From entry to exit with Gabby Leibovich, Founder, Catch.com.au
Startup Victoria’s Growth Club, proudly supported by LaunchVic, brings scaleup founders together in conversation with successful founders, technology executives and investors. When the cameras go off, founders have the opportunity to ask questions about their most exciting opportunities and their biggest challenges, completely uncensored.
This March, Gabby Leibovich, Co-founder of Catch Group, told scaleup founders how he built a host of Australia’s most successful ecommerce startups, over 14 years, before selling to Wesfarmers for a cool $230m.
Enter Gabby Leibovich
Gabby’s startup journey began when he left the sales floor of his dad’s retail store and started selling products on eBay.
The landscape was very different then. Bulky tube TV’s were still on the shelves and online shopping was yet to take off. Things were about to change in a big way, and Gabby was in the right place at the right time to ride the wave of innovation that was about to completely transform retail.
Over the next 15 years Gabby and his brother Hezi built an Australian ecommerce empire.
The Leibovich brothers started with Catch of the Day (now Catch.com.au) and moved large volumes of stock with their famous daily deals. Gabby went on to found a host of other ecommerce businesses including Scoopon, Eatnow, Mumgo and Grocery Run, and invested in over 20 Australian startups.
Here are three things that 15 years as a founder taught Gabby about taking a business from entry to exit.
Building business by building relationships
Gabby built his business on the back of good relationships with customers, with suppliers and even with competitors.
“I used to tell people, “Don’t sell to me unless you can make a profit.””
Gabby says that short-term gains will damage you in the long-run. Much better, he says, to create a situation where both parties stand to benefit. In Gabby’s case, this meant that wholesalers would keep coming back to Gabby, delivering more value over time.
This same attitude helped the Leibovich brothers turn skeptics into advocates.
Certain businesses believed that the low prices on Catch of the Day would devalue their product, and would even prohibit their retailers and wholesalers from reselling stock to Catch of the Day.
In these situations, Gabby and his brother would connect with businesses through their other brands, such as Mumgo or Grocery Run, to build trust and demonstrate the value that Catch of the Day could add to their business.
Benefit from Frenemies
He also believes in keeping your enemies close, having regular catch up with all the players in their markets. You would find quite often that you can do the best deals with these businesses by cooperating and possibly later on merging or a full acquisition.
“We were inspired by them and we wanted to beat them.”
Making friends with your enemies – frenemies – opens businesses up to new opportunities that wouldn’t be viable outside of partnership.
He gives their relationship with Menulog as an example. Menulog was the biggest online food delivery service when Catch Group launched EatNow, and they were soon the two dominant players. Instead of throwing all their energy into trying to squeeze market share off one another, the businesses worked together, merged, and eventually sold for $855 million.
“A lot of people are afraid to do business with competitors,” Gabby says. “We do business with our enemies, putting businesses together to get a smaller piece of a much bigger pie.”
Startup Darwinism; evolving to survive
Gabby was heavily involved in ecommerce when it took off in Australia, so he’s seen the damage that complacency can do to a business.
When Catch of the Day started in online retail, none of the major retailers were online and some of them would never make it through the imminent market disruption. By contrast, the Leibovich brothers continued to adapt their offering throughout their time at the helm of the Catch Group.
For them, this meant that they diversified with new products that addressed different verticals as Catch of the Day grew.
Branching out into food delivery with Eatnow, and offering deals for services, groceries and travel with other brands, the Catch Group was able to build a larger and more resilient business. The decision to add an online marketplace, allowing independent sellers onto Catch.com, was adding more than $2 million dollars in weekly sales during the first year.
However, Gabby cautions that not all adaptation will be good for survival, and says that founders need to be proactive in recognising this.
Learning from mistakes
Gabby learnt this lesson the hard way. When the children’s clothing brand, Pumpkin Patch, went into receivership, the Catch Group acquired the brand for $2 million dollars, with the idea of rebuilding it as an online only brand.
But even though Catch Group had experience selling these types of products, aimed at mothers and their children, through Mumgo, they had never made clothes or built a fashion brand. After a year of trying to remake Pumpkin Patch, they cut the project short.
“Learn to admit your mistakes,” he says, adding that a leader is more likely to do more damage if they, “can’t let go of their ego.”
This lesson, for Gabby, emphasised the importance of sticking to your strengths.
Strength to strength
Despite building some of Australia’s most successful e-commerce businesses, Gabby says that this doesn’t trace back to a deep interest in tech.
“Me and my brother aren’t technical,” he says. Rather, Gabby’s passion and drive has always come back to a love of products. “I love being the buyer, I love catalogues, I love browsing,” he says, “and I think I’m very good at that.”
He says that founders who don’t recognise their own strengths (and therefore limitations) will have a much harder time than those who do, and will often create problems for themselves. Instead, he says, you can overcome your own limitations when you, “surround yourself with smart people,” and act as, “the glue that connects those smart people together.”
Again, this talks to the importance of building strong relationships with the people around you. Gabby says that this focus on the people created a real sense of family at Catch Group.
“Everyone wants to have the best culture. Why does it happen? “It starts from the top.”
A people focus is better for your team, creating a happier and more productive environment. It’s also good for founders, leading to a more rewarding career for those who build relationships with their suppliers, their staff, their customers, their frenemies and, of course, their peers in the startup community.
“We are worth so much more together,” Gabby says.
Are you a scaleup founder? Come together with other founders at Startup Victoria’s Growth Club so you can learn, grow and succeed together. To find out more, contact Startup Victoria’s Director of Programs and Partnership, Poppy Trewhella on firstname.lastname@example.org.