What you need to know:

• Big Red Group aims to deliver one ‘experience’ per second by 2030, meaning 18x growth across its ecom marketplaces.
• The firm has about 25 per cent of the addressable market for experiences - everything from travel and tourism to parachuting and axe throwing.
• It’s helping 3,000 local suppliers rebuild post-Covid but must expand beyond Australia to hit the numbers, with designs on the UK and Europe next year.
• Before then it needs to consolidate five different tech stacks across its brands – Adrenaline, Experience Oz, Experience Oz Local Agent, and RedBalloon.
• It started the $16m transformation last year. But it didn’t go to plan, per CEO David Anderson.
• So the firm hired CTO Brent Rutherford to start again.
• Alongside CMO Paul Connell, a former Unilever exec, the strategy is to tap 2.6m customer IDs to show suppliers where they are missing demand – and derisk their growth while driving conversions through better customer experience and delivery.
• Meanwhile, its suppliers, mostly small businesses, get new tools to boost their own growth, cut costs and better understand price elasticity in the face of rising inflation and potential cuts to discretionary customer spend.
• The trio unpack the plan and how not to do a tech transformation – quashing any suggestion of CMO-CTO tension – while Anderson outlines what the CEO wants from the c-suite.

Double bubble

Big Red Group operates as a double-sided ecom marketplace, bringing buyers and sellers together across four brands under the BRG umbrella. Privately owned, it’s capturing about 25 per cent of the ANZ experience market – everything from gift vouchers to tourism, hotel and restaurants, adventures, skydiving and axe throwing (which Anderson says is a surprise hit with a certain female demographic).

It has some 3,000 suppliers in its books, 80 per cent of which are small businesses, many of whom were battered by Covid. Now rebuilding, they face rising costs – energy, wages, food – hobbling growth ambitions, while the economic outlook makes them fearful of raising prices in a discretionary spend category.

BRG reckons it can derisk those growth ops for suppliers – and give them the tools to become more efficient, fuelling its own growth ambitions in the process.

“What we’re aiming to do is give suppliers the tech that allows them to fish for themselves,” says Anderson. “Inside our master services agreement they can access booking engines, data insights, perks programmes to offset their cost-base – and they can obviously get customers from us,” he adds. “So we are building a rich set of services around our supply-side community – a value proposition that is much broader than just a pure marketplace play.”

Global intent

But the domestic tours and activities market, while at circa 15 per cent CAGR, will only get BRG so far. Anderson is eyeing circa $140bn global market – and further buys.  To hit 18x growth, “it’s a step change,” says Anderson. “We can’t do it organically.”

Before international expansion and acquisition, with the UK and Europe on the cards next year, BRG needs to bring five “monolith” tech stacks together via a $16m capex programme.

“There was always a realisation that we had to do it, but we kicked the can down the road during Covid. No one took capital risk during Covid, we're the same,” says Anderson.

“I can't take five systems global. We need to consolidate our IP over the next twelve months whilst we've got big global macro trends, which are negative for me investing internationally. So let's use that window to consolidate, optimise, and build a platform that we can take internationally.”

Plus, gifting boomed during Covid, as people stuck at home brought each other presents to redeem later, bolstering the tech war chest.

“We doubled in size [revenue wise] through the pandemic," says Anderson, "and we recognised that customer expectation had fundamentally changed.”

Grand plans...

Seven months in to the tech transformation programme, has it gone to plan?

“No,” says Anderson. “No it has not. But do we have optimism for it? Yes. I think the beauty of our business is that we can accept that innovation requires invention and invention requires failure. As a business, we can accept when we fail at stuff, write it off and move on.”

He says the errors made at the outset were the problem.

“What we didn't get right was some of the foundational setup. We needed much more clarity around the foundational: what's our CI/CD [continuous integration/continuous delivery] strategy going to be? What's our landscape strategy? What's our data security? Those types of foundational architectural principles. We needed to get much more grounded before we started,” admits Anderson. Instead, “we came out like a bullet from a gun.”

A lack of consistent development standards “meant that we were herding cats”, he says. “So coming back, setting the foundation and putting in place the right governance and enforcing that is a lesson we've learned.”

The second big lesson is that the so-called ‘Strangler Fig’ approach – going live with incremental steps and try to unlock benefit while fixing bugs along the way – was not going to cut it.

