Zuru is one of the world’s largest toy com­pa­nies. Bunch O Bal­loons? Theirs. Robo Fish? And that. The Fid­get Cube? Yep, that too. Aston­ish­ing­ly, Zuru is owned by three sib­lings from Toko­roa: Mat Mow­bray (co-founder and co-CEO), Anna Mow­bray (CFO and COO) and Nick Mow­bray (co-founder and co-CEO). Jake Mil­lar inter­viewed the youngest of the three, Nick Mow­bray, at his event, Unfil­tered Live. (Our ed, Jen­ny, watched the inter­view, and imme­di­ate­ly asked Jake if we could share Nick’s sto­ry, beause it’s SO BRILLIANT. Thank you, Jake for allow­ing us to print it!) To watch the inter­view in full, as well as hun­dreds of oth­ers with entre­pre­neurs and busi­ness lead­ers from around the world, vis­it unfiltered.tv.

Jake: The first time I met you, last year, I walked away think­ing, how is this pos­si­ble? I felt so proud that Zuru had been found­ed by three Kiwis. Tell us how it start­ed.

Nick: My old­er broth­er, Mat, won the New Zealand Sci­ence Fair when he was 12 years old with a hot air bal­loon kit set. He made a few more, and we got our friends togeth­er and went door to door, sell­ing the­se kits. We were a total start-up cliché! By the time we start­ed sell­ing them out of shops, Mat decid­ed to drop out of uni­ver­si­ty after a year, and found­ed Zuru. We con­vert­ed a barn at my par­ents’ dairy farm in Toko­roa into our first fac­to­ry. I had fin­ished my first year at uni­ver­si­ty study­ing law and wasn’t accept­ed for a sec­ond, so when Mat sug­gest­ed we move to Chi­na and have a real go at the busi­ness, it was an easy ‘yes’. I was 18 years old. We bor­rowed about $20,000 from our par­ents and flew to Chi­na.

We slept in bush­es out­side the air­port when we arrived, as the lights were too bright inside. We got ham­mered by mos­qui­tos! We rent­ed an apart­ment for about $20 a mon­th in a lit­tle town called Shan­tou. It was absolute­ly tiny and a long, eight-storey climb up the stairs. We con­vert­ed our liv­ing room into an office, hired our first mem­ber of staff, a Chi­ne­se girl called Ria, and went to a trade show. And that was the begin­ning.

Jake: Your sto­ry sounds so casu­al; I didn’t get into law school so I went to Chi­na as a teenager with my broth­er, slept in some bush­es and start­ed a toy com­pa­ny. Did you go there think­ing you were going to build a mul­ti-mil­lion dol­lar busi­ness?

Nick: We had huge inner con­fi­dence. Look­ing back, I was so naive. We had no idea about the indus­try. For exam­ple, we didn’t know that we could out­source man­u­fac­tur­ing. We thought we had to build every­thing our­selves!

We rent­ed this lit­tle garage, which was our first fac­to­ry in Chi­na, and spent about half of our mon­ey on an injec­tion mould­ing machine. Mat and Simon, who came with us from home and who is still with Zuru, weld­ed our first pro­duc­tion line. We had two prod­ucts, which we had found online and copied: the Night Fris­bee, and the Mon­ey Gob­bler. My job was to go out and sell them.

I took our two prod­ucts to a New York trade show and put my dis­plays up on my stand, enthu­si­as­ti­cal­ly pitch­ing my prod­ucts to any­one who would lis­ten. About two booths down, unbe­known to us, was the per­son whose Night Fris­bee we had copied. He came scream­ing into our booth and went crazy, so under the unim­pressed eye of our dis­trib­u­tor, I took the pro­duct down.
It was dis­ap­point­ing, but I still had Mon­ey Gob­bler, so car­ried on with gus­to, until the inven­tor of that toy showed up from five aisles back. The anger of the Night Fris­bee guy had noth­ing on this lady. With­in an hour I had an emp­ty stall, two law­suits and learned that we couldn’t copy prod­ucts.

