Interview with Zoom2u (ASX:Z2U) CEO, Steve Orenstein
Listen to the interview here: https://open.spotify.com/episode/6iF6xWYekYSdboKWMCXtg8?si=1ed6e9305fdf4fcf
[00:00:00] Ben: I'm joined by Steve Orenstein from Zoom2u. Steve, how you going?
[00:00:03] Steve: Good Ben. Great to be here.
[00:00:05] Ben: Thank you, thanks for joining us. We quite like doing these episodes, have a bit of fun. So, I guess first thing, first, give me your elevator pitch for the people who aren't across the story.
[00:00:16] Steve: So Zoom2u: we've got two parts of the business. The first is we've got the Zoom2u Marketplace, which essentially connects customers to drivers for a fast same day delivery. We've been operating that marketplace since 2014 and we've got some big clients like Nespresso, DHL, and Bunnings more recently in that business. And then we've got thousands and thousands of small businesses that use us on a daily basis to move a parcel from one location to the other location on the same day.
[00:00:42] Steve: The second part of our business is we've got Locate2u, which is a SaaS platform, and so essentially what we've done is we've taken the technology that we built inside of Zoom2u and built it into its own standalone product. And so, you think about any business that's running their own fleet of their own drivers, they need some technology to help manage those drivers. And they use Locate2u to do that.
[00:01:04] Steve: So, one of our enterprise customers that came on just after we listed was Amart Furniture. And they've got all their trucks around Australia delivering furniture. And they use Locate2u to manage the route optimisation, but also the customer notification so customers know when their furniture's actually arriving.
[00:01:22] Ben: And you mentioned that Zoom2u's been around since 2014, so circa eight years. From memory, you launched on the ASX about a year ago, September last year.
[00:01:31] Steve: That's right.
[00:01:32] Ben: Locate2u. So that's the other part of the business. Has that been around for the same amount of time?
[00:01:37] Steve: No. So Locate2u, we started building the product, it was around 2019, so pretty early on and we spent a fair bit of time before listing in building the product, but very little revenue you've seen inside of Locate2u, and now we're starting to see all the work that we've done in building that product and actually coming to life and getting customers on board and starting to see some revenue flow through the Locate2u product.
[00:02:04] Ben: Since listing, has there been much change in that? So, you started building it in 2019 when you listed it was X, now it's Y, what's the sort of gap up there?
[00:02:14] Steve: Yeah. I mean we're starting to see some substantial growth in Locate2u. On listing, I think it was $30,000 worth of revenue, very small amounts of revenue. In that prior financial year, and this last financial year, we did about $500k of revenue. So still small, but what we're seeing is some really good uptake from customers.
[00:02:32] Steve: And the product is a monthly reoccurring subscription, a long tail of small business customers that are using the product. But then you've got these larger enterprise deals now starting to come through. Just recently we signed the Mayo Clinic in the US, so a big enterprise customer. A small amount of revenue attached to them for right now. They're piloting a project that they're working on, but it just shows you the capability of the product and not just in Australia but being sold across the world.
[00:02:57] Ben: And I guess Locate2u, doubled-sided market. So, you've got drivers on one side, businesses on the other. Typically, obviously revenue is not margin, and you've got to build one side ahead of the other. It's very hard to match them. I imagine being a SaaS or, recently moving into SaaS us, I imagine just so much more straightforward for one. Selling the SaaS and having to deal with both sides, but also much higher margin...
[00:03:25] Steve: Yeah. Correct. So, I think you meant, you said Locate2u, but I think you meant Zoom2u.
[00:03:29] Ben: Sorry. I did. Yes.
[00:03:30] Steve: But yeah, exactly right. Zoom2u, you're building a two-sided marketplace. It's really in the early days of building that business, it was really challenging because you're having to build up supply and demand. Whereas now, we've got to scale inside of that business and so it's much, much easier to scale up inside Zoom2u.
[00:03:45] Steve: But whereas in Locate2u, you spend all this time in building the platform. You can't really get customers until you've built a fair portion of the platform or the SaaS product. And now we've done that and now we're starting to see the revenue growth from being able to sell that product to customers across the world.
[00:04:00] Ben: And I guess on that geographic point was the question I was going to ask. So, are you restricted geographically with Locate2u?
[00:04:08] Steve: No, we can sell it anywhere. I guess we're focused in our marketing efforts into certain regions. We've been testing a number of different countries throughout the world, we're seeing, good uptake obviously in Australia, also in the US, but also in India. And India's an interesting market where I think there's a very large opportunity there. Obviously a very big population, but India's a country that's been doing delivery for a very long time, and particularly local delivery, and they've been doing it without any technology. And now everyone has a smartphone there, they're using an Android device, they're used to using that. Enabling these businesses and very small and micro businesses to do delivery efficiently is yeah, I think is really powerful.
