It’s been a week since logistics start-up Drive Yello was crowned Business of the Year at the My Business Awards 2019. And its founding CEO, Steve Fanale, is still stoked at the recognition.
“We obviously appreciate the accolade, and it really means a lot, I suppose some recognition of where we’ve come. We’re a fairly young company, we’re only five years old. And we’re dealing with some of the biggest clients in Australia.”
Mr Fanale (pictured, centre) said he entered the awards partly as a branding exercise, but more so to “gauge where we’re sitting in the marketplace”.
Depending on what type of award we’re talking about, there’s obviously ones that are specific to retailers and then others, more of a generic business award.
“I’ve been a fan of the publication for some time; I’ve been in start-ups for almost 20 years. So, from my perspective, I just thought it would be good to see how we’re performing against other businesses in the market,” he said.
Here, Mr Fanale expands on what his business is doing that the award judges found so inspiring, and his key learnings from a mixed bag of results in running multiple businesses over the years.
How did Drive Yello come about?
Basically, it came on the back of a problem that my colleague had with regards to... he was having problems finding drivers. And my background being tech and product-based, my first thought was, “What is the technical solution to this?”
I came up with the idea around being able to not only book drivers but manage drivers, even if they’re with their own fleet.
It started off in targeting the QSR — a Quick Service Restaurant — space. So, that’s really where the problem originated and where the solution I came up with was solving.
But it soon became clear that we could apply this to other businesses, and that’s where we moved into grocery and alcohol. With our biggest client being Woolworths, and then more recently in the last 18 months, just general retail, delivering for the likes of SHEIKE, Cue clothing, GlamCorner, just to name a few. Basically trying to deliver anything within three hours.
Do you operate in the B2B space as well?
Yeah, we do. The B2B, with regard to hardware, Total Tools is a very big client of ours. We also do the tracking for BetterHomeLiving, which is a major retailer, where they’re delivering to their stores.
In catering, [we work across] B2B catering. We also deliver construction wear, construction gear to construction sites, etc.
From a B2B perspective, it doesn’t really matter so much what type of delivery we have to do. It’s just about whether there’s a need for it to be fast or managed over same day, is something that we’re particularly targeting. But we also do scheduled orders and just using a crowdsourced marketplace is probably where we have that major benefit.
How did you go about getting the likes of a company the size of Woolworths on board as a customer of yours as a small tech business?
Tenacity I should say is probably the main reason!
No, look, I pitched at a start-up [event]... maybe three years ago. I pitched there and the Woolies Group were thinking about doing delivery at the time. And they pulled me in, I pitched to them and away we went.
Before we even delivered a single delivery, we worked a lot with them to determine how we were going to achieve it.
And they were really interested in working with a start-up that could help them offer a service that no one else could offer.
And obviously they had tried and looked at the bigger guys, the Ubers and the regular courier companies, but they couldn’t really offer the service that we could with our technology and with a crowdsourced marketplace. So, it just meant that we could offer something slightly different, which means that they had a bit of an edge in the market.
Where are you currently operating?
So, our coverage, we’re doing deliveries in Sydney, Melbourne, Brisbane and Perth. Looking at Adelaide and New Zealand in the new year. Canberra and the Gold Coast. So, we’ve got plenty of expansion plans within the next three to six months.
You have offices in both Sydney and Melbourne. Why split your operations across multiple sites?
It really comes about from the driver network and managing them. Once we see the need for face-to-face interviews and things like that.
We have a couple of people down in Melbourne. Melbourne’s also a pretty big hub for retailers. So, they need some people on the ground that see them fairly regularly, particularly the larger ones.
Brisbane doesn’t necessarily have as much of the retail side, although that is growing and there may be a need for that in Brisbane [as well]. But it really is around some of the training and management of the driver community. The crowdsourced marketplace and getting them on board, etc. So, we need some level of presence in areas that we’ve got high growth.
How many employees does Drive Yello have now?
