Identifying, Valuing and Growing Great Brands with Adrian Johnston, Co-founder of Una Brands

Featuring: Adrian Johnston, Co-Founder of Una Brands

Adrian is the co-founder of Una Brands, which is an Australian startup that has just raised 50 million Australian dollars to acquire and grow e-commerce businesses in Australia. Prior to starting in a brand’s agent worked at Goldman Sachs for three years and Boston Consulting Group for another three years. Adrian holds four degrees including two from Oxford and one from Harvard.


Una Brands is an Australian startup that acquires and grows e-commerce businesses recently raising $50m AUD. Prior to co-founding Una Brands, Adrian was a maths teacher turned Goldman Sachs banker and BCG consultant. In this episode, we chat to Adrian about what makes a brand great, how he values ecommerce businesses (including a dive into valuation methodology) and how to grow a brand. We also touch on his experiences of changing careers and the lessons learned from corporate to startup.

Discussion points:

  • Different methods to entrepreneurship
  • What makes a brand great
  • How to value e-commerce businesses and brands
  • How to create value for brands?
  • Investor enthusiasm about the aggregator business model
  • Startups & competition
  • Corporate career vs startup career

Key learnings

  1. Entrepreneurship doesn’t need to follow traditional steps, such as discovering. The Rocket Internet model draws from pre-existing successful business models. About $6.5B that has been raised by various aggregators doing kind of similar business models.
  2. It’s important to consider the forward view and the type of growth that can be achieved with a business before investing. This includes lower SKU numbers, how streamlined it is.
  3. Don’t be put off by others doing the same business model. You only need to execute slightly better than them to try to win to win the race.
  4. There is huge value in getting experience under your belt in corporate environments. When going straight into startups, there is less certainty of getting well rounded experience.

Sydney: Hi everyone. Welcome back to Sprout. Today our special guest is Adrian Johnston. Welcome to our show, Adrian.

Adrian: Hello, lovely to be here.

Viv: So a bit of an intro. Adrian is the co-founder of Una Brands, which is an Australian startup that has just raised 50 million Australian dollars to acquire and grow e-commerce businesses in Australia. Prior to starting in a brand’s agent worked at Goldman Sachs for three years and Boston Consulting Group for another three years. Adrian holds four degrees including two from Oxford and one from Harvard. So Adrian, why don’t you tell us more about what brands does?

Yeah, for sure. So Una Brands buys small e-commerce businesses across APAC. In particular, we buy businesses selling on marketplaces like Amazon and Ebay, and Catch or Kogan and Shopify and we then roll those businesses together and grow them into the world’s largest e-commerce conglomerate. So that’s the plan.

Viv: Amazing and what led you to start Una Brands?

Adrian: Yeah, so prior to working in Una Brands, I was a consultant at Boston Consulting Group. Consulting is a really fun career in a lot of different ways and you learn a lot of skills and you get exposure to lots of different types of businesses and opportunities. But one thing that I found frustrating about it is you end up giving a lot of advice to people, but not really getting to deliver any of the advice that you’re, that you’re, that you’re and to action any of the advice that you’re giving to people. And so I really wanted to start a business of my own and to have kind of hands on experience of growing a business.

There are various different ways you can go about starting a business. And when I was in business school, there’s a kind of standard story that everybody tells, about how they started their business, which is that they kind of sat in a room with some friends and they and they identified a particular problem that they were facing. And then they thought about what particular solution could they come up with to that problem and they, and they built the business from there. That’s one way of doing entrepreneurship.

But the way that the, the method, or the way that I came to entrepreneurship was actually more akin to the Rocket Internet model. I don’t know if you guys are familiar with Rocket Internet. It’s a venture incubator based in Berlin. And the business model is that they, they look for fast growing successful business models from other parts of the world and then they replicate them incredibly quickly kind of faster than anybody else can. So it’s, I don’t know if you know Hello Fresh, but that’s Rocket Internet Venture. Oh, I can probably name 20 that you would recognize immediately.

I discovered this business model which was being very successful in the US. And, and some, some of the investors were wanting to grow the business outside of the US. And I had independently been looking into the business model because of the success in the US. So I kind of reached out to the investors and pitched the idea of an Australian version of this particular type of kind of business model of kind of buying and growing small e-commerce businesses. And they then put me in touch with my co-founder, who’s based in Singapore, who was doing a similar thing for the Singaporean market and we essentially merged together. So he runs the Singapore part. I run the Australia part. And together we are growing APAC business that is building businesses, building companies and growing companies across the whole region. So that’s kind of how I came to this.