[00:04:44] Steve: And also, stopping these businesses from being super reliant on the likes of these large platforms like Uber where they're losing lots of revenue to these platforms and, enabling them to sell direct to their customer.
[00:04:55] Ben: Do you have any overflow between Locate2u through to Zoom2u? So, if I've got something in Locate2u, my drivers are busy, can I overflow into Zoom2u, to your network?
[00:05:07] Steve: Yeah, so we don't yet, but certainly that's the vision of where we see things happening. With Bing Lee, one of our customers here in Sydney where they've got their own trucks delivering their appliances and electronic goods. But then they do have these smaller items that they want delivered within three hours or on the same day, and they use the Zoom2u network. And so, they're able to separate at the point of checkout as to "this product is going through their network" and "this product's then going to go through the Zoom2u network".
[00:05:33] Steve: One of the acquisitions we did towards the end of last year was this product called local delivery. It's an add-on to Shopify. And what that allows you to do is at the point of checkout in your Shopify store, it allows you to actually select where that person, like they can enter in their location, and based on their location then it brings up a list of delivery options. A lot of e-commerce stores, particularly retail stores that are running an e-commerce platform who want to do local delivery in an area that's close to their store, needs an application like that.
[00:06:02] Ben: Going back a step and speaking about the customers and Zoom2u, you mentioned Bunnings. I guess besides delivering the snags on a weekend what's the kind of typical order there? And also give us a bit of insight into that sales cycle. How long did it take to close someone like Bunnings? What's the process? You get the whole thing at once after an arduous project, or do you do bits to earn the trust and build the vision?
[00:06:27] Steve: Usually with any of these large enterprise deals you're probably looking anywhere from three to six months to bring them on board. And there's usually a period where there's a bit of a trial phase where they want to test it. There's probably some integration. Integration is really important and helping them send booking data as the order comes in from their e-commerce site across into ours electronically. And once we've proven out that, then it's a matter of, "okay, how do we scale this out to, all of their stores?" And you don't necessarily launch, "day one, everything". You go, "okay, let's add 20 stores this week, another 20 next week", and you continue to add until you get all the stores on board. We've been working with Bunnings for a long time now, since the beginning of this year, and it's great to see that rolling out really nicely across all their stores.
[00:07:08] Ben: Fantastic. One thing I like to do with these, it's not just, what's your pitch and tell me the highlights of the business, but I like to talk about the, probably the one thing or one of the things that's more important than money, which is time. So, this is being your baby. You've been part of this business for a long time. You've obviously listed and committed to being around for a bit longer.
[00:07:30] Steve: I see this as, " I don't want to retire". And I want to build this into a substantial business, so I'm in it for the long term.
[00:07:36] Ben: So, I guess what gives you that drive? What gets you the push to keep putting in time every day into the business? Every week, every year. Why are you here? What do you see?
[00:07:46] Steve: Yeah, if I think back to when I started building this business, it came off the back of experiencing really poor. Even today, people want stuff delivered, and you're given a timeframe, "it's going to arrive today between nine and five if you're lucky". Other times, it just arrives out of surprise. You never actually know when stuff's been delivered, and I think ultimately that's the problem I want to solve and solve that at a global scale.
[00:08:05] Steve: And it's not actually just about delivery, it's service. A tradesperson turning up at your home and you've been given, a large time window when they're going to arrive, you know that technology can solve all of that, and technology can connect the service person to the consumer to know when they're arriving.
[00:08:22] Steve: If you're an installer for anything inside of your home, whether it's telecommunications or anything, that can all be solved and made a lot more efficient. And this is a big problem and it's inefficiency that's costing the world lots of money be because of this inefficiency.
[00:08:35] Steve: And there's also, I think, a green aspect of this around, sort of, inefficiently " routing of optimization" that's occurring where deliveries are taking place, or service jobs are taking place right across the world. I'm very keen on solving that problem and solving that both here in Australia, but also across the world.
[00:08:52] Ben: I think it's a really nice view, right? That takes it further than just the delivery of goods that you're doing now. And it's not here to pump your tires, right? But it's nice to see that. Vision is taken further and it resonates, right?
[00:09:04] Ben: We've got a family of five, I'm an employer of 30 people, as a family we have to take time or spend time working from home because we get a delivery window or a service window, which is 12:00 PM to 8:00 PM and you're like, "come on guys, it's got to be better than that."
[00:09:21] Ben: No forward looking estimates, right? Let's be clear, do your own due diligence, everyone, but if you're looking forward, where do you see the opportunity for the business? Is it your current business internationalizing? Is it Locate2u growing? Is it something else that's in the works?
