“If you are working on something exciting that you really care about, you don't have to be pushed. The vision pulls you.”
– Steve Jobs
I believe we can learn from everyone, and in my line of work, I’m so grateful to have interviewed hundreds of people to learn more about their amazing journeys. If you’ve read my last book Think and Grow Rich: The Legacy, you’ll remember that the inspiration in the book came from REAL stories – so you can get a real blueprint to apply in your own life.
That's why I'm so excited about the first official guest we’ve ever had on the show, Michael Fox. I've known Michael for years. He’s a super-successful, extremely well-connected dude, but what I love most about him is how down to earth and humble he is.
Eleven years ago, Michael and his two partners (one being his wife at the time) recognized that the future of retail was in personalization and customization – where shoppers could create the products they wanted rather than buying the generic ones that everybody else bought.
The niche they found was women who wanted to customize their own shoes. I’ve got a wife, a mum, and a sister, and they all love shoes, so this certainly looked like a phenomenal concept from day one.
In 2009, Michael and his two partners launched Shoes of Prey. For the first time, women around the world were able to order shoes online that they had designed themselves. They were manufactured to their specifications, delivered to them quickly, and at a very competitive price.
In the years after, Shoes of Prey raised more than USD $25 million and had partnered with companies including retail giant Nordstrom. Michael was on top of the world.
Then it all came crashing down.
In this interview, we talk about Michael’s rollercoaster entrepreneurial journey that’s taken him from his home country Australia to Asia, America, and Europe, and what lessons he's learned along the way. We’ll also talk about the impact on his personal relationships and what happened that made 2019 – literally the next year after his business collapsed – the best year of his life.
We then get an exclusive insight into Michael’s new business, Fable Food Co, that’s attracting huge attention around the world with its high-quality meat alternative, including from one of the world's most acclaimed chefs, Heston Blumenthal.
There’s so much in this interview: How to start a business; How to raise money; How to be happy; How to respond to criticism; How to dust yourself off from failure; How to partner with the most accomplished people on the planet, and more!
How are you doing in the COVID-19 world!?
We’re based on the Sunshine Coast in Queensland, Australia. It's probably one of the best spots in the world if you're going to be isolated somewhere. We live right near the beach, and beaches here have stayed open. So, on the personal and family front, we’re fine.
On the business front, it's disrupted some parts, but it opened up opportunities too. Actually, overall, we've been growing nicely through this whole period. So yeah, I think we're sort of counting our lucky stars—we have been fortunate.
A lot of aspiring entrepreneurs want to know the best way to come up with a new business idea. Do you have a set formula that you follow? Or is it more of an intuition honed after many years in the entrepreneurial world?
The big learning for me – and I didn't do this early on, but I've done it with my current business – is to find what you’re personally deeply, truly passionate about and pursue that. As an example, my last business Shoes of Prey was custom women's shoes. I loved lots of parts of that business, but I was never deeply passionate about women's shoes. Not at all. I loved building a brand, I loved the manufacturing, I loved the supply chain, I loved establishing partnerships and the sales and the retail. All of that I loved. But the actual product, I just wasn't into.
Whereas with my new business, Fable, I'm deeply passionate about the product, the mission, and what we're working on. It makes such a difference. For example, I wake up on a Saturday morning, when I could be doing something else, and the only thing I want to do is read about what's going on in the industry or listen to podcasts relating to food and relating that to what we're doing.
Contrast that to Shoes of Prey – I didn't read fashion magazines in my spare time. And that difference, I can see it playing out in so many ways, such as my deep understanding of the customer (i.e. the value proposition that they're looking for). So I highly recommend starting something in an area that you're deeply passionate about.
Once you've got a new business idea, how important is research to test that concept? And, how early should you do that research?
Early on, I think the most critical thing to do is customer research and determine your business model. You need to understand the value proposition of who you’re targeting and what they want, coupled with an understanding of what business model is most applicable.
With Fable, we've got a meat alternative to slow-cooked meat. It’s like pulled pork and braised beef, but it's made predominately from mushrooms and other plant-based ingredients. Before kicking off this business, I'd been vegetarian for four and a half years, eating all the Beyond burgers and Impossible burgers, and other products on the market, so I had a good personal understanding of the category. I've also talked to everyone around me trying to encourage them to turn vegetarian and hear the feedback that they're giving on why they find it hard, what they miss about meat, and other feedback around the alternatives.
"Find what you’re personally deeply, truly passionate about and pursue that."
Then, I just spend a lot of time exploring and understanding the market, particularly watching people as they shop the meat alternatives. After they selected or not selected something, I go up and talk to them about their decision. All of that research is hugely valuable to the path that we're going down now.
I see that you've been very proactive about seeking that feedback. Contrast that to a lot of entrepreneurs who simply work on an idea themselves because they’re worried someone is going to steal it … and they're certainly not proactive about obtaining feedback.
