4- Nathan Huppatz - Surviving the E-Commerce Rollercoaster: Tales from the Costume Business

We were talking in the green room beforehand. So whereabouts in Australia are you? I'm

in a sunny Melbourne at the moment. In our summer. You are in your summer

and we're in our winter. We've had horrendous storms and you guys have been basking

on the beach and enjoying your Christmas in a pair of shorts. That must be

great. It is good. It is good to have a warm Christmas. We've had our

fair share of storms as well actually this summer. But one year I do plan

to have a white Christmas somewhere, so I might be coming to visit sometime.

I wouldn't come here. We just seem to get wind and rain, we don't seem

to get snow. So it's weird because obviously Nathan has

started his next day and I'm just finishing mine. It's always difficult to try and

find a window of opportunity to talk to people, so

I'm delighted that we've found a window to be able to talk. I know that

Nathan was quite happy to jump on a call at five in the morning, but

I managed to throw 3 hours on the time. So we're talking. I think it's

09 00:00:49

00 for me in the morning for you. That's right, yes. It was very kind

09 00:00:52

of you, Banks. So if one of us looks and sounds battered and one looks

09 00:00:56

fresh, that's why there's that kind of disparity between us.

09 00:01:00

Nathan, you've been in this industry for what seems like an eternity. I think

09 00:01:04

you started in 1990. Kind of walk me through why you ended up getting into

09 00:01:08

the digital marketing space in the first place. Yeah, it does feel like a

09 00:01:11

while. That certainly turned me gray. I think I'm

09 00:01:15

47 at the moment and I started in

09 00:01:19

95, which was pretty much a year out of university.

09 00:01:22

But the reason I love the digital and online space was when

09 00:01:26

I was a kid in school, my dad, he was a computing teacher at

09 00:01:29

school and we always had a computer at home. And I remember when

09 00:01:33

he showed me the Internet, which was with an old dial up modem, it was

09 00:01:37

so slow. And when he clicked on a web page and said, if you

09 00:01:41

click this link, the next page you see is going to come from

09 00:01:44

Finland or somewhere in Europe. And it absolutely blew me away. And

09 00:01:48

ever since then I was sort of, sort of been hooked on the Internet, whether

09 00:01:52

that's online publishing or marketing or e commerce, for a long

09 00:01:55

time now. And software. So I knew that

09 00:01:59

as soon as I left school I wanted to do an information technology

09 00:02:02

university course, which I did, and basically went

09 00:02:06

straight into a tech job after that, yeah, I remember.

09 00:02:10

I got into it. I was working in insurance and hated

09 00:02:14

insurance and I was looking for an opportunity and I got the opportunity to kind

09 00:02:17

of be a sales manager for a web design company. And then obviously

09 00:02:21

we built all these websites and people like, what do I do now? And I

09 00:02:24

said, well, you need to do web marketing. And they said, well, what the web

09 00:02:27

marketing? And I really had no clue. I had to kind of learn very

09 00:02:30

quickly about SEO and then paid

09 00:02:34

media kicked in and everything else. Back then, most things were

09 00:02:38

really kind of still done on dial up and at home. I

09 00:02:41

used to regularly run up a 1000 502,000 us

09 00:02:45

dollar a quarter bill on dial up. It was just

09 00:02:49

insane the amount of time that I was spending on it. I mean, it was

09 00:02:52

always one of those things. You download a picture of a car and it would

09 00:02:56

take 15 minutes to download kind of a jpeg of a

09 00:02:59

car. Great. Line by line.

09 00:03:04

I remember it. I'll go for another one. When we first started

09 00:03:08

at university, we actually designed a few websites for local

09 00:03:11

businesses and I think we used a very early version

09 00:03:15

of Microsoft Front page, or I'd just do it in a text editor doing

09 00:03:18

HTML. And just as uni kids, we used to

09 00:03:22

sell these websites for $100 an hour is what we would charge our time for.