We fought those two law­suits, and since that day, we’ve been in about 16 law­suits. Only now, it’s the oth­er way round. Oth­er peo­ple are copy­ing our ideas, and we are suing them.

The oth­er big real­i­sa­tion at the begin­ning, was that we had to think big: we want­ed to work with the biggest retail­ers and man­u­fac­tur­ers in the world with the best ideas. It’s as much work to build rela­tion­ships with small retail­ers as it is to work with the biggest retail­ers. My atti­tude was that we were going to go as hard as pos­si­ble, and think as big as pos­si­ble, and we were going to get there.

Play­ing ten­nis with Sir Richard Bran­son

Jake: And you’ve cer­tain­ly done that. When I last saw you in New York, you had just walked out of a meet­ing with the CEO of Wal­mart. they employ 1.2 mil­lion peo­ple! How did such a small com­pa­ny like Zuru build rela­tion­ships with the­se huge organ­i­sa­tions?

Nick: It was all about per­sis­tence. I would stalk buy­ers in their hotel rooms, put sam­ples under their doors, and send thou­sands and thou­sands of emails.

Back in our office in Chi­na, after that ini­tial trade show, I rang absolute­ly any­one I could, try­ing to sell new prod­ucts. Because of the time dif­fer­ence, I’d often be up at about 1 in the morn­ing, cold call­ing. I was always try­ing to get hold of Wal­mart, Cost­co, Tar­get: all the huge dis­trib­u­tors. One day after months of call­ing, I got through to a guy called Ryan Hal­ford at Wal­mart. I was total­ly thrown, as I wasn’t expect­ing him to answer. I bur­bled away about what a great com­pa­ny we were, when the real­i­ty was we were still oper­at­ing out of the tin shed and our liv­ing room.

He said, “I’ll come and see you in your show­room in Hong Kong.” I was all, “Sure! Give me your email so I can send you the address!” We had no idea at the time, but it tran­spired that every­thing revolved around retail­ers vis­it­ing show­rooms around the world. So I got on the next train to Hong Kong to find a show­room for him to vis­it us in. I saw that all the toy com­pa­nies were in one lit­tle area, so I start­ed knock­ing on doors, ask­ing if I could rent some space in their toy room to sell my prod­ucts. No one was will­ing, and then I found this tiny cub­by hole, which was real­ly expen­sive for us. We debat­ed long and hard about tak­ing the space. It was tiny. I lived in the space, which was just big enough for a table. I had a tiny mat­tress that I would unroll under the table to sleep on. The win­dows curved round the table. The first meet­ing I had there was with a lady from KMart Aus­tralia. She arrived ear­ly and I was still asleep. I was lying there in my box­er shorts, and could see her feet inch­es in front of my face under the cur­tain. I didn’t quite know what to do! I let her go away and emailed her, feign­ing igno­rance, say­ing, ‘Err, weren’t we sup­posed to have a meet­ing?!’ She came back, and became one of our first cus­tomers.

One night I saw a buy­er hav­ing din­ner in a restau­rant with about 20 oth­er peo­ple. He worked for Dick’s Sport­ing Goods, one of the biggest sport­ing goods chains in Amer­i­ca. I’d been con­tact­ing him for about a year and he’d always said no to a meet­ing. So I ran back to my show­room, the one with the hard mat­tress under the table, filled a bin bag with as many sam­ples as I could, and crashed his din­ner. It didn’t go down well at all. It wasn’t until years lat­er that he start­ed to work with us.

Jake: Per­sis­tence is a key fac­tor in your suc­cess. Do you find you still have to be per­sis­tent, even though you are now in the big league?

Nick: Absolute­ly. The toy busi­ness is very much dri­ven by fash­ion; you real­ly need to have your fin­ger on the pulse to find the next big thing, and the thing after that. That’s the area of the busi­ness where I spend most of my time. Toys can be very lucra­tive, and can also drain you of mon­ey.

