idea for a more efficient way of communicating what events interest you. We thrashed that out for a while, and it evolved into Hip Flask, which contrary to what people think, is actually Hip Flask. Ghostface Killer has invested in it and organized their space building later. So that's where Hip Flask came from. Then on a trip to London, someone told me they could introduce me to so-and-so if I could get to London tomorrow. I made that connection. I was out with a friend staggering down Brick Lane one particularly dusty morning when the words 'Toastface Grillo' came into my head. I thought, 'Well, that business plan just writes itself.' So I rang up a buddy—a group of us looking to start another bar here in Perth—and we opened a little cafe. Because we had such a clear idea: this will just be a hip-hop culture based toasted cheese sandwich joint. It kind of came together. Grimacey Studios is an interesting one. Anyone putting their work into their own startup has cash flow concerns and they start off cool. People are here building an app and want to know if you can do an app for them, and they come to you with money. Whereas ours, we were just spending our own time and money. Grimacey Studios came out the back of all those requests coming to Hip Flask. Hip Flask got up on its own feet, and then I decided it was more of a hobby, something fast. Drew's still running Grimacey, so it's a good business going on manual. I started trying to get an electric car share company off the ground. A lot of time and money was spent on maybe being a bit too optimistic about taking a big city idea into a small city. It just wasn't really that—not just critical amounts of support, but support in all forms from the city as well. Through doing my research to see what the size of the electric vehicle community is in Perth, I met the president of the Australian Electric Vehicle Association, Chris Jones. He had this half-built race bike that he'd been speaking about. After two or three meetings with him, I just asked, 'Can I have a look at this bike?' I'm a redhead—I navigate around my car all my scars from a big stack I had on a mountain bike when I was 16 years old. I made a decision: I better get some element of skill in this domain because you're going to have to talk about this for the rest of your life. I saw the bike—it was obvious that it was going to be a monster. Chris had poured all of his savings into it and didn't get the bike finished in time for that race season. So I made a decision to sell the pub and sponsor the team. There was no real commercial reason for doing that at the time; it was just a hunch that this is really cool and it's important that someone does it. It was a beautiful pub, one of my favorites ever, but I don't know—I got bored. So I started O'Hanlon Electric Motorsport. I went in and sponsored the team, and that's going to be winding up because this year I said to the guys, 'If you want to sponsor it again, I can put the same cash project down, but make me the CEO and a few other things.' So now it's Voltron Electric Motorcycles. We've built a lot of batteries for the bike—it's a monster. I thought I'd captivate you guys before. The bike is nuts. I've got a 1000cc road bike, and the electric bike is far more intimidating. It'll go to 100 in 3 seconds, top speed of 340 km/h. It's a real monster. It's all in one gear, so it's fixed. We won 14 from 16 starts in the last season. We took six seconds off the electric lap record at Eastern Creek, and we now have permanent permission to race against Club 1000 Watts, which means basically a hot street bike that an enthusiast-level rider such as myself would be racing down the racetrack. The bike is on par with a 600cc petrol bike. Going down the straight, it's the fastest bike in Australia, including the petrol bikes, going through the speed trap. It's faster than the fastest superbike. But because the bike is heavy, there's a little weight penalty in the corners, so our lap times are slower than 600s. As the battery gets lighter and lighter—if you think of the batteries as fuel, then our bike without fuel is about 40 kilos lighter than a MotoGP bike without fuel. So as battery tech gets better, that's the potential. Lithium-air batteries, which people are talking about and some say they've been working on, have the same energy density as petrol. It's not like we haven't identified that. For me, that's really exciting because it means better performance for a sellable product. It's kind of politically correct. And Western Australia has a lot of lithium. There's a company two doors over called Talison, and they've got a little mine in Greenbushes that puts out 35% of the world's lithium. It's owned by a joint venture between the biggest lithium supplier and a Chinese battery manufacturer. So we're really at the hub of that. Last night I wrote a few things down to have some structure, but this morning I disregarded that—I won't read this at all. Everything that I did that was successful was because I had a co-founder who was there for the heavy lifting. As you can see, I'm kind of a distracted sort of person. If you get a chance to have a chat, I'll wander off. That's symptomatic of how I am in my businesses as well. They all synergize with each other in a really big way. For example, Hip Flask is going to sponsor the electric motorbike, which means the bike is going to be really visible, which adds value to my pitch when I say to other people, 'Hey, want to sponsor my bike?' It's totally—the other guy just distracted myself. I wanted to talk about the value of guys like Matt, guys like Ben who's sitting there with the blue thing over his white shirt—guys who can keep focus on a target. He's still there, he's really operations focused. He gets a standard way of attacking a problem and will always address that situation the same way. That's a real good balance. The point to think about is if you're trying to start a company, make sure you've got balance in your team. If you know that you're really loose, then find someone who's thorough and tied to people. I don't think that you need a guy like me on the team most of the time. Similarly, with Toastface Grillo, Alistair—the tall blonde fella who's there who'll make you coffee—he gets upset if I stand behind any of the equipment trying to make a coffee or a toasted sandwich because my 'near enough is good enough' isn't anywhere near good enough. Ben started to identify that as well. So myself, Ben, and Matt are the board of Hip Flask. I think for the guys who took with me, they learned that my dream about making it really easy to transparently find out what's going on in the social network that interests you, with no commercial distortions, is beautiful. But how the hell does that pay for itself? You get these dreams, and then you've got to build a team. If you're the person who says, 'This is my dream, this is my team, this is my agenda,' but you're the only one doing it for the dream—everyone else is doing it because ultimately they're there to work. If you don't respect that, you won't be able to build a team. One of the things I wrote down and scribbled out because it was clumsy is this idea of comparing building a business to a physical construction project: the relationship between the builder and the architect. You really need the guys with the builder's mentality who will actually get into the architect's vision. But if the architect's vision doesn't consider the reality of what the builder needs, then it's going to be somewhere in between. That's really where I'm at right now. There's one more step for me that's really exciting: seeing this community and how many people are serious about starting their own companies across everything from retail to your deepest tech projects. I've decided that I'm going to run for Lord Mayor, which is going to be pretty sick because they've got $100 million sitting in a term deposit earning just 3.5% for heaven's sake. It's ridiculous. We've got so many bright people and opportunities to invest here. Recently I've got involved with the guys at Perfectus—I don't know if you can put your hand up if you know who they are. Of course. St. Cath's College across the road from UWA has given a group of guys essentially an area to do something a bit like this, but it's led by people in their early 20s. It's really exciting, really heavily dominated by tech and personalities. The kinds of adventures and investment opportunities coming up there are, to be frank, if you're not a scientist, you're not going to understand them, so you're not going to invest. It's a vocabulary. I just think it's a huge opportunity for our city to take the lead in starting businesses and addressing global opportunities around that lithium. We've got all this sunlight, and someone here in the room is doing pretty well off all the sunlight. Anyway, I'll stop talking there. If you guys have any questions, I'll happily dance around them.