09 00:03:26

Which we thought was amazing back in the 90s. But it was a big

09 00:03:29

thing to have a new website launched. We did a website for the local

09 00:03:33

member of parliament and they did a launch day for the website. And

09 00:03:37

the premier of Victoria, Jeff Kennett, came and launched the website. So

09 00:03:41

I got to meet the premier of Victoria and all this sort of thing back

09 00:03:44

in 97 or 98 or whatever that was. Those

09 00:03:48

were the days. It was definitely the Wild West. I always kind of think of

09 00:03:51

it a little bit like, looking back, that was a bit like the emperor's new

09 00:03:54

clothes. There were so many things that you did. I mean, you'd say to people,

09 00:03:58

oh, you need a website and you need home page and you need a contact

09 00:04:01

page and a page with a map on so people can get directions and people

09 00:04:05

phone. All your salespeople have business cards and they have the website

09 00:04:09

address on it. So if they ask you for information, rather than telling them the

09 00:04:12

information, send them to your website. I always remember in

09 00:04:16

the web design company that we had, we employed two people. It wasn't

09 00:04:20

just one person, two people and their job to refresh the

09 00:04:24

pages by clicking the f five key because we had a counter

09 00:04:27

at the bottom that said how many hits?

09 00:04:31

Enhancing the number of hits to the page. And then somebody

09 00:04:34

showed me a way how you could do it, I think with Javascript, so you

09 00:04:37

can kind of have it automatically have start at whatever, rent it,

09 00:04:41

whatever. So those two people lost their jobs unfortunately. But

09 00:04:44

yeah, it was certainly again. So for me it's

09 00:04:48

been a really enjoyable, fun kind of

09 00:04:52

experience to kind of be there right at the very kind of beginning of

09 00:04:56

what we kind of know of today as digital marketing. So it's

09 00:04:59

obviously, like I said, you had an early start, but where did you kind of

09 00:05:03

progress from there? How did you kind of get to where you are now? So

09 00:05:06

I went to work for a large corporate business called Orica, and they

09 00:05:10

own dulux paints and Orica Chemnet, the chemicals

09 00:05:13

business. And I basically worked there for about three years

09 00:05:17

in total. But I really didn't like the corporate world a

09 00:05:21

lot. And I looked around at a lot of the guys who are working

09 00:05:25

next to me and they'd been in the same job for 20 years and that

09 00:05:27

just, I could not fathom doing that. So

09 00:05:31

I was always looking for new things to learn new things. I joined their

09 00:05:35

e business team. I worked on some big e business, ecommerce projects,

09 00:05:39

they call it e business in the corporate world. And at that time,

09 00:05:42

because I was into I'd love my cars, always have love cars. I'd found a

09 00:05:46

website called autospeed.com and it was an australian

09 00:05:50

based website, but it was really quite busy, had a lot of

09 00:05:53

traffic and really busy forums. And so I met a couple of guys on

09 00:05:57

there. We did car catch ups and things. And

09 00:06:01

eventually I started a small side business importing performance cars

09 00:06:04

from Japan, like Nissan Skylines and Supras and this sort of

09 00:06:08

thing with a bloke that I met on these forums. And yeah, we sort of

09 00:06:11

approached the owner of this business and said, hey, can we advertise

09 00:06:15

our cars on your website and we'll do a sort of a commission deal? This

09 00:06:18

was my business idea and they got us in to have a chat and I

09 00:06:22

remember they said, yeah, we're in this house,

09 00:06:26

the third garage door to the left, and I turned

09 00:06:29

up at someone's house. There was a proper startup, they were literally

09 00:06:33

in a garage with a couch, a couple of computers, and

09 00:06:37

running this website with I think at the time, two or three or

09 00:06:40

400,000 visitors a month. It was quite decent traffic for the time

09 00:06:44

and they said, come and work with us. So yeah, that's sort of how I

09 00:06:47

got started in the startup, sort of software online at

09 00:06:51

the coalface sort of job and had been there ever since. I've worked

09 00:06:55

with the same business partner, we've done lots of different things together. But, like,

09 00:06:59

you'd be starting at the very beginning when you could game Alta

09 00:07:02

Vista and spam it with keywords and get the top ranking

09 00:07:06

for terms pretty quickly if you knew what you were doing all the way through

09 00:07:10

to now, where the system, the industry, is far more

09 00:07:13

mature and complex. Yeah. I always remember when people used to say to me, what

09 00:07:16

do you do for a living? Because people would always say to me, you work

09 00:07:20

with computers, right? And I'm thinking, well, again, I looked around, I thought, we

09 00:07:24

don't have any more different computer equipment than they would have in a doctor's