If you think you've got certain insights and a really big potential idea, it can be a natural concern that you might want to protect that. But, in my experience anyway, when it comes to building businesses, it’s 1% inspiration, 99% perspiration, as Thomas Edison said.
If you've got an idea, there’s probably 1,000 other people who've had the idea. Your success with that idea will come down to how well you execute on it. Therefore, the pros of getting feedback from people early on far outweigh the risk of someone else stealing your idea. Because even if someone steals your idea, are they going to be good at executing? The reality is that most people aren't going to do that – they're not going to leave their existing job to start a new idea. And even if they do, the reality is that it’s tough to start a business, and most businesses don't succeed.
So yeah, I think the benefits of getting the feedback from people early on far outweighs them taking your idea and beating you at it. And if they beat you at it, you’re probably not the best executor in the first place.
True, and that's the world of business, I guess. What about the Shoes of Prey concept – when did you have a feeling that you were onto a winner?
A lot of interesting learnings came out of that journey, which was also 10 years of my life. Pretty early on, we had an idea that this was a concept with really good potential. And I think that was a function of us talking to everyone around us about the idea and asking them, “Would you want to design your own shoes?”
And the overwhelming feedback was, “Yes, that would be amazing!”
Everyone's got this dream of being creative and having some kind of unique fashion item that they've designed and created for themselves to wear. So the response was kind of overwhelming from people that we spoke to.
"If you've got an idea, there’s probably 1,000 other people who've had the idea. Your success with that idea will come down to how well you execute on it."
And so then we ran a test. We setup a basic supply chain and worked with a manufacturing partner in China (just outside Hong Kong) who could produce shoes. And before we built a website or anything, we just used photographs of the different elements of the shoes. We presented that to our friends and said, “Hey, these are normally going to retail for $250. If we sell for half price and you can design using these images, would you want to do it?”
We emailed that out to 100 of our friends, and about 25 of them paid the money to design the shoes with us. We thought that was a pretty good response rate and an indication to us that it had potential.
What about things like minimum order quantities, if you're ordering through Asia – was that a challenge when you were trying to test whether this was a good idea? I can imagine some of them saying, “Yes, we’ll do it – if you produce 50 million units with us!”
Yeah, we had lots of funny, Lost in Translation conversations on that! We would explain the concept and they’d say, “Oh, yes, we can supply shoes. Minimum order quantity: 10,000.”
And we’re like, “No, we need to order one!”
“Oh, you mean 1,000?”
“No, we mean literally one.”
We managed to find some little shoe stores in Hong Kong that did design your own shoes, so our initial manufacturing partner was one of them. It was a small operation, so we were never going to be able to scale with them. But they were happy to partner with us initially and would do one pair at a time. So that's how we started.
The Shoes of Prey journey had a bit of a public ending that was obviously not the outcome that you and your co-founders and the whole team wanted. What were the circumstances when you went from having an amazing business concept to, 10 years later, coming undone?
Basically, we initially did really well in this niche of women who were passionate about designing their own shoes. These were creative women who had a good sense of their own style and design, and they loved the concept. For the first time, they had the ability to design their own shoes. We also did well in some niches like wedding shoes, which is obviously a good market for personalization, as well as small / large and wide / narrow sizes, because we could produce efficiently one at a time; we could service those people who couldn’t normally buy shoes in their size.
"Early on, I think the most critical thing to do is customer research and determine your business model."
So we were doing well in these little niches, and getting really high net promoter scores because in those niches, the customers really, really loved the product. But we were never going to be able to scale in those niches. Then, we went out and did our market research to understand whether the mass market consumer would buy Shoes of Prey shoes.
We could see all these customers coming to our website – we literally had 10,000 customers coming to our website every day, but we had really low conversion rates. And so we started talking to all these customers who were coming and not buying.
What we realized is most of the women coming to our website weren't those niche customers: they were mass market fashion customers. When we talked to them, they said, “Yeah, look, I love the idea of designing my own shoes. That's why I'm coming your website to have a look and spending time on here.”
They told us there were three things that stopped them from buying:
1. “We want a simplified shoe design experience.”
Our initial shoe design experience was targeted to that really creative customer, so it was very freeform. The mass market consumer wanted to be guided through the process and have a simpler process.
2. “We want a shorter turnaround time.”
We had a five-week turnaround time on our shoes, which if you're organizing your wedding shoes, you're doing that more than five weeks in advance. If you’re small / large and wide / narrow sizes, you'll take anything – you don't mind if it's five weeks or more. But if you're a mass market fashion consumer, you're often thinking about a purchase and need delivery within two weeks.
3. “We want cheaper pricing.”
We were charging a 30% premium over the same quality shoes, and the mass market fashion consumer said, “I'm keen to do it, but I don't pay a premium.”