“The transitional interface work was just too big for us and so we decided to take much bigger bang steps. Less incremental, bigger drops was the lesson we learned,” says Anderson. “We were too busy trying to figure out short-term benefit release rather than how we actually align with the organisational and business transformational change to make sure we’re a bit more joined up.”

The third lesson was sequencing: “Sequencing for us needs to bear in mind that it's not pure technical transformation, it's a business transformation – there are organisational implications,” says Anderson. “For seventy five per cent of our business, it changes the way [the brands] operate with the technology. The capability that we need to build, the processes that we want to run are changing quite substantially. So getting the sequencing piece right was the third challenge. We got that wrong in the first iterations.”

False start

Asked for an example of sequencing misalignment, Anderson suggests it was a case of recognising and reordering priorities.

“We thought we could move more quickly with a headless environment for Red Balloon, because we thought we could get quicker value out of our blog packages and blog pages and odds and sods. Well, it's pretty small beer compared to the rebranding of our Adrenaline platform. Actually the right first choice was to launch our website on Adrenaline as opposed to Red Balloon as an example.”

But he’s sanguine about taking the decision to step back and restart.

“We’re only human. There's not a lot of sunk cost in the programme so far. I think we'll still deliver the programme for the capital we said we would. We also learned we can't do everything ourselves. I'm a big believer in meritocracy. I'm a big believer in promoting people with the minerals. Have you got the raw ability, the commitment, the intellect? You'll figure it out. But in reality, these transformations at some point also need specialists – bringing third party SIs [systems integrators] to work with us on point solutions to actually bring the expertise that we need. Trying to figure out how to do it by yourself is just too hard,” says Anderson.

“At 150ish people, you're too big to do it in your kitchen and figure it out between you. And you're too small because you're so busy running the business that you can't change the business. You don't have the capacity to do both.”

Stack attack

Hence five months ago, the group hired a CTO, Brent Rutherford, to lead the re-architecture – and reset the course.

Aptly, for someone rebuilding the entire tech platform on the fly, Rutherford had been working as CIO for InQuick, a firm that makes modular concrete bridges, following lengthy stints at Apple and Dell.

Now he’s working closely with CMO Paul Connell, a former Naked Wines and Unilever marketer who joined the firm two months earlier, to join the dots between growth and the underlying enabling structures.

Rutherford walked into a “weird and wonderful” collection of stacks.

“We had everything from Cold Fusion, which most people haven't heard of for quite some time, through to an open source tech stack. We've got one that was a Salesforce stack, Salesforce plus custom code, and then another piece of the puzzle, which was another version of open source. So they're all very different.  Different databases, different code bases, different architectures. All of them were monoliths, so they were never designed to be extended. They were all very good – they all did what they needed to for each individual brand, but they were never designed to come together in a broader, more scalable international environment, let alone 20 times the volume, which is also obviously a challenge technically."

But Rutherford thinks that the experience gleaned from those stacks will fuel BRG’s massive growth agenda.

“One of the problems that our industry needs to solve is integrating with 40,000 suppliers, or 3,000, depending on where you aim. They're all different. They're all complicated. Booking an experience for jumping out of an aeroplane is very different to booking a restaurant. So the data that's required to do that, the way that you interact with the APIs, is very different,” he says.

“Thankfully, our brands have all of that history. That is a solved problem. So when we choose the path forward, we're able to leverage all of that history, take the best of those stacks and use that in the new architecture, which is much more cloud-centric, leveraging platforms to enable us to grow in the way that we're planning to.”

Data-fuelled

BRG has 2.6m customer IDs and is now in the process of selecting a CDP to use them to power growth for the group and its suppliers.

“We’ve got a shortlist [of vendors] but we’re looking at this holistically, says CMO Paul Connell. “How can we realise some epic value that we haven’t been able to today? Our amazing head of data has structured our data in a really strong way. So it’s about how we get that unified ID and orchestrate it,” he says, along with suppliers and partners, “rather than as some other [firms] are using [CDPs] to just house their insights and data.

"So we’re more sophisticated in our ambition that just picking the best CDP off the shelf. We’re down to a couple [of vendors], but it’s actually about how we get to that future state than picking the best one for today.”