09 00:07:27

surgery or any office. The same amount of

09 00:07:31

computers and equipment that we had, we were just doing different things on

09 00:07:35

it. But I always remember people used to say to me, so what is it

09 00:07:38

you do for a living? And I used to say, I fuck with Google, because

09 00:07:41

for me it was like they started 97 and they were very

09 00:07:45

keen to kind of work with agencies. Certainly I had a paid search

09 00:07:49

agency. They were really keen to kind of get us to spend money with them

09 00:07:52

and think, wow, we were sort of the established business and they were

09 00:07:56

just a fledgling startup at that particular point in time. So they were desperate

09 00:08:00

for us to spend money with them and obviously they evolved and everything. And

09 00:08:04

I always kind of say that when you look at a Google

09 00:08:07

employee that you have the sort of pre IPO Googlers and the post

09 00:08:10

IPO Googlers, and they're very different groups of people, right? Because the pre

09 00:08:14

ipos, there are a lot more freedom that the post IPO

09 00:08:18

Googlers don't have. And for me, I think it's a bit of a shame that

09 00:08:21

a lot of those, I mean, most of the pre IPO Googlers that I

09 00:08:25

know have gone on to do amazing things in all sorts of

09 00:08:28

different spheres, but most of the kind of post

09 00:08:32

ipos, they kind of come into your life for a short period of time and

09 00:08:34

then they go off because they get outcome that we had pre IPo.

09 00:08:38

And for me, I think that's a bit of. Yeah, it's a different sort of.

09 00:08:45

We. Sorry, carry on. I was going to say, we first started using

09 00:08:48

Google very early as well. We would

09 00:08:51

optimize our websites for Alta Vista at the time, which was sort of the leading

09 00:08:55

search engine, at least in this region, but I think in the US as well.

09 00:08:58

And then when Google came around, we realized that you couldn't game it

09 00:09:02

quite so easily. So we spent a fair bit of time trying to understand

09 00:09:05

it, trying to get our sites to rank well. And we had

09 00:09:09

an early relationship with them in Australia, but they wanted us to

09 00:09:13

market with them. So we had an Adwords account with them,

09 00:09:17

which was still well before they had australian dollar billing. So we had a

09 00:09:21

us dollar Adwords account from, I think the late ninety s. And

09 00:09:25

we spent quite a bit of money with them back in the day.

09 00:09:28

Like you said, you'd have a contact and you knew that person, you had a

09 00:09:32

relationship. They were a different team, they were a bit more entrepreneurial and

09 00:09:36

wanting to help businesses. I think they were a little bit more of an altruistic

09 00:09:39

business back then. Yeah, it's definitely changed these days. Yeah. And

09 00:09:43

again, I think so much of it, I kind of tell the story of I

09 00:09:46

helped Google build my client center, Google

09 00:09:50

Ads editor, because they would have engineers

09 00:09:54

come to the UK from the states,

09 00:09:58

they would invite agencies in and they would say, how can we make your life

09 00:10:02

better? And we used to just sort of sit there in a bit of a

09 00:10:04

roundtable and say, well, it would really be good if we could do this and

09 00:10:07

this and this and one of the sort of

09 00:10:11

backwards and forwards to various parts of the country and also

09 00:10:15

overseas. I said, I say what would be really good? If we had a tool

09 00:10:18

that we could kind of download accounts, right? Make some changes. If we

09 00:10:22

happen to be on a plane or something, make some changes. And then when we

09 00:10:25

got to the other end, plug it into a computer, go back onto the Internet

09 00:10:29

and upload it all back into the interface. And that was kind

09 00:10:33

of the initialization of Google Ads editor, right?

09 00:10:36

I mean, I always say to people, I helped build Google Ads editor, but that

09 00:10:40

was just my client center. I mean, I always remember we

09 00:10:44

used to have an awful lot of clients, and every single client had a

09 00:10:48

username and a password to log in. It's just a nightmare having to log out,

09 00:10:51

log back into another account. So you've got 50, 60, 70 having

09 00:10:55

to do that. I said it would be really good if we just had one

09 00:10:58

sort of drop down where you could just choose a particular account from a drop

09 00:11:01

down list and then duration between the people that were using

09 00:11:05

their sort of tools on a daily basis versus the people that kind of

09 00:11:08

worked in engineering. The engineers will always just come up with what they think is