So we looked at those three things and we realized, well, we can execute on those three things – we're just going to need to go out and raise venture capital to do it because we’ll need to build our own shoe factory to get the lead times down and get more efficient to get the unit costs down. At the time we were just working with that little supplier outside of Hong Kong who had two shoe stores, so they weren't scaled up. This was about three years into the journey. And we'd done really well in that time just in those niches. We hadn't raised any venture capital – it was all self-funded, growing out of our own cashflow.
In addition to needing to build our own factory, we also needed to hire more software engineers to simplify the shoe design experience. From all the research we'd done, it revealed this big mass market fashion opportunity, and we needed to cross the chasm from these niche customers over to the mass market.
We spent the next five years executing on building our own shoe factory in China. Manufacturing shoes one at a time is a massive undertaking. So that took us a good five years to open, scale, run efficiently, and we brought the delivery time down from five weeks to, we averaged, 11 days in the last couple of years. And we brought the unit cost down so we could bring our retail prices down. And we built our software engineering team out to about 10 people and simplified the shoe design experience. That whole process took about five years.
The problem for us was we basically built the whole value proposition that the mass market fashion customer had asked for. And we realized it just wasn't resonating. Like, we grew sort of 3-4x over those five years. We grew to maybe $12 million/year in revenue, but we really needed to be at about $30 million/year revenue to breakeven because now we had all the fixed costs associated with the shoe factory and software engineers. So our breakeven point was about $30 million / year.
Based on our customer research, if the mass market customer had responded the way that our research said she would, we should have been at $100 million / year revenue. We were in Nordstrom stores in the US where you could design your own shoes right there, and we were in all the right places for the mass market customer.
Now that we’d built this value proposition, we could watch how our customer behaved on our website and in the Nordstrom stores. What we realized was … we got our research wrong. The mass market customer thinks she wants to customize. So if you ask her, consciously, she thinks she wants to customize shoes. I mean, who wouldn't love the idea of being creative and designing your own shoes? So you ask her, she'll tell you that's what she wants to do, because she thinks she does.
But deep down subconsciously, she doesn't want to do that – she doesn't really have the confidence to do it and she doesn't know if the shoes are going to look any good. Also, she doesn't really have the time to sit there and design the shoes. And so deep down subconsciously, she really just wants a fashion designer brand to tell her what's on trend and what to wear. She wants to see what's popular on Instagram and buy those exact shoes and that brand, which is kind of the antithesis of designing your own shoes.
What she consciously thought she wanted is the opposite to what she actually really wanted. And we had built our whole value proposition and business around the opposite of what she actually really wanted. That's what brought us down.
Was this research that you conducted every few months, or every year? Or was it something that you did comprehensively early on as a one-off and just ran with that assumption?
No, it was constant research. We were running surveys with all these people who were coming to our website and weren't buying. Nordstrom are the biggest retailer of women's shoes in the US, and they invested in the business because their research told them the same thing. We ran focus groups … we did everything. We watched how consumers behaved in different environments.
"What she consciously thought she wanted is the opposite to what she actually really wanted. And we had built our whole value proposition and business around the opposite of what she actually really wanted. That's what brought us down."
We did everything that I think we could have done, except the one thing we didn't do, because we couldn't, was actually watching how female fashion shoppers behave when designing their own shoes. And the reason we couldn't do that is no one had built this before – it didn't exist.
Only once we built the value proposition – and you could go to our website, use the simple design process, order at a good price point, and receive your shoes in 11 days – it was only once we built all of that, we could watch how the customer behaved on the site. And then she wasn't buying. Then we talked to her and delved into why she didn’t buy. That helped us to uncover that the research we’d done and what customers are telling us is actually different to what they really want.
Can you take us into the moment when you realized for the first time that Shoes of Prey and 10 years of your life was irrecoverable – that, no matter what you did, the dream for this particular business was all over?
That's a good, good question. It was probably more like ripping a band-aid off slowly, rather than a single moment, so it's kind of even more painful because of that. Yeah, I mean, it was gradual. As we gradually simplified our shoe design experience, our sales would rise, so the research wasn't completely wrong. But the sales weren't going up anywhere near as much as we'd expected. So we could see that we were making progress, but it just wasn’t the progress we wanted.
We sort of convinced ourselves that it needed all the pieces of the value proposition to work. And I still think that logic made sense – it was just the research was wrong. So even if we simplified the shoe design experience, if our delivery time was still four weeks, yeah, okay, we might get a bit of growth, but we wouldn't get the sort of scaled growth that we were looking for.
Over a few years, we weren’t growing as much as we needed to, but we were growing enough to keep pursuing it and to raise more through venture capital firms. Nordstrom was still on board with us through that.
It was only really when we delivered the whole value proposition and the revenue was less than half of where it needed to be. We were running out of cash in the bank, and we knew it was going to be hard to raise more. So we spoke with our investors and, yeah, it was clear we weren't going to be able to raise more money easily, or even at all in the end. So it wasn't a single moment or conversation, but more like ripping a band-aid off slowly.