The easy one is the investment one. When we started The Bird, I had about $7,000 left on a credit card. I lied to the real estate agent that I owned the house I was renting, and I got the lease. Then I started smashing walls out with a sledgehammer. The consequence of failure was that it just wouldn't happen—I wasn't going to go to jail for destroying a property. There's nothing like necessity to make it work. I come from a blue-collar family. My dad was nine years old when his dad died in Ireland; my dad was born in 1936. I had to work. The pub went really well. The Bird sells more liquor per head of license than anything in Australian industry, potentially anything in global history. So it sold all right. Because it was a really visible success, Toastface Grillo—my business partner finally got a bank loan, and they said if you provide the startup capital, the company will honor that line. So I got off really light with the capital for that one. With Hip Flask, I sold 10% of my share in The Bird to a business partner and made some money available to pay wages. But a large part of that was saying to Matt, 'Hey, I've got this idea. I'll give you half the shares, you do all the work.' That's a motivating department. That blends into your first question: managing a relationship. If you're not spending time with someone and talking to them about what they need, the only way to evolve with someone is to be there and communicate. As much time as possible in the room is key. I don't think there's a handle to getting someone interested in the first place. I'm always attracted to talent. My partner in my cat brought Matt to my attention and said, 'This guy's the smartest guy you're ever going to meet.' He gave me some stats about him, and I was like, 'Okay, let's work.' Similarly, with Toastface, Alistair—my partner—he loves making coffee and social media. He genuinely gets satisfaction out of that stuff. With the motorbike, Chris is the guy who started building the bike. He has such a scientific approach to everything. The bike was built from a first principles approach. There are a couple of things that make the track really fast and impressive. That was more him attracting to me. He paid attention to first principles, and then you go, 'Okay, with this...' So how do you actually manage once the initial startup phase goes to the more mature days where you go one way and the other person goes another? That part is also quite important. I guess thankfully, I need to sell one thing to fund the next. I'm not being an equity hog. I think what's toxic to a business is when someone doesn't want to let go of equity to acknowledge the value that needs to come in behind them. Getting the first three people on the road to say, 'Let's spend two days a week on this,' is great. But if I make a commitment to you to say, 'Okay, let's do something 40 hours a week, I'm not going to do anything else,' I'm not going to let you down because there are other things on the line. There's a phrase that's been in my head since I was a kid. I really enjoyed rowing, and I had a coach who had this idea: 'Any seat in a wooden boat only has one percent to make room to get all the right people in.' So I think that's it.