I remem­ber you and I were togeth­er, Jake, when I was try­ing to get hold of the rights to the Fid­get Cube, the sec­ond most backed Kick­starter project of all time. The most backed was Bunch O Bal­loons, which we also have the rights to, and we bought from a Tex­an father of eight. The rea­son we won that over the big boys like Has­bro and Mat­tel, was because I knew we could auto­mate their pro­duc­tion, and that we could build the machi­nes nec­es­sary for that automa­tion. Fast.

The Fid­get Cube start­ed with two broth­ers, called Matt and Mark, in Col­orado. They orig­i­nal­ly had a fund­ing goal of about $15,000 and raised about $6 mil­lion in the first 30 days. So, they were sud­den­ly being inun­dat­ed. Every­one want­ed a piece of them, try­ing to license the intel­lec­tu­al prop­er­ty (IP) and the patents. And I was one of those peo­ple. I was try­ing every way pos­si­ble to get hold of them: on email, Insta­gram, Face­book, Linked­In, phone books, every­thing. And I knew that every oth­er toy com­pa­ny would be try­ing to do the same thing, because crowd­fund­ing is a great barom­e­ter of pop­u­lar­i­ty.

Our Vice Pres­i­dent of Sales, James, men­tioned they would have reg­i­sis­tered their IP to an address and that I should call our lawyer, who then flew over to the boys and staked out their home until they turned up. Which they did after two days. As soon as they got to the front door, he called me and hand­ed them the phone.

I told them they need­ed us over every oth­er toy com­pa­ny in the world. We had a great track record: Bunch O Bal­loons, in terms of rev­enue, is the most suc­cess­ful crowd­fund­ed pro­duct of all time. I flew down to meet Matt and Mark, and we beat Mat­tel, the biggest toy com­pa­ny in the world, for the third time. (The oth­ers were Bunch O Bal­lons, Nimuno Loops, and a pro­duct called Moon­light, which we even­tu­al­ly pulled out of.)

Win­ning Toy Of The Year in the active/outdoor cat­e­go­ry for Bunch O Bal­loons at the Toy Of The Year Awards

Jake: You men­tioned that the suc­cess of Bunch O Bal­loons is large­ly thanks to automa­tion. You guys are world lead­ers in that area, aren’t you?

Nick: The world’s chang­ing at such a fast pace. In the next 30 years, I believe half the world’s jobs will be gone and replaced by automa­tion. We are mov­ing heav­i­ly into that space and are work­ing on a project that I can’t talk too much about, but it’s going to be world chang­ing. Way big­ger than toys.

Our inno­va­tion with automa­tion has given us this abil­i­ty to be real­ly dis­rup­tive in the toy indus­try. And that’s my broth­er Mat’s area. Most of our com­peti­tors out­source their pro­duc­tion to big, ori­en­tal toy man­u­fac­tur­ers. But we have auto­mat­ed much of ours. Take Nerf, for exam­ple. We are now sec­ond to Nerf glob­al­ly with our X-Shot brand. Last year we shipped 27 mil­lion dart blasters; this year we are closer to 40 mil­lion. Ours are all made through automa­tion, but our com­peti­tors make theirs through pro­duc­tion lines. So we can real­ly dis­rupt the­se well estab­lished, ‘com­mod­i­ty’ toy lines with our val­ue pro­duct. And we do that by own­ing our own fac­to­ries, and the IP behind the automa­tion engi­neer­ing. We have four more toy cat­e­gories in our sights, which we’ll enter over the next two years.

Jake: What’s also real­ly inter­est­ing is how things work inside the com­pa­ny. Tell me about bas­ing your busi­ness in Chi­na.

Nick: We orig­i­nal­ly went to Chi­na to man­u­fac­ture. But it turns out this was an oppor­tune time for oth­er rea­sons. A bit like Japan a while ago, Chi­na has moved from being a man­u­fac­tur­ing econ­o­my to an inno­va­tion econ­o­my. There is some insane tal­ent in Chi­na. There are eight Ivy League schools here. We take the top 1% of the top 1%, main­ly thanks to our rep­u­ta­tion, so we have the­se incred­i­bly tal­ent­ed automa­tion engi­neers, design­ers, and mar­keters. The core of our busi­ness is entire­ly in Chi­na. Our busi­ness mod­el, of invest­ing in automa­tion and the best tal­ent, is very pow­er­ful and has made us very prof­itable.