I feel like one of the most unsung elements of being an entrepreneur is the mental health battle, the daily roller-coaster that you and I have both seen with various businesses and projects that we've been involved in. How was your mental state at the time when it all started to unravel? Were you feeling down on yourself or on the brink of burnout?
It was definitely tough. I was living in LA. I had some friends over there that I'd made, obviously, but not the kind of friendship groups that you grew up with or family around. I was married, so I had my wife and did have some good friends there, but those kinds of things made it harder.
It was tough. This vision that we'd had … we'd had all this success early on, we'd raised AUD $35 million [USD $25 million] from investors, partnered with Nordstrom. All these exciting things had built up over time and then sort of gradually coming to the realization that this wasn't going to work out. It was hard, you know. There's not even really adjectives to describe it.
What helped me to get through it was reflecting on the fact that we were dealing with women’s shoes and investors’ money. These are important things, but it's not like we're dealing with life and death, you know? It's not like we were a medical company and people were dying because we were failing.
I spent a lot of time reflecting on having my health and my family. My first son was born during this challenging period, which was kind of a revelation that, “Okay, well, Shoes of Prey is going poorly at the moment and my career is in a bit of a shambles, but I've got a healthy son and this is a wonderful life experience.”
Puts it all into perspective?
Yes, exactly. I think that was kind of the big thing that helped me get through. Also, with the benefit of hindsight, I learned that as tough as things can be in the moment, you can get through those things and enjoy yourself on the other side.
Absolutely. And I think a lot of people, myself included, have really enjoyed the posts that you've written, just the reflections on the journey. It's so real. It's so raw. And I think it's really inspiring to people. So, I wanted to quickly bring up a quote that you wrote a year ago [March 2019] when you were reflecting on that Shoes of Prey journey:
“If I ever find myself in a position where I'm attempting to change consumer behavior, I will ensure I've peeled back the layers to truly understand the psychology of my target customer.”
Do you still stand by that? And how can aspiring entrepreneurs’ action that in a practical sense?
Yeah, I definitely still stand by that. And I mean, that just speaks to how we were trying to get consumers to change their behavior by designing shoes rather than ordering preexisting shoes. Our market research failed because we listened to what the customer consciously thought she wanted – and we didn't peel back the layers to understand the deep psychology of what she was thinking and what was driving her to buy shoes. Maybe if we had done that, we might have uncovered that while she said she wanted to design shoes, she didn't really want to. So yeah, I definitely still stand by that learning.
And I think there are two practical ways to deal with that. One is to actually do that deep psychological research if you are trying to change consumer behavior. I would definitely go deeper than we did with Shoes of Prey, if I was doing that again.
The other way to get around that is to not change consumer behavior, and that's the lesson that I've taken with Fable. For example, I've been vegetarian for four and a half years. I've tried to convert everyone around me to being vegetarian. I think I've convinced two people! I caught up with one of them the other day, and they're not vegetarian anymore. So I'm trying to change people to become vegetarian. Either I'm not good at it or it's hard to do. It's probably a bit of both.
I've realized that trying to convince people to eat hemp seed patties, falafel balls, and salad, most people don't want to do that because they still love the taste and texture of meat. The learning for me there is don't try to change their behavior and make them eat hemp seed patties and falafel balls, but give them ‘meat’ – something that has the taste and texture of meat, but just don't make it from animals.
"Our market research failed because we listened to what the customer consciously thought she wanted."
We’re not the only ones doing meat alternatives, and that's the kind of approach that the whole alternative protein industry is taking: don't try to convince people to change their behavior and not eat meat, but to give them meat, and just make it from something different. It means that in all of our product development, our big focus is on making sure that the product has the taste and texture of meat – that's the number one part of the value proposition. And once that's achieved, it means you don't have to change consumer behavior. They can eat the same way, cook the same way; all the dishes they've done before, but just doing it without animals.
With Shoes of Prey, you were out on a limb so much trying to do this yourselves. Do you feel more comfortable being in a massively growing industry? I mean, you’ve got as much research as you could possibly want to help underpin some of the decisions that you're making to remove some of the guesswork. Although it seems like experience has taught you that even when you have the research, there can be a lot more to the picture?
Definitely, I'm finding the experience much, much easier because of that. There's pros and cons, right? So it means there's other people doing meat alternatives, which I love from a mission perspective because I want to end industrial animal agriculture. If it’s Fable, great but if it’s other people, that’s amazing too.
But from a purely business perspective, putting aside the mission, it means we've got competitors in the space and consumers have a choice of different products. So that's the con of operating in a category that other people are operating in, but the pro is just like you described – there's other people doing it too, so we can learn from each other. I can actually go into the supermarket and watch how consumers shop the alternative protein section. Whereas with Shoes of Prey, there was no other website or nowhere else that you could design your own shoes, so I couldn't watch how consumers did it.