The firm is leveraging its first party data to underpin an insights platform, now in pilot mode, and feeding in data via partnerships with Mastercard, weather and travel data providers along with its own experiential data. Anderson and Connell think it could enable its 3,000 suppliers to derisk growth – fattening its own supply pipe.

“It means I can sit with a supplier and say ‘here’s how your pricing sits against the geography, here’s how your pricing sits against the category on an anonymised basis; here’s how your landing page and your conversion rate sits compared to your competitors; here’s what we suggest you do to improve that conversion, what you can do from a price elasticity perspective etc.,’ says Anderson. “We are uniquely positioned to offer our suppliers all of that off the back of the data.”

Supplying demand

Post-Covid, that first party data can be spun into gold for suppliers fearful of over-stretching after two barren years and rapidly rising costs.

“One of the challenges experience partners face is that they're still running off limited capacity – because they're having to place bets every day around when they ramp up,” per Connell. “But if we can see demand has increased 30 per cent in the Gold Coast but their capacity has opened up only eleven per cent, we know there's a 20 per cent delta where they're not capturing that market into experiences. So they can open up extra days, they can add extra staff, and they can do that without risk.”

CEO David Anderson says the same applies to suppliers launching into new states or territories, or building sideline ventures into standalone businesses.

“We have is unique insight into geographic and category gaps. We know that an axe throwing experience works in a certain geographic and a certain demographic. So we can replicate or look across Australia and say confidently we think there is opportunity to grow that 5x,” per Anderson.

Out of interest, who is an axe thrower?

“It’s the most popular experience for hens parties,” he deadpans.

Disability dollars

BRG is aiming for another untapped multibillion-dollar market: disability tourism. Chief sustainability officer and former Red Balloon CEO, Jemma Fastnedge, says industry data suggests circa “46 cents in every dollar that is available for people with disabilities in the tourism space is unspent,” due to the challenges many people – and providers – face in accommodating their needs.

She points to a Guardian article that suggests the domestic market alone could be worth up to $8bn, with billions of dollars left on the table “because it is just too hard for them to find the information, to make a booking – or it’s just not accessible to them online” says Fastnedge. “A lot of it just about information [via suppliers]. So that is a big push for us – how we bring that to life through our marketplaces as a cornerstone. Because we are missing a big chunk of the total addressable market.”

CMO-CTO tension?

Tension between CMO and CTO agendas is not uncommon. Connell and Rutherford claim it’s all healthy at BRG.

“From my perspective, marketing and customer experience is all of our jobs … and it takes all of us, regardless of your job title. We have a gift in working with Brent, who comes not just from a technical background but a product background. He’s asking and thinking about customer as much as anyone else in our business, sometimes more,” says Connell. “Brent is a great partner in crime.”

Rutherford returns the love. He points to the three oversized chairs in BRG’s boardroom, where he was seated alongside Connell the previous week for a seemingly CEO-mandated mutual appreciation session.

“We had to give each other compliments … That’s a thing, apparently,” says Rutherford. “But I described Paul as my thinking partner and that’s really how we work together. We challenge each other; we push the boundaries of each other’s thinking.

“For big chunk of my career [including 12 years with Apple], I was delivering customer experience in retail. So that was a way of living for me, thinking about everything from the customer's perspective. Hopefully I bring that to the discussion every day,” Rutherford continues.

“So we connect more than we don't – and where we don't, it's a discussion about what's best for the company and how it works. I think it is important for somebody in a technology position to be very connected with the customer.”

C-suite requirements

Anderson owns BRG with co-founder Naomi Simson. Absence of private equity interference enables rapid decision-making, but "carries some responsibility,” per Anderson.

“So I look for three things [from my c-suite]. Firstly, shared values are critical. Nobody can stay in the team if we are not aligned from that perspective. You need to be able to debate the issue, not the man. So that ability to be vulnerable and demonstrate radical candour is really important when you have the ability to make decisions,” he says.

But for all the importance of overlapping cross-disciplinary thinking, Anderson underlines a golden rule. “Ultimately, it’s really important to know your swim lanes. Once everyone starts thinking they can do each other’s jobs, you’re screwed.”

Where next

BRG can’t get close to 18x growth within seven years domestically. So where’s next, once transformation and stack consolidation is bedded in?

“My favourite phrase is that the road to the US is paved with the bones of Australian companies that have tried,” says Anderson.

