Sometimes the best laid plans can go awry.
A couple of months ago Nathan Murphy was in Silicon Valley trying to raise capital for Eyecrowd, the start-up he was working on.
Murphy says he had a couple of investors showing interest in the site, which uses crowdsourcing to research consumer opinions on marketing slogans and logos, when Google dropped a bombshell: it was launching a similar site called Google Consumer Insights.
“Google came into the space with a competing product and that really floored us, and we put our hands up and said you have to be realistic about which battles you choose to fight,” he says. “They launched a product that did exactly what we did but it also did a hundred other things at a tenth of the price.”
Being 20 at the time also presented its own problems when raising capital in the US. He was too young to drink so was denied entry to many of the events potential investors attended and was too young to get an international licence, so had to walk to and from meetings along California’s Sand Hill Road, the epicentre of US venture capital investment.
But Murphy, who has been involved with a number of start-ups since finishing high school, would not give up and was determined to create his own viable business.
While he was still in the US, Murphy got the idea for his next start-up when he heard about the Dollar Shave Club. The site sells discounted men’s disposable razors for a monthly subscription of $3 and has been wildly successful since its launch in March this year, reportedly winning 12,000 customers in its first 48 hours of operation.
Dollar Shave Club uses the increasingly popular subscription commerce model, where customers are charged a monthly fee for goods that are regularly sent to them. The business model has an advantage over sites that offer one-off sales, because as long as the customers remain satisfied repeat business is guaranteed. Other examples from the US include beauty product site Birchbox and gourmet food site foodzie.
“I thought that’s amazing, I wonder what I could do in that space,” says Murphy.
Looking for inspiration, Murphy looked straight down at his breakfast bowl - the now 21-year-old had been eating muesli everyday for the past four years and making it himself.
“And I thought to myself wouldn’t it be cool if you could make your own muesli mix – you pick a base, you pick your fruit, you pick your nuts – and then every month we package it and deliver it to you.”
The result - Muesli For Me - which sends consumers a month’s supply of muesli at a time, made to their own specifications. The site sends out 1.5 kilograms of muesli per month – enough for a daily 50 gram serve at less than $1 per day.
The site took just two months and $3000 to get going after Murphy returned to Australia and recruited co-founders Sean Pieres and Patrick Hamilton, whom Murphy needed because he isn’t a programmer. “My skill set is having an idea and rapidly executing it and seeing what are the moving parts that need to happen,” he says.
The site is already gaining traction. “We just put it out on Facebook,” says Murphy. “We’re pretty excited because we’re struggling to get through all the orders at the moment.”
Murphy says he’s talking to investors and so won’t reveal how many regular customers the site has – except that it’s more than 40 and fewer than 1000 – but says the site is already cash flow positive.
Overheads are very low because Muesli For Me only buys enough stock to fill the orders it already has.
Making the muesli only takes the three founders one day a month, says Murphy.
“Then we spend the rest of the month thinking about how we can make the business better, working on different things, improving the customer experience, then getting feedback from our customers and thinking about how we can grow the business,” says Murphy.
While Murphy says the muesli site has international potential, the founders are concentrating on the local market for the time being. He says the aim is to make sure customers who sign up once, continue to use the service.
Eyecrowd might not have worked out for Murphy, but he says he learned some valuable lessons. “I learned how important it is to be able to present a vision to an investor, that they will understand you clearly what it is you’re trying to do and believe in you and invest in that vision,” he says.
And there was another bonus to Google entering its market. “If it hadn’t happened then I probably wouldn’t have thought of Muesli for Me,” says Murphy.