On the Shoes of Prey side, just to round off on that incredible chapter in your life, what was the biggest personal cost to you after 10 years – was it time, money, something else?
There was the financial side. I'd worked for 10 years at well below market salary, and put quite a bit of my own money into the business beforehand. So, I sort of ended that 10 years in my late 30s with not much money to my name, whereas if I'd stayed down the corporate path, I’d been in a different place financially, so that was a cost. Not a cost I would directly attribute to Shoes of Prey, but it was definitely a catalyst.
I was married to one of my co-founders, Jodie, in Shoes of Prey when we first started the business. We divorced partway through the Shoes of Prey journey. We stayed really good friends, stayed good business partners, and still to this day we chat nearly weekly. It wasn't because of Shoes of Prey – we just grew apart in our 20s. But Shoes of Prey was definitely a catalyst. Working and living with the person that you're starting a business with puts all sorts of strains and pressures on a relationship, so that was another big personal cost through it all.
I'd say those are probably the big two.
I feel like marriage has enough strain itself. I can't imagine throwing in the added complexities of raising tens of millions of dollars, moving countries, trying to figure out manufacturing, building an international team, second-guessing your market research, and signing deals with some of the biggest department stores in the world – it's a lot for your relationship.
But I guess it says a lot about the character of each of you when you still are able to maintain a very cordial relationship and both respect and support each other, even as your journeys forked.
Thank you. It was definitely a tough period. It was a mutual decision to separate which I think made it easier, because when it’s one-sided it’s so much harder for couples to stay on good terms. We both wanted to stay friends and actively wanted to keep working together because we were both wanting to make Shoes of Prey a success, so we really kind of did a lot of work to make sure that was okay. We said if we're going to separate, let's make sure the friendship remains and the business partnership remains, so I guess we just focused on that and we were able to achieve it.
After that, you went to Denmark for almost half a year of soul searching, and now you're living on the Sunshine Coast in Australia. After the grind that you had living in LA trying to get all this stuff done, ‘lifestyle’ became such a huge focus for you, as well as general health and well-being.
A few months ago, you wrote that 2019 was the best year of your life, which I bet you would not have expected if you had a crystal ball looking forward. What contributed to 2019 being the best year of your life?
Yeah, I totally wouldn't have expected it! I finished up with Shoes of Prey in the middle of 2018, so that first half of 2018 was pretty horrible – laying off 200 people, shutting down a factory, that kind of 10-year dream ending, telling investors that we can't get them their money back, let alone a return. So yeah, I would not have expected that to play out.
As you touched on, my wife's Danish so went over to Denmark for six months. We kind of had to do that because our second child was born. When I left Shoes of Prey, the visa was attached to Shoes of Prey, so I had 60 days to leave the country [the US]. My wife Katrine was about six months pregnant, nearing the point where you can’t fly anymore. Katrine was not Australian so we wouldn't have had health coverage in Australia to have the baby, so Denmark was the only place we could go to actually have the baby without having to fork out all the costs.
A whole new basket of stresses to add to the mix!
And with a one-and-a-half-year-old, as well! We went to Denmark, but it turned out really well. It was really nice to spend some time with Katrine’s family. For me, it was just a great period to have a reset – I didn't have any pressure to find a job or figure out what I was going to do next. I just knew, okay, there's six months, I can focus on being a dad and just do whatever I feel like doing.
I just ended up reading a lot of books. And because I've been vegetarian for four and a half years, I just ended up reading more about industrial animal agriculture. There were other areas that I was really passionate about and started exploring too like community living and some different areas like that. But I just ended up reading all these different areas that I was passionate about.
Then towards the end of the six months, I started thinking, “Well, there's two or three areas I'm deeply passionate about, is there a business model or something that I could do?” Well, actually, I didn't even want to start a new business. I was thinking that maybe I could work for someone else in in the meat alternative space because it’s a space that's been growing really quickly.
That six months allowed me to explore whatever I wanted to, wherever my intellectual curiosity took me. And I think that helped me to narrow in back to your very first question around finding what my passion was and where I might want to do something. As you touched on, we made the kind of lifestyle decisions. We came back to Australia to live on the Sunshine Coast. I grew up in Brisbane, which is where I know you and the rest of your family. And my extended family is all Brisbane / Sunshine Coast-based. So, with two young kids in tow, we wanted to be back near all of them: grandparents and aunties and uncles.
"That six months allowed me to explore whatever I wanted to, wherever my intellectual curiosity took me."