Weird fact is that I’ve got an identical twin brother who works for McKinsey and he just quit his job three months ago to start the exact same business as me but based in Dubai. So it was actually, it was actually through my twin brother that I was put in touch with the investors.

Viv: Interesting. I guess twins do you think alike?

Adrian: Yeah, yeah, yeah.

Viv: I also do want to just remind our listeners that you are hiring. Can you tell us a little more?

Adrian: Yes, that’s right. Yeah, we are looking for interns and recent graduates to join very actively. Yeah. And so ideally kind of long-term internships are kind of six months or so, but also for short term internships and the types of positions we’re hiring for our acquisitions associates. So, people who can identify fast growing companies and, and then kind of build a relationship with the seller and, and work with that with the deal from end to end. We’re also looking at people who can help us with valuations of businesses, and then people who can help integrate and grow the businesses once we have decided to acquire them. So big, big range of opportunity and keen to hear from people who might be looking for those types of opportunities.

Sydney: Sounds like a really great learning opportunity and a chance to get experience across different aspects of running a business.

Adrian: Yeah, absolutely. Yeah. We have a team of five interns in Singapore at the moment and I think they’ve had a great experience from a learning perspective.

Viv: Yeah. Awesome. And where can people find the application?  

Adrian: Yeah, sure, they can find it on our website, which is or people can message me directly on LinkedIn as a good way to reach out to me.

Sydney: Sounds good. As for thinking about brands, what do you think makes a brand great? Like what do you see as signs for potential high growth that you’re looking for when thinking about which ones to acquire?

Adrian: Yes, great question. I would say that there are lots of things that can make a brand great, which, would not be a fit for our portfolio because we have kind of quite specific categories and criteria that we look at. But I can tell you within the categories and criteria that we look at, what makes a brand particularly great. So, the brand, the categories that we look at are kind of pretty safe categories of home, living, pets, bathroom, outdoors, kitchen, pets, those sorts of things. And the reason why we look at these categories is because typically they’re less cyclical than some of the other categories. Also they have pretty low return rates in comparison to electronics and fashion. Also, they have lower demand for product innovation than say, fashion. So fashion, people can build a great brand in fashion, but you’re quite at risk of missing various fashion trends or whatever. So that’s a category that we stay away from.

Then in terms of the businesses that we buy within those categories, so we focus, we look at businesses that typically have a low number of SKU. So SKU is stock keeping units is the individual products that they sell because you know, you get some businesses with thousands of SKU and obviously they’re very complex beasts to manage. Whereas we look for businesses with kind of 10 products, but they do those 10 products really, really well rather than a thousand products that they, they have less focus on. So that’s one element.

The second element is kind of the cleanliness and the streamlined nature of the business. So one question we always ask the sellers is how many hours a week do you spend on your business? Where the lower the number they spend the better as far as we’re concerned, because that means that the business is more automated and easier for us to integrate into our platforms. And so, the way that people go around and go about putting less time into the business is that they typically outsource everything. So that might be customer service management, it might be returns management when somebody sends a product back, there’re whole companies that manage that process. It might be optimizing your PPC paper marketing spend using third party agencies. All of this stuff can be done by third parties. Obviously, you need to have a product that’s selling and generating the revenue to support that. But quite often it can be more effective and more efficient to have a third party manage all of that stuff, then do it internally.

And then when I say cleanliness, what I’m talking about is it’s much better to have, you know, we sometimes value some businesses where somebody will be managing five different businesses from one bank account and then you’re trying to piece, you know, was this expense related to this business or this business and trying to value those types of businesses is very difficult. So, it’s important that people use accounting software like Xero or A2x whatever to help with that process. And then, and then in terms of the, the, the product itself, we like products that are unique and different. But we’re not looking for, you know, we’re not looking for the next Iphone or, you know, it just needs to have. So for example, one I can show you have one company that we’ve bought recently is a company called Kadams, which makes digital products and timers. This is one of their products. It’s time that’s used for kids with special needs to tell them. Like when, if they’re brushing their teeth, how long to spend, or if they’re doing their homework long, they need to spend. And there’s, there’s no other products on the market that looks like this and does what this product does. It’s, you might think it’s a mission and the sales there aren’t that many people that would require this type of product. But this product sells on in the USA, which is obviously the biggest consumer market in the world. And so even though it’s a small niche, you can still find a huge amount of customers.

Viv: Interesting. Are you able to quickly walk through how that works just for the people who can actually see the picture of it?