[00:09:37] Steve: I think we're going to continue to see growth inside of Zoom2u, and we'll continue to work with enterprise businesses to bring them on board. But also just as big an opportunity inside of the Locate2u business.
[00:09:48] Steve: We spent a lot of time in building the technology, and now it's a sales and marketing effort and getting adoption of customers using this product across the world; very focused into the US very focused in India. And there's other markets, but I think for right now we're very focused on those three markets between Australia and India the US.
[00:10:08] Ben: I always say there's two things: the company and the code. So we've spent some good time talking about the company, as we should. And if we think about the code September last year, fantastic time to list. The last 12 months, awful time to be listed . Yeah.
[00:10:21] Ben: And so we see that quite clearly, probably in your share price, if we're being open. It went up and probably rightly and then it's been sold off and I would say, not rightly, which obviously would cause some frustration. I know you are the largest shareholder in the business. Tell me a bit about who are the major shareholders in the business and are they on the same journey that you are on?
[00:10:38] Steve: I think the one thing is, "am I frustrated in the share price?" Probably not really. It's obviously disappointing to see it go down, but I guess myself and probably the top 20 shareholders, they've all got a long term view. We see this as a worthwhile problem to solve. And it's not just a problem that we're solving for the next quarter or the next two quarters. It's, over the next 10, 20 years and is this business today going to be substantially bigger in 10 years time? Without giving a forecast, I think there's no reason why it shouldn't be.
[00:11:04] Ben: Coming towards the end of this, and I know it's been a bit rapid fire, so thank you for staying with me. I find that a lot of founders and CEOs get asked a few questions on the journey that they really love and resonate with, and usually hope that they get asked that question. So my question is just what do you hope I would ask or what do you find is a really good question that dives into the business, that you would wish you got more often?
[00:11:25] Steve: I think there's probably a couple of things. I think one of the things I found is some of our larger investors that came on board pre-IPO, they spent a lot of time actually speaking to our customers and actually testing things. Nespresso is one of our customers. They actually went to the Nespresso website and actually ordered and experienced the delivery experience. And I think that enabled them to actually see, "okay, this is the difference" and could compare the difference.
[00:11:49] Steve: But then yeah, speaking out to some of our more enterprise customers and trying to understand why they've made the switch and then the impacts it actually had to their business. And you look at sort of the impact for someone like Amart, they were manually sitting there figuring out every single day of the week across all their depots, which they're in every state. They had someone there working out which driver's going to do which deliveries for the following two days. It would take the person an entire day and it wasn't done super efficiently. By using our software, they were able to convert that and do that in 10 minutes. And so it made us material difference to their business and what it also enabled them to do is it wasn't reliant on a person, it was now reliant on a platform. It added huge value to their business. And so I think it's looking into the detail around how that was actually impacting the businesses and the customers of using Locate2u and Zoom2u.
[00:12:39] Ben: So Steve, I've got a got a referral for you. So it's a Melbourne based business called Western Distributors. They do delivery of an installation of a whole range of floor coverings and tilings and all things. They're a big western Melbourne family business. And when you order, they've got two giant Blackboards behind reception, which is literally their booking system. One Blackboard is this week, the other Blackboard is next week, . And that's how they manage their entire business on these two blackboards. It's insane. It's hilarious. And it's the same person who's been filling in the blackboard for 25 years. And as soon as that person leaves, it's all going to fall apart.
[00:13:19] Steve: We see this all the time. And there's a lot of these legacy businesses that are out there that are still substantial businesses, but they don't have the systems and processes in place. And so if you do have someone like that who leaves it becomes really painful for that business.
[00:13:32] Ben: And I think an interesting thing that I like to talk about is if there's existing shareholders in the business, or people who are watching and want to be shareholders, I imagine you're very open to being introduced to businesses that could benefit from either Zoom2u or Locate2u. And I think that's a side benefit of being a listed business with the number of shareholders and the visibility that you have. No matter how much you've got, if you've got 500 bucks or 500 grand in the business, you can still have this impact and help influence the value of your stock. Especially this end of the market rather than the other end of the market.
[00:14:03] Steve: Yeah. Yeah. Absolutely. Definitely. And we do get that today where I get a number of referrals that do come in from existing investors. A number of drivers on the Zoom2u platform have bought shares. So it's great that they're part of the journey of building the business.
[00:14:17] Ben: I know you're on TikTok, I've seen the videos. But I guess if people want to reach out to you, what's the best way? Is TikTok the best way? Is LinkedIn? Is email?
[00:14:24] Steve: Look, LinkedIn is really good. Search for me on LinkedIn, I'm pretty active on there. But otherwise, shoot me an email, email@example.com.
[00:14:31] Ben: Perfect. All right, Steve, thanks very much. It's been great.
[00:14:34] Steve: Thanks Ben, great to be here
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