And it's a much cheaper cost of living on the Sunshine Coast than down in Sydney. We initially planned to go back to Sydney. But to rent a house in Sydney, it's like AUD $1,500 - $2,000 / week [or USD $960 - $1,300 / week] to rent a nice three-bedroom house. We sort of took that budget and looked at what we could get on the Sunshine Coast and we've ended up renting a house literally right on the beach. The beach is 100 meters to my left as I sit here – a little private walk track through the bush and we're on the beach. We’ve got a pool and a giant barbecue perfect for cooking plant-based meat.
Just the lifestyle here is amazing. It’s great being back around family, reconnecting with friends that we grew up with. It's a combination of now doing what I'm really deeply passionate about, the living environment, and then also just the family side – I'm just loving being a dad, and you're having the dad experience too. All that for me has just added up to 2019 being genuinely amazing, just deep personal satisfaction.
Yes, parenting is a wonderful journey. I've always wanted to have kids, but I just never understood the amount of meaning that it creates in your life. You just learn so much about the world from your kids.
In the media, you’re getting a lot of wonderful coverage with Fable, but how do you feel when the largest media outlets in the country still describe you as a ‘failed entrepreneur’ and part of a ‘collapsed company.’ Do you just try and ignore that, or does it motivate you to succeed?
Yeah, it's good, good question. I mean, it's a whole combination of feelings. Like it's definitely a hit to your ego and self-belief. And I think that also contributed to my initial thoughts when I came back to Australia to go work for another company because, literally, the thought of starting another business made me feel ill. My self-confidence was down.
I had a good understanding of why Shoes of Prey failed, but still felt like I'd messed some things up. In your head, we'd messed up that market research and didn't get those insights right, and I was like, “Well, okay, I cannot succeed in business so maybe I'm not made up to being an entrepreneur.” So, it's a mix of those feelings.
On the flip side, spending the time to deeply reflect on the Shoes of Prey experience helped build my confidence again. We had done a lot of things really well, and if our market research had been right, it would be an amazing business today. I think we got close – we made lots of other mistakes too – but I think we got all the other pieces of the business mostly right. It was just that one insight that we didn't get right. So that sort of brought a bit of confidence back.
"Literally, the thought of starting another business made me feel ill."
Kicking off with Fable, I came back to Australia and wanted to work in the alternative protein space, but there were just no jobs. Everyone in the category was a startup, and there were no jobs in the category. So my decision was either going back to the corporate world or, since there are no jobs in what I’m really passionate about, having to start my own business again.
That's what kind of drove me back to starting a business. Initially, yeah, I really genuinely didn't want to do it. But then once I started, it felt good again being in those early stages. I went back and talked to all of the old Shoes of Prey investors. I had been talking to them all the time anyway, but to talk to them about the idea and they were excited about it. Their feedback was, “Michael, we’ll back you again. If you get this to a place where you're raising money and it could work, we'd love to look at it and back you again.”
When we raised funding in November, it was deeply satisfying to have both Blackbird Ventures and Grock Ventures [personal investment fund of Atlassian co-founder Mike Cannon-Brookes] because they were two large investors in Shoes of Prey and had lost all their money in Shoes of Prey. So that helped on the confidence side and I just found myself loving doing it again.
The media has now been supportive too. Media headlines are designed to drive clicks and advertising revenue. So a headline about Shoes of Prey’s collapse, that's a great sounding headline. That's the almost business industry gossip that people want to read, and I find myself drawn to those kinds of articles too. It's just an innate human psychology. That's the reason journalists want to write those kinds of headlines, and it doesn't change the emotional feeling from it, but at least you can have a logical reflection on it.
But you know, that's life, that's what the media is always going to do. There might be some truth to it, but it doesn't mean you have to buy into it. And it doesn't factor in the future as well.
They’re only taking into consideration one aspect of the past and not factoring in all the assets like the investors you mentioned, and other people you know, and all the learnings you bring to the table.
But at the same time, you've got that carrot of going back to the corporate world. I feel like a thing for people who have a professional Monday to Friday job, they don't realize how lucky they have it when they can just work five days a week, they can switch their phone off on weekends, they can have a six-figure salary without the stress that an entrepreneur faces when there is no off switch. And, like you said, from the moment you activate that new business idea, it is potentially seven days a week for an indeterminable amount of time.
One hundred percent.
Well, you've got Fable now which is just such an incredible story, obviously still very young in the journey. Can you let us know a bit about Fable: the product, the market, and what you're trying to achieve?
Once I had that realization that like, “Okay, if I want to go into this category, I’ve got to start something myself,” I started thinking through how I would want to do it – what kind of product I'd want to develop and how I'd want to enter the category. And I didn't want to compete head to head with the existing players in the market, like Beyond and Impossible who between them have raised nearly a billion US dollars. There’s plenty of good companies in Europe and some good ones in Australia, too. So I wanted to differentiate and find another gap in the market.