09 00:11:12

best. And I think getting the feedback from people who use the tools on a

09 00:11:16

daily basis is so much better to kind of have. I think that's

09 00:11:20

one of the things that we learned early on as well in our business when

09 00:11:22

we started developing our own software was that sometimes what we thought would

09 00:11:26

be a good solution for a customer didn't

09 00:11:30

necessarily come out as being true. And all of our

09 00:11:33

ecommerce experience ourselves, really helped us build our shipping

09 00:11:37

software over the last five to ten years. Because we were retailers,

09 00:11:41

we knew how to build a solution for this specific problem because

09 00:11:45

we had that problem. So it becomes difficult when someone like you say is

09 00:11:48

engineering a product for a solution, but the engineering

09 00:11:52

team doesn't have that experience in

09 00:11:56

the problem they're trying to fix. They don't understand really how it's supposed to work.

09 00:11:59

So that experience is super useful. It's encouraging that Google used

09 00:12:03

to do that. But yeah, I've gone through the same. They don't now

09 00:12:07

the same issues. They pretty much can't do their own thing and introduce whatever they

09 00:12:10

want and just try and spin it in a way that makes it sound like

09 00:12:14

it's fantastic. But in a lot of cases, it's not that.

09 00:12:20

And I think for the benefits of people listening in on the podcast, I actually

09 00:12:23

met Nathan, I think, for the first time in the Gold coast in Australia.

09 00:12:27

So I was at a conference down there. Yeah, I think so. That would have

09 00:12:31

been some time ago now, but e commerce conference in the Gold coast. And

09 00:12:34

again, for me, that was an amazing opportunity to kind of go

09 00:12:38

to a new continent, meet new people and see how things are done in

09 00:12:42

a different way. And we had lots of good conversations. I obviously watched

09 00:12:45

Nathan present and at the time you were kind

09 00:12:49

of presenting yourself as working with costumes.com

09 00:12:53

au, which I think was a kind of fancy dress company, is that

09 00:12:57

right? Exactly, yeah. That

09 00:13:00

was our own business that we started in

09 00:13:04

2009. And before that we'd been Magento

09 00:13:07

partners building Magento websites, and we

09 00:13:11

wanted to do something different and we chose to go back into e commerce.

09 00:13:15

So we started that website and we only just actually sold it a month ago.

09 00:13:19

But, yeah, we built that website, won a bunch of awards with it, did a

09 00:13:23

lot of SEO and PPC work for it all internally. So I think

09 00:13:27

my presentation was on SEO and migration or something like that. So,

09 00:13:30

yeah, I remember that well, I. Was always curious when people have a

09 00:13:34

business that is so dramatically focused

09 00:13:38

on a very short space of time. I mean, obviously

09 00:13:41

costume world. I mean, I know that at the moment there's the world,

09 00:13:45

darts going on and lots of people kind of go to that and you have

09 00:13:47

the rugby sevens and all that sort of stuff. But generally speaking, I

09 00:13:51

think what tends to happen is people will kind of get

09 00:13:55

costumes for Halloween and pretty much. Right. So

09 00:13:59

how did that manifest itself in terms of your stress levels and everything else? It

09 00:14:03

must have been hugely stressful to kind of short bursts of massive amounts of

09 00:14:06

traffic and revenue. Yeah, it was

09 00:14:10

interesting. We sort of kind of fell into it because we had a number of

09 00:14:14

e commerce businesses at the same time. So I think at the point,

09 00:14:17

we just sold an online fishing business that we'd built up on eBay. We had

09 00:14:21

a musical instruments business. We imported our own brand from China, some

09 00:14:25

electronics and something else. And this other little thing, which was like a

09 00:14:29

lingerie costume sort of business. And we picked that

09 00:14:33

one because we saw another competitor in Australia had started a

09 00:14:36

costume business, and we had easy access to

09 00:14:40

supply supplier information, data, which we thought would be great for

09 00:14:44

SEO to help build the site. So we're thinking more from, I guess, a technical

09 00:14:47

point of view. But at that time, we were just, let's throw something at the

09 00:14:51

wall and see if it sticks. And this business did seem to

09 00:14:55

grow fairly quickly. I think we doubled in revenue every year for the

09 00:14:58

first five years, something like that. But what we found was

09 00:15:02

that in America and maybe in the UK, I'm not too

09 00:15:06

sure about your market, because we don't sell there, but there was a really big

09 00:15:09

peak for Halloween and then not much at all for the rest of the year.