Adrian: Right, yeah, sure. So it looks a bit like a traffic light and you set the timer on the bottom. And then when the, when you can set the, the orange level after one minute or two minutes or whatever. And then the red light will flash when it’s time for the student to stop. So, it’s kind of a unique type of product.

Viv: Yeah I’ve never seen anything like it before.

Sydney: Adrian, just then you mention thinking about valuing e-commerce businesses. Coming from sort of a finance background, I know for typical companies, you would do a DCF, look at cash flow. I was wondering when thinking about valuing e-commerce stores and brands, what other factors might you consider?

How to do value a e-commerce business and brand? 

Adrian: Yes, great question. So the valuation that we give to companies is broken into two parts. There’s the annual profitability multiplied by the multiple and those two parts are looked at quite separately. So to calculate the profitability, the metric that we use is called the TTMSDE study, which stands for the trailing 12 month seller’s discretionary earnings. So it’s, it’s basically looking at the last 12 months profitability. And when, when we talk about profitability, we’re talking about basically the EBITDA, but we don’t take, we don’t take as a cost, the seller’s salary themselves. The reason why is because you might have one business that is making, that makes maybe 100k EBITDA. But then the seller is paying himself a salary of 100k, in which case the STE, the seller’s discretionary, and it would be 200 hundred. Well, you might have another business which is making same EBITDA, but the seller is paying themselves like 5K. And you want to be able to compare between those two businesses, because it’s kind of irrelevant how much the seller has decided to take it out as a dividend from that business. So that’s, that’s the way we look at the profitability. And then, and then we apply a multiple and in this space to the typical average multiples, go from around two times two to three times the annual profitability.

How we decide whether to value it at two time multiple or two and a half times, or three times multiple, we have a scorecard which has 25 or 30 different metrics on it. And each one of those metrics contributes to the, to the multiple that we give. So some of those metrics would be the profit margin. We might, we would look at what percentage is spent on marketing, where typically the lower, the better we would look at. As I mentioned, the number of SKUs the, the Google trend line over the past few years for that particular product. And then another 15 or 20 metrics on top.

Viv: Interesting, I’m keen to hear more about why marketing for lower spend for marketing is better.

Adrian: Typically, because it means that it means that we can increase the marketing spend and so it’s a balance between you want to buy businesses that are growing and are profitable businesses. But at the same time, you don’t want to buy a perfect business because then there’s nothing left to optimize. So when it comes to, so if we’re buying a business and it has pretty good profitability, and it turns up on page four of Google rank of Google search, that’s good for us because it means with a few little tweaks on the, on the search digital marketing side of things, we can move it from page for page one. Whereas if it’s already the number one ranking on Google search, it’s kind of like you can’t really get squeeze anything more out of out of that company from there.

Sydney: Yeah, it sounds like you’re looking both at the fundamentals of the business and also a big part of the value that you can add to improve the business as well.

Adrian: Yeah, precisely. Yeah, we create kind of like a forward-looking view for the business and what type of growth we think we can achieve in the business.

Viv: Absolutely, and I’m really keen to hear about how exactly do you actually create more value for one of those brands that you do buy.

How to create value for brands?

Adrian: Yeah, for sure, so there’re a few different levers that we pull. So firstly, we invest in the businesses and so quite often the sellers will, will tell us that they, that they want to grow the businesses, but they don’t have the kind of capital to invest in, in working capital for inventory purchases, as well as investing in new products for the rest of it. So we put a large amount of cash into the business and then with that we look to grow the products across a few different dimensions.

One is geographical expansion. So a lot of our businesses sell on big marketplaces in the US or in Australia and so we would like to expand outside of those markets across APAC, across Europe. Secondly, is product expansion. And then thirdly is channel expansion. So taking it outside of just the Ebay, or just the Amazon ecosystem and pushing it into all of the other channels, including direct channels via kind of a Shopify website or anything else.

And then, and then I guess an additional lever is just around taking the best practice from across the whole portfolio and being able to apply that to all of the different brands that we have. We’re able to kind of so for example, with Amazon, Amazon quite often changes the algorithm that they use and so we’re able to spot that very quickly across the whole portfolio of companies and then implement changes in response to that. Whereas an individual seller might be slower to respond to some of those changes that is made by the marketplaces. So yeah, that’s on the, on the kind of growth and revenue side of things.

And then on the cost side of things, there’s a whole bunch of stuff that we do around reducing the, optimizing the procurement and supply chain and the internal operations as well around HR, finance, legal, technology. And yeah, so those two elements together create a winning formula that is Una brand’s growth machine.