Most of those businesses are doing ground beef and burger patties. So, my first thought was, “Okay, there's plenty of other types of meat out there, or I should try to replicate something else?” And then secondly, “I'm a pretty healthy eater. I shop at my local farmers markets, do a lot of my own cooking, and try to eat a healthy, minimally-processed diet. Would it be possible to create a meat alternative that has really natural, healthy, whole food ingredients?”
It was those two insights that sort of led me to researching more in the space. I obviously don't have a food background so I just started talking to anyone in the food industry who would be willing to listen to me and answer my questions. And that kind of led to the thought of using mushrooms as a base ingredient for a meat alternative. So most meat alternatives are made from textured vegetable protein. It's a protein that is stripped out of a soybean or pea and then it's this high heat, high pressure process to turn it into a texture that's like a minced beef. And then you add different flavors and ingredients. And so most meat alternatives are made from textured vegetable protein.
So I was exploring whether you could make a meat alternative out of mushrooms. Mushrooms are really natural, healthy food that we should be eating more of. And they've kind of got a lot of the umami flavors of meat in them. It's just that the textures are not really meat-like for most mushrooms. So that's what led me to researching mushrooms.
I ended up meeting the two guys who are now my co-founders. Jim Fuller grew up in Texas and started his career as a chef. He grew up on all the slow-cooked meats like pork and braised beef. He worked as a chef for 10 years in Texas and wanted to understand the science behind what he was cooking. so he went and studied agricultural science and chemical engineering. And he majored in mycology in his agricultural science degree, which is mushroom science. Then, he's worked as a mushroom scientist in Australia for the last 12 years.
Talk about a niche!
Yeah, he's got this weird skillset of chef and mushroom scientist in one human being! I've never met anyone else with that combo. And then Chris McLoghlin, he's been in farming most of his career. He co-founded Australia's largest organic mushroom farm, and was also Young Farmer of the Year and Organic Farmer of the Year in Australia in 2018. So, Chris and Jim have got this deep technical expertise in mushrooms, whereas I sort of come at it from the business side of things.
Together, we've developed our first product that replicates those slow-cooked meats that Jim grew up on: pulled pork and braised beef. The value proposition that we focused on in developing a product was:
1. Taste and texture:
It's got to have the taste and texture of meat. It's got to cook like meat.
People are willing to pay a bit of a premium for meat alternatives at the moment, but not too much. And ultimately, if we want to end industrial animal agriculture, we want to produce products that taste as good as meat and are cheaper than meat. If you can do that, you can get even the most avid meat-eater buying meat alternatives rather than meat.
3. Plant-based and healthy:
Our product is two-thirds mushrooms, and the other ingredients are all natural, plant-based ingredients – nothing artificial. It's clean, minimally-processed, and has all the health benefits of shiitake mushrooms – which have been used in Chinese medicine for thousands of years as a really healthy ingredient reinforced with a whole bunch of Western science speaking to its health benefits.
That’s the product we created. We launched in December last year in partnership with British chef Heston Blumenthal. We launched at Heston’s restaurant in Melbourne, and Heston is also using the product in The Fat Duck [named world’s best restaurant in 2005 and current three-star Michelin] in London and Perfectionists’ Cafe in London.
Wow. Incredible. Obviously, you've got a phenomenal team with your co-founders, but how did you establish your relationship with one of the most renowned chefs in the history of the world to help you launch this whole new business?
It kind of came from two angles. One, we designed the product for chefs to use. I mean, we designed it to be like a slow-cooked meat. Meat doesn't have a lot of base flavor; it’s what you do with it, the spices and sauces that you add, which turn it into a dish. It's like what makes meat go great with barbecue sauce and curries and Italian pastas, bolognese, ragu, lasagna … things like that. So we designed the product to be a good base ingredient for chefs to use.
We're fortunate that co-founder Jim had gotten to know Heston a couple of years ago in the mushroom world. Heston has been getting into the brain-gut connection and getting into all the health benefits of mushrooms. He and Jim had met through a Thai mushroom professor, at this Thai mushroom professor's son's wedding in Thailand. So they met at this wedding, got on like a house on fire because they both live and breathe food.
It was a real thrill for Jim actually, because Heston was the reason that Jim went and studied chemical engineering and agricultural science. Jim had been working as a chef for 10 years. He’d never met Heston, but was just inspired by him and his scientific understanding of cooking. That's what prompted him to go and study chemical engineering and agricultural science to understand the science behind what he was cooking.
And I think it was even that same trip where Heston and Jim went and visited some mushroom farms for a couple of days. Jim sort of took him around the places that he was working with in Thailand at the time. They established this deep personal connection and then once we developed the Fable products, we took it and showed Heston and he absolutely loved it. He couldn't believe it was made from mushrooms and was super keen to work with it. So that was a real thrill for us. And it's been an amazing reference for when we go and talk to other chefs.
You’ve obviously done a fantastic job raising money with Shoes of Prey and now with Fable. When entrepreneurs reach a point where they feel like they need external funding, how should they go about it, and should they be looking beyond just the money?