Definitely interested in it, but even if that was a petrol bike with no new tech, as a starter... I can imagine—I have this every April Fools—I think it'd be funny to release an electric bike that kills dolphin bridge or something. But there are just so many ways it could go wrong. You get a 200-horsepower bike and people confuse the racetrack with the street. That's something I only do on the racetrack. I drive a crappy old four-wheel drive really slowly on the street.

The idea there is that we just provide quality. We don't spend much—we haven't spent money on... We started noticing that the kind of user we want to get on board is someone who knows what it tastes like. Let me start that again. What we started doing recently that's going well is taking... We've got to keep coming up in two weeks. What the artist wants out of the app is publicity and visibility. So we've got a nice little basement under those boats—we call it our dirty basement, which is a reference to Dirty Fastcar, one of Ghostface Killers' associates. It's pretty well set up. I'm going to come stumbling down the stairs and video an element of your jam and put that online. So when we give you correctly created unique content—the guys doing something candid that there's not usually an insight into, like a band—it gets a lot of views. So you've got a piece of content that's getting a lot of views linking to every event that's visible on our app. That event is visible on a web page, and that web page has a link that tells you to get the app. So it's all around trying to think about what users are looking for as a broad individual sitting at your desk at work—pretty colors and safe-for-work videos. It's important to get different equipment. Every day we try something a little different.

Yeah, that's the subject of remaining later this afternoon. I've got two other business partners in Toastface. Two of them were really keen to go and live in the States, so it just started. I think we're going to get our visas sorted. One of the guys is going to fly over. Three out of the four of us went over to meet with people. We found a location—we found an area we want—and we saw two or three place opportunities that are suitable. So now I'm going to send one of the guys over, and he will confirm the final location, find bread suppliers, small goods suppliers, working coffee machine, what beans we're going to use. Once he works that out, one of my definable skills—my only one—is I can quickly jump in and put a timber deck down. I worked as a builder's laborer between school and uni, so I did all kinds of construction laboring. I really like to get my shirt off and just get the tools out. So that's what we'll do: just go open one little one, probably get a food truck and another outlet happening here in Perth, because that's a lot easier and the cash flow will support the New York Metro expansion.