Viv: So interesting, I was wondering like, I don’t mean to put you on the spot. It’s totally fine if you don’t have an example. But I was wondering if you have an example of a brand that you bought and how you sort of change that and what it is now.

Adrian: Yeah, I mean, to be honest, we’ve only been, we only launched three months ago. So we’re, we’re still early days in the acquisition process, where we’re looking to acquire between 20 and 25 businesses over the next 6 to 12 months. I mean, I can talk to you about the Kadams business I just mentioned earlier. So the first thing that we’re doing so that business sells on in the USA. There’s, there’s a few obvious things that we’ll do straightaway with that one is that we will create its own website for direct to consumer sales and we’ll do that using Shopify. After that we will then investigate products, new products, and the seller that we bought the business from has a whole pipeline of ideas of new products that we might be able to launch. So we’ll engage her quite thoroughly to try to launch some of those. And then, yeah, after that we’ll look at geographical expansion to sell the products abroad.

Sydney: Cool. Yeah. Before you mentioned that, um, well actually we mention, that you’ve just raised fifty million dollars in seed funding. I was wondering if you could maybe elaborate on why you think investors might be enthusiastic about this business model and what you guys are doing.

Investor enthusiasm about the business model

Adrian: Yeah, for sure. So there’s, so just so you’re aware, there are a lot of there’s a lot of interest in this space at the moment from investors. I think that is currently since in the last year there has been about six point five billion dollars that has been raised by various different aggregators doing kind of similar business models. And the reason why is firstly this business model has now become more understood. So the first people to launch this business launched this business about 18 months ago in the US and they became the fastest ever company to become a unicorn and they did it in 18 months. That, that company was then copied in Europe by a company called Razor, which is one of our sister companies. We have the same investors as them, and they overtook Thrasio to become the fastest company to become a unicorn. And, and then it was copied again by a company called Perch, which is now just becoming a unicorn last week after a half a billion dollar investment from Softbank. But nobody is yet doing this in APAC so we’re the first people to launch this business in APAC and maybe the fastest company to become a unicorn. But there’s various reasons why the business so, so I guess the success of the early versions of this business model have given investors confidence in these, in e-commerce businesses where previously they were wary and, and didn’t have full understanding of the, the exit, the growth opportunity there.

But then secondly, there’s just a wall of capital which is waiting to be deployed at the moment. And that’s on the back of kind of low interest rates, plus a whole bunch of historical factors. In the private equity world, people call it “dry powder”. So there’s, there’s just an enormous amount of dry powder which is looking for investment. And so it’s kind of the right place at the right time for this type of business model.

Viv: I think really interesting, you sort of mentioned how different companies are copying each other in different countries. I’m working on sort of like a start-up competition at the moment and every time we have an idea, we’ll look into it and we’ll be like, oh, the exact same thing exists, but it’s in America. Do you have any sort of like startup advice when that sort of stuff happens? Like can we just copy them or do we have to make it drastically different?

Advice when your startup runs into competition

Adrian: Yes, I would say I would say like, don’t be put off the fact that there’s somebody else doing the same business model. This like I would say ideas are ten a penny in the sense that ideas are very easy to come across but it’s the execution that is the difficult bit, and you only need to execute slightly better than them to try to win to win the race, basically. And if anything, if they’re, if there are no, if there’s literally zero other people doing anything similar, then you might have to ask, you know, is that maybe there’s a reason for that? Maybe. So is the presence of a competitor can quite often be a good thing because it can validate that there is actually a need for this. As somebody, as Alan Sugar says, there might be a gap in the market, but is there a market in the gap? That’s what she’s concerned about. I think there’s a gap in the market for lots of things like you know, cars with toothbrushes in them in the steering wheel, but is there a market in the gap for that product? I don’t think so.

Viv: Yeah. Really interesting. I think like we always think that there is a gap in the market and then when we do more research, we find that it actually exists, but it’s not well known or anything.

Adrian: Exactly. So that means it’s a good thing to have competitors. Yeah. Yeah.

Sydney: I like your advice about the importance of execution. Do you have any advice as to how to actually do that? Is it in the details? Is it the fastness? How fast you’re growing, what do you think that actually means?