There's lots of other capital sources, but I can only really speak to raising money from venture capital firms. The thing that those firms are looking for, particularly in the early stages of a startup is that there is a billion-dollar market opportunity with your business. Market size is very important to them. If you're successful and build a big business, is the market big enough for you to reach a billion dollar plus valuation?
Product market fit with a broad segment of consumers is a big one, as well as the founding team and their background skillsets and drive to make this a success. Are there proof points that they're not going to quit so that you know they’re fully committed to this? Are they deeply passionate about it?
That's where the whole, doing something that you're personally deeply passionate about helps through the fundraising process as well. Those are the main things that they're looking for. And if you can present something to them that meets all of those criteria, they're going to be interested enough to invest.
What about these companies like Impossible Foods and Beyond Meat that are attracting massive amounts of attention? How do you feel about them and the other players that are in the industry?
It's actually great for us. Going back to where we've differentiated, we're replicating a different type of meat to them, with our slow-cooked meat. We're complementary rather than directly competitive with those brands. We've just recently launched into Singapore, pre-COVID. We were starting to get into some restaurants in Singapore, and our distributor over there – who also sells Impossible Foods – was very optimistic. I think Singapore is the best market per capita for Impossible, so it represents a good opportunity for us, too.
Our distributor pitches restaurants by saying, “If Impossible is working well for you with the burgers, clearly you've got demand from consumers for a meat alternative. What about your slow-cooked meat dishes? You might want a meat alternative in there, and that is Fable.” So the sell is we're not competing head to head, and the fact that Impossible will already be in a restaurant makes the sell easier for us.
A second point difference is the customers who are looking for minimally processed foods and want a meat alternative, and we fit that bill nicely.
So it's great for us that those companies are succeeding on a business level. It's also great on a mission level, because they're helping the same customer as us to reduce their meat consumption. They've got all this money behind them to help educate those consumers about great meat alternatives and why they should try them.
And going back to that market research piece, they give me the ability to go into a supermarket or a restaurant and watch how consumers are behaving and shopping these products. I can see and learn firsthand and understand more about where Fable can fit in the market.
Every year it seems that there's more and more awareness around what healthy food is and educating consumers on how to read an ingredient list. For example, in the US, there are companies like LaCroix that make sparkling water. Everyone thinks, “Wow, this is amazing, it only contains natural flavors and no other ingredients!” And then you realize that not all-natural flavors are natural.
And I feel like Fables is in a strong position as time progresses and consumers naturally seek cleaner products and don’t want a whole laundry list of ingredients for something that's supposed to be an alternative to ‘100% beef.’
Exactly. We feel like we sit at hopefully what will be the apex of two really big trends. There’s the meat alternative trend, which is clearly very big. And then there's this whole, as you touched on, this health food trend, and mushrooms are an emerging trend because they’re this crazily healthy food.
In Western countries, we eat 2.3 kilograms, about five pounds, of mushrooms per person per year. In Asia, they eat 13.5 kilograms, about 30 pounds, of mushrooms per person per year. We should be eating a lot more mushrooms, so we see Fable as a way to help people reduce their meat consumption and replace that with mushrooms, which overall are much, much better for you.
What an incredible business. Well, what happens if heaven forbid, the stars don't align – could you ever go back to the corporate world after the taste of freedom and excitement?
As you touched on before, there are a lot of attractive benefits to working in the corporate world and only work nine to five with a consistent salary. I would never write it off completely.
When I was coming to the end of my time in Denmark, where I realized there were no jobs in Australia, I did a couple of interviews with recruiters who were looking at corporate jobs. And it was kind of a horrible time because I had this sick feeling no matter what I did – I had a sick feeling about starting another business, and a sick feeling talking to these recruiters about going into the corporate world. But the sick feeling was a little bit less on the entrepreneurial side, so that's where I kind of ended up.
I don't know … if this failed again, maybe it would be too much to try and start a third time. And maybe I would go back to the corporate world, but I don't think I'm particularly built for it. I hope if I ever go back into the corporate world, no one ever listens to this!
We’ll wipe all the data online before you start handing your resume out!
Check out the PODCAST or YOUTUBE version where Michael does the Win the Day Rocket Round, answering questions about his favorite quote, what advice he’d give his 18-year-old self, his favorite book, and a whole lot more 🚀
Final question. What's one thing you do to Win the Day?
Connecting with talented, interesting people who have good perspectives on the world. These are the people who are motivated, who have big visions, and are doing exciting things. Surrounding myself with people like that is just massive from an inspirational perspective and it helps in all sorts of different ways.
I hope you found that interview as powerful as I did! There’s so many actionable steps that Michael spoke about and good lessons for all of us, especially in these uncertain times.
Remember to get out there and win the day!
Onwards and upwards always,