“In truth, the US is quite a nascent market compared to Europe, which is much more mature and understands experiences, understands the voucher market. There's some much more significant enterprises in UK and Europe than there are in the US. So I think we would point more towards Europe and the UK for midterm growth opportunity.”

Brand v demand

Marketplaces such as Airbnb have made a sustained push away from performance media, placing major emphasis on brand in recent years. Per its latest earnings call, CFO Dave Stephenson said the approach is paying dividend.

“Our brand marketing [is] delivering excellent results overall with a strong rate of return. And it’s been so successful that we are actually expanding to more countries.” Stephenson added that Airbnb’s strategy is “to continue to focus on the overall brand of Airbnb and to be less reliant on search engine marketing. We’ve been incredibly effective at that 90 per cent of our traffic remains direct or unpaid.” Meanwhile, CEO Brian Chesky said the “Holy Grail is pointing demand to where we have supply”.

BRG’s CMO admires Airbnb’s approach, but isn’t pulling back from performance, particularly paid search, any time soon.

“I align with a lot of what Airbnb has done. We've also got a great proof-point in that Red Balloon has been increasing investment in brand for the last three to four years and has its best set of salience scores, its best ever level of organic traffic and therefore its best level of profitability,” says Connell. “But where we continue to invest much more in performance, that is also working hard for us.”

The firm has brought on agency partners BMF and Kaimera for creative and media to continue that trajectory.

“We’re not talking about turning off performance. Our thinking is ‘lets invest much more in bringing people into the experience economy knowing that will make our performance work harder’,” says Connell. “It’s 60:40, not 100 and zero.”

He agrees with Airbnb’s push to better match supply and demand, which is why showing suppliers pockets of underserved demand (he calls them “geo-gaps”) and enable their expansion is mission critical.

“The better job we do with demand, the more we can enable increased supply,” says Connell. “That is why we are looking at demand versus where we see gaps in supply, and approaching partners to help us open that up. There is an opportunity to do that more and more – and we have to do it.”

Trust funds

Adrenaline, acquired by BRG in late 2018, is the brand that Connell thinks has the most immediate growth opportunities, pointing to the “number of people walking around in Kathmandu gear”. With partnerships – including the likes of GoPro – and a solid community now in place, he says the tech transformation will enable the brand’s CX and online experience “to match that versus building the promise and not delivering it”.

The growth strategy for tourism platform ExperienceOz, acquired in late 2021, is through “partnerships and in-destination authority,” says Connell. It has partnerships in place with Tourism Queensland and Virgin Airways as well as CamperMate, one of last year’s the most downloaded tourism apps, as well as “both retail and hotel groups where tourists are looking for the modern concierge,” says Connell. Essentially, it's about showing people “What’s good, what’s great around here", and for the suppliers, "what’s easy to convert", per Connell. "It’s about being where everybody needs to know who to trust – and converting that trust into action.”

Tech weeds

Anderson breaks down BRG’s set up – and where it’s headed. Essentially more custom-built solutions at the ends of the business, with standardisation in the middle.

“What's unique about our industry is how we engage with bookings and availability with suppliers. Hotels may be very consistent in the way you want to book a hotel room, but we operate with 140 different types of suppliers today. Whether you're axe throwing, chocolate making or you're jumping out of a plane, they're all quite different businesses. What's unique about our industry is how do you engage with very diverse suppliers and offer booking and availability to consumers? Fact is, if you can offer availability, conversion rate goes up. It’s pretty important for us to be able to do that. That is our core knitting. So we build that ourselves, because there is no off the shelf package to do that,” says Anderson.

“But when you move into the middle of our business, that's when you can start to leverage more natural platform services – because an order is an order. So we use Service Cloud to run our CE [customer engagement] – because a call is a call. We use Marketing Cloud to run our messaging and EDM platforms, because that stuff for me is a bit more commoditised and we're better off leveraging large vendor platform services out of the box than trying to figure out how we build that stuff ourselves,” says Anderson.

Commerce is a little more involved, because BRG is currently operating three different storefronts across its brands. “Over time, they will be totally headless. But today, we will probably leverage some of the existing Salesforce component architecture to give us speed to value,” says Anderson. “Ultimately our strategy is to move headless, with headless CMS and DAM [digital asset management] and so on.”

“But through the middle of the business, the martech layer is really interesting for us, because it is just changing so quickly.”