Eighteen here in Australia. We’ve got six or seven over in the Philippines as well as six or seven in the Ukraine.
And what about the driver network?
With them, it’s obviously a transient network. So, we’ve had over 20,000 drivers registered at any point. But at this point in time, we’ve got anywhere between 2,000 and 3,000 active.
What has been the strategy behind Drive Yello’s growth?
As I mentioned before, originally we started off really just focusing on fast food. That became not only competitive, but we were finding that some of the businesses were really struggling to get demand outside of the aggregator space.
We then partnered with Menulog to help them do delivery. And that was a real strong, high-growth channel for us. Unfortunately, they... decided they wanted to start up their own delivery arm, which really dug a hole for us and we had to find our way out of it.
That was back now about a year and a half in, two years in. And that’s where we started looking outside of the food space and were lucky enough to get access to grocery and alcohol through Woolworths. But now we’ve grown our alcohol fairly significantly as well.
And we found that, obviously, there aren’t that many players in the grocery space in Australia. So, we felt that we needed to look beyond that and that’s when we started looking in general retail.
But also, understanding that the consumer demand for the type of delivery that we were offering. [It] is also growing on the back of the likes of Amazon and other major retailers... offering great customer experiences. That is fast delivery, at least same day, as soon as you ordered. We figured that the need for our service is just going to continue to grow. So, we doubled down.
It sounds like yours is a story of adaptability because when the Menulog partnership fell through, that could’ve been basically the end of the business. So, you’ve had to adapt and renew...
Exactly. Look, that’s a story of probably any start-up that survives, to be honest. It’s all about tips and learning and understanding product market fit and adapting and pivoting as a sort of a major adaption is called for. Really understanding what’s going to work in the marketplace.
And when you’re developing a new product, and particularly when it comes to technology, you’ve got to have your finger on the pulse as far as what the market wants and desires. It doesn’t mean you’re always adapting to anything, but at the same time, if something’s not quite scaling, you’ve got to look at things that may scale or whether your products are the right fit for that particular vertical. So, there’s always a constant assessment, I think in the first five years, if not ongoing.
How have you managed to grow when competing against the likes of a global behemoth like Uber Eats?
I suppose in the food space, we weren’t really taking them on directly in a sense that we never really had a consumer product. So, we weren’t like an aggregator of sorts. We were providing a technology solution that allowed restaurants to run their own delivery teams and run their own delivery service outside of that aggregator. So, we basically assisted those restaurants in not having to 100 per cent depend on those aggregators if they needed something delivered.
It did become more difficult as far as the growth of Uber Eats in particular. But at the same time, we’re offering a completely different solution. So, what we’ve found in essence is that, when they first hit the market, we had a major hit, if you like, to what we were doing.
But we’ve actually seen a bit of a resurgence, because a lot of these restaurants and cafés aren’t making any money off the aggregators.
So, they’re actually looking for another solution that can help them offer a delivery service that still has that technology experience to their customers without necessarily having to pay large commissions to the likes of Uber Eats and Deliveroo.
You personally have got quite the entrepreneurial background. What business number is this?
This is the sixth one. So, I’ve had two successful exits. There’s two that are still running, one of which I’m just a director of, and this one, Drive Yello, which I’m very heavily involved in running.
And I’ve also had two very “valuable experiences”, let’s put it that way. So, you know, both helped me evolve in different areas.
From these varied experiences, what would you say has been the ultimate lesson in business you have taken away?
I think the ultimate lesson in my opinion, as far as what leads to success, is an understanding that nothing is easy, but that perseverance is probably the key factor in success.
And that you have to find, whatever it is you’re working on, has to be motivating enough for you personally to persevere. If you lose the enthusiasm for whatever it is you’re doing, or you lose belief that it can become something that is a business that works, then you’ll soon stop having the motivation to get up early and work late at nights and make something work.
Business is not easy, particularly in those early years. So, it’s important that whatever you’re working on, is motivational enough for you to persevere.