Zuru have been toy part­ners with Dis­ney on Find­ing Dory and Tsum Tsum, and with Dream­Works on the Trolls movie.

Jake: If there’s one thing that’s real­ly spe­cial and quite dif­fer­ent about your sto­ry, it’s your team of three sib­lings. Mat is the pro­duct, engi­neer­ing and R+D mas­ter­mind. your sis­ter, Anna, is the COO and CFO – to run the oper­a­tions as well as finances is incred­i­ble. And then there’s you, a busi­ness devel­op­ment and sales genius. How did that hap­pen? Did you all study in dif­fer­ent areas?

Nick: No, I think it was all main­ly luck! My dad’s got an engi­neer­ing brain, and my mum just talks a lot. I got part of her, my broth­er got more of my dad and my sis­ter is a mix of both. Zuru has an unusu­al mix of Kiwi, Chi­ne­se, and our own Mow­bray fam­i­ly cul­ture run­ning through it.

Being pas­sion­ate about our own areas and hav­ing com­plete­ly dif­fer­ent skill sets has allowed us to grow quick­ly. We argue like crazy, and each of us likes to win, and I think that helps us end up with the best deci­sion. We do a huge amount togeth­er, too. We have just bought a house togeth­er at home in New Zealand in Coatesville.

Jake: All three of you seem so laser-focused on your busi­ness. Has it always been that way?

Nick: Our first big hit was a deal we did with the David Beck­ham Acad­e­my. I was about 20. We made a whole load of mon­ey, and lost focus. So the three of us sat down, and we said out loud, “From this day on, we are nev­er going to have anoth­er unprof­itable mon­th.” Not a quar­ter, half, noth­ing. We are going to spend every bit of our time, ener­gy and resource on being prof­itable. And as soon as we made that con­scious deci­sion, 10 years ago, every mon­th we have become more and more prof­itable. It’s fun­ny real­ly, look­ing back. It was just a con­scious deci­sion. I think the glob­al obses­sion with val­u­a­tions takes focus away from the nit­ty grit­ty of build­ing a real­ly good, prof­itable com­pa­ny. When you make prof­it, you can do so many things.

Jake: What’s your vision for the future? Do you have an exit strat­e­gy? Do you want to sell? Or is this a life­long job?

Nick: I’m a nev­er say nev­er kind of guy. We love what we do, and we’ve got ambi­tions that are far big­ger and more world chang­ing than toys. That’s all dri­ven by my broth­er, Mat, and his automa­tion team. I don’t think that far ahead to be hon­est. I just think about how we can do bet­ter than last year. We can always improve. Not just to become more prof­itable, but to improve every aspect of the busi­ness all the time. We have a relent­less approach to doing bet­ter.

Jake: Uni­ver­si­ty. Is that some­thing you’d rec­om­mend? Or should we just get out there and start?

Nick: I was lucky that I had com­pet­ing par­ents. My mum want­ed us to go off and study, but my father believes that from the age of 18 until you have chil­dren, you should be out there tak­ing risks, and exper­i­ment­ing. So Dad encour­aged us and was pas­sion­ate about us not going to uni­ver­si­ty, where­as my moth­er strong­ly pushed for us to go!

Yes, of course, get out there as ear­ly as pos­si­ble. The world is mov­ing so fast with artif­i­cal intel­li­gence, social, and dig­i­tal. And our edu­ca­tion sys­tem is real­ly quite lin­ear in terms of what we are teach­ing our chil­dren. I think we need to start entre­pre­neur­ship lessons. Our edu­ca­tion needs to keep up with the pace of the world.

Jake: What piece of advice would you give your 18-year-old self?