Adrian: Yeah, it’s a good question. I was listening to a podcast by the founder of AirBNB, and he was basically saying that the death of start-ups is people’s lives. And when you have peope’s lives get in the way of startups. You kind of need a fairly focused determination and single mindedness to work on a kind of fast-growing startup. And to do that you kind of need space and freedom from other responsibilities. So I would say, I would say trying to work on a start-up. This advice is probably not very useful to your listeners. But I was going to say, like trying to trying to do a startup like part time is it is difficult if you’re, if you’re really serious about it. So where possible, try and give yourself the space to throw everything you have at it. But I realize like if you’re studying part time, then you know if you’re studying and doing a start-up part time, then you know that. I’m not telling people to quit

Viv: What’s really interesting about our listeners is like a lot of them around their final few years of uni and thinking about what they would do after they graduate. And a lot of people are considering like corporate companies like BCG, like Goldman. How has your experience been different in the corporate side and also the startup side, doing your own thing?

Corporate vs Startup

Adrian: Yeah, I, it’s an interesting one because I much, much prefer what I’m doing now. And I love the startup environment. And you know, we’re ten people already in Sydney with 15 people in Singapore, five people in India and you know, having the chance to build that team and manage, manage people and, and grow the business is super exhilarating and super exciting. But I’m also aware that I wouldn’t have been given this opportunity if I didn’t do it well, I would have been very unlikely that I would have been given this opportunity in terms of the investment, if I hadn’t had the experience from Goldman and BCG. Goldman from a finance perspective and a banking and kind of M&A perspective and then BCG, from a corporate strategy management perspective.

So, sometimes people ask me, would you recommend doing entrepreneurship straight out of uni or doing corporate stuff first? It’s a difficult one. I think there is huge, huge value in getting a few years under your belt in like a corporate type environment. I mean, even things like learning excel, like, you know, working at Goldman, they give you a very, very structured training on excel. And it’s, it’s super, super important to understand, to have experience learning that type of stuff. Whereas if you go into a start-up, you might get that experience. But it’s just less certain that you’ll come out with a kind of well-rounded experience.

Viv: Yeah, I’m wondering when you were just graduated, you have the desire to start your own thing or did that sort of come later as you started working?

Adrian: Well one thing you didn’t mention in my introduction or I didn’t tell you earlier, was that when I first graduated, I spent three years as a high school math teacher in London. So my, my dream since I was a child was always to be a high school math teacher and then I became a teacher and I realised I hated it. So I left quite quickly.

But no, so I never really had like an entrepreneurship drive. And then and then I guess it was through working in kind of corporate, I realized I wanted to try and do something of my own uh, after that.

Sydney: Yeah that’s, that’s really cool. And I think it also speaks to sometimes you can have a dream, but it’s not until you really experience it that you really know for sure whether it’s something you want to do forever and you don’t even have to do it.

Adrian: Yeah, that’s certainly true. Fail fast. That’s one phrase people use. If you’re going to change, you know, you don’t need to stick at stuff for ages and ages, just try lots of different stuff and you’ll find something that you like.

Viv: Yeah, that is so true.

Sydney: Throughout your experiences, what do you think is the biggest lesson you’ve learned or something that is a mantra that you hold onto as you make decisions and experience different things?

Biggest learning

Adrian: Um, the biggest lesson I’ve learned … one thing with building a startup is that it’s, I’m finding that it’s always a balance every day is a balance between moving fast and building processes. And what I mean by that is so we, we acquired our first company in Australia after two months of operation. But in order to, which is very kind of quick turnaround to complete all of the due diligence and all of the legal and, and even finding the business in the first place. But in order to do that, we had to sacrifice, you know, putting in place very rigid structures and all the rest of it. And, and I’m glad that we did that, but now we’re having to go back and put in place all of the structures.

So it’s been a learning for me trying to trying to walk that balance. I think both are important. And I think when I, when I interview people, I look for people who have an appreciation of both. Like you don’t want people who spend all their time building processes, but don’t get on and actually do stuff. But vice versa, you want to have some type of structure. I think I fall more into the first camp. And I guess what I’m learning is that it’s important to surround myself and build a team which has people who fall more into the build process camp and then we kind of balance each other out. So I think it’s, I think it’s around the value of a diverse team, is what I’m learning.

Viv: That’s a really great learning balance is so important. To wrap up our episode today, what is what’s next for you in a brand?

Adrian: Yes, we just, so we just closed the seed round a couple of weeks ago, and we’re now fully fledged series A fundraising mode. So if you know any investors, send them in our direction. Yeah, we’re currently raising the series A which will give us much greater capacity and the ability to acquire businesses. As mentioned at the beginning, we are very actively looking for interns and recent grads to join the team. So definitely reach out to us either to me on Linkedin or through our careers portal and what’s next is taking over the world basically.

Viv: I love that. Well, thank you so much for joining us, Adrian.

Adrian: Thank you for having me. lovely to be here.

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