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Friday, November 22nd, 2019

Second-wave disrupters kicking goals

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by August 23, 2016 General

Whole industries are developing around new, digital businesses.

One day we’re going to talk about different waves of disruption. At the moment we’re in the first wave, where businesses like Uber have turned the taxi sector on its head and AirBnB is challenging hotels. 

But in the second wave of disruption we’re going to see whole industries spring up around newly disrupted markets.

Steve Fanale and Johnny Timbs spotted a gap in the takeaway food home delivery market. Steve Fanale and Johnny Timbs spotted a gap in the takeaway food home delivery market.  

Case in point is Drive Yello, an app that launched in December 2015 that connects delivery drivers with the businesses that need them like restaurants.

One of the founders, Johnny Timbs, saw the potential for the start-up when he was running five Crust Pizza franchises in Sydney’s eastern suburbs and North Shore.

“Delivery had always been a major problem for me; it was about 80 per cent of the business, we had a delivery team of more than 100 people. But it was always very difficult. The traditional delivery driver is an 18-year-old student and they’re not the most reliable people,” says Timbs.

“We were running a multi-million dollar business on the back of that. I thought there must be a different way we could be doing this. One day I was having a couple of beers with Steve Fanale, my co-funder. I got a phone call saying one of my drivers hadn’t turned up to work, which was almost an everyday occurrence. Steve’s been in the start-up game for 20 years, and he looked at me and said, ‘Surely there’s an Uber where you can just call in a driver if you need them, and they can come and help you out?’,” he explains.

There wasn’t. So the pair set about building Drive Yello, a business-to-business logistics platform for the takeaway food home delivery market. 

“We are a marketplace of independent contractors who work for themselves. Food businesses go onto our app and post a job we call shifts. Then drivers apply for shifts,” Timbs explains.

Drivers work directly with the companies for which they are booked. They are not paid by Yello, which is just a facilitator.

“The driver builds a relationship with the business just as much as the business does with the driver,” Timbs says. “Drivers get rated for their work, and the driver also rates the store. The cream rises to the top; if you’re a really good business and you do a great job, you look after your staff, then you get rewarded for that because people want to work with you, and vice versa.”

Timbs says the business is currently looking to scale up, having recently raised $1.7 million. “We’ve just opened an office and hired a general manager in Melbourne. We’re hiring here in Sydney. We’ve got big brands on the platform like Mad Pizza and Miss Chu. McDonald’s is on board and Menulog has signed up as a partner. We expect a number of other major brands in Sydney, Melbourne and Brisbane will sign up between now and Christmas.”

There is currently more than 2000 drivers registered on the platform, with about 50 new drivers signing up and undertaking training every week on things such as food health and safety and safe driving.

There’s a fantastic mentor and start-up scene in Australia. Everyone’s willing to help and give their opinions.

David Truong started working as a driver for Drive Yello in March this year. “When I started I was doing one or two shifts a week, now it’s three or four and I drive for a couple of restaurants.”

He is able to work for multiple restaurants in the same shift, and makes about $400 a week, which he uses to supplement his income teaching music production. 

“There’s massive growth opportunities for us here in Australia. We’ve also been approached by a couple of brands to go to New Zealand and Singapore and even to the States and to Europe,” Timbs adds. “There’s a lot of opportunity within this marketplace, and I think it’s purely based on the fact that we are looking at it from the business rather than the consumer perspective.”

He says rather than being competitive threats, businesses like UberEATS, foodora, and Deliveroo, which also provide drivers for restaurants, validate his model. 

“The big brands we work with have the brand power to facilitate their own deliveries. They have their own channels, their own applications. We power the delivery on behalf of them. Whereas, Deliveroo, UberEATS and foodora own the consumer. They have all the payment details, all the consumer details. People are loyal to their brand, so they’re loyal to UberEATS, they’re loyal to Deliveroo. They’re not loyal to McDonald’s. 

“If you’re doing a couple of hundred deliveries a week, we can help you manage your existing teams and that process more efficiently. If you’re a store that’s doing 20 deliveries a week, you’re probably better off going with those guys. Once the delivery market has been validated for your business, and you really see it as a great opportunity to bring in a new revenue stream, then Yello empowers you to do that.”

Vietnamese food delivery outfit Mister Minh is one business that relies on the UberEATS platform as its delivery partner. Minh Chu, who previously owned Vietnamese restaurant Binh Minh, has opened a commercial kitchen, Mister Minh, for the sole purpose of serving meals via the UberEATS platform.

“I had a restaurant for 17 years and it was very successful but it was pretty full on. I sold my business two years ago so I could spend more time with my family,” says Chu. “Now I’ve decided to open a commercial kitchen for catering and delivery. I’m addicted to Uber from a customer point of view. I thought it would be great if I could build an app that would allow customers to order my food from anywhere. Now I can concentrate on the quality of the food. I’m pretty excited I can reach customers anywhere.”

It’s still early days for Drive Yello. Timbs says it has generated $200,000 in revenue in the last eight months for its drivers, of which the business takes a cut. He says the company expects to make more than $1 million in revenue within its first 12 months. 

Technology is the business’s major hurdle in achieving that figure. “There’s complexity around building a digital product, and building it fast. With technology, nothing’s ever going to be perfect all the time. It’s just a matter of coming up with solutions to allow our marketplace to be happy,” he says.

The business will also look to raise between $3 million and $5 million in additional funding in the near future, to help it service the big fast food brands. 

“Our initial investors were high net worth people. In this next round we’ll look to a few more significant sophisticated investors. We’ve just finished six months as part of the Telstra-backed accelerator program muru-D. We had a demo day three weeks ago, which was fantastic. We presented to investors and VCs in Sydney and around Australia. We’ve had interest come out of that,” says Timbs, who says Asian investors have also shown appetite to invest.

Timbs’ tip for aspiring entrepreneurs is to not to be too timid about openly seeking advice from other people.

“There’s a fantastic mentor and start-up scene in Australia. Everyone’s willing to help and give their opinions; it’s a really good community. So have an open mind, be willing to talk to people about your idea or your product and get feedback on it. 

“Don’t keep your cards too close to your chest, because I’ve seen a lot of people do that and the business falls apart because they don’t want to take funding, they don’t want to take help, they don’t want to take suggestions. I always like that saying ‘hire people who are smarter than you’. Because it’s important to bring in people who can help you grow your business and become part of your team. That’s a really important part of what start-up life’s all about.”

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