I actually want to... my mom's language... she's got a friend who's a fantastic cook. I was thinking of maybe Charlie on this idea of the numbers and the papadums. But there's a food truck idea. If you're having multiple outlets, you need a vehicle for transporting goods anyway, to cater to other people and other cafes and ourselves. So it kind of just makes sense to do that. Hip Flask has built the app for the Food Truck Rumble, which is happening this coming Sunday, and that's led to us understanding what the food trucks need.

That was prohibited about two years ago, but then there was some early acceptance, and now this repair is going to get a reasonable amount, so it's expanding. It's a cool thing. It's funny what you said about it being outlawed—it wasn't so much outlawed as the industry wasn't allowed to exist anymore. I think that's the thing we'll find in Perth. We've got a lot of old-fashioned institutions. Look at the taxi-Uber situation. Whether you're a big guy coming in with an interruptive one or a little guy, you're going to see them. There are people that have... but the big issue that the food trucks have is that people like me—not us specifically, but lots of cafe owners—have the position of, 'Hang on, they don't pay rates.' So there's quite a bit of political pressure on the Lord Mayor to say don't make this happen here. So it's an interesting thing. See you there on Sunday. Get down with the app. Yeah, pro food trucks.

You hit the nail on the head. That's really important. I don't think I have a strategy for that—it's to find something around your friends you want to help each other. I'm lucky and I'm surrounded by good people who want to work hard. That's how I've outsourced that responsibility. But you're right, it's really important. I can see when I was a kid, I had that bike crash when I was 16 years old. I took a big hit. It was a lot of effort to get out of the hospital and go look at yourself in the mirror in quite a state. Everyone was wearing my teeth, coverage first through my lip, my steel frame Sony... the road achieved the profile of my nose quite a little. I was riding over the crest of the hill and there were some people with prams, so I went to do a little wheelie off the curb, and at that point my suspension forks... so I didn't have a front end. I was going about as fast as I could. It was pretty nasty. My tongue split up the middle, I've got no bottom teeth, there's gravel wherever there should be, you could see my cheekbone, I've had my wrists on the greatest minute. Sometime after, a few days later, I crawled to the corner to see what I looked like. It took me ages. I looked in the mirror and it was an unexpected sight—pretty gnarly. You see Hollywood scenes that look like that. That became really important to me from there going forward: just to have a lot of fun. There are a couple of ways you can deal with any situation. Fun—you hit the nail on the head. But I don't want to do something... I don't know where that goes to the personal insight.

Oh yeah, without a doubt. The team is everything. Your role of coming up with the idea is a highly overrated aspect of a business. It's all about execution. The idea is almost worthless. You hear people say execution is everything, and execution in those early stages is all about the team. I like to think about where your problem has a spectrum to it, and you should have the same spectrum of strengths as your problem. One of the first projects I ever looked at was a great idea, but I had no ability to... It was actually one of the first... I'm really upset about a company called American Superconductor because I asked them a very detailed question about the costs of a high-voltage superconducting cable to link Perth to Adelaide to the East Coast for balancing the grid. I was really interested in how I could use my engineering brain in the energy sector, and I thought, 'This is a cool opportunity.' The question I asked them, they thought I was just some kid with an email address. They put a lot of resources into answering that question. It probably wasn't worth it. But that's an example of a great idea that would bring utility to a lot of people but was totally cost-prohibitive. You can have a lot of ideas, but then actually dealing with the obstacles that come up is the challenge. I guess what I ultimately bring to a team is: 'Okay, here's an opportunity, and I can do this bit—and it's usually a really narrow bit. I can do this bit better than anyone in this room. Can everyone in the room help me do the rest of it?' Then you get everyone to go, 'I can do that if you guys do that.' Just being realistic about what your strengths are and making sure your expectations for equity reflect that.