09 00:15:12

Whereas in Australia, there's much more of a culture of maybe an

09 00:15:16

80s dress up party or a 70s party, or there would

09 00:15:20

be constant sales all year. And the Halloween peak, although it was there, was

09 00:15:24

not quite as dramatic as in the US. And

09 00:15:27

we discovered other things as well. Like schools would have a book

09 00:15:31

week parade. I think you guys might have sort of a book week in the

09 00:15:35

UK. As every school dresses Harry

09 00:15:38

Potter. So they kind of like, yeah, basically,

09 00:15:42

Harry Potter was massive for.

09 00:15:47

We didn't think book Week was a thing. We didn't know when we started this

09 00:15:50

business. We just saw this big bump of sales in August in our country for

09 00:15:54

book week, and we had to ask customers, why are you buying all these Harry

09 00:15:56

Potter costumes? And they're like, oh, it's book week. Okay. So when we actually

09 00:16:00

optimized our traffic and did some work on

09 00:16:03

SEO and the term book week and book Week 2015

09 00:16:07

and whatever, all of a sudden, our book week

09 00:16:10

sales became bigger than our Halloween sales. And that's when we

09 00:16:14

realized that there was a lot of demand there, a lot of people searching for

09 00:16:18

these terms in Google that we just really had no idea about. So that's

09 00:16:21

when we realized that the market was probably bigger than we

09 00:16:25

thought for that business. And that's when we decided to change the name to

09 00:16:29

costumes.com au. We had just a generic name before that. So we went

09 00:16:32

out, we bought the domain, we migrated the website, we thought we'd re engineer

09 00:16:36

it in Magento. And I think that's the presentation I did in the Gold

09 00:16:40

coast, was about moving to a new domain name, migrating

09 00:16:44

all of our URLs, and how we saw a decent increase in traffic at

09 00:16:48

the time, probably because of that domain name, costumes.com au, which

09 00:16:51

is a pretty good one. Yeah. So we were surprised it was still peaky.

09 00:16:55

There was certainly some challenges in ordering. Stock, probably less peaky, things like

09 00:16:59

that. Or the UK. Yeah, I think so.

09 00:17:03

But at the same time, we also had our shipping

09 00:17:06

platform SaaS business, that was slowly growing in the background

09 00:17:10

as well. So that's now overtaken

09 00:17:14

the retail business. So we did have a sort of backup

09 00:17:17

there. You mentioned that you run a shipping SaaS business. I've been talking

09 00:17:21

to a couple of the guests I've had, and we talked a little bit about

09 00:17:24

COVID and the impact it had. What did Covid have in terms of impact on

09 00:17:27

your business? Good question, as you could imagine. Well,

09 00:17:31

firstly, I'll go back in Australia. We had some pretty aggressive

09 00:17:35

lockdowns and shutdowns of business and that sort of thing. I think you

09 00:17:39

guys did in the UK as well. But in Victoria, where I am in particular,

09 00:17:42

I think we had some of the world's longest and strictest sort of

09 00:17:46

lockdowns. And what that meant was that people

09 00:17:49

couldn't go outside for more than an hour a day. You couldn't get together in

09 00:17:53

groups. So, as you can imagine, costume business

09 00:17:57

revenue dropped by. I think it was 80% overnight.

09 00:18:01

It was a bit shocking, actually. That was in, I think, early February in

09 00:18:05

2020, from memory. And at the time, we were like,

09 00:18:09

oh, jeez, what are we going to do here? And what's the government going to

09 00:18:12

do to try and help business? And it turned out that the government

09 00:18:15

did introduce a program to help us, called JobKeeper to pay

09 00:18:19

staff. So, unfortunately, that particular episode of

09 00:18:22

bad decisions with Jim Banks, with Nathan Huppertz, I had to cut it short

09 00:18:26

because, unfortunately, Nathan had a few technical issues at his end

09 00:18:30

when he was uploading his video to the cloud. So

09 00:18:34

I'm going to get Nathan back to talk to us again, because I really enjoyed

09 00:18:38

the conversation with him. I thought he had some really insightful stuff to

09 00:18:41

say. So thank you, Nathan, for being on the show, and. And I

09 00:18:45

look forward to having you on as a guest for a podcast episode in

09 00:18:49

the future.