Nick: Get a men­tor ear­ly. We were so over­ly naive and over­ly con­fi­dent that any­thing we did would come togeth­er and work. I look back at the num­ber of mis­takes we made. Today, I could teach some­one so quick­ly how to not make those same mis­takes.
Get a men­tor!

And look after your­self bet­ter. I’ve prob­a­bly burnt the can­dle at both ends for a bit too long. I think build­ing any busi­ness you have to be pas­sion­ate, because it’s hard. And you need to be obsessed, because you have to stick at it for a real­ly long peri­od of time. You aren’t going to get any good if you aren’t pas­sion­ate and don’t keep plug­ging away. You only need a lit­tle bit of smarts; it’s more about the hunger, per­sis­tence and pas­sion. They are the three things which help you learn, and help you get bet­ter and bet­ter. And whilst that obses­sion is great for grow­ing busi­ness­es, it’s not nec­es­sar­i­ly that healthy.

Jake: What do you want now?

Nick: What do I want now? It’s not a ques­tion I real­ly think of. I com­pete with myself. I always think about how we can get bet­ter. That’s what I get off on, and I enjoy push­ing for the next lev­el, and I love com­pet­ing. When I look at our com­peti­tors doing some­thing well, I boil inside a lit­tle bit, and I push every­one fur­ther to get to that lev­el.

Jake: What’s your bil­lion dol­lar piece of advice in the world of entre­pre­neur­ship?

Nick: The way to build­ing a real­ly prof­itable busi­ness is to keep things sim­ple. Keep look­ing at how you can sim­pli­fy, ratio­nalise, and stream­line every­thing. I could spend hours on the pow­er of sim­plic­i­ty, and how that dri­ves a great busi­ness. But I’ll give you an exam­ple in my indus­try. Take Lego in the ear­ly 2000s. They might have looked fine from the out­side, but they were about a year away from bank­rupt­cy. Today, they are worth about $20 bil­lion. And to become that prof­itable, they changed very few things.

A young guy called Jor­gen Vig Knud­storp was brought in as the first non-Kris­tiansen to head the fam­i­ly firm since it start­ed in 1932. He realised they were mak­ing new bricks for each pro­duct. That meant more design, man­u­fac­tur­ing, pack­ag­ing, the whole lot. It was expen­sive. They were pret­ty much redesign­ing from scratch every time. Effec­tive imme­di­ate­ly, he decid­ed each pro­duct would be made up by 75% of exist­ing bricks, and only 25% of new bricks. And he reduced the num­ber of Pan­tone colours used from 200 to 10. He worked out that 90% of Lego’s bricks were unprof­itable. That lit­tle tweak trans­formed the whole busi­ness.

Look at KMart. In Aus­tralia, 10 years ago, they were los­ing mon­ey. Guy Rus­so came in from McDon­alds and asked, “Why is KMart try­ing to be all things to all peo­ple? How can we sim­pli­fy things?” So instead of sell­ing 10 bar­be­ques, they worked out who their cus­tomer was and what they want­ed, and stocked just one great pro­duct. He dras­ti­cal­ly cut down the num­ber of items KMart stocked. That meant less inven­to­ry, less qual­i­ty con­trol, less buy­ers, and they could go all the way down the val­ue chain and get the best price because they were ben­e­fit­ing from economies of scale. KMart could then spend much more time buy­ing each pro­duct, mak­ing sure they got a bet­ter deal. The changes also cleaned up the shop­ping expe­ri­ence. Six years lat­er, they are more prof­itable than the oth­er sev­en hard­ware stores in Aus­tralia com­bined. The mod­el was get­ting more and more com­pli­cat­ed, and he just sim­pli­fied it.

Sim­plic­i­ty is real­ly pow­er­ful in build­ing a prof­itable busi­ness. Peo­ple have a ten­den­cy to get more and more com­pli­cat­ed, and we have a habit, as we get big­ger and big­ger, to add more and more prod­ucts. But that actu­al­ly doesn’t serve the busi­ness very well. Less is more.

Jake: Less